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HomeMy WebLinkAbout2002-07-15 City CouncilCity of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: UTILITIES DATE: SUBJECT: JULY 15, 2002 CMR: 298:02 REQUEST TO AUTHORIZE THE CITY MANAGER TO EXECUTE REPLACEMENT AGREEMENTS RELATED TO ELECTRIC TRANSMISSION INTERCONNECTION SERVICES REPORT IN BRIEF A number of agreements need to be executed by the City and by Northern California Power Agency (NCPA) on behalf of the City in the coming weeks and months to replace the Pacific Gas and Electric Company (PG&E) Electric Transmission Interconnection Agreement (IA). The IA terminates on September 1, 2002. The new set of agreements will continue to provide the City the capability to connect City-owned and contracted generation resources located outside the City limits to the City’s electric load. The new set of agreements will have a number of signatories including NCPA; NCPA member cities including Palo Alto; PG&E; and the California Independent Systems Operator (CAISO, the successor transmission system operator that replaced PG&E after the electricity market deregulation in California in 1998). The combination of the three agreements recommended in this report will allow the City to operate with reasonable operational and cost certainty in the CAISO environment upon the termination of the PG&E IA. CMR:298:02 Page 1 of 8 RECOMMENDATION Staff recommends that Council authorize the City Manager to execute on behalf of the City the following agreements and any related ancillary agreements that may be required to ensure a reliable transmission interconnection: 1.Letter Agreement with NCPA that will formally commit the City to the Aggregated Metered Sub System Operator (MSSO) Agreementbetween NCPA and the CAISO 2.PG&E Replacement Interconnection Agreement (RIA) between PG&E, NCPA, and NCPA member Cities including Palo Alto 3. Schedule Coordination Service Agreement between the City and NCPA BACKGROUND The City of Palo Alto Utilities Department (CPAU) operates the electric utility with the objective of providing reliable service at low and reasonable cost to the residents. In order .to electrically connect the City’s electric load to City-owned and contracted generation resources located outside the City, the City requires third party transmission services. The City has obtained this service from PG&E for decades, and has relied on the PG&E transmission system since the 1920’s. The City, along with other NCPA member cities, has been a signatory of the PG&E Interconnection Agreement since 1983. The PG&E IA provides, among other things, transmission interconnection services between City load and City-owned NCPA generation projects. In July 1997, PG&E exercised its three-year notice right to terminate the IA, which would have resulted in a termination date of August 2000. A number of interim agreements extended the IA past August 2000. In August 2001, PG&E unilaterally filed with the Federal Energy Regulatory Commission (FERC) its proposed replacement IA (RIA) to be effective April 1, 2002. The RIA by PG&E provides basic protocols to physically connect loads and generation resource to the transmission grid, but defers to the .CAISO to provide the transmission and control area services required by the City and other NCPA member cities. FERC, upon NCPA’s request, delayed the effective date of PG&E’s proposed RIA to September 1, 2002, and convened a number of teclmical conferences with NCPA, PG&E and the CAISO to facilitate the negotiation of an acceptable replacement arrangement by September 1, 2002. Since September 2001, with input from City staff and other member cities, NCPA has been negotiating with the CAISO to develop a transmission arrangement that is well adapted for load serving entities like the City. The Aggregated Metered Sub System Operator (MSSO) Agreement now negotiated with the CAISO meets the City’s needs at this time, and provides reasonable operating protocols and defined cost and settlement mechanisms. These agreements are expected to be filed with FERC in July 2002 to meet the September 1, 2002 deadline. CMR:298:02 Page 2 of 8 Staffhas kept the Utilities Advisory Commission (UAC) apprised of the City’s approach to obtaining transmissionservices and have incorporated Commission input in this regard (October 3, 2001; January 9, 2002, February 13, 2002, May 1, 2002). Council was provided an information report on the topic on January 28, 2002 (CMR: 114:02). DISCUSSION The replacement to the IA negotiated with the CAISO will result in the City load and City- owned generation being treated as a Metered Sub System (MSS) in the CAISO-operated electric transmission system, with NCPA becoming an Aggregated Metered Sub System Operator (MSSO). Under these .agreements, the City’s electric demand will be metered along with the City’s NCPA-owned gene~ration and electric contracts. NCPA as an entity that aggregates all NCPA member city loads has the responsibility of balancing the metered demand of NCPA member cities with the electric supply contracts and generation resources operated by NCPA. A balanced load-resource schedule is then submitted to the CA[SO to ensure the reliable operation of the overall electric transmission grid. Key aspects of the MSS/MSSO agreement is briefly outlined below: Provides for load-following capability.with NCPA-owned generation, whereby the City balances load and resources in real time and avoids the CA[SO volatile real time market prices. This also enables the City to avoid certain CA[SO overhead charges: Local generation, within City limits, will not be subject to CA[SO transmission charges when plant output does not exceed City load. This retains the incentive for site generation within the City. City/NCPA retains local control over City/NCPA-owned generation resource. That is, the CA[SO may not dispatch these units uniess NCPA decides to participate in the CA[SO-operated markets for energy and ancillary services. If the City maintains its full generation capacity and reserve requirements to meet its load, the City will not be required to participate in any "economic" blackouts which may occur in northern California due to other utilities’ failure to procure sufficient capacity to meet their loads. The scheduling and real time flexibility of the City’s Western contract is maintained until 2004, with .some limitations on the magnitude of the change of schedules. This provides an excellent tool to efficiently meet changing City loads without being fully exposed to the CAISO’s volatile ancillary services markets. CMR:298:02 Page 3 of 8 The agreement does not recognize the City’s claim for firm-transmission rights under the past commitments (Stanislaus Commitments) made by PG&E. However, the City’s.rights to seek legal determination of this issue at a later time in some other appropriate venue are preserved. In order to transition from the IA framework to operations under the MSS/MSSO protocols, a number of agreements have to be signed by NCPA, NCPA member cities including Palo Alto, PG&E and the CAISO. To execute these agreements to meet the September 1 deadline, the City’s NCPA Commissioner voted, at the June 27, 2002 NCPA Commission meeting, to authorize the NCPA General Manager to execute the following three agreements on the City’s behalf. This rapid City/NCPA authorization is also necessary to accommodate FERC staff review and the FERC order drafting schedule which necessitated that some. combination of a settlement package and an ISO filing be filed at FERC on or about July 1, 2002. Agreements Executed by NCPA: MSSO Agreement with the CAISO .provides for the scheduling and settlement protocols for NCPA to represent the City’s power plants and load in the CAISO operated grid. B)PG&E Replacement IA - provides for the physical interconnection of NCPA power plants and City load to the PG&E owned transmission grid. C)FERC Partial Settlement Agreement in IA Termination Docket - legal vehicle by which the CAISO will file the MSSO agreement and other related CAISO tariff changes; the revised PG&E replacement IA is consistent with the MSSO Agreement. In addition to the above agreements signedby NCPA on behalf of its members, the-three agreements listed below need to be. signed by the City. Agreement 1 and 2 below will formally make the City a party to the agreements signed by NCPA on the City’s behalf. Agreement 3 will be between NCPA and the City, and will formally obligate the City to pay the Scheduling Coordinator charges incurred by NCPA on the City’s behalf. 2) 3) City/NCPA Letter Agreement - acknowledges that NCPA is signing the MSSO agreement with the CAISO and that the City agrees to be bound by .the relevant conditions thereto. PG&E Replacement Interconnection Agreement - provides for the physical power interconnection between the City load and PG&E’s transmission grid (NCPA Will execute this agreement as well with regard to the NCPA generating plants). NCPA Schedule Coordination Services Agreement - designates NCPA as the City’s CMR:298:02 Page 4 of 8 Schedule Coordinator to interface with the CAIS0 on the City’s behalf as well as indicate the manner in which CAIS0 charges and respective NCPA staff charges will flow through to the City (this is currently under development). Timely execution of these agreements is imperative for the City to obtain transmission services from the CAISO on September 1, 2002. Staff will work with the City Attorney’s Office and NCPA to have agreements 1 and 2 ready for execution by the City Manger in July 2002, and agreement 3 completed by September 1, 2002. The table below summarizes the six agreements discussed above. Agreement A. MSSO Agreement B. ’. PG&E Replacement IA C. FERC Partial Settlement Agreement in IA Telanination Docket 1. City/NCPA Letter Agreement to be party to the NCPA MSSO Agreement with CAISO 2. PG&E Replacement IA What It Does Transmission and control area services: Real time load/resource balancing Aggregation of pool loads Avoids transmission cost for local generation Avoid certain CAISO charges Provides for the physical interconnection of NCPA power plants and City load to the PG&E owned transmission grid; The partial settlement agreement is the 1,egal vehicle by which the CAISO will file the MSSO agreement and other related CAISO tariff change~, and the revised PG&E replacement IA which consistent with the MSSO Agreement Acknowledges that NCPA is signing the MSSO agreement (Agreement A above) with the CAISO and that the City agrees to be bound by the relevant conditions thereto; Who Signs and Timeline NCPA on behalf of member cities, ISO July 2002 NCPA on behalf of member cities, PG&E July/August 2002 NCPA on behalf of member cities, PG&E, ISO July/August 2002 3. NCPA Scheduling Coordinator Agreement Acknowledges that NCPA is signing the PG&E replacement IA (Agreement B above) with PG&E and that the City agrees to be bound by the relevant conditions thereto; Obligates the City and other NCPA members to pay NCPA charges that NCPA will incur on behalf of the cities as their Scheduling Coordinator with the CAISO City and other NCPA member cities to be party to agreement A above July/August 2002 City and other NCPA member cities to be party to agreement B above July/August 2002 City and other NCPA member cities with NCPA August 2002 CMR:298:02 "Page 5 of 8 ALTERNATIVES Given that there is only one electric transmission grid and grid operator in. California, the City has three alternatives in the short-term. The first is to be a party to and sign existing agreements designed by the CAISO for CAISO. electricity market participants (Participating Generator Agreements (PGAs) for Cityrowned NCPA generation and Utility Distribution Company (UDC) Agreements for the City’s electric load). This alternative is not well-suited for utilities like Palo Alto that have retained the obligation to serve load and .which own generation resources to serve this, since it results in higher costs and less control over City-owned assets. A second alternative is to negotiate an MSS agreemen~ directly with the CAISO. This alternative will result in higher staff, legal and consultant costs and does not leverage the joint action opportunities by utilizing NCPA. The third alternative is the negotiated MSS/MSSO agreements, designed for entities with thg obligation to serve load with their own generation resources at low and reasonable cost, withsome level of cost certainty. This is the recommended alternative. Three potentigl long-term alternatives are available. The first is to build generation within the City and be independent of the transmission grid. A second long-term alterriative is to build the City’s. own transmission to connect to City load with City-owned generation. While City continues to monitor the feasibility of these two options, they are very expensive and technically infeasible to implement at this time. A third alternative that could be implemented in the next two to three yearsis to establish a separate transmission control area within the CAISO transmission control area. The City, along with other NCPA members, is reviewing this option, but this option is not achievable in the short-term. RESOURCE IMPACTS Interconnection and transmission services in the CAISO environment is projected to be more costly than under the past PG&E !A, which will no longer be available to the City. The higher cost is due to numerous factors. Part of the cost increase is due to higher CAISO overhead costs related to operating electricity markets, while the remainder is due to the expiration of certain cost caps the City enjoyed under the IA with PG&E. Currently, the City’s total transmission (including transmission asset debt payments and Western wheeling cost), ancillary services, and control area operator charges are approximately 0.5 cent/kWh, or about $5 million annually. These costs do not include any congestion-related costs that may be imposed on the City due to the CAISO’s and FERC’s initiatives to restructure the California electricity market. Under the proposed CAISO arrangement, these costs are projected to increase to approximately 0.8 - 1.0 cents/kWh, or between $8 million and $10 ’million per year. These CMR:298:02 Page 6 Of 8" cost increases were anticipated by the City and have been incorporated in’the City’s budget and electric retail rate-making process. The City and NCPA staff will carefully monitor resulting CAISO .charges and take all prudent actions to maintain such charges at reasonable levels. POLICY IMPLICATIONS This recommendation is consistent with the Council-approved Utilities Strategic Plan (USP) and Electric Portfolio Planning Objectives. Specifically, this recommendation plays a strong part in CPAU’s efforts to maintain low and stable rates (Portfolio Planning Objective 1); it supports USP Strategy 2 - "Maintain a supply cost advantage compared to the market prices". Strategy 3 - "Streamline and manage business processes to allow CPAU to work efficiently and cost effectively" is supported through leveraging joint action with NCPA andother member cities in obtaining.transmission services. ENVIRONMENTAL REVIEW These services do not constitute a project for the purposes of the California ¯ Environmental Quality Act. ATTACHMENTS A.Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Execute Replacement Agreements Related to Electric Transmission Interconnection Services B.Aggregate MSSO Agreement with the CAISO (Agreemem A in the CMR) - Draft C.PG&E Replacement IA (Agreement B in the CMR) - Draft D.Partial Settlement Agreement (Agreement C in’the CMR) - Draft E.Letter Agreement with NCPA To Formally Commit the City to the MSSO Agreemerit (Agreement 1 in the CMR) - Draft F. NCPA Scheduling Coordinator Agreement (Agreement 3 in the CMR) - Draft CMR:298:02 Page 7 of 8 PREPARED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: Shiva Swaminathan Senior Resource of Utilities HARRISON Assistant City Manager CMR:298:02 Page 8 of 8 Attachment A RESOLUTION NO RESOLUTION OF THE COUNCIL OF THE CITYOF PALO ALTO AUTHORIZING THE CITY MANAGER TO EXECUTE REPLACEMENT AGREEMENTS RELATED TO ELECTRIC TRANSMISSION INTERCONNECTION SERVICES WHEREAS, since 1983, the Pacific Gas and Electric Company ("PG&E") has provided the City of Palo Alto ("City’!) and other member cities of the Northern California Power Agency (~NCPA") with electric transmission and related services pursuant to an Interconnection Agreement between PG&E and NCPA (~IA") ; WHEREAS, because the IA is scheduled to expire on or before September i, 2002, it will be necessary for the City to enter into a replacement interconnection agreement with PG&E and the California Independent System Operator (~CAISO"), which replaced PG&E as the electric transmission system operator after the adoption of AB 1890; WHEREAS, the City, the NCPA, the NCPA member cities, the CAISO and, PG&E must execute several agreements in order to effect a transition from the IA transmission protocols to CAISO protocols; . WHEREAS, these ’agreements will contain terms and conditions governing: CAIS0 operational protocbls; the interconnection of the City’s electric loads to the transmission grid; the interconnection of NCPA-owned generation to the PG&E- owned transmission grid; the NCPA’s representation of member cities as the scheduling coordinator (~SC") with the CAISO; the obligation of NCPA member cities to pay for the scheduling coordination costs of the NCPA; and other related aspects related to transmission services; WHEREAS, to facilitate the timely filing of these agreements with the Federal Energy Regulatory Commission ("FERC") in order to commence services under the new protocols by September i, 2002, the City’s representative on June 27, 2002, at an NCPA Commission meeting, authorized NCPA to enter in. to several agreements on behalf of the City; WHEREAS, the City Manager seeks the Council’s delegation of authority to him to sign several agreements that will obligate the City to abide by agreements entered into by the 020710 svn 0072197 1 NCPA on the City’s behalf and pay for CAISO charges incurred by ~the NCPA and PG&E on the City’s behalf; NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION I. The Council hereby finds that the City, and the NCPA on behalf of the City, must execute several agreements in order for the City to obtain electric transmission and related services from the CAISO and PG&E after August 31, 2002. The Council hereby determines that the City’s execution of these agreements will serve the public health, safety and welfare of its ratepayers. The Council hereby ratifies the action taken by its representative to the NCPA at the NCPA meeting, on June 27, 2002. SECTION 2. The Council hereby delegates to the City Manager the authority to negotiate and execute on behalf of the City of Palo Alto the following agreements in substantial form and content: ’ o A letter agreement between the City and the NCPA, that will formally obligate the City to perform under the Aggregate Metered Sub System Operations Agreement between the NCPA and the CAISO; A new Interconnection Agreement between PG&E, the NCPA, and NCPA member cities, including the City; An NCPA Scheduling Coordinator Project Agreement between the NCPA and NCPA members, "including the City. // // // // // // // 020710 syn 0072197 SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under the California Environmental Quality Act and the CEQA Guidelines ~ and, therefore, no environment assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST:APPROVED: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney Mayor City Manager Director of Utilities Director of Administrative Services 020710 syn 0072197 3 Attachment B 6/4/2002 DRAFT 6/4/02 PRIVILEGED SETTLEMENT COMMUNICATION [NOTE: NCPA and the ISO RESERVE THE RIGHT TO PROPOSE MODIFICATIONS TO THE TERMS OF THIS DRAFT BASED ON ADDITIONAL INTERNAL REVIEW AND THE ONGOING NATURE OF THE NEGOTIATIONS.] CALIFORNIA INDEPENDENT SYSTEM OPERATOR AND NORTHERN CALIFORNIA POWER AGENCY Aggregate Metered Sub System Operations Agreement Attachment 2- CMR29802_Authorization to Sign IAs.doc2 6/4/2002 NCPA OPERATIONS AGREEMENT THIS AGREEMENT is dated this into, by and between: day of ,20.~_ and is entered (1)Northern California Power Agency, a joint powers agency organized under the laws of the State of California, having its registered and principal place of business located at 180 Cirby Way, Roseville, California 95678 ("NCPA"); and (2)California Independent System Operator Corporation, a Califomia non-profit public benefit corporation having its principal place of business located in such place in the State of California as the ISO Governing Board may from time to time designate, initially 151 Blue Ravine Road, Folsom California 95630 (the NCPA and the ISO are hereinafter referred to individually as "Party" or collectively as the "Parties." Whereas: NCPA and the NCPA Members are engaged in, among other things, generating and transmitting electric power in Northern California, and distributing electric power in the Service Areas of the NCPA Members comprising NCPA’s System, with NCPA serving as the system coordinator for the Metered Subsystem of each NCPA.Member. The ISO, a NERC or its successor-certified Control Area, is engage.d in, among other things, exercising Operational Control over certain electric transmission facilities forming the ISO Controlled Grid, including transmission facilities owned by Pacific Gas and Electric Company (hereinafter referred to as "PG&E"), scheduling transactions that utilize those transmission facilities, and operating certain markets, including markets for Imbalance Energy and Ancillary Services, pursuant to the terms of the ISO Tariff and has certain statutory obligations under California law to maintain the reliability of the ISO Controlled Grid, as well as certain NERC and Western Electricity Coordinating Council or its successor (’WECC")-mandated responsibilities to ensure the reliable operation of the entire electric grid within the ISO Control Area; C=NCPA’s System is within the ISO Control Area and is interconnected to the ISO Controlled Grid and with the electrical system of the Western. Area Power Administration (’~NAPA"); D=NCPA and the NCPA Members desire to continue to operate the generation, transmission and distribution resources of NCPA’s System in an integrated NCPA OPERATIONS AGREEAdENT manner to reliably serve the Loads of each NCPA Member and also desire, as or through a Scheduling Coordinator, to schedule transactions using the ISO Controlled Grid and participate in the ISO’s markets as a buyer and a seller; E=The Parties are entering into this Agreement in order to establish the terms and conditions on which (1) NCPA will operate NCPA’s System electric resources within the ISO Control Area; (2) NCPA will, as or through a Scheduling Coordinator, schedule transactions using the ISO Controlled Grid and participate in the iSO’s markets; and (3) the Parties will meet their obligations under the ISO Tariff, as may be modified by this Agreement and in connection therewith; This Agreement is necessary only upon termination of the NCPA-PG&E Interconnection Agreement designated as PG&E Rate Schedule FERC No. 142; G=NCPA intends to continue to utilize NCPA’s System resources to follow the Load of NCPA Members, make economic resource decisions, and the intent of the Parties is that any ISO charges will be charged to NCPA based on the principle of cost causation, with due regard for historic considerations, timing and transition issues, and other relevant factors; In order to maintain the reliability of the interconnected electric systems encompassed by the WECC, the WECC RMS Agreement requires the ISO to require all Generators in its Control Area, including NCPA, to comply with certain WECC reliability criteria and to be subject to penalties imposed by the WECC Reliability Criteria Agreement should they fail to do so, which requirements, are set forth in Section 10.4; and NCPA is a specially organized agency under the Constitution of the-State of California and utilizes tax-exempt financing for one or more of its projects that restrict the amount of private use. NOW THEREFORE, in consideration of the mutual covenants set forth herein, THE PARTIES AGREE as follows: 1.1 ARTICLE I DEFINITIONS AND INTERPRETATION Master Definitions Supplement. Unless defined in the introduction or Section 1.2 of this Agreement, all terms used in this Agreement with initial capitalization shall have the same meaning as those contained in the Master Definitions Supplement to the ISO Tariff. Attachment 2- CMR29802_Authorization to Sign IAs.doc NCPA OPERATIONS AGREEMENT t’gna~va~ ~ CO~gZOraTzg S~ co, v~v~cano~v 614102 ’1.2 Special Definitions for this Agreement. In this Agreement, the following terms shall have the meanings set opposite them: "NCPA’s System" means all transmission facilities, distribution facilities, and generating facilities owned or controlled by NCPA or the NCPA Members. A description of the generation facilities and Points of Interconnection comprising NCPA’s System is set forth in Schedule 1. "NCPA Members" means NCPAB and NCPAS members. "NCPAB" means those entities identified in Schedule 18 that will be bound under this Agreement. "NCPAS" means those entities identified in Schedule 18 that sign individual agreements with the ISO, but will have NCPA act as Scheduling Coordinatoron their behalf. "Point of Interconnection" means any point at which the Service Areas of the NCPA Members that are part of NCPA’s System are directly interconnected with the ISO Controlled Grid or the WAPA system. The initial Points of Interconnection are described in Section 4.1. 1.3 "Under Frequency Load Shedding" or "UFLS" means automatic Load Shedding, accomplished by the use of such devices as underfrequency relays, intended to arrest frequency decline and assure continued operation within anticipated islands. Rules of Interpretation. The following rules of interpretation and conventions shall apply to this Agreement: (a)the singular shall include the plural and vice versa; (b)the masculine shall include the feminine and neutral and vice versa; (c)"includes" or "including" shall mean "including without limitation"; (d)references to a Section, Article or Schedule shall mean a Section, Article or a Schedule of this Agreement, as the case may be, unless the context otherwise requires; (e)any reference to the ISO Tariff or any provision of the lSO Tariff will mean a reference to the ISO Tariff or provision then in effect as modified during the term of this Agreement, unless otherwise specifically provided; Attachment 2- CMR29802_Authorization to Sign IAs.doc 3 NCPA OPERATIONS AGREEMENT t~wzea, r~ ~v~ co~,rm~rmu, s~rn.r.Mr.~ coMMa~’~c, mo~v 6/4/02 (0 unless the context otherwise requires, references to any law shall be deemed references to such law as it may be amended, replaced or restated from time to time; (g)unless the context otherwise requires, any reference to a "person" includes any individual, partnership, firm, company, corporation, joint venture, trust, association, organization or other entity, in each case whether or not having separate legal personality; (h)unless the context otherwise requires, any reference to a Party includes a reference to its permitted successors and assigns; (i)any reference to a day, week, month or year is to a calendar day, week, month or year; the captions and headings in this Agreement are inserted solely to facilitate reference and shall have no bearing upon the interpretation of any of the terms and conditions of this Agreement; and (k)all references to "NCPA" herein shall be deemed to refer to both NCPA and the NCPA Members. 2.1 2.2.2 ARTICLE II TERM AND TERMINATION Effective Date. This Agreement shall be effective as of the date it is accepted for filing and made effective by FERC, and shall remain .in full force and effect until terminated pursuant to Section 2.2 or upon such other date as the Parties shall mutually agree. Termination Termination by Default. Either Party (the terminating Party) may terminate this Agreement by giving written notice of termination in the event that the other Party (the defaulting Party) commits any default under this Agreement or the applicable provisions of the ISO Tariff which, if capable of being remedied, is not remedied within 30 days after the terminating Party has given the defaulting Party written ¯ notice of the default, unless excused by reason of Uncontrollable Forces under Article XVIII of this Agreement. Termination on Notice. Either Party shall have the right to terminate this Agreement in accordance with this Section 2.2.2, subject to the procedural requirements set forth in Section 2.2.3. Either Party may terminate this Agreement by giving the other Party written notice at least six (6) months in Attachment 2- CMR29802_Authorization to Sign IAs.doc 4 NCPA OPERATIONS AGREEMENT advance of the intended effective date of termination. The Parties’ i’ights to terminate this Agreement in accordance with this section 2.2.2 shall arise only after two (2) years from the effective date as provided in Section 2.1 has passed. 2.2.3 Filing. With respect to any notice of termination given pursuant to this Section, the ISO must file a timely notice of termination with FERC. The filing of the notice of termination bythe ISO will be considered timely if: (1) the request to file a notice of termination is made after the preconditions for termination have been met, and (2) the ISO files the notice of termination within 30 days of receipt of such request from NCPA or issuance of its own notice of termination. This Agreement shall terminate upon the date on which the notice of termination is permitted by FERC to become effective. 3.1 3.2 ARTICLE III GENERAL TERMS AND CONDITIONS Scope of Agreement. Except as specifically provided otherwise, the provisions of this Agreement will apply only with respect to the facilities comprising NCPA’s System, the facilities of NCPAS members, and to Loads and Generating Units directly connected only to NCPA’s System. Subject to the terms of Article II, this Agreement shall not affect NCPA or NCPA Members’ ability to join or establish another Control Area or NCPA’s right to exercise any available legal recourse to obtain or confirm that it possesses other forms of transmission rights. ISO Responsibility. The Parties acknowledge that the ISO is responsible for the efficient use and reliable operation of the ISO Controlled Grid and the operation of the ISO’s Control Area consistent with achievement of planning and Operating Reserve criteria no less stringent than those established by the WECC, or its successor, and NERC and further acknowledge that the ISO may not be able to satisfy fully these responsibilities if parties to agreements with the ISO, including NCPA, fail to comply fully with all of their obligationsunder those agreements. Relationship Between Agreement and ISO Tariff If and to the extent a matter is specifically addressed by a provision of this Agreement (including any schedules or other attachments to this Agreement), the provision of this Agreement shall govern notwithstanding any inconsistent provision of the ISO Tariff. Attachment 2- CMF~9802_Authorization to Sign IAs,doc 5 NCPA OPERATIONS AGREEMENT 3.3.2 3.3.3 3.3.4 3.3.5 3.3.6 3.3.7 3.3.8 3.4 If and to the extent this Agreement provides that a matter shall be determined in accordance with the applicable provisions of the ISO Tariff, the applicable provisions of the ISO Tariff, as in effect from time to time during the term of this Agreement, shall govern. Except as provided in Section 3.3.1 a~d;ii~¢ti~/7~-i~,~5, NCPA shall, with respect to the operation of any of the Generating Units of NCPA’s System, comply with the requirements applicable to Participating Generators under Article 5 of the ISO Tariff and all other provisions of the ISO Tariff governing Participating Generators, except as specified in this Agreement. Nothing in this Agreement shall obligate NCPA to execute, except as already executed, a Participating Generator Agreement with respect to any NCPA Generating Unit. Except as provided in Section 3.3.1 and!!~’Sec{i6i31;71~5, NCPA shall, with respect to the operation of any Load in NCPA’s System, comply with the requirements applicable to Participating Loads under Article 5of the ISO Tariff and all other provisions of the ISO Tariff governing Participating Loads, except as specified in this Agreement. Nothing in this Agreement shall obligate NCPA to execute, a Participating Load Agreement with respect to any NCPA Load. Except as provided in Section 3.3.1 ~nd’jS~iSectioni!i71.13, NCPA shall, with respect to the operation of the distribution facilities of NCPA’s System, comply with the requirements applicable to Utility Distribution Companies under Article 4. of the ISO Tariff. Nothing in this Agreement shall obligate NCPA or any NCPA Member to execute a UDC Operating Agreement. The applicability of any provision of the ISO Tariff to NCPA, including as provided in Sections 3.3.1 through 3.3.5, inclusive, shall, in the event of a dispute between the Parties, be determined through the ISO ADR Procedures in accordance with Article 13 of the ISO Tariff. Nothing in this Agreement shall preclude NCPA from becoming a Participating TO by executing the TCA and fulfilling all other applicable requirements. If NCPA becomes a Participating TO, it shall comply with the requirements applicable to Participating TOs under Article 3 of the ISO Tariff This Agreement shall serve, with respect to NCPA, as the written agreement required by Section 5 of the ISO Tariff, the UDC Operating Agreement required by Section 4. t.1 of the ISO Tariff, the Metered Subsystem Agreement required by Section 23.1.1 of the ISO.Tariff, and the Meter Service Agreement for ISO Metered Entities required by Section 10..3.1 of the ISO Tariff. Amendment to Agreement Attachment 2- CMR29802_Authorization to Sign IAs.doc NCPA OPERATIONS AGREEMENT 3.4.1 Except with respect to the ISO’s rights set forth in Section 3.4:2 of this Agreement, this Agreement may be modified only by mutual written agreement between the Parties. Amendments that require FERC approval shall not take effect until FERC has accepted such amendments for filing and made them effective. This shall not modify NCPA’s rights under Section 206 of the Federal Power Act. 3.4.2 3.4,2.1 3.4.2.2 The ISO shall have the right to apply unilaterally under Section 205 of the Federal Power Act to change the rates, term~:i~n~d!~0nditio~_~.iunder this Agreement for services provided to NCPA. In proposing any changes, the ISO will consider the principles in this Agreement as detailed in Section 3.5.2. Additionally, any changes proposed by the ISO shall be subject to the following: ThelSO shallprovide NCPA 30 days advance written notice ofsuch change. The ISO shall meet and confer with NCPA regarding the change, provided that the scheduling of such meeting shall not be unreasonably delayed. NCPA may waive these requirements upon written request by the ISO. The ISO shall provide NCPA with a copy of the FERC filing if, and when, made. 3.4.3 3.5 The Parties recognize that their responsibilities and operations may change during the term of this Agreement. The Parties agree that, in the event any such change substantially affects the allocation of rights, responsibilities, and obligations between the Parties under this Agreement, the Parties, while continuing to honor the terms and conditions of this Agreement, willmake good faith efforts to negotiate an appropriate amendment to this Agreement and shall endeavor in that process to restore that allocation. Amendment to ISO Tariff. 3.5.1 Nothing in this Agreement shall affect in any way the authority of the ISO to modify unilaterally the ISO Tariff in accordance with Section 19 of the ISO Tariff or of the ISO and NCPA to exercise their rights under the Federal Power Act or any other law or to pursue any legal remedies. 3.5.2 In making amendments to the ISO Tariff, the ISO will consider the impact on Metered Subsystems and the principles reached in this Agreement, including but not limited to: 3.5.2.1 Cost Causation: The intent of the Parties is that ISO charges will be charged to the Scheduling Coordinator for the MSS Operator, based on Attachment 2- CMR29802_Authorization to Sign IAs,doc 7 NCPA OPERATIONS AGREEMENT t~W~.a~O ,~ CO~D~nz~ s~ COMMO~CanO, V 6/4/02 the principle of cost causation, with due regard for historic considerations, timing and transition issues, and other relevant factors. 3.5.2.2 3.5.2.3 Load Following Capability: NCPA desires to maintain Load following capability to match the Loads of the NCPA Members, and to make economic resource decisions with the resources in NCPA’s portfolio. Compatibility of Market Participants: For efficient use of transmission facilities and to decrease Congestion, the ISO desires that all Market Participants operate using similar rules and Scheduling timelines. 3.6 Market Design 2002. The ISO is in the process, simultaneously with the negotiations of this Agreement, of redesigning the ISO’s markets ("MD02"). To the extent possible, the components of MD02 that impact Metered Subsystems will be incorporated in this Agreement. If components of the MD02 design are not known until after the execution of this Agreement, the Parties agree to amend this Agreement in accordance with Sections 3.4 and 3.5.2. 4.1 4.2 4.3 4.4 ARTICLE IV INTERCONNECTION Points of Interconnection. The Points of Interconnection between NCPA’s System and the ISO Controlled Grid or the WAPA system initially will be the points on NCPA’s System described in Schedule 1. Additional Points of Interconnection may be established only by mutual agreement of the Parties, for which consent shall not unreasonably be withheld. Interconnection Operation Standards. The ISO and NCPA shall maintain stable established operating parameters and control power and reactive flow. within standards stated in Schedule 2. ¯ Operation, Maintenance, and Load Serving Responsibilities. NCPA shall operate and maintain all facilities forming any part of NCPA’s System, and shall be responsible for the supply of the Energy and Ancillary Services required to reliably provide electric service to the Loads connected to NCPA’s System within the ISO Control Area in accordance with Applicable Reliability Criteria, including WECC and NERC criteria. Expansion, Retirement, and Modification of Facilities. NCPA shall coordinate with the ISO in the planning and implementation of any expansion, retirement, or modification of those facilities forming parts of NCPA’s System that are identified in Schedule 1, replacements for such facilities, and other facilities forming parts of NCPA’s System that serve similar functions.or that otherwise will or may significantly affect the Points of Interconnection, and shall provide Attachment 2- CMR29802_Authorization to Sign IAs.doc 8 NCPA OPERATIONS AGREEMENT 6/4/02 sufficient advance notice to enable the ISO to conduct any necessary studies. The Parties will amend Schedule 1, as necessary, should a new Point of Interconnection be established in accordance with Section 4.1. 4.5.2 4.5.3 Installation of Facilities and Rights of Access Pursuant to Schedule 3, the Parties shall permit one another, on reasonable notice and with mutual agreement in each case, to install equipment or have installed equipment or other facilities on the property of the other Party to enable the installing Party to meet its service obligations, unless doing so would negatively impact the reliability of service provided by the owning Party. Unless otherwise agreed, all costs of installation shall be borne by the installing Party. A Party installing equipment on the property of the other Party shall be granted, free of charge, reasonable rights of access to inspect, repair, maintain and upgrade that equipment. Access shall be provided only on prior notice and such access shall not be unreasonably withheld. Notwithstanding any other provision in this Section 4.5, NCPA shall provide the ISO with access for inspection or audit, to any equipment or other facilities of NCPA’s System listed in Schedule 1, the operation of which affects any Point of Interconnection or the ISO Controlled Grid, without prior notice during normal working hours, 8:00 a.m. to 5:00 p.m. Monday through Friday, excluding NERC defined holidays. For access for inspection or audit during times outside of normal working hours, the ISO shall provide NCPA with one (1) Business Day advance notice. A shorter advance notice time may be attained subject to mutual agreement of the Parties. An NCPA Supervisor is to be present at anytime access is granted, to any equipment or other facilities of NCPA’s System, the operation of which affects any Point of Interconnection or the ISO Controlled Grid. 5.1 5.1.1 ARTICLE V OPERATIONS Outages NCPA shall coordinate Outages of Generating Units and transmission facilities constituting parts of NCPA’s System with the owners of the transmission facilities with which NCPA’s System is interconnected so that each of those owners can take those Outages into account in coordinating maintenance of its transmission facilities with the ISO. 5.1.2 NCPA shall schedule with the ISO on an annual basis, pursuant to Schedule 4, any maintenance Outages of the equipment included in Schedule 1, and shall Attachment 2- CMR29802_Authorization to Sign IAs.doc 9 NCFA OFERATIONS AGREEMENT t’~.w-~a~ /~ co~r.n’r~ s~rn~.m" co~,~cano, v 6/4/02 coordinatethe Outage requirements of NCPA’s System with the Participating TO or WAPA, as applicable, with which NCPA’s System is interconnected. 5.1.3 Notwithstanding anything to the contrary in this Agreement, to the extent required by any valid law, regulation or order issued by any state or federal authority having jurisdiction over NCPA or NCPA’s System, which law, regulation or order applies to entities that have executed a written undertaking required by Section 5 of the ISO Tariff, NCPA shall coordinate Outages of Generating Units and transmission facilities constituting parts of NCPA’s System with the ISO, pursuant to any generally applicable program established by the ISO to implement such law, regulation or order. 5.2 Safety and Reliability. NCPA shall operate and maintain NCPA’s System in accordance with applicable safety and reliability standards, WECC and NERC requirements, regulatory requirements, operating guidelines, and Good Utility Practice so as to avoid any material impact on the ISO Controlled Grid. Without limiting the foregoing, NCPA shall operate and maintain NCPA’s System, during normal and System Emergency conditions, in compliance with NCPA’s EAP and the requirements applicable to Utility Distribution Companies in ISO Operating Procedures and standards. In the event any such ISO Operating Procedure or standard is revised to modify the requirements applicable to Utility Distribution Companies, the Parties shall comply with such revision. 5.3 Critical Protective Systems. NCPA will coordinate with the ISO, PG&E, WAPA, and any Generators on NCPA’s System (other than NCPA itself) to ensure that ISO Controlled Grid Critical Protective Systems, including relay systems and other systems described in Schedule 5, are installed and maintained in order to function.in a coordinated and complementary fashion with protective devices installed by NCPA, PG&E, WAPA, and Generators. NCPA shall notify the ISO as soon as is reasonably possible of any condition that it becomes aware of that may compromise the ISO Controlled Grid Critical Protective Systems, including the systems described in Schedule 5. 5.4 Control Center. NCPA shall maintain and operate a control center that is staffed twenty-four (24) hours per day, seven (7) days per week and shall, together with the ISO, establish appropriate communications facilities and procedures between NCPA’s control center and the ISO Control Center. The initial points of contact are set forth in Schedule 6. A Party must update the information in Schedule 6 as the information changes. Changes to Schedule 6 shall not constitute an amendment to this Agreement. 5.5 Transmission Losses, Outages, and Congestion. NCPA shall be responsible for transmission losses within any NCPA Member’s Service Area and to any Points of Interconnection. In addition, NCPA shall be responsible for Attachment 2- CMR29802_Authorization to Sign IAs.doc 10 NCPA OPERATIONS AGREE/VIENT transmission line Outages and transmission Congestion within any NCPA Member’s Service Area ~~:b!~{S;".~fii’..n. {_~e~5il~bti~. 6.1 6.2 6.3 ARTICLE Vl INFORMATION SHARING Forecasts. NCPA shall provide to the ISO annually its ten-year forecasts of Demand growth, internal Generation, and expansions of or replacements for those transmission facilities that are part of NCPA’s System identified in Schedule 1 and other transmission facilities that are part of NCPA’s System that serve similar functions or that otherwise will or may significantly affect any Point of Interconnection. Such forecast shall be provided on the date that Utility Distribution Companies are required to provide similar forecasts in accordance with the ISO Tariff, which is currently October 15. The ISO shall notify NCPA of any changes in this date. Peak Demand forecasts for NCPA Members shall be submitted weekly by NCPA’s Scheduling Coordinator and monthly in accordance with the ISO Demand Forecasting Protocol. System Surveys and Inspections. NCPA and the ISO shall cooperate to perform system surveys and inspections of facilities at or near the Points of Interconnection that may significantly affect the facilities of the other Party. Maintenance Schedules. NCPA shall provide the ISO on an annual basis with a schedule of planned maintenance of those generation and transmission facilities identified in Schedule 1, and other transmission facilities serving a similar function or which otherwise would significantly affect the ISO Controlled Grid in accordance with Schedule 4. NCPA and the ISO shall also maintain records of the Maintenance Outages scheduled by NCPA on such facilities and their actual duration. 6.4 Reliability Information. NCPA and the ISO shall each have the obligation to inform the other Party, as promptly as possible, of any circumstance of which it becomes aware (including, but not limited to, abnormal temperatures, storms, floods, earthquakes, and equipment depletions and malfunctions and deviations from Registered Data and operating characteristics) that is reasonably likely to threaten the reliability of the ISO Controlled Grid or the integrity of NCPA’s System respectively. NCPA and the ISO each shall also inform the other Party as promptly as possible of any incident of which it becomes aware (including, but not limited to, equipment outages, over-loads or alarms) which, in the case of NCPA, is reasonably likely to threaten the reliability of the ISO Controlled Grid, or, in the case of the ISO, is reasonably likely to adversely affect NCPA’s System. Such information shall be provided in a form and content which is reasonable in all the cimumstances, sufficient to provide timely warning to the Attachment 2- CMR29802_Authorization to Sign IAs.doc 11 NCPA OPERATIONS AGREEMENT Bzwl~a~ am, comzo~nv~, s,-nZeMr.m" commvmcano~v 6/4/02 other Party of the threat and, in the case of the I$0, not unduly discriminatory with respect to the ~$O’s provision of similar information to other entities. 6.5 6.6 Major Outage Reports. NCPA shall promptly provide such information as the ISO may reasonably request concerning NCPA’s operation of NCPA’s System to enable the ISO to meet its responsibility under the ISO Tariff to conduct reviews and prepare reports following major Outages. Where appropriate, the ISO will provide appropriate assurances that the confidentiality of commercially sensitive information shall be protected. The ISO shall have no responsibility to prepare reports on Outages that affect customers on NCPA’s System, unless the Outage also affects customers connected to the system of another entity within the ISO Control Area. NCPA shall be solely responsible.for the preparation of any reports required by any governmental entity or the WECC with respect to any Outage that affects solely customers on NCPA’s System. Annual Reviews and Reports 6.6.1 The ISO shall make available to NCPA any public annual reviews or reports regarding performance standards, measurements or incentives relating to the ISO Controlled Grid that the ISO makes available to MSS Operators and Participating TOs. 6.6.2 6.6.3 NCPA shall make available to the ISO any public annual reviews or reports regarding performance standards, measurements or incentives relating to NCPA’s System that may affect the !SO Controlled Grid. The ISO and NCPA shall jointly develop any necessary forms and procedures for collection, study, treatment, and transmittal of system data, information, reports and forecasts. ARTICLE VII EMERGENCY OPERATIONS 7.1 In General. NCPA shall have an "Emergency Action Plan" ("EAP") approved by the ISO and on file with the ISO, which EAP shall be attached as Schedule 11. The EAP shall include the operational steps NCPA on behalf of the NCPA Members shall take during System Emergencies, when the ISO implements its System Emergency- related Operating Procedures. Under the direction of the ISO, NCPA shall follow all instructions as they pertain to the ISO’s System Emergency-related Operating Procedures, including actions to be taken by NCPA with respect to Generation, Ancillary Services, and the handling of Load Attachment 2- CMR29802_Authorization to Sign IAs.doc 12 NCPA OPERATIONS AGREEMENT reductions as specified in the EAP. NCPA shall participate in all S.ystem Emergency - operations-related communication between the ISO and other MSSs and UDCs within the ISO Control Area, which may include meetings, conference calls, hotlines, and/or e- mails. NCPA shall provide all. necessary Load and Generation.data associated with the ISO’s System Emergency-related Operating Procedures, including Generation supplied, Load shed, and reserves made available during the time of an ISO declared System Emergency. In the event a System Emergency occurs or the ISO determines that a System Emergency is threatened or imminent, NCPA shall, in accordance with Good Utility Practice and the NCPA EAP: (a) comply with all directions from the ISO concerning the management and alleviation of a threatened or actual System Emergency, which may include shutting down or starting a Generating Unit, altering the scheduled delivery of Energy or Ancillary Services to or from, as well as within, the ISO Control Area, and/or disconnecting NCPA Members’ Load and (b) comply with all other procedures concerning System Emergencies set out in the NCPA EAP, ISO Protocols and ISO Operating Procedures, in accordance with the applicable provisions of this Agreement. Without limiting the generality of the foregoing: 7.1.1 When requested by the ISO du~ih:gb Sy~te~i Eme~rg~:ncY:that 6c~rs!~due t~6~erating ~hti~gencies~ ~whi~h mb~ilih~l~d~ f~rc~d~lOsS of~OurceSa~dio~ trans~ni~ion l ..... 5o~P~he~ts ~or may othe~ise ~be!caused by:an uncostrollable,F~r~: NcPA Shall operate all of the Generating Units of NCPA’s System to supply the ISO with Energy that can be made available by those Generating Units in order to make available as much Energy as possible to the ISO during the term of any System Emergency, consistent with: (a) maintaining the adequate supply ofEnergy to Loads on NCPA’s System, other than in accordance with Section 7.4 of this Agreement; and (b) due consideration for particular obligations of NCPA, provided that NCPA shall provide the ISO with advance notice of any changes to the NCPA EAP or limitations that NCPA’s obligations impose on the operation of the Generating Units of NCPA’s System. For that purpose, NCPA shall provide the ISO annuali~ With a copy0f the updated NCPA EAP and a SChedulelo~ any limitations on the operation of the Generating Units of NCPA’s System, and shall update such schedule promptly whenever it becomes aware of factors that require changes in such limitations, provided that updates shall be provided at least quarterly and no updates may be provided later than the deadline for the submission by other Generators of changes in limitations on the operation of Generating Units, which is currently the deadline for the submission of final Hour-Ahead Schedules, except when a change is due to a Forced Outage. In making as much Energy available to the ISO as possible for use in System Emergency conditions that obcur ~ue to operating contingencies, Which ma~ incl~-d6 foi:ced loss bf res0u~ces and/o~transmissi~n, components or:mayotherwisebe"cause~dbya~U~controllable Force, subject to the foregoing, NCPA shall: Attachment 2- CMR29802_Authorization to Sign IAs.doc 13 NCPA OPERATIONS AGREEMENT t’~¢lzza~.o A,vp CO~T/DZ.A’n~ S~ CO, V_,~U~V/CA~IO, V 6/4/02 7.1.1.1 Schedule, reschedule and operate to the maximum extent possible, the Generating Units and other sources of power of NCPA’s System within and without the ISO’s Control Area to maximize the amount of Energy available to the ISO; and .7.1.1.2 Reschedule outages of equipment and facilities, including Generating Units and any facilities which may impact the operation of Generating Units, to maximize the amount of Energy available to the ISO. 7.1.2 In the event that the ISO issues a Dispatch instruction that contravenes the NCPA EAP or any limitation duly communicated in accordance with Section 7.1.1, NCPA shall not .be required to follow that instruction, although it may consent to do so in a particular case(without prejudice to its right to decline any.such instructions thereafter). If NCPA does not follow such an instruction, it shall notify the ISO that it will not follow the Dispatch instruction due to the previously communicated limitation. 7.1.3 NCPA shall receive compensation for Energy supplied in response to System Emergency Dispatch instructions issued by the ISO in accordance with the ISO Tariff. 7.1.4 During a System Emergency, the ISO and NCPA shall communicate through their respective control centers and in accordance with procedures established in this Agreement and the ISO Tariff 7.1.5 Notwithstanding anything to the contrary in Articles V, VII, VIII, IX,.or X of this Agreement, or any ISO Tariff now or hereafter in effect, under no circumstances shall NCPA, NCPA Members or associate members be expected or required to curtail their loads or operate their generating units in a System Emergency that is due in whole or in part to the failure of other Load Serving Entities or the ISO to maintain creditworthy status or to maintain generating resources adequate to preserve reliability for the CAISO control area. 7.2 Notice. When a System Emergency occurs, the ISO shall notify NCPA’s control center as part of the process by which it notifies all Utility Distribution Companies and MSS Operators of System Emergency conditions. Details of thenotification process are set forth in Schedule 7. 7.3 Records. NCPA and the ISO shall maintain all appropriate records with respect to operations during a System Emergency in accordance with the ISO Tariff. 7.4 Load Shedding 7.4.1 Disconnection of Load. NCPA, on behalf of the NCPA Members, shall implement and have at all times operational an automatic Under Frequency Load Shedding (UFLS) program described in Schedule 8 and any under-voltage relay protection program that may be described in Schedule 9. When called upon to do so by the ISO to avert, manage, or alleviate a System Emergency, NCPA, on behalf of the NCPA Members, Attachment 2- CMR29802_Authorization to Sign IAs.doc 14 NCPA OPERATIONS AGREEMENT shall implement the manual Load Shedding program described in Schedule 10. The - ISO shall notify NCPA when conditions exist that would require NCPA to implement the Load curtailment and Interruptible Load programs described in Schedules 10 and 10B. Subject to the provisions of Section 7.1.2 and 7.4.2, if the ISO determines that Load curtailment is required to manage a System Emergency, the ISO shall determine the amount and location, if applicable, of Load to be reduced and, to the extent practicable, shall allocate a portion of the required Demand reduction to NCPA and each UDC and MSS Operator based on the ratio of its Demand at the time of the ISO Control Area annual peak Demand for the previous year to total ISO Control Area annual peak Demand for the previous year, taking into account system considerations and NCPA’s curtailment rights. The ISO shall consult with NCPA, together with other Market Participants, in the ISO’s annual development of a prioritization schedule for the Load Shedding program in accordance with Section 2.3.2.6 of the ISO Tariff. 7.4.2 Manual Load Shedding Priorities. Section 4.5.3 of the ISO Tariff provides that the ISO will determine each UDC or MSS that has insufficient resources to meet its forecasted Demand in accordance with the ISO forecast. If Load Shedding is required solely due to insufficient resources to meet Load and/or inability to meet Operating Reserve obligations (as defined by WECC or its successor and implemented by the ISO), as determined in accordance with Section 4.5.3.2 of the ISO Tariff, and only if NCPA is short of resources to meet its forecasted Demand and exports, as determined in accordance with Section 4.5.3.2 of the ISO Tariff, will NCPA be required to shed Load, as directed by the ISO. NCPA shall provide the ISO with detailed real time information, in graphical or tabular format for those contracts and WAPA resources that do not have direct telemetry, demonstrating its full resource sufficiency during any time that the ISO interrupted firm Load within the ISO Control Area or during which time an ISO direction to interrupt firm Load was in force, like other MSS Operators and UDCs seeking similar exclusion from firm Load Shedding obligations, and shall be subject to the provisions of Section 4.5.3.2 of the ISO Tariff for any failure to make such demonstration. 7.4.3 7.4.4 7.4.5 Load Restoration. Load shed in accordance with Section 7.4.1 and 7.4.2 of this Agreement shall be restored pursuant to Schedule 12. The ISO shall use reasonable efforts to coordinate NCPA’s Under Frequency Load Shedding program with the Under Frequency Load Shedding programs of other MSS Operators and Utility Distribution Companies, and the implementation of all such other programs, so that no one entity bears a disproportionate share of Load Shedding in the ISO Control Area. NCPA warrants that its Under Frequency Load Shedding program does and will continue to fully adhere to the applicable WECC plans and requirements governing such programs. To the extent NCPAreduces NCPA’s System Load, it shall exercise its best efforts to maintain the same level of Generation and imports as was scheduled prior to the Load reduction in order to provide the ISO with Energy, subject to the Attachment 2- CMR29802_Authorization to Sign IAs.doc 15 NCPA OPERATIONS AGREEMENT 6/4/02 provisions of Section 7.1.2. NCPA shall receive compensation for any Energy or Ancillary Services made available to the ISO as a result of such Load Shedding in accordance with the ISO Tariff and ISO Operating Procedures. 7.5 Electrical Emergency Plan 7.5.1 NCPA shall cooperate with the ISO’s implementation of the Electrical Emergency Plan ("EEP") developed by the ISO in accordance with Section 2.3.2.4 of the ISO Tariff. NCPA shall implement the NCPA EAP set forth in Schedule 11 of this Agreement. 7.5.2 NCPA shall notify the NCPA Members of any voluntary Load curtailments of which the ISO notifies NCPA pursuant to the EEP. 7.5.3 When the ISO allocates an amount of Load curtailment to NCPA pursuant to the EEP to manage a System Emergency, NCPA shall notify the NCPA Members, and the NCPA Members shall effectuate the required Load reductions. Lo~d, re~i~ti~5~ ~ii ,5~i~ffectsate~, iwitSin:te~i;(i O) miS~tes~fmm re~i~ 6f the~lSQi!~ operati.fi~g ~n~i_ucti0n ~i~mctin~. ~ uch- Lo~d :(e~uct~b~i 8.1 8.1.1 8.1.2 8.1.3 ARTICLE VIII LOCAL AND REGIONAL RELIABILITY Reliability Within NCPA’s System NCPA shall be solely responsible for maintaining the reliability of electric service to customers in NCPA’s System in accordance with Applicable Reliability Criteria, WECC and NERC requirements, regulatory requirements, and Good Utility Practice, subject to the responsibilities of the ISO as the operator of the Control Area in which NCPA’s System is located. NCPA shall be responsible for any reliability Generation, Voltage Support, and Black Start service requirements within NCPA’s System and at the Points of Interconnection. If and to the extent the WECC criteria change or NCPA does not maintain sufficient Generation to meet the reliability criteria in Schedule 16, as may be amended, as applied to NCPA’s System and thus avoid adverse impacts on the ISO Controlled Grid, then NCPA may be assessed costs incurred by the ISO to support the reliability of NCPA’s System. The ISO will notify,NCPA that the reliability criteria have not been met and the Parties shall negotiate in good faith over necessary modifications and, if they cannot reach agreement, submit the dispute to dispute resolution in accordance with Article XV of this Agreement. Attachment 2- CMR29802_Authorization to Sign IAs.doc 16 NCPA OFERATIONS AGREEMENT 614102 8.2 Control Area Reliability. NCPA shall be responsible for supplying or bearing the costs of a proportionate share of the generating resources required for the reliability of electric service i6~£_oa~d~ in the ISO Control Area, determined in accordance with this Section 8, except for Reliability Must-Run ("RMR") Generation costs on the ISO Controlled Grid, where such costs are the responsibility of the Participating TO where the RMR unit is interconnected, provided further that NCPA is not a Participating TO. NCPA may meet such obligation from resources it owns or with respect to which it has contractual entitlements to the Energy and Ancillary Services or it may purchase those products through the ISO’s markets in accordance with the terms of the ISO Tariff. 8.2.1 NCPA’s reliability Generation is currently identified in Schedule 14. In addition, some of NCPA’s Generation provides RMR Generation-services to PG&E and is subject to the terms of the ISO Tariff applicable to Reliability Must-Run Generation. 8.2.2 Nothing in this Agreement shall obligate NCPA to make any Generating Units available as Reliability Must-Run Generation other than those identified in Schedule 14. Additionally, the ISO agrees not to designate any other NCPA Generating Units as RMR Units provided NCPA agrees that in a System Emergency, as long as such System Emergency occUrsd~it~ 6perati~g c6htingencie~; ~hich m~ylinclude forcei:l, ios~ 0f-resoUrce~ andio~ transmission components ~or’.~ ~a yot herwise be ca used~ byla n. Uncontrollable Eorce, an y .... Generation not being used to serve NCPA Members will be made available to the ISO in accordance with Section 7 of this Agreement. 8.3 Voltage Support. Except as otherwise agreed by the Parties, NCPA shall maintain the voltage on NCPA’s System so that reactive flows at the Points of Interconnection are within the power factor band of 0.97 lag to 0.99 lead. NCPA shall not be compensated for maintaining the power factor at the levels required by the ISO within this bandwidth. If NCPA fails to maintain the power factor at the levels specified by the ISO, NCPA’s Scheduling Coordinator shall bear a portion of the ISO’s Voltage Support costs in accordance with Section 13.6. 8.4 8.5 Black Start. NCPA shall provide its own share of ISO Control Area Black Start capability. If it fails to do so, its Scheduling Coordinator shall bear a portion of the ISO’s Black Start costs in accordance with Section 13.7. Ancillary Services. NCPA’s responsibility for the ISO Control Area requirements of Ancillary Services shall be determined in accordance with the ISO Tariff. If NCPA’s Scheduling Coordinator schedules sufficient self-provided capacity complying with the applicable requirements of the ISO Tariff, which capacity is committed to the various required Ancillary Services, and maintains the Ancillary Service capacity as available to the ISO for that purpose, NCPA Attachment 2- CMR29802_Authorization to Sign IAs.doc 17 NCPA OPERATIONS AGREEMENT shall not be required to purchase capacity in the ISO’s Ancillary Service markets. To the extent NCPA’s Scheduling Coordinator does not schedule sufficient capacity for this purpose, NCPA may, through its Scheduling Coordinator, purchase the required capacity in the ISO’s Ancillary Service markets. To the extent NCPA’s Scheduling Coordinator does not maintain the availability of capacity committed to the ISO for Ancillary Services for that purpose, the Scheduling Coordinator shall be responsible for the applicable charges under the ISO Tariff. 8.6 Imbalance Energy. To the extent that sufficient Energy for the purpose of serving Load in NCPA’s System and exports from NCPA’s System, including losses, is reflected in Schedules submitted by NCPA’s Scheduling Coordinator and.delivered in real time, NCPA shall not be required to purchase Imbalance Energy in the ISO’s market nor to incur costs allocated by the ISO to Scheduling Coordinators in proportion to their purchases of Imbalance Energy, To the extent that sufficient Energy for that purpose is not reflected in NCPA’s Scheduling Coordinator Schedules and delivered in real time, NCPA may (through its Scheduling Coordinator), purchase the required Energy in the ISO’s Imbalance Energy market and shall incur costs allocated by the ISO to Scheduling Coordinators in proportion to their purchases of Imbalance Energy. However, when NCPA is following NCPA’s System Load and exports from the. ISO Control Area with NCPA’s System resources and imports, to the extent that the net Imbalance Energy on all of NCPA’s System Loads and exports, and resources and imports, is within NCPA’s portfolio deviation band, as specified in Section 13.12, NCPA’s Scheduling Coordinator will not be subject to costs or penalties including deviation band penalties, other than the cost of the Imbalance Energy itself. In following Load, NCPA may utilize any resource available to it regardless of whether, or at what level, that resource is reflected in Schedules submitted by NCPA’s Scheduling Coordinator~ ARTICLE IX ACCESS 9.1 9.1.1 9.1.2 Existing Rights and Access to the ISO Controlled Grid Nothing in this Agreement shall be construed or interpreted in any manner that would interfere with the terms and conditions of any Existing Contract under which NCPA exercises Existing Rights or relieve the ISO of its obligation to honor such Existing Rights, provided that NCPA shall schedule its use of Existing Rights as specified in Section 11.3 of this Agreement. NCPA’s Existing Rights are listed on Schedule 13. NCPA shall have open and non-discriminatory access to the ISO Controlled Grid for the scheduling of transactions that do not utilize Existing Rights for it or its Attachment 2- CMR29802_Authorization to Sign IAs.doc 18 NCPA OPERATIONS AGREEN~ENT }’~z~cEp ~u~,o co, v~[Jwz~ s~’z’nz~J~ co,~M~wcA no, v 6/=t/02 members in accordance with the ISO Tariff and for other transmission services the ISO may provide in the future under the ISO Tariff. 9.1.3 .9.1.4 NCPA may use the ISO Controlled Grid in accordance with the ISO Tariff to buy and sell electric products in the ISO’s markets and in bilateral transactions with other Market Participants~ NCPA shall afford open and non-discriminatory access to the transmission facilities included in NCPA’s System to any entity qualified to obtain an order under Section 211 of the Energy Policy Act of 1992 that affords such access to the transmission facilities that such entitY owns or controls. 9.2 Access to ISO Markets 9.2.1 Sales of Energy and Ancillary Services. Energy and Ancillary Services produced by Generating Units and Loads on NCPA’s System may be sold in the ISO’s markets on the terms applicable under the ISO Tariff to Participating Generators and Participating Loads, respectively, as modified by this Agreement. If NCPA’s Scheduling Coordinator submits a bid for Energy or Ancillary Services from a Generating Unit or Load of NCPA’s System, NCPA warrants to the ISO that it has the capability to provide that service in accordance with the ISO Tariff and that it shall comply with ISO Dispatch instructions for the provision of the service in accordance with this Agreement. If NCPA’s Scheduling Coordinator submits a bid for Energy or Ancillary Services from a Generating Unit or Load within a Service Area of NCPA’s System, any Energy delivered from that Generating Unit or Load shall be added to the calculation of NCPA’s net metered Demand and exports for PurPoses of determining deliveries to NCPA’s System in assessing charges pursuant to Article XIII. 9.2.2 Certification. NCPA shall not use a Scheduling. Coordinator to submit a bid for the provision of an Ancillary Service or submit a Schedule for the self provision of an Ancillary Service unless the Scheduling Coordinator serving NCPA is in possession of a current certificate pursuant to Sections 2.5.6 and 2.5.24 of the ISO Tariff. 9.2.3 9,2.4 Supplemental Energy and Ancillary Service Bids. Bids in the ISO’s Supplemental Energy and Ancillary Service markets may only be submitted by NCPA’s Scheduling Coordinator. Black Start and Voltage Support. NCPA shall be entitled to bid the resources on NCPA’s System in anyopen solicitation held by the ISO for Black Start or Voltage Support services, provided that the supply of any service by NCPA shall not impair its ability to provide the service it is required by Article VIII of this Agreement to provide for NCPA’s System, and, if the services are sold to the ISO, NCPA shall provide such services in accordance with the ISO Tariff. Attachment 2- CMR29802_Authorization to Sign IAs.doc 1 9 NCPA OPERATIONS AGREEMENT 6/4/02 10.1 10.1.t 10.1.2 10.1.3 10.2.2 ARTICLE X GENERATING UNITS AND PARTICIPATING LOADS Identification of Resources. NCPA has identified in Schedule 14 the individual Generating Units and Participating Loads that it owns, operates or to which it has a contractual entitlement, that are connected to NCPA’s System. Technical Characteristics. NCPA has provided to the ISO in Schedule 14 the required information regarding the capacity and operating characteristics of each of the Generating Units and Participating Loads listed in that schedule. The ISO may verify, inspect, and test the capacity and operating characteristics provided in Schedule 14, and any changes thereto made pursuant to section 10.1.2 of this Agreement, in accordance with Section 2.5.25 of the ISO Tariff. Notification of Changes. NCPA shall notify the ISO sixty (60) days prior to any change to the information provided in Schedule 14, provided that such notice shall not be required for changes to parameters of operating limitations set forth in Schedule 14, which shall be made in accordance with the ISO’s Operating Procedures. The Parties shall amend Schedule 14, as applicable, to reflect that change. Subject to such notification, and verification, inspection, and testing in accordance with Section 10.1.1, but without waiting for the execution and effectiveness of an amended Schedule 14, the Parties shall implement any new information for a Generating Unit or Participating Load identified in Schedule 14 upon the effective date for the next scheduled update to the ISO’s Master File. Nothing in this section shall preclude NCPA from informing the ISO of changes in limitations on the operation of a Generating Unit, as provided in Section 7.1 of this Agreement, or to comply with environmental laws and regulations, provided that NCPA provides the ISO with advance notice of any changes in such limitations. Generating Unit Operation NCPA shall install and maintain direct links to the ISO’s EMS system for each NCPA Generating Unit, including ISO certified meters and telemetry that enables the ISO to view the status,, voltage, and output of the Generating Unit and transmits data automatically to the ISO’s meter data acquisition system. NCPA shall calculate and specify to the ISO any distribution loss factor applicable to the Generating Units of NCPA’s System. If NCPA chooses to supply Regulation or self-provide Regulation from a Generating Unit, it must provide the ISO with control over the Generating Unit providing Regulation and place the Generating Unit on Automatic Generation Control ("AGC") responsive to the ISO’s Regulation signal. Regulation service Attachment 2- CMR29802_Authorization to Sign IAs.doc 20 NCPA OPERATIONS AGREEA~ENT shall be provided in accordance with the ISO Tariff. NCPA may adjust output of the Generating Units of NCPA’s System, in response to NCPA’s Load following needs, provided that, if NCPA is providing Regulation to the ISO from any Generating Unit, it may not adjust the output of that Generating Unit unless the integrity of the ISO’s Regulation signal, and the continuous responsiveness of such Generating Unit, via AGC, to the ISO’s Regulation signal, is not compromised. If the ISO determines that the integrity of the ISO’s Regulation .signal or the continuous responsiveness to the ISO’s Regulation signal is compromised, NCPA’s Generating Unit shall be deemed not to have provided the Regulation, and NCPA shall be subject to the provisions of the ISO Tariff applicable to failure to provide Regulation. To the extent that NCPA chooses not to provide Regulation from an NCPA Generating Unit, the ISO shall not control the Generating Unit via a direct link between the ISO and the Generating Unit without NCPA’s consent. 10.3 ISO Authority to Dispatch NCPA Resources. The ISO’s authority to Dispatch any portion of the capacity of any Generating Unit of NCPA, other than in accordance with a bid submitted to the ISO by NCPA’s Scheduling Coordinator, is set forth in and subject to Section 7.1 of this Agreement. 10.4 WECC Requirements Applicable to Participating Generators 10.4.1 Reliability Criteria. NCPA shall comply with the requirements of Section 5.4 of the ISO Tariff applicable to Participating Generators. 10.4.2 Payment of WECC Sanctions. NCPA shall be responsible for payment directly to the WECC of any monetary sanction assessed against NCPA by the WECC, as provided in Section 5.4.3 of the ISO Tariff. ARTICLE Xl SCHEDULING 11.1 Scheduling Coordinator. All Schedules submitted on behalf of NCPA for the delivery of Energy and Ancillary Services to Loads in NCPA’s System and for exports from NCPA’s System shall be submitted by a Scheduling Coordinator certified in accordance with the applicable provisions of the ISO Tariff that has entered into a Scheduling Coordinator Agreement with the ISO that is currently in effect. The Scheduling Coordinator may be NCPA itself or a Scheduling Coordinator designated by NCPA. 11.2 Self-Provided Energy and Ancillary Services. NCPA may self-provide all or any portion of its obligation for Energy and Ancillary Services. Whether or not NCPA engages in such self-provision, NCPA’s Scheduling Coordinator shall include the gross output, less auxiliary load, of each Generating Unit and import Attachment 2- CMR29802_Authorization to Sign IAs.doc 21 NCPA OPERATIONS AGREEMENT from which NCPA meets that obligation and the gross Load served on NCPA’s System and gross exports from NCPA’s System in Schedules submitted to the ISO. If the ISO amends the ISO Tariff to relieve Scheduling Coordinators of the obligation to schedule gross Generation, imports, Loads, and exports, and the amendment would have applied to NCPA in the absence of this Agreement, the Parties shall negotiate an amendment to this Agreement to conform the obligations of this section to the modified procedures. 11.3 Scheduling Timelines. NCPA’s Scheduling Coordinator shall submit all Schedules, including Schedules for the use of its Existing Rights, Schedules for the use of the ISO Controlled Grid as a new firm use, and Schedules for the self- provision of Energy and Ancillary Services, within the timelines established by the ISO Tariff. NCPA’s Scheduling Coordinator shall not be precluded from making real-time Schedule changes if such scheduling capability is afforded NCPA or NCPA Members under Existing Rights or the terms of a settlement agreement approved by FERC, to which the ISO and NCPA represent at least two of the settling parties. Schedule 13 includes any Scheduling timelines required for Existing Contracts. NCPA agrees that in the Day-Ahead Schedule it will schedule the maximum Existing Rights needed for the hour. Any Existing Rights available after the Day-Ahead Schedule is submitted, that are not used by NCPA, shall be available for new firm uses of the ISO Controlled Grid. NCPA may revise its Schedule in the Hour-Ahead provided no more Existing Rights are used. However, NCPA’s Hour-Ahead Schedule may use less Existing Rights than its Day-Ahead Schedule. ARTICLE XII METERING 12.1 12.2 12.3 NCPA shall ensure installation of ISO-certified revenue quality meters and associated equipment at (a) the Points of Interconnection and, (b) for each Generating Unit connected to NCPA’s System, at each bus to which one or more Generating Units is connected, provided that the Demand of any Load at that bus, other than a Generating Unit auxiliary load, is separately metered. The provisions of the ISO Tariff applicable to ISO Metered Entities shall apply to NCPA, subject to the particular rights and obligations of the Parties with respect to metering set forth in Schedule 15, including access to and testing of NCPA’s meters. The calculation of NCPA’s Settlement Quality Meter Data shall be in accordance with the formula set forth inSchedule 15. Attachment 2- CMR29802_Authorization to Sign IAs.doc 22 NCPA OPERATIONS AGREEMENT 6/4/02 ARTICLE Xlll CHARGES 13.1 Charges Generally. Except as may be provided otherwise in the provisions of this Article XIII, NCPA’s Scheduling Coordinator shall be responsible for charges incurred in accordance with the ISO Tariff, provided that nothing in this Agreement shall prohibit NCPA from challenging the allocation of any new charge under the ISO Tariff to NCPA on the ground that the proposed charge is not appropriately assessed against a MSS Operator, or on any other ground. Further, except as specifically provided in this Agreement, NCPA shall only be responsible for charges allocated by the ISO Tariff to Participating TOs if it decides to become a Participating TO, as permitted by Section 3.3.7. Charges assessed in accordance with Existing Contracts shall be paid in accordance with the Existing Contract and not the ISO Tariff. 13.2 13.3 Transmission Losses. NCPA’s Scheduling Coordinator shall be responsible for transmission losses, in accordance with the ISO Tariff, only for the delivery of Energy to NCPA’s System or from NCPA’s System, provided NCPA fulfills its obligation to provide for transmission losses on the transmission facilities forming part of NCPA’s System in accordance with Section 5.5 of this Agreement. A Generation Meter Multiplier ("GMM") shall be assigned to the Generating Units on NCPA’s System at the Points of Interconnection for use of the ISO Controlled Grid. That GMM shall be 1.0 for all Generating Units within NCPA’s System that are located at or behind a Point of Interconnection, to the extent that the Load at the Point of Intemonnection.for that portion of NCPA’s System exceeds the amount of Generation produced by the Generating Units connected to that portion of NCPA’s System, except that a GMM shall be calculated .by the ISO for Energy produced pursuant to a Dispatch instruction from the ISO. Congestion Costs. NCPA’s Scheduling Coordinator Shall be responsible for Usage Charges and Grid Operations Charges, and any successor charges through which the ISO collects Congestion costs from Scheduling Coordinators, in accordance with the ISO Tariff only with respect to NCPA’s delivery of Energy and Ancillary Services to NCPA’s System or from NCPA’s System, including NCPA’s delivery of Energy and Ancillary Services from Generating Units on NCPA’s System to NCPA’s System Loads other than Loads within the same Service Area to which the Generating Units are connected, provided that NCPA fulfills its obligation to manage Congestion on NCPA’s System and at the Points of Interconnection at its own .cost in accordance with Section 5.5 of this Agreement. In accordance with the ISO Tariff, delivery of Energy and Ancillary ~xisting Rights shall not be subject to Usage Charges I~ Attachment 2- CMR29802_Authorization to Sign IAs.doc 23 NCPA OPERATIONS AGREEMENT 6/4/02 13.4 Unaccounted-For Energy Costs. NCPA’s System shall be treated as a Utility Distribution Company Service Area for purposes of allocating responsibility for Unaccounted-for Energy costs in accordance with the ISO Tariff. 13.5 Reliability Generation. NCPA shall be.responsible for the costs of maintaining the reliability of transmission facilities on NCPA’s System, including costs of Generating Units operated by or on behalf of NCPA for that purpose. If and to the extent NCPA does not maintain sufficient Generation to meet the reliability criteria in Schedule 16 as applied to NCPA’s System and thus avoid material adverse impacts on the ISO Controlled Grid, then NCPA may be assessed costs incurred by the ISO to support the reliability of NCPA’s System. 13.6 Voltage Support Costs. If and to the extent NCPA.does not satisfy the Voltage Support obligations set forth in accordance with Section 8.3 of this Agreement, NCPA’s Scheduling Coordinator shall bear a proportionate share of the ISO’s Voltage Support cost in accordance with the ISO Tariff. 13.7 Black Start Costs. If and to the extent NCPA does not provide its own Black Start capability in accordance with Section 8.4 of this Agreement, NCPA’s Scheduling Coordinator shall bear a proportionate share of the ISO’s Black Start cost in accordance with the ISO Tariff. 13.8 Neutrality Costs. NCPA’s.obligation to pay neutrality adjustments and Existing Contracts cash neutrality charges (or collect refunds) shall be based on its net metered Demand and exports. 13.9 Summer Reliability.Costs. NCPA shall secure capacity reserves on an annual basis at least equal to fifteen percent (15%) of the peak .Demand responsibility of ~NCPAB members, and provide documentation to the ISO of such capacity reserves. Such capacity reserves may include on-demand rights to Energy, peaking resources, and NCpAB members’ Demand reduction programs. The peak Demand respons!bility shall be equal to the annual coincident peak Demand Forecast of,NCPAB plus any firm power sales by NCPAB, less. interruptible Loads, and less any firm power purchases. Firm power for the purposes of this Section 13.9 shall be Energy that is intended to be available to the purchaser without being subject to interruption or curtailment by the supplier except for Uncontrollable Forces or emergency. To the extent that NCPA demonstrates its provision of capacity reserves in accordance with this Section 13.9, NCPAB members shall not be obligated to bear any share of the ISO’s costs for any summer Demand reduction program or for any summer reliability Generation procurement program pursuant to ISO Tariff Section 2.3.5.1.8. NCPAS members mustdemonstrate their provision 6f Capaci~ reserves separately, ................................................ 13.10 Generating Unit Emissions and Start-Up Costs. If the ISO is compensating Generating Units for emissions and start-up costs and if NCPA charges the ISO Attachment 2- CMR29802_Authorization to Sign IAs.doc 24 NCPA OPERATIONS AGREEMENT 6/4/02 for the emissions and start-up costs of the Generating Units serving the Load of NCPA’s System, then NCPA shall bear its proportionate share of the total amount of those costs incurred by the ISO based on NCPA’s System gross metered Demand and exports ~d~tl~Ge~tin~O-ni~,~il~b~ ~de~|~ble not to charge the ISO for the emissions and sta~-up costs of the Generating Units se~ing the Load of NCPA’s System, then NCPA shall bear its propo~ionate share of the tota~ amount of those costs incurred by the ISO based on NCPA’s System net metered Demand and expo~s. ~!bcti6~ WSeth~:~tb:~hbrg6 ~h~i~’O~f6~ {hes6~b6~t~on ~b~ahnual b~si~ 13.11 GMC for Load Following. If the ISO is charging Grid Management Charges for uninstructed deviations, and if the MSS Operator has uninstructed deviations associated with Load following, then the ISO will net the Generation and imports to match the Load and exports, and will not charge the GMC for such portion of Energy that is use to match Load and exports. If Generation, above the amount to cover Load and exports, was sold into the ISO’s Imbalance Energy market, then the MSS Operator will only be charged GMC for this quantity. If insufficient Generation and imports was unavailable to cover Load and exports, MSS Operator purchased Imbalance Energy from the ISO’s market, then the MSS Operator will only be charged GMC for this quantity. 13.11 Billing and Payment. Billing and payment will be in accordance with the ISO Tariff. 13.12 Deviation Band Calculation. In calculating the portfolio deviation band for purposes of Section 8.6, it shall be the lesser of either three pement (3%) of the metered Demand and exports fromthe ISOControl Are~ plus any ISO directed firm Load Shedding or three percent (3%) of the Load and exports from the ISO Control Area included in the Final Hour-Ahead Schedule adjusted for forced outages (exclusive of any ISO directed firm Load Shedding). If the Generation resources and imports are greater than one hundred three percent (103%) of the metered Demand and exports from the ISO Control Area plus any ISO directed firm Load Shedding or the Load and exports from the ISO Control Area included in the Final Hour-Ahead Schedule adjusted for forced outages and exclusive of any ISO directed firm Load Shedding, then NCPA’s Scheduling Coordinator will not receive payment for such excess Imbalance Energy. If the Generation resources and imports are less than ninety-seven percent (97%) of the metered Demand and exports from the ISO Control Area or the Load and exports from the ISO Control Area included in the Final Hour-Ahead Schedule adjusted for forced outage, then NCPA’s Scheduling Coordinator shall pay three hundred percent (300%) of the ex post price for the purchase of such Imbalance Energy outside of the band. Attachment 2- CMR29802_Authorization to Sign IAs.doc 25 NCI:’A OPEF, ATION$ AGREEMENT 13.13 Operating and Maintenance Costs. NCPA shall be responsible for all its costs incurred in connection with procuring, installing, operating, and maintaining the facilities, Generating Units, and Participating Loads of NCPA’s System for the purpose of meeting its obligations under this Agreement. 14.1 ARTICLE XlV PENALTIES AND SANCTIONS Penalties. NCPA shall be subject to penalties and/or sanctions for failure to comply with any provisions of this Agreement only to the extent that(a) the penalty or sanction is set forth in the ISO Tariff and has been approved by FERC; and (b) the ISO Tariff provides for the imposition of the same penalty or sanction on a UDC, MSS Operator, Participating Generator, or Participating Load in the same circumstances. Nothing in this Agreement, with the exception of the provisions of Article XV, shall be construed as waiving the rights of NCPA to oppose or protest any penalty or sanction proposed by the ISO to the FERC or the specific imposition by the ISO of any FERC-approved penalty or sanction on NCPA. 14.2 Corrective Measures. If NCPA fails to meet or maintain the requirements set forth in this Agreement or in the applicable provisions of the ISO Tariff, the ISO shall be permitted to take any of the measures, contained or referenced herein or in the applicable provisions of the ISO Tariff that the ISO deems to be necessary to correct the situation, at the expense of NCPA. 15.1 ARTICLE XV DISPUTE RESOLUTION Dispute Resolution. The Parties shall make reasonable efforts to settle all disputes arising out of or in connection with this Agreement. In the event any dispute is not settled, the Parties shall adhere to the ISO ADR Procedures set forth in Section 13 of the ISO Tariff, which is incorporated by reference, except that any reference in Section 13 of the ISO Tariff to Market Participants shall be read as a reference to NCPA and references to the ISO Tariff shall be read as references to this Agreement. ARTICLE XVI REPRESENTATIONS AND WARRANTIES 16.1 . Representations and Warranties. Each Party represents and warrants that the execution, delivery and performance of this Agreement by it has been duly Attachment 2- CMR29802_Authorization to Sign IAs.doc 26 NCPA OPERATIONS AGREEhdENT. t’~w~a~z~ wv~p co~n~rr~ s~ coA~,~u~cAno~v 6/4/02 authorized by all necessary corporate and/or governmental actions,to the extent authorized by law. 16.2 Necessary Approvals, Each Party represents that all necessary leases, approvals, licenses, permits, easements, rights of way or access to install, own and/or operate its facilities subject to this Agreement have been or will be obtained prior to the effective date of this Agreement. 16.3 NCPA Representation of NCPA Members. NCPA represents and warrants that it has been authorized by all applicable NCPA Members to perform the duties and obligations set forth in this Agreement. ARTICLE XVII LIABILITY AND INDEMNIFICATION 17.1 Neither Party shall be liable in damages to the other Party for any losses, damages, claims, liability, costs, or expenses (including legal expenses) arising from the performance or non-performance of its obligations under this Agreement, except to the extent they result from gross negligence or intentional wrongdoing on the part of the Party from which damages are sought. 17.2 Neither Party shall be liable to the other Party under any circumstances for any consequential or indirect financial loss including but not limited to loss of profit, loss of earnings or revenue, loss of use, loss of contract or loss of goods. To the extent not precluded by Sections 17.1 and 17.2, NCPA shall indemnify the ISO and hold it harmless against all losses, damages, claims, liabilities, costs, or expenses (including legal expenses) the ISO incurs to any other entity arising from NCPA’s performance or non-performance of its obligations under this Agreement except to the extent they result from the gross negligence or intentional wrongdoing on the part of the ISO. 18.1 ARTICLE XVIII UNCONTROLLABLE FORCES Section 15 of the ISO Tariff shall be incorporated by reference into this Agreement, except that all references in Section 15 of the ISO Tariff to Market Participants shall be read as a reference to NCPA and references to the ISO Tariff shall be read as references to this Agreement. ARTICLE XIX MISCELLANEOUS Attachment 2- CMR29802_Authorization to Sign IAs.doc 27 NCPA OPERATIONS AGREEMENT 19.1 Notices. Any notice, demand or request which may be given to or made upon either Party regarding this Agreement shall be made in writing to the employee or official identified in Schedule 17 of this Agreement, and shall be deemed propedy given: (a) upon delivery, if delivered in person, (b) five (5) days after deposit in the mail if sent by first class United States mail, postage prepaid, (c) upon receipt of confirmation by return facsimile if sent by facsimile, or (d) upon delivery if delivered by prepaid commercial courier service. A Party must update the information in Schedule 17 as the information changes. Such changes shall not constitute an amendment to this Agreement. 19.2 Waivers. Any waiver at any time by either Party of its rights with respect to any default under this Agreement, or with respect to any other matter arising in connection with this Agreement, shall not constitute or be deemed a waiver with respect to any subsequent default or other matter arising in connection with this Agreement. Any delay, short of the statutory period of limitations, in asserting or enforcing any right under this Agreement shall not constitute or be deemed a. waiver of such right. 19.3 19.4 Governing Law and Forum, This Agreement shall be deemed to be a contract made under, and for all purposes shall be governed by and construed in accordance with, the laws of the State of California, except its conflict of laws provisions. The Parties agree that any legal action or proceeding arising under or relating to this Agreement to which the ISO ADR Procedures do not apply shall be brought in one of the following forums as appropriate: any court of the State of California, any federal court of the United States of America located in the State of California, or, where subject to its primary or exclusive jurisdiction, before the Federal Energy Regulatory Commission. Merger. This Agreement constitutes the complete and final agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements, whether written or oral, with .respect to the provisions of this Agreement. 19.5 Counterparts. This Agreement may be executed in one or more counterparts at different times, each of which shall be regarded as an original and all of which, taken together, shall constitute one and the same Agreement. 19.6 Consistency with Federal Laws and Regulations. Nothing in this Agreement shall compel either Party to violate federal statutes or regulations, or orders lawfully promulgated thereunder. If any provision of this Agreement is inconsistent with any obligation imposed on a Party by such federal statute, regulation or order, to that extent, it shall be inapplicable to tt~at Party. No Party shall incur any liability by failing to comply with a provision of this Agreement that is inapplicable to it by reason of being inconsistent with any such federal, statutes, regulations, or orders lawfully promulgated thereunder; provided, however, that such Party shall use its best efforts to comply with this Agreement, to the extent Attachment 2- CMR29802_Authorization to Sign IAs.doc 28 NCPA OFERATIONS AGREEMENT that applicable federal laws, regulations, and orders lawfully promulgated thereunder permit it to do so. 19.7 Severability, If any term, covenant, or condition of this Agreement or the application or effect of any such term, covenant, or condition is held invalid as to any person, entity, or circumstance, or is determined to be unjust, unreasonable, unlawful, imprudent, or otherwise not in the .public interest by any court or government agency of competent jurisdiction, then such term, covenant, or condition shall remain in force and effect to the maximum extent permitted by law, and all other terms, covenants, and conditions of this Agreement and their application shall not be affected thereby, but shall remain in force and effect and the Parties shall be relieved of their obligations only to the extent necessary to eliminate such regulatory or other determination unless a court or governmental agency of competent jurisdiction holds that such provisions are not separable from all other provisions of this Agreement. 19.8 Assignments. Either Party may assign its obligations under this Agreement, with the other Party’s prior written consent, in accordance with Section 17 of the ISO Tariff, which is incorporated by reference into this Agreement. Such consent shall not be unreasonably withheld. Attachment 2- CMR29802_Authorizati0n to Sign IAs.doc 29 NCPA OPERATIONS AGREEMENT IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on behalf of each by and through their authorized representatives as of the date hereinabove written. CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION By: Name: Title: Date: NORTHERN CALIFORNIA POWER AGENCY By: Name: Title: Date: Attachment 2- CMR29802_Authorization to Sign IAs.doc 30 NCFA OPERATIONS AGREEMENT The following facilities form NCPA’s System, including the Points of Interconnection. This does not include any COT facilities or SOT rights. 31 NCPA OPERATIONS AGREEMENT t’~dw~ae~ ,~ co~m~mz,~ s~m~z,~wr co,~,~ow~car~o,v 6/4/0 2 SCHEDULE 2 INTERCONNECTED OPERATION STANDARDS The ISO and NCPA shall jointly maintain stable operating parameters and control power and reactive flow in accordance with the following Intemonnected Operation Standards. NCPA Responsibilities 1.0 NCPA shall operate the facilities of NCPA’s System at each Point of Interconnection with the ISO Controlled Grid in such manner as to avoid any material or adverse impact on the ISO Controlled Grid. In accordance with this performance goal, NCPA shall: 1.1 Operate the facilities of NCPA’s System at each Point of Interconnection with the ISO Controlled Grid within established operating parameters including normal ratings, emergency ratings, voltage limits, and balance of load between electrical phases. 1.2 Maintain primary and backup protective systems such that faults on NCPA’s System facilities will be cleared with minimal impact on the ISO Controlled Grid. 1.3 Maintain Ioadpower factor at each Point of Interconnection with the ISO Controlled Grid in accordance with Section 8.3 of this Agreement. 1.4 In addition, NCPA shall operate the facilities of NCPA’s System at each Point of Interconnection in accordance with the requirements applicable to Utility Distribution Companies in the ISO Operating Procedures and standards, except as otherwise provided in the Agreement. ISO Responsibilities 2.0 2.1 2.2 The ISO shall operate the ISO Controlled Grid at each Point of Interconnection with NCPA in such manner as to avoid any material or adverse impact on NCPA facilities. In accordance with this performance goal, the ISO shall: Participate with all affected parties (including NCPA and PG&Ei in the development of joint power quality performance standards and jointly maintain compliance with such standards. Observe NCPA grid voltage limits specified in Attachment 1 including requirements for reduced voltage on ISO Controlled Grid facilities which apply during heavy fog (or other unusual operating conditions) as needed to minimize the risk of insulator flashover. 32 NCPA OPERATIONS AGREE~4ENT 2.3 Approve NCPA’s maintenance requests in a timely manner for transmission facilities that impact the ISO Controlled Grid, and shall not unreasonably withhold approval of such requests for authorization to perform energized insulator washing work or to take planned Outages needed to replace or insul-grease insulators. 2.4 Support NCPA investigation of power quality incidents, and provide related data to NCPA in a timely manner. 2.5 Support installation of apparatus on the ISO Controlled Grid to improve power quality, and take all reasonable measures to investigate and mitigate power quality concerns caused by actions or events in neighboring systems or control areas. 2.6 Maintain load power factor at each Point of Interconnection with NCPA’s System in accordance with Section 8.3 of the Agreement. 33 t’~.w~a~ ~ co~w~r.wru~, s~nzM~rr co~,~c~o~v 6/4102 SCHEDULE 2 ATTACHMENT 1 NCPA OPERATIONS AGREEMENT NCPA GRID VOLTAGE LIMITS There are no NCPA grid voltage limitations at the present time. 34 NCFA OPERATIONS AGREEMENT SCHEDULE3 RIGHTS OF ACCESS TO FACILITIES 1.0 1.1 1.2 1.3 1.4 2.0 3.0 Equipment Installation. In order to give effect to this Agreement, a Party that requires use of particular equipment (the. equipment owner) may require installation of such equipment on property owned by the other Party (the property owner), provided that the equipment is necessary to meet the equipment owner’s service obligations and that the equipment shall not have a negative impact on the reliability of the service provided, nor prevent the property owner from performing its own obligations or exercising its rights ¯ under this Agreement. Free Access. The property owner shall grant to the equipment owner free of charge reasonable installation rights and rights of access to accommodate equipment inspection, maintenance, repair, upgrading, or removal for the purposes of this Agreement, subject to the property owner’s reasonable safety, operational, and future expansion needs. Notice. The equipment owner shall provide reasonable notice to the property owner when requesting access for site assessment, equipment installation, or other relevant purposes. Such access shall not be provided unless the parties mutually agree to the date, time, and purpose of each access. Agreement on the terms of the access shall not be unreasonably withheld or delayed. Removal of Installed Equipment. Following reasonable noticel the equipment owner shall be required, at its own expense, to remove or relocate equipment, at the request of the property owner, provided that the equipment owner shall not be required to do so if it would have a negative impact on the reliability of the service provided, or would prevent the equipment owner from performing its own obligations or exercising its rights under this Agreement. Costs., The equipment owner shall repair at its own expense any property damage it causes in exercising its rights and shall reimburse the property owner for any other reasonable costs that it may be required to incur to accommodate the equipment owner’s exercise of its rights under Section 4.5 of this Agreement. Rights to Assets. The Parties shall not interfere with each other’s assets, without prior written agreement. Inspection of Facilities. In order to meet their respective obligations under this Agreement, each Party may view or inspect facilities owned by the other 35 NCPA OPERATIONS AGREEMENT t’~dwz~a~ ~ co~or.mz~ s~m~’r co~,~umca~o~v 6/4/02 Party. Provided that reasonable notice is given, a Party shall not unreasonably deny access to relevant facilities for viewing or inspection by the requesting Party. 36 NCPA OPERATIONS AGREEMENT co~,~u~c~r~o~v 6/4/02 SCHEDULE 4 MAINTENANCE COORDINATION By October 1st of each year, NCPA shall exchange with the ISO a provisional planned -outage program for all lines and equipment in Schedule 1. That document will be updated quarterly or as changes occur to the proposed schedule. The ISO shall approve all proposed outages on equipment and lines listed on Schedule 1 unless a proposed outage would cause the ISO to violate Applicable Reliability Criteria. Approval of outages shall not be unreasonably withheld. As noted on Schedule 1, some facilities are jointly owned by NCPA and one or more other entities. The ISO acknowledges that, under the terms of the operating agreements applicable to each such facility, NCPA may not be able to control unilaterally the timing of outages. NCPA shall exercise its rights under the operating agreements, if any, applicable to each jointly owned facility listed on Schedule 1 to coordinate scheduling of outages with the ISO in accordance with this Agreement to the maximum extent possible and shall not enter into any operating agreement or amendment to an existing operating agreement with respect to any such facility that diminishes NCPA’s rights to schedule outages. However, NCPA shall communicate directly to the ISO regarding its coordination of scheduled outages. Applications for scheduled work shall be submitted to the ISO by NCPA’s Grid Operations group via means to be agreed to by both Parties. The documents submitted by NCPA shall record the details for all work and become the database for reporting and recording outage information. 37 NCPA OPERATIONS AGREEMENT CRITICAL PROTECTIVE SYSTEMS Distribution protective relay schemes affecting the ISO Controlled Grid are those associated with transformers that would trip transmission breakers and/or busses at NCPA’s Points of Interconnection when activated. These would include any of the following: 1. 2. 3. 4. 5. 6. High Side Overcurrent Relays Differential Overcurrent Relays Sudden Pressure Relays Low Oil Relays Neutral Ground Overcurrent Relays On fuse protected transformers, it would be the high-side fuses. Following is a brief description of the relaying schemes at Substations 38 s~’rr~rr co, v.,wow~cano~v 6/4/02 SCHEDULE 6 OPERATIONAL CONTACT NCPA OP£RATIONS AGREEMENT ISO: Transmission Dispatcher (Folsom): Transmission Dispatcher (Alhambra): Operations Shift Supervisor: Manager of Dispatch and Security Coordination: City/State/Zip Code Other ISODispatch Operations Phones: Generation Dispatcher (Folsom) Generation Dispatcher (Alhambra) Security Coordinator NCPA: Name of Operator: Address: City/State/Zip Code: Phone: Fax: E-Mail Address 39 NCPA OPERATIONS AGREEMENT EMERGENCIES The ISO shall notify NCPA’s Power Control Center ("PCC") Operator, as identified in Schedule 6, of the emergency, including information regarding the cause, nature, extent, and potential duration of the emergency. The PCC Operator shall make the appropriate notifications within NCPA organization. The PCC Operator shall then take such actions as are appropriate for the emergency. NCPA shall make requests for information from the ISO regarding emergencies through ~ontacts to the ISO’s Operations Shift Supervisor, by NCPA’s PCC Operator, or NCPA’s Information Officer may coordinate public information with the ISO Communication Coordinator. NCPA is required to estimate service restoration by geographic areas, and shall use its call center and the media to communicate with customers during service interruptions. NCPA is also required to communicate the same information to appropriate state and local governmental entities. For transmission system caused outages, the ISO’s Operations Shift Supervisor will notify the PCC Operator, who will make appropriate notifications within NCPA’s organization of any information related to the outage such as cause, nature, extent, potential duration and customers affected. The PCC Operator and Grid Control Center logs, Electric Switching Orders and Energy Management System temporal database will be used in preparation of outage reviews. These documents are defined as the chronological record of the operation of the activities which occur with the portion of the electrical system assigned to that control center. The log shall contain all pertinent information, including orders received and transmitted, relay operations, messages, clearances, accidents, trouble reports, daily switching program, etc. NCPA shall retain records in accordance with its standard practices for six years. 4O NCPA OPERATIONS AGREEMENT co~u~Tc.~no~v 614 I SCHEDULE UNDERFREQUENCYLOADSHEDDING The objective of the Under Frequency Load Shedding (UFLS) program is to provide security and protection to the interconnected bulk power network by arresting frequency decay during periods of insufficient resources NCPA’s UFLS program set forth in this Schedule 8 establishes Under Frequency Load Shedding objectives consistent with the load shedding policies of the Western Electricity Coordinating Council; the North American Electric Reliability Council and NCPA. NCPA’s UFLS program satisfies the requirements of the WECC Off-Nominal Frequency Load Shedding and Restoration Plan (Formal Report November 25, 1997). NCPA UFLS program utilizes WECC planning criteria in this area. Per WECC requirements, UFLS is on the feeder side of the transformer. NCPA’s UFLS incorporates the following tripping scheme: [NOTE: NEEDS TO BE ADDED.] 41 NCPA OPERATIONS AGREEMENT SCHEDULE 9 OTHER AUTOMATIC LOAD SHEDDING NCPA has no other automatic load shedding devices other than those identified in Schedule 8. 42 NCPA OPERATIONS AGREEMENT MANUAL LOAD SHEDDING NCPA accomplishes manual load shedding through Power Control Center electronic operation of feeder switchgear. Criteria for the implementation of manual Load Shedding are set forth in the Electrical Emergency Plan attached to Schedule 11. 43 NCPA OPERATIONS AGREEMENT ROTATING LOAD CURTAILMENT PROCEDURES NCPA’s rotating load curtailment procedures are described in the Electrical Emergency Plan attached to Schedule 1i. restored u~!~a~ua~6r~ gmate~.,~b~~t ~f ~n0the~ bi~ckOfib~d~ i~ ~terrbpt~ fi~t~ 44 NCPA OPERATIONS AGREEMENT INTERRUPTIBLE LOAD Should NCPA establish an interruptible Load program and seek to bid any interruptible Load into any ISO market, NCPA shall provide a complete description of the program to the ISO at least sixty (60) days prior to the submission of the first such bid by NCPA’s Scheduling Coordinator and all applicable Operating Procedures shall be followed. 45 NCPA OPERATIONS AGREEMENT COMMt~Ca~O~ 614/02 SCHEDULE11 NCPA EMERGENCY ACTION PLAN (EAP) PURPOSE A. The primary purpose of this plan is to provide the NCPA Members (MSSs) and NCPA Staff with a written procedure to follow in case of System Emergencies that may directly and/or indirectly affect the NCPA Member(s) abilities to schedule their resources and loads within the California Independent System Operator (CAISO) Control Area. There may be times that the CAISO Control Area is experiencing adverse conditions (i.e., storms, fires, loss of generation, transmission, etc.) causing large interruptions to load throughout the state. During these conditions this EAP will allow the NCPA Dispatch Center (NDC) to operate under established emergency procedures with CAISO & PG&E. B. The secondary purpose of this plan is to satisfy therequirements of the CAISO/NCPA Operating Agreement (CNOA), whereby NCPA acts as System Coordinator for the Metered Subsystem(s) within the Service Area of the NCPA System, dated It is NCPA’s goal to use all available resources to help limit the amount of power interruption to the NCPA Member Cities by assisting the CAISO, PG&E-TOC and/or the WECC Reliability Coordinators in the prevention and/or the restoration of grid related outages throughout the Western United States. REFERENCES ¯ NCPA Emergency Notification Procedure (8/00) ¯ NCPA Load Tripping Plan (2/98) ¯ NCPA System Alert Procedure #600-15 ¯ NCPA EAP Lake Alpine Dam ¯ NCPA EAP Utica Reservoir Dam ¯ NCPA EAP New Spicer Meadows Dam ¯ NCPA EAP McKay’s Point Diversion Dam ¯ NCPA/ISO Reserve Sharing Agreement ¯ ISO Operating Procedure E501 -ISO Control Area System Restoration Procedure ¯ ISO Operating Procedure E502 - Emergency Manual Load Shedding Procedure ¯ ISO Operating Procedure E503 - Underfrequency Load Shedding Procedure ¯ ¯ ISO Operating Procedure E508 - Electrical Emergency Plan ¯ ISO Operating Procedure E509 - Restricted Maintenance Operations NCPA OPERATIONS AGREEMENT 6/4/02 ¯ ISO Operating ¯ ISO Operating Energy ¯ ISO Operating ¯ ISO Operating ¯ ISO Operating ¯ ISO Operating Procedure Procedure Procedure Procedure Procedure Procedure E511 - Load Reduction Programs E516 - Dispatch Muni/Western [WAPA] Reserves & Excess T121 - Sacramento Area Voltage Stability T133 - Bay Area Dispatch Instructions T134 - Tracy 500KV Transformer Bank Loading T149- Internal Lodi Summer Operating Instructions RESPONSIBILITY 1.0 The NDC will be the first point of contact for NCPA Emergency Operations under the NCPA Operating Procedures, CAISO Emergency Operations under the CAISO Operating Procedures and all Emergency Operations under the CNOA. All directives/orders affecting the individual NCPA-Pool Members(Metered Subsystems "MSSs") will be issued through the NDC. In the event of any conflicting instructions/orders with the above procedures from a third party, and in the absence of any direct order from the WECC Reliability Coordinator, the NDC instructions/orders will prevail. The NDC will ensure that all emergency procedures are followed and all instructions for the operation of all the NCPA Resources are directed by the NDC or its designate following the applicable NERC Policies and WECC Criteria, as well as "Good Utility Practice". 1.1 The NDC may have to man the Backup Dispatch Center located at the City of Roseville’s Electric Operating Center. During this time, all orders, instructions and coordination with CAISO & PG&E will be communicated by the NDC from the remote site.- NCPA on call staff will be dispatched per this EAP by the NDC either from the normal or back-up locations. a. The. NCPA Pool Members (MSSs) Under-frequency Load Shedding Schemes are to be in compliance with WECC requirements and in service at all times or have reported to the NDC the reason for being out of service and the estimated time it will return to normal status (in service). See Attachment "A". b. The NCPA Scheduling Coordinator (NCPA-SC) will follow the NCPA Emergency Notification Procedure for communication with the NCPA Members (MSSs) and their associated Operation Centers of all conditions calling.for the NCPA EAP and/or the ’ CAISO System Emergency Operating Procedures to be placed in service. PROCEDURE 2.0 The NDC will make notifications to all parties associated with the NCPA Emergency Notification Procedure when implementing the EAP. The EAP will be implemented when, in the judgement of the NDC, conditions in the CAISO Control Area will be affecting NCPA Operations or i__~f the CAISO, PG&E Transmission Operation Center 47 NCFA OPERATIONS AGREEMENT (PG&E-TOC) and/or WECC Reliability Coordinators declare a WECC System or statewide emergency. The EAP may also be implemented by the NDC in cases where only NCPA is experiencing an emergency (i.e., EAP’s associated with the Hydro Project and/or other resource failures). 2.1 As provided in the CNOA, the CAISO will communicate all instructions for NCPA to follow through the NDC. All instructions will be followed under the CNOA to the extent they do not conflict with NCPA Policies & Procedures, as incorporated in NCPA EAP, or violate any State and Local laws. a; NCPA can only deliver power that is surplus to its system. b. NCPA cannot supply generation to third parties unless the native load of NCPA and the NCPA Members is being 100% served. c. NCPA while participating in involuntary load curtailments cannot provide such realized surplus power unless the WECC/CAISO is under System Emergency Stage 3 Contingency Conditions. 2.2 NCPA will communicate with CAISO, PG&E-TOC, WECC Reliability Coordinator and any affected third party during the time the EAP is in force. a. In coordination with the EAP, the NDC will implement NCPA Policy #600-15 and Issue a NCPA System Alert Message. All work on NCPA Resources and their associated facilities is to be cancelled and all resources that can be returned to service should be returned with the exception of annual planned Unit outages. b. The NDC will coordinate the implementation of all CAISO Emergency Procedures with the NCPA Pool Members (MSSs) including Stage-3 involuntary load curtailments and the potential of manual deep load shedding by CAISO through PG&E-TOC (see Attachment "B" matrix). NCPA will provide all necessary post-event information to CAISO, and if applicable to PG&E-TOC, regarding the amounts of load curtailed per NCPA Member City. c. The NDC Shift Dispatcher has the authority to implement the operations under this EAP and to dispatch the NCPA Resources to assist in restoring the CAISO and/or WECC Grid to normal status even if doing so requires manual load shedding of the NCPA Member Cities Loads or other actions that may be necessary as determined by the NDC Shift Dispatcher. NCPA ACTIONS 3.0 The NDC will contact the Dispatch Supervisor and set-up to have double coverage in the NDC when implementing the’EAP. In addition, the Relief Operators are to be notified that the NCPA-EAP has been implemented and they are to be on cal! during 48 NCPA OPERATIONS AGREEMENT t’~.w~a~ nA,D CO, WD~u, s~rr~.~ewr co, mYo~c~r~o~v 6/4/02 this time in case additional personnel .are needed. The NDC computer programmer will be notified to ~tandby in case of SCADA or other related computer trouble during the time the EAP is in service. :3.1 The NCPA Unmanned Generating Plants are to be manned, this includes the Hydro, CT#1 (5 simple cycle Units), the STIG 50mw Unit and the Murphy’s Hydro Headquarters. The NCPA Geothermal Unit’s (4) is already a manned station; they need to know that the EAP has been implemented. The transmission connections to the main grid are controlled from the power plant switches and can be operated by the NDC via SCADA for all stations except the Geothermal facility, which are controlled by SCADA at the plant sites. Communication With the plants before operation of station switches should be established before any operations occur. a. The NCPA Collierville generating Units (250mws) should be on line at minimum load, available for full load pickup if requested by the CAISO, PG&E-TOC and/or the WECC Reliability Coordinators. b. All backup generators for station service and UPS Systems batteries including the NDC are to be available and maintained in good operating condition at all times with ample fuel supply/charge so as to meet the demand needed during total bl&ckout conditions. (:. The NDC staff will have all applicable operating procedures readily available for any system emergency in which NCPA may be involved either directly or in fulfillment of its obligations pursuant to the CNOA to aid in the prevention of damage to and/or the restoration of the CAISO and/or the WECC associated grid. d. The NDC will be ready to switch Operation Centers over to the Backup Dispatch Center at the City of Roseville if the need arises. The NCPA Dispatcher is to bring with them the EAP and lap top computer along with any other documents that may be needed before additional help arrives. e. The NDC will follow the WECC communication plan as it pertains to our NDC operation. f. The NDC VHF base radio station with direct communication to all generation facilities will tested and kept in service at all times. Communication with the generation facilities is to be established during the times the EAP is in service. g. The NCPA Sites all have cell phones as a backup. Standing orders will be issued to all plant sites on operation of the Units in case of communication loss including black start procedures. h. The NDC will call the NCPA Technician into the NCPA Main Office with the NCPA mobile van that has the mobile VHF radio. The Technician & van will position itself 49 NCPA OPERATIONS AGREEMENT ~Z~GED /UVD COA,nD~A~ S~./~Ar~ CO,~.~b’VV~OA’ 6/4102 parked outside of the NDC which can be used to .go to needed locations for communication with the NDC and those generating facilities needed for system restoration. i. In case of a California blackout and loss of all communication, the NCPA ManageF of Coordinated System Operations or his designate could drive in the NCPA mobile van with the VHF radio to the CAISO located 12 miles from NCPA and receive operating orders to then relay back to its operating stations for assisting in system restoration. j. The NDC will black-start all available units either on orders from CAISO, PG&E-TOC, the WECC Reliability Coordinator to assist in restoration of the California Grid or as needed by the NDC for load restoration within the cities of Alameda, Lodi or Roseville. k. The Roseville CT#1 Plant Site is located approximately 5 miles from the NCPA NDC. One of our Relief Dispatchers could drive to the site if the NCPA mobile van was busy elsewhere and relay operating orders for black-start and/or start-up and generating orders to the plant operator. 3.2 NCPA will follow all Emergency Operating Procedures listed above and will take and implement instructions from CAISO, PG&E-TOC and WECC Reliability Coordinators to aid the grid in its restoration efforts. 3.3 All news media inquiries received by the NDC or other NCPA Staff during abnormal conditions, should be directed to the on site supervisor. To the extent possible, all factual information released to the media will be coordinated with CAISO, and PG&E- TOC, if applicable. If no supervisor is on site then the supervisor most informed of the current system conditions should be contacted, see Emergency Notification Procedure contact list and numbers. This procedure will be modified as conditions warrant. AI Parsons, Manager Coordinated System Operations. ATTACHMENT "A" = Under frequency Relay Plan ATTACHMENT "B" = Load Shedding Plan 50 NCPA OPERATIONS AGREEMENT SCHEDULE 12 LOAD RESTORATION NCPA shall follow the procedures set forth below in this Schedule 12 in promoting orderly, coordinated restoration of electric systems after a major system disturbance has occurred which resulted in load Shedding by frequency relays in California. Immediately after load shedding by frequency relay has occurred in NCPA’s System, NCPA shall remain in contact with PG&E’s Area Control Center (ACC) until normal frequency has been restored throughout the ISO Control Area or the ISO Shift Supervisor has concluded that such full- time communications can be terminated. Emergency communications over the California ACC Hot-line will be under the direction of the ISO Shift Supervisor and the senior dispatcher present at the PG&E ACC(s). Manual load restoration shall not normally be initiated until the California ACC Hot Line is attended. No load is to be manually restored unless directed by the ISO after the frequency has recovered and there is indication that the frequency can be maintained. NCPA shall await direction from PG&E’s ACC who will be in contact with the ISO Shift Supervisor. The ISO Shift Supervisor shall determine whether adequate generation resources are available on line to support the load to be restored. o If the ISO cannot meet the WECC and NERC Control Area Disturbance Control Standard or the Control Performance Standard post disturbance, no manual load restoration shall be permitted. If the frequency is such that automatic load restoration occurs under these conditions, if NCPA has restored load automatically, it will manually shed an equivalent amount of load to offset the load which was automatically restored. Restoration of ties and off-site power supply to nuclear generating facilities should be given top priority. Manual load restoration will be deferred during periods of tie restoration. NCPA should be equipped and prepared to drop load manually when necessary to allow frequency recovery sufficient to re-establish ISO intra-area ties and ties between the ISO Control Area and outside systems. Where manual load shedding is required, the ISO shall make reasonable efforts to allocate the load shedding requirement equitably among NCPA, UDCs, and MSS Operators where load shedding shall be beneficial, and such load shedding shall be made in accordance with Section 7.4. NCPA shall use its existing plans and priorities to restore load within the parameters given by the ISO, giving the appropriate priority to essential services such as military, public safety agencies, water treatment plants, sewage treatment plants, etc. 51 NCPA OPERATIONS AGREEMENT SCHEDULE 13 EXISTING RIGHTS NCPA exercises the following Existing Rights under Existing Contracts. WAPA Contract 2948A WAPA Contract 2947A COA other ¯ TANC Agreements providing rights on the COT SOTP Seattle City Light Exchange IAAppendix C issues Amount Scheduling Timelines Note: The Existing Rights in the above table have been designated by NCPA. The ISO has not reviewed the Existing Contracts or verified the existence or nature of these Existing Rights, and the ISO’s execution of this Agreement is not equivalent to the ISO’s endorsement of the Existing Rights designated by NCPA in this Schedule. 52 NCPA OPERATIONS AGREE/ViENT SCHEDULE 14 GENERATING UNITS AND PARTICIPATING LOADS NCPA has identified in the attached table all of the individual Generating Units and ¯Participating Loads that it owns or controls on NCPA’s System, together with certain information required by the ISO. [NOTE: TABLE TO BE PREPARED AND ATTACHED.] 53 NCPA OPERATIONS AGREEMENT SCHEDULE 15 METERING OBLIGATIONS Obligations and Rights of NCPA 1.0 Submission of Meter Data through the ISO’s Revenue Meter Data Acquisition and Processing System ("MDAS"). NCPA agrees to make available to the ISO through MDAS its Meter Data-in accordance with the ISO Tariff. The ISO’s requirements regarding the frequency with which it requires Meter Data to be made available to it through MDAS by NCPA are referred to in the Metering Protocol of the ISO Tariff. 1.1 Meter Information. NCPA shall provide in the format prescribed by Schedule 15.1 the required information with respect to all of its meters used to provide Meter Data to the ISO: NCPA must immediately notify the ISO of any changes to the information provided to the ISO in accordance with this Section and provide the ISO with any information in relation to such change as reasonably requested by the ISO. NCPA shall have the right to modify Schedule 15.1, although such modification shall not constitute an amendment to this Agreement. 1.2 Transformer and/or Line Loss Correction Factor. If NCPA uses low voltage side metering, it shall use the ISO approved transformer and/or line loss correction factor referred to in the Metering Protocol of the ISO Tariff. 1.3 Rights to Access Metering Facilities. NCPA shall use its best efforts to procure any rights necessary for the ISO to access all Metering Facilities of NCPA to fulfill its obligations under the ISO Tariff, and its obligations under this Agreement. If, after using its best efforts, NCPA is unable to provide the ISO with such access rights, NCPA shall ensure that one of its employees is an ISO Authorized Inspector and such employee undertakes, at the ISO’s request, the certification, testing, inspection and/or auditing of those Me, tering Facilities in accordance with the procedures established pursuant to the Metering Protocol of the ISO Tariff, including the requirement to complete and provide to the ISO all necessary documentation. The ISO acknowledges that it will not be prevented from fulfilling its obligations under the ISO Tariff or this Agreement by reason of the fact that it is provided with escorted access to the Metering Facilities of NCPA. 1.4 Security and Validation Procedures. The security measures and the validation, editing, and estimation procedures that the ISO shall apply to Meter Data made available to the ISO by NCPA shall be as referred to in the Metering Protocol of the ISO Tariff. 54 NCPA OPERATIONS AGREEMENT 1.5 Authorized Users. In addition to the persons referred to in the ISO Tariff, including NCPA and the relevant Scheduling Coordinator, as being entitled to access Meter Data on MDAS, NCPA may set forth in Schedule 15.2 of this Agreement any additional authorized users that shall be entitled to access NCPA’s Settlement Quality Meter Data held by the ISO. NCPA shall include in Schedule 15.2 as authorized users the relevant UDCs and TOs. The ISO shall provide the authorized users with any password or other, information necessary to access NCPA’s Settlement Quality Meter Data held by the ISO on MDAS. Any amendment or addition to Schedule 15.2 shall not constitute an amendment to this Agreement. 1.6 Certification, Inspection, and Auditing of Meters. NCPA shall be responsible for all reasonable costs incurred by the ISO or an ISO Authorized Inspector in connection with them carrying out the certification, inspection, testing or auditing of the meters identified in Schedule15.1 from which NCPA provides Meter Data to the ISO. The ISO or ISO Authorized Inspector shall furnish NCPA, upon request, an itemized bill for such costs. Obli_clations and Rights of the ISO 2.0 Direct Polling of MDAS. The ISO shall allow the Scheduling Coordinator representing NCPA and all authorized users to directly poll MDAS for the-Meter Data relating to NCPA in accordance with the procedures referred to in the Metering Protocol of the ISO Tariff. 2.1 ISO as a Third-Party Beneficiary. The ISO shall be a third-party beneficiary to any future agreement between NCPA and any other party relating to the Metering Facilities of NCPA for the purpose of granting the ISO access to any relevant information, records and facilities as needed by the ISO to fulfill its obligations under the ISO Tariff and its obligations under this Agreement. 2.2 Remote and Local Access to Metering Data. The ISO shall provide NCPA any password or other requirements necessary for NCPA to access its Meter Data remotely or locally at the meter. Calculation of NCPA Settlement Quality Meter Data The calculation of NCPA’s Settlement Quality Meter Data shall be as follows: NCPA SQMD = 55 NCPA OPERATIONS AGREEMENT 6/4/02 METER INFORMATION Resource ID/Meter Number Name of the Facility Location (address if applicable) 56 NCPA OPERATIONS AGREENIENT ACCESS TO METER DATA AND AUTHORIZED USERS [NCPA shall provide in Schedule15.2 a list of all authorized users of NCPA’s Settlement Quality Meter Data and any restrictions or limitations placed on them.] 57 NC£A OPERATIONS AGREEMENT TRANSMISSION RELIABILITY CRITERIA For transmission reliability, NCPA.shall abide by all NERC and WECC Planning Criteria and the following: Power Flow Assessment: Criteria Contingencies Thermal 3 Voltage Generating unit 1 A/R NR Transmission line 1 A/R A/R Transformer 1 NR 5 NR ~ Overlapping 2 A/R NR 1 2 3 4 5 All single contingency outages (i.e. generating unit, transmission line or transformer) will be simulated on participating transmission owners’ local area systems. Key generating unit out, system readjusted, followed by. a line outage. Applicable Rating - Based on ISO Transmission Register or facility upgrade plans. Applicable Rating- ISO Grid Planning Criteria or facility owner criteria as appropriate. Based on judgement of ISO and facility owner, a thermal or voltage criterion violation resulting from a transformer outage may not be cause for Reliability Must-Run Generation solution if the violation is considered marginal (e.g. acceptable loss of life or low voltage), otherwise (e.g. unacceptable loss of life or voltage collapse) a Reliability Must-Run Generation solution would be indicated. Post Transient Load Flow Assessment: Contingencies Selected 1 1 2 Reactive Margin Criteria 2 A/R If power flow results indicate significant low voltages for a given power flow contingency, simulate that outage using the post transient load flow program. The post-transient assessment will develop appropriate QN and/or PN curves. ¯ Applicable Rating - positive margin based on 105% of 1 in 2 year load forecast. 58 AND CONFIDENTIAL SE77ZF2HEA~ COMMUNIC~4TION Stability Assessment: 614102 NCPA OPERATIONS AGREEMENT Contingencies Stability Criteria 2 SeleCted 1 NR 1 If power flow or post transient study results indicate significant low voltages or marginal reactive margin for a given contingency, simulate that outage using the dynamic stability program. 2 Applicable Rating - ISO Grid Planning Criteria or facility owner criteria as appropriate. 59 NCPA OPERATIONS AGREEMENT SCHEDULE 17 NCPA NOTICES Name of Primary Representative: Title: Address: City/State/Zip Code: Email Address: Phone: Fax No: Name of Alternative Representative: Title: Address: City/State/Zip Code: Email Address: Phone: Fax No: 6O 614102 NCPA OPERATIONS AGREEMENT Name of Primary Representative: Title: Address: City/State/Zip Code: Email Address: Phone: Fax No: Byron Woertz Director of Client Relations 151 Blue Ravine Road Folsom, CA 95630 bwoertz@caiso.com (916) 6~)8-7066 (916) 608-7074 Name of Alternative Representative: Title: Address: City/State/Zip Code: Email Address: Phone: Fax No: Deborah A. Le Vine Director of Contracts 151 Blue Ravine Road Folsom, CA 95630 dlevine@caiso.com. (916) 351-2144 (916) 351-2487 61 Attachment C Interconnection Agreement between Pacific Gas and Electric Company and Northern California Power Agency and City of Alameda, City of Biggs, City of Gridley, City of Healdsburg, City of Lodi, City of Lompoc, City of Palo Alto, City of Ukiah, and Plumas-Sierra Rural Electric Cooperative TABLE OF CONTENTS 1 2 3 4 PREAMBLE : .......I RECITALS ...................................................1 AGREEMENT ................................................. 43 4.1 4.2 4.3 4 4 4 5 4 6 4 7 4 8 4 9 4 i0 4 ii 4 12 4 13 4 14 4 15 4 16 4 17 4 18 4 19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 4 4 4 Agreement . ........................44-3 Ancillary Services .................................4__~ Business Day .........................................4 Control Area 4 Control Area Arrangements "54 Control Area Operator .......................0 ...... Cost .................................................5 COTP ................................................6~ CPUC "6~ Effective Date .....................................64~ Electric System ....................................6~-~ Emergency ...........................................7~ Engineering and Operating Committee (E&O Committee) ....................................7__~ Existing Contracts ...................................7 Facilities Study -7 FERC ...............................................8@-% Forced Outage ......................................8~-% FPA ........ ........................................ Good Utility Practice .............................. Interconnection Capacity ........... Interbonnection Facilities .......................... IS0 ................................................ ISO Control Area ...................................94)% ISO Controlled Grid ................................ ISO Tariff .........................................I0@ kW Demand ........................................i0~-~9~ Participating TO ................................. PG&E Interconnection Handbook ..................... PG&E Transmission Owner Tariff ....................iI~-~ PG&E Wholesale Distribution Tariff ..............llq-~ Point(s) of Interconnection .....................ii/-I-I-~ Responsible Meter Party ...........................12<-~ Scheduling Coordinator ............................12q-~ Service Area ............................, ..........12~-~ System Impact Study .............................12A-2q-~ .36 System Reinforcements ...........................12~-2q-~ .37 Third Party .......................................13q-~ .38 Transmission Arrangement ....................- ....13~--3-~ 8 4.39 4.40 4.41 Uncontrollable Force ~13~-3-I-~ Upgrade Facility ................................13~-3-I-~ Wholesale Electric Power Requirements ...........14~-3-I-~ 5 SCOPE ....................................................14~-3 5.1 Interconnected Operations .........................14~-3 5.2 Effective Date ....................................16~-~ 5.3 Termination .....................................17~-~-I-~ POWER SOURCES ...........................................17~-~ 6.1 Customer Obligation To Procure Power ..............17~-~ 6.2 Reactive Power Requirements ......................17~-7-14 6.3 Transmission Arrangements .................... .....19~-~ 6.3.1 Compliance With Control Area Tariff Requirements ............................... 19~4~ 6.3.2 Scheduling Coordinator Services ..........19~-9-I-% 6.3.3 Other Arrangements with a Control Area Operator .................................20~-~ 6.4 Control Area Operation 21@4~-I-9 6.4.1 Relationship to Control Area Operations.. 21~0-I-9 6.4.2 Operating~Procedures ...................-.. 21~ 6.4.3 Control Area Operator Coordination .......22~0-2-~ 6.4.4 Separate Control Area..~ .................23~ 6.4.5 COTP Scheduling .....~ ....................23~ INTERCONNECTIONS ......................................24~3~ 7.1 Establishing or Modifying Point(s) of -- Interconnection .................................24~4-2-~ 7.1.1 System Impact Study Procedure ............26~z-5~ 7.1.2 Facilities Study Procedure ...............26~ 7.1.3 New Interconnection Facilities and Interconnection Facilities Upgrades ......26~z~2-4 7.2 Ratings for Points of Interconnection ........... 7.2.1 Interconnection Capacity ............ .....28~2-~ 7.2.2 Setting Interconnection Capacity ......... 7.2.3 Consequences Of Exceeding Interconnection Capacity .................30L~9-2~ 7.3 No Facility Preservation Obligation After Termination .....................................31@4~ 7.4 Changes at Point(s) of Interconnection ...........31~-i~-9 7.5 Unused Point(s) of Interconnection ..............32~JI-2-9 OPERATING PROVISIONS ............................ ......34~-3-3-~ 8.1 8.2 8.3 8.4 8.5 8.6 Power Delivery Standard .........................34~3-3-~ Coordination Of Operations ......................34~ Reporting Significant Events ............. .......35@4-3~ Operation Pursuant to Good Utility Practice .....35@-5-3-3 Protective Devices ..............................36@-5-3-~ Requirements for Generators Operated by NCPA that are Connected to PG&E Electric System ......36~ ii 9 i0 II 12 13 14 15 8.7 8.10 8.11 8.12 8.13 8.14 Requirements for NCPA Member Customer Operating Backup Generation ...............................36~ Remote Telemetry Units ..........................374N~34 Continuity of Service ...........................37~%9-~ 8.9.1 Operation Actions to Maintain Continuity ......................................... 379-7-3~ 8.9.2 Unscheduled Interruptions ................ 8.9.3 Scheduled Interruptions ..................384~8-34 8.9.4 Interruption by Protective Devices ....... Jeopardy ........................................394~8-34 Underfrequency Load Shedding .....¯ ...............40~@-3-~ Proportional Shedding Policy ....................414-I-3~ Operating Records ...............................424-1-39 Test Period for Interconnections ........~.; .....434:2-4~ SYSTEM PLANNING COORDINATION ..........................434-2-4~ 9.1 Planning Process ................................434q~4~ 9.2 System Reinforcements ...........................444-34~ SIGNIFICANT REGULATORY OR OPERATIONAL CHANGE ..........444-34~ I0.i Significant Regulatory Change ...................444-34~ i0.i.i Definition of Significant Regulatory Change ...................................444-34-~ 10.1.2 Change in Functions or Scope ............454-44-~ 10.2 Significant Operational Change ..................464-54~ 10.3 Notification ... ............................. ....47444-3 10.4 Amendment of Agreement ..........................474444 10.5 Studies of Significant Operational Change .......49484~ 10.6 Mitigation and Costs ............................504m~4~ 10.7 Failure to Notify of Significant Operational Changes .........................................51~04-% INSTALLATION AND ACCESS .................¯ ..............51@4~4~ METERING ...............................................52~I~9 12 .I 12.2 12.3 12.4 12.5 12.6 12.7 Delivery Meters ................................. 52~1-4-9 Requirements for Meters and Meter Maintenance .o. 53~£--5~ Meter Reading and Access ........................53~Z4) NCPA’s Obligation to Provide Meter Data to PG&E Consequences of Failing to Provide Meter Data in a Timely Fashion .............................54~9-5a= Meter Testing and Meter Errors ..................55@-3-5-~ Unavailability of Data ..........................56~ BILLING AND PAYMENT ...................................56~-5-5~ APPENDICES INCLUDED ...................................56~ ACCOUNTING ............................................57~ 15.1 Accounting Procedures ...........................57~6-5~ iii 15.2 Audit Rights ....................................57~-54 16 ADVERSE DETERMINATION OR EXPANSION OF OBLIGATIONS .....58~-7--54 16.1 Adverse Determination ...........................58~n-94 16.2 Expansion of Obligations ............... .........59~-7-5-9 16.3 Renegotiation ...................................59~4~ 17 ASSIGNMENT ............................................60~4~ 17.1 NCPA Permitted Assignment .......................60~4~ 17.2 PG&E Permitted Assignment .......................60~9-54 17.3 Assignee’s Continuing Obligation ................61~x9-5-~ 18 CAPTIONS ........................................ .......61~3-5-~ 19 CONSTRUCTION OF THE AGREEMENT ..........................61~0-5-~ 20 CONTROL AND OWNERSHIP OF FACILITIES ................... 21 COOPERATION AND RIGHT’ OF ACCESS AND INSPECTION ........62~4~ 22 DEFAULT. ..........................’ ..................~. 62~-5~ 22.1. Termination for Default .........................62~I-~ 22.2 Other Remedies for Default ......................63~2--5x9 23 DISPUTE RESOLUTION ....................................63~2~ 24 GOVERNING LAW 64~2~ 25 INDEMNITY ............................................. 25.1 Definitions .....................................644~ 25.1.1 Accident ................................64~6Q 25.1.2 Indemnitee .................., ...........65~34-~ 25.1.3 Indemnitor ..............................65~34-~ 25.2 Indemnity Duty ................... ............... 26 JUDGMENTS AND DETERMINATIONS ..........................66~-5~ 27 LIABILITY .............................................66~-54~ 27.1 Third Parties ’ 27.2 Between the Parties .............................67~ 27.3 Protection of a Party’s Own Facilities ..........674~6~3 27.4 Liability for Interruptions .....................67~ 28 NO DEDICATION OF FACILITIES ...~ .......................68~64 29 NO OBLIGATION TO OFFER SAME SERVICE TO OTHERS .........68~ 30 NO PRECEDENT ..........................................69~-74-~ 31 NO TRANSMISSION, DISTRIBUTION, POWER, ENERGY SALES OR ANCILLARY SERVICES PROVIDED ...........................69~ iv 32.1 Written Notices 69~6~ 32.2 Changes of Notice Recipient .....................70~94~ 32.3 Routine Notices 32.4 Reliance on Notice ..............................71~ 33 RESERVATION OF RIGHTS ....¯ .............................71~64~ 33.1 Rate Changes ....................................71~6~ 33.2 California Law ...................................72~-i-~ 33.3 Governing Law ...................................73~-I-69 34 RESPONSIBILITY FOR PAYMENTS AND SECURITY ..............73/-2~ 35 RULES AND REGULATIONS .................................74/-2-7~ 36 SEVERABILITY ..........................................74~-3-7~ 37 CONTINUING RIGHTS OF NCPA UPON TERMINATION ............75/-3-7~ 38 RIGHTS OF PG&E UPON TERMINATION .......................76~4-7-~ 39 UNCONTROLLABLE FORCES ...................................76/-5-7-~ 40 WAIVER OF RIGHTS ......................................76~-5-7-~ 41 ENTIRE AGREEMENT; AMENDMENTS ..........................77~--5-7-~ 42 NO THIRD PARTY RIGHTS OR OBLIGATION .................... 78~L6-7~ 43 WARRANTY OF AUTHORITY .................................78:L6-7-4 44 EXECUTION .............................................. APPENDIX A -POINTS OF INTERCONNECTION APPENDIX B -° TIME PERIODS APPENDIX C - DISPUTE RESOLUTION AND ARBITRATION APPENDIX D - UNDERFREQUENCY LOAD SHEDDING SCHEDULE APPENDIX E - UPGRADE FACILITIES APPENDIX F -BILLING AND PAYMENTS APPENDIX G -ENGINEERING AND OPERATING COMMITTEE APPENDIX H -SPECIAL FACILITY AGREEMENTS v INTERCONNECTION BETWEEN PACIFIC GAS AND ELECTRIC COMPANY AND NORTHERN CALIFORNIA POWER AGENCY AND CITY OF ALAMEDA, CITY OF BIGGS, CITY OF GRIDLEY, CITY OF HEALDSBURG, CITY OF LODI, CITY OF LOMPOC, .’.’.’..." ,.’,~’. ~,~,TT T ~ CITY OF UKIAH,CITY OF PALO ALTO, ..............., AND PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE 1 PREAMBLE This Interconnection Agreement is made this day of , 200_, by and between PACIFIC GAS AND ELECTRIC COMPANY (hereinafter referred to as "PG&E"), a corporation organized and existing under the laws of the State of California, and NORTHERN CALIFORNIA POWER AGENCY (hereinafter referred to as ""CPA"), and City of Alameda, City of Biggs, City of Gridley, City of Healdsburg, City of Lodi, City of Lompoc, City of Palo Alto, ~ of ~ozcville, City of Ukiah and Plumas-Sierra Rural Electric. Cooperative (hereinafter referred to collectively as "NCPA Member Customers"), any or all of which is or are hereinafter referred to individually as "Party" or collectively as "Parties." 2 RECITALS 2.1 Whereas, it is the policy of the Federal Energy Regulatory Commission that open and non-discriminatory access to transmission be provided through transmission systems comprising as large an area as possible under the supervision and direction of an Independent System Operator or a Regional Transmission Organization; and 2.2 Whereas, PG&E is an electric utility company providing both wholesale and retail electric power and energy sales, transmission and distribution services in northern and central California and owns an extensive electric transmission system within that area; and 2.3 Whereas, PG&E has transferred operational control of its transmission system to the California Independent System Operator Corporation (ISO) 2.4 Whereas, PG&E is a Participating Transmission Owner (Participating TO) subject to the direction of.the ISO in the operation of its transmission system and provision of transmission access to the ISO Controlled Grid, pursuant to the terms of the ISO Tariff and the PG&E TO Tariff; and 2.5 Whereas, NCPA and NCPA Member Customers are electric utilities providing either wholesale or retail electric service in northern and central California and are presently interconnected with PG&E’s electric transmission system and directly or indirectly with the ISO ConErolled Grid;~ 2 2.8 ~-~Whereas, this Agreement is intended to provide for the terms and conditions of a continuation of the interconnections between the electric systems of all the Parties from and after the termination and replacement of the existing July 29, 1983 Interconnection Agreement between them, as that agreement has been amendedi Whereas, the Parties have a disaqreement as to the continuing obligation of PG&E under the group of obligations commonly referred to as the "Stanislaus Commitments," but NCPA and NCPA Member Customers are willinq, so long as the ISO has operational control of the PG&E transmi~ssion system, to obtain transmission services which they believe PG&E is obligated to provide under the Stanislaus Commitments from the ISO, subject to later resolution of the meanin~ of those PG&E obligations, which later resolution will be r~ported to the ISO by PG&E to be treated as Existing Contracts; and Whereas, the Parties recognize that this Agreement may have to be reneqotiated if and when the ISO no longer is capable of providing transmission services over the PG&E transmission lines. 3 AGREEMENT NOW, therefore, in consideration of the mutual covenants herein set forth, the Parties agree as follows: 4 DEFINITIONS The following terms, when used in this Agreement with the initial letters capitalized, other than proper names, whether in the singular, plural or possessive, shall have the meanings indicated below. Some terms are defined by reference to definitions in Appendix A, Master Definition Supplement, to the ISO Tariff. 4.1 Agreement This Interconnection Agreement between PG&E and the NCPA member Customers, as it may be amended. 4.2 Ancillaz-y Services As defined in the Master Definition Supplement to the ISO Tariff. 4.3 Business Day As defined in the Master Definition Supplement to the ISO Tariff. 4.4 Control Area As defined in the Master Definition Supplement to the ISO Tariff. 4 Control Area Arrangements An arrangement between a Party and the Control Area Operator in which a Party agrees to self-provide or procure the necessary resources and perform the necessary operations to meet any and all Control Area operating requirements prescribed by the Control Area Operator to maintain the operating reliability and integrity of the Control Area’s electric system. Contractual arrangements between NCPA and an NCPA Member Customer for NCPA to provide the Wholesale Electric Power Requirements of that customer shall be considered a Control Area Arrangement as long as NCPA itself has a Control Area Arrangement with the Control Area Operator. 4.6 Control Area Operator The entity which is responsible for operating a Control Area. For purposes of this Agreement,. the Control Area Operator in northern and central California is the ISO or its successor. 4.7 Cost All just, reasonable, necessary and prudent expenses or capital expenditures, including but not limited to those for operation, maintenance, engineering and facilities studies, adverse impact identification, adverse impact mitigation, contract modification, administrative and genergl expenses, taxes, depreciation, and fees for consultants, as determined in accordance with the FERC Uniform System of Accounts 5 as such may be amended or superseded from time to time, and costs of capital. The appropriate components of the Cost, as defined herein, shall be applied for the particular transaction performed. 4.8 COTP The California Oregon Transmission project. 4.9 CPUC The Public Utilities Commission of the State of California or-its regulatory successor. 4.10 Effective Date The date specified as the Effective Date of this Agreement in Section 5.2. 4.11 Electric System All properties and other assets, now or hereafter existing, which are leased to, licensed to, owned by, or controlled by a hingle person or entity, and used for or directly associated with the generation, transmission, transformation, distribution or sale of electric power, including all additions, extensions, expansions, and improvements thereto, but excluding the properties and assets of subsidiaries of such person or entity. To the extent a person or entity is not the sole owner of an asset or property, only that person’s or that entity’s ownership interest in such asset or property shall.be considered to be part of its Electric System. For purposes of this Agreement, NCPA’s Electric System shall include only the 6 facilities in northern and central California which are used to serve t~e NCPA load. 4.12 Emergency Conditions beyond the normal control of the operator of a Control Area or an Electric System that adversely affect or may reasonably be expected to affect adversely the ability of the Control Area or Electric System to function normally, including but not limited to any abnormal system condition which requires immediate manual or automatic action to prevent loss of load, equipment damage, or separation of system elements which might result in cascading outages, or to restore Electric System operation to meet the minimum operating reliability criteria. 4.13 Engineering and Operating Con~nittee (E&O Committee) The committee established pursuant to Section Existing Contracts The contracts which grant transmission service rights in existence on April i, 1998 (including any transmission service contracts entered into pursuant to such contracts), as may be amended in accordance with their terms or by agreement between the Parties thereto from time to time. 4.15 Facilities Study An engineering study conducted by PG&E to determine required modifications to its Electric System to accommodate a request by NCPA for a new Point of Interconnection or a modification of an existing Point of Interconnection, including the cost and scheduled completion date for such modifications that will be required to provide needed services. TO the extent .that generator interconnections are governed by the ISO Tariff or contracts between NCPA and NCPA Member Customers and the ISO those procedures will apply, and not the procedures set out in this Agreement ~,,~ .-- ~ ....~ .....~cnc~ 4.16 FERC The Federal Energy Regulatory Commission or its regulatory successor. 4.17 Forced Outage An unplanned partial or total outage of a Party’s Electric System, including but not limited to outages of generating resources, or transmission or distribution facilities. 4.18 FPA The Federal Power Act as it may be amended. 4.19 Good Utilit~ Practice As defined in the Master Definition Supplement to the ISO Tariff. 8 4.20 Interconnection Capacity The delivery or receipt capability specified in Appendix A for each Point of Interconnection. 4.21 Interconnection Facilities Electric Facilities which establish an existing Point of Interconnection or which are required to modify an existing Point of Interconnection or to establish a new Point of Interconnec~ion, at the point where the ISO Controlled Grid is electrically connected to the Electric System of a Party or a Third Party. 4.22 Currently, t~e California Independent System Operator Corporation, a California public benefit corporation, that exercises operational control over PG&E’s transmission system. The term ISO shall include any successor that exercises such operational control, including a Regional Transmission Organization as that term is used by the FERC. 4.23 ISO Control Area As defined in the Master Definition Supplement to the ISO Tariff or any successor load frequency control area provided for under the ISO Tariff or a successor tariff. 4.24 ISO Controlled Grid The system of transmission lines and associated facilities and contractual entitlements of all Participating TOs that have been placed under the ISO’s Operational Control. 4.25 ISO Tariff The ISO’s FERC-filed electric tariff, ’as it may be modified from time to time or superseded, or the tariff of a successor, including a Regional Transmission Organization that exercises operational control over PG&E’s transmission system. If any modified, superseded 6r successor tariff does not include a Master Definition Supplement, the terms defined in this Agreement by reference to the Master Definition Supplement shall be as defined elsewhere in the modified, superseded or successor tariff. [WHERE?? DOES THIS WORK???] 4.26 kW Demand The maximum electrical demand for power iduring a specified time period, determined for both on-peak and off-peak time periods, kW Demand is measured as the average amount of kilowatts (kW) delivered during the30-minute on-peak or off,peak interval in which such delivery is greater than in any.other 30- minute on-peak or off-peak interval during the specified time period; provided, that if the load is intermittent or subject to extreme fluctuations, a lesser interval may be used. The times which are "on-peak" and "off-peak" are specified in Appendix B. 4.27 Participating TO AS defined in the Master Definition Supplement to the ISO Tariff. I0 4.28 PG&E Interconnection Handbook A handbook, developed by PG&E, that prescribes technical requirements.for wholesale generators and loads connected to the PG&E Electric System, as that handbook may be modified or superseded from time to time. Where there is conflict or inconsistency between the terms of this Agreement and the PG&E Interconnection Handbook, the terms of this Agreement shall apply. 4.29 PG&E Transmission Owner Tariff PG&E’s FERC Electric Tariff, Original Volume No. 5, as it may be modified from time to time or superseded. To the extent obligations or tasks performed by PG&E under this Tariff are later assigned or transferred to, or undertaken with PG&E’s consent by the ISO, reference to such obligations or tasks being performed pursuant to the PG&E Transmission Owner Tariff shall be deemed references to the ISO Tariff. 4.30 PG&E Wholesale Distribution Tariff PG&E’s FERC Electric Tariff, Original Volume No. 4, as it may be modified from time to time or superseded. 4.31 Point(s) of Interconnection The physical connection of PG&E’s transmission or distribution lines with NCPA’s Electric System, as specified in Appendix A hereto, as that Appendix may be modified~from time to time. ii 4.32 Responsible Meter Party A Party having the responsibility for providing, installing, owning, operating, testing, servicing and maintaining meters and associated recording or telemetering equipment at each Point of Interconnection. Unless otherwise specified herein, NCPA shall be the Responsible Meter Party under this Agreement. 4.33 Scheduling Coordinator As defined in the Master Definition Supplement to the ISO Tariff. 4.34 Service Area For PG&E, that area within the geographic boundaries of the several areas in which PG&E, now or in the future, provides transmission and/or distribution service for retail ^7^-~ly ......~ ~!consumers ............t ~.~4 ......4~ .~ ...... , ~ .....[INTENTION IS TO COVER EVENTS IF PG&E PLAN OF REORGANIZATION IS APPROVED IN BANKRUPTCY] 4.35 System Impact Study An engineering study conducted by PG&E to determine the adequacy of PG&E’s Electric System to provide or maintain a Point of Interconnection and whether modifications or changes may be required. 4.36 S~stem Reinforcements Reinforcements to PG&E’s Electric System, including but not limited to those identified by a System Impact Study conducted pursuant to Section 7.1, necessary to establish or 12 maintain the Interconnection Capacity to a Point of Interconnection. System Reinforcements may berequired when a Point of Interconnection is added or modified, when a Significant Operational Change pursuant’to Section 10.2 is proposed, or when required by Good Utility Practice. System Reinforcements are limited to facilities required on PG&E’s Electric System and ordinarily would not include Interconnection Facilities required at the Point of Interconnection. 4.37 Third Party A person or entity other than PG&E, NCPA or an NCPA Member Customer. 4.38 Transmission Arrangement The agreement, either the ISO Tariff or an Existing Contract, under which NCPA oran NCPA Member Customer meets its obligations to procure power to meet its Wholesale Electric Power Requirements pursuant to Section 5.1 an~ Section 6. 4.39 Uncontrollable Force As defined in the Master Definition Supplement to the ISO Tariff. 4.40 Upgrade Facility A new or upgraded Interconnection Facility and/or System Reinforcement constructed or installed pursuant to this Agreement. 13 4.41 Wholesale Electric Power Requirements NCPA .and the NCPA Member Customers’ entire electric capacity and energy requirements, including but not limited to related arrangements for transmission, distribution and Ancillary Services, or services which aresimilar, which are required by NCPA and its Member Customers to supply their load. 5 SCOPE 5.1 Interconnected Operations This Agreement governs the interconnected and coordinated operation of PG&E’s Electric System, a portion of which has been turned over to the operational control of the ISO, and the Electric Systems of NCPA and the NCPA Member Customers. As of the date of this Agreement, the ISO operates the Control Area in which the Parties operate their respective Electric Systems This Agreement does not provide f0r, and expressly .....w~~,~’~’~ [INCORRECT AS DRAFTED 2948A°°.. STANISLAUS COMMITMENTS?] an_9_y__PG&E’s having any obligation to meet any or all of.the Wholesale Electric Power Requirements of NCPA or the NCPA Member Customers. While NCPA and its Member Customers believe that there are continuing obligations under the Stanislaus Commitments, those obligations wil! be resolved outside this agreement ~ ~ ’~ ~^~ ~ .......~ at ~ ~-~- 14 ~^~+~4~ ~ ......o ....4 .....+~ If any Party operates without being an established Control Area or without a Control Area Arrangement in e~fect, or fails to meet its Wholesale Electric Power Arrangements, that Party shall fully indemnify and make whole the other Parties for any costs imposed or other damages caused to .......... ~ rata ...........nt~. The Parties specifically intend that this Agreement shall relate only to their rights and obligations pertaining to the interconnection of their Electric Systems. The Parties agree that, during the term of this Agreement and unless otherwise provided for by amendment of this Agreement, NCPA’s Electric System shall be interconnected with PG&E’s Electric System, and the two Electric Systems shall be operated in parallel pursuant to the terms and conditions of this Agreement. Each Party shall, at all times, to the maximum extent practicable, avoid causing any adverse impact on the other Party’s Electric System. 15 ..... ~ ...................¯~~ .........~ .....Ancillary Services. ~y transmission semite over PG&Z’~ ~y~tem ~h~ll be provided through the ISO, or ~mcmes~or entity, in ~cmord~nme with the ISO T~riff (or ~ueee~or t~riff) ~nd the PG&E Transmission O~er T~riff ~nd, if ~pplim~ble, the PG&E Wholesale Distribution T~riff, and whatever instructions PG&E may provide the ISO in accordance with the procedures noted for resoluti0n’of the ~isputes as to the meaning of the Stanislaus Co~itments. 5.2 Effective Date ~.............~ ~ ~=~"~ Date The Effective Date~ ¯¯term ",, as used in this Agreement shall mean 0000 hours of the day following that on which FERC accepts this Agreement for filing and permits it to be placed into effect. If FERC sets this Agreement for hearing to determine whether it is just and reasonable and otherwise lawful, this Agreement shall become effective on the date it is permitted to be placed into effect and subject to any conditions imposed by FERC. The ordering of such a hearing in and of itself shall not be considered a material change. 16 Termination This Agreement shall terminate on the earliest of: (i) the occurrence of the fifth anniversary of the Effective Date~ (ii) the tenth anniversary date of the Effective Date, if the Parties have agreed to an extension not later than the fourth anniversary of the Effective Date; or (iii) the end of the 12~h month following the’ date on which either Party gives the other Party written notice that this Agreement shall terminate~, but in no instance, shall this Agreement terminate earlier than December 31, 2004 other than for default. 6 POWER SOURCES 17 18 6~--~6.1 Transmission Arrangements ~6.1.I Compliance With Control Area Tariff Requirements Whenever a Party elects to. procure. transmission services, it sh~ll do so in accordance with applicable Control Area Tariff requirements. ~6.1.2 Schedulin~ Coordinator Services Whenever a Party elects to procure the services of an ISO Scheduling Coordinator, it shall do so in accordance with its own arrangements with the ISO, including arrangements consistent with those described in Section 6.4. Except for continuing obligations under E~xistinq Ceontracts and/or encumbrances,~o. Party shall have any 19 obligation to serve as .Scheduling Coordinator for any other Party under this Agreement or take on any other role in which it acts on behalf of the other Party as to the other Party’s transactions with the ISO. 6~--~6.1.3 Other Arrangements with a Control Area Operator If at any time the IS0 is not the Control Area Operator and PG&E and NCPA are located within the same Control Area, each Party shall establish and maintain the necessary arrangements with the Control Area Operator(s) for submission of electric transaction schedules as required by that Control Area Operator for the use of transmission within its Control Area. It shall be the responsibility of each Party to ensure that it has obtained sufficient rights and services to accommodate the transactions necessary for meeting its Wholesale Electric Power Requirements. Except as specified in section ~--~-~6.1.2, N_nothing in this Agreement sh~ll require either Party to schedule the transmission or distribution of electric power or .energy or any other or related transmission transactions for, or take any other actions, in which it acts on behalf of the other Party as an agent, representative, or has any responsibilities similar to those of a Scheduling Coordinator under the ISO Tariff, or any protocol of the ISO. 2O Control Area Operation 6~4~6.2.1 Relationship to Control Area Operations It is the intent of the Parties that NCPA and PG&E shall at all times be integrated into the ISO Control Area, except as provided in Section--6~4-~6.2.4, and shall operate in accordance with Good Utility Practice and in compliance with applicable requirements of federal, state, and local laws, licenses, and permits. PG&E has and will have in effect various existing arrangements with the Control Area Operator. These arrangements currently includethe Transmission Control Agreement, the Transmission Owner Tariff, Scheduling Coordinator Agreements, and a UDC Operating Agreement, all of which enable PG&E to satisfy the obligations ofoperating within the ISO’s Control Area. This Agreement is subject to PG&E’s obligations and responsibilities under those arrangements, and in the event of any inconsistency between those arrangements, and this Agreement, the latterformcr shall control.[Chcck for ~.J NCPA shall enter into a UDC Operating Agreement or other appropriate agreements with ~he ISO that may be needed by the ISO for operation of the CQntrol Area. 6-~4~-~6.2.2 Operatin~ Procedures 6.4,2.1 The Parties shall establish an Engineering and Operating Committee as provided in Appendix G. This "E&O Committee" shall agree upon, and modify as necessary, 21 operating procedures required to implement this Agreement consistent with Good Utility Practice. 6.4.2.2 ~ PG&E, at the direction of the ISO, may be required to take actions with respect to its transmission system, including emergency actions to protect the integrity of the Control Area. PG&E’s operation of Points of Interconnection is at all times subject to such instructions from the ISO. In addition, PG&E is responsible .for maintenance and switching operations of its Electric System ~ ....~ ......4~ 4~ ! ~ .....~v~.~-cd in~ ~ ......~ .~n~’~ ~,,.-~’4~ PG&E and NCPA shall at all times coordinate and communicate their various outages which may have a material affect on the operations of the other Party’s Electric System. As long as they remain a part of the ISO Control Area, the Parties shall abide by the operating procedures of the ISO. 6-~4~-B6.2.3 Control Area O~erator Coordination The Parties agree that the procedures for the coordination and operation of their Electric Systems with the 22 Control Area Operator shall be in accordance with the ISO tariff and other Control Area Arrangements 6~4~46.2.4 Separate Control Area Nothing in this Agreement shall prevent a Party from joining or forming a new Control Area and making its Electric System a part of that new Control Area. In such event, this Agreement shall be revised as appropriate to reflect such change in Control Area operations. ~4~6.2.5 COTP Schedulin~ As an accommodation to the ISO, PG&E has provided the IS0 with schedules reflecting the transactions of COTP rights holders using their COTP rights. PG&E has performed this role in reliance on its understanding that it will not incur 23 any Ancillary Service or other ISO charges from the ISO. PG&E shall continue in this role until an alternative arranclement, satisfactory to the ISO and NCPA is accepted by FERC and allowed to become effective.~IA*~~’~ ~ .......*~! b~ d .......~ 7 INTERCONNECTIONS All deliveries of electric power to NCPA~.,~-~ ~ ~,,~--~ ~v~ ~’~ ~~ ~"~ ....~ -~ only the Point(s) of.............. ~ ...............^c-"r at Interconnection identified in Appendix A~,~-~ ~,, ~ .......=,~,~,,~ up to, but notshall not exceed~-~, the Interconnection Capacity set forth therein for each point; provided that, such Interconnection Capacity may be subject to the ISO’s operation and control of PG&E’s Transmission System. 7.1 Establishin@ or Modifyin~ Point(s) of Interconnection NCPA or any NCPA Member Customer may request the addition or modification of a Point of Interconnection as provided in this Section 7. Whenever NCPA or an NCPA Member Customer requests the addition or modification of a Point of Interconnection at transmission voltage, which is 60 kV or higher, it shall submit to PG&E a completed application in 24 accordance with. the PG&E Transmission Owner Tariff and PG&E shall act on that application in accordance with. its Transmission Control Aqreement[NEED TO SEE PG&E’S TCA - I’VE ONLY SEEN THE PRO FORMAl. Upon PG&E’s receipt of the Completed Application, unlczs -4,E shall process the a....... ~ .........., ~ ~ .......PG&cation in accordance with section 10.3 of the Transmission Control A@reement. Disputes arising under Section 7.1 shall be resolved as provided in the PG&E Transmission Owner Tariff. Whenever NCPA or an NCPA member Customer requests the addition or modification of a Point of Interconnection at distribution voltage, which is lower than 60 kV, it shall submit to PG&E a completed application as described in the PG&E Wholesale Distribution Tariff and in accordance with the requirements of that tariff. Upon PG&E’s receipt of the completed application, PG&E shall follow the applicable procedures and requirements of the PG&E Wholesale Distribution Tariff to determine what Upgrade Facilities, if any, shall be required. Upgrade Facilities required for the addition or modification of a Point of Interconnection at distribution voltage shall be constructed by PG&E and paid for and owned by NCPA (or the NCPA Member Customer) pursuant to the requirements of the PG&E Wholesale Distribution Tariff. [CHECK THIS AGAINST SC, CURRENT IA; WHY SHOULD WE NOT OWN IF WE PAY FOR?] 25 7.1.1 System Impact Study Procedure Pursuant t0 Section 7.1, above, and in accordance with the PG&E Transmission Owner Tariff [NEED TO REVIEW PROCEDURE IN TO TARIFF]or PG&E Wholesale Distribution Tariff, as applicable, PG&E shall determine the need for a System Impact Study. If PG&E determines that a System Impact Study is required, it shall so notify the applicant, providing an .explanation of the basis for this determination. The Parties shall then follo~ the procedures described in the applicable PG&E tariff. If the results of the System Impact Study indicate the need for a Facilities Study, then the procedures described in Section 7.1.2 shall apply. 7.1.2 Facilities Study Procedure Pursuant to Sections 7.1 and 7.1.1, above, a Facilities Study to determine the Costs of Upgrade Facilities shall be conducted in accordance with the procedures described in the PG&E Transmission Owner Tariff or the PG&E Wholesale Distribution Tariff, as applicable. 7.1.3 New Interconnection Facilities and Interconnection Facilities U~rades If Upgrade Facilities are needed as a result of an NCPA or NCPA Member Customer request to establish or modify a Point of Interconnection pursuant to this. Section 7, the Parties shall meet and confer on a mutually acceptable plan to complete the Upgrade Facilities. The Cost responsibility for 26 Upgrade Facilities required as a result of a request to establish or modify a Point of Interconnection shall be determined based on the provisions of ~e-the Transmission Control Agreement (Section 10.3) PG&E Transmission Owner Tariff or the PG&E Wholesale. Distribution Tariff, as applicable. Any dispute regarding the actual capability of the existing transmission, distribution, or Interconnection Facilities, or the need for Upgrade Facilities that will support the new or upgraded. Point of Interconnection, or the Cost of or how the Cost responsibility for the necessary Upgrade Facilities should be allocated, shall be resolved through the dispute resolution procedures set forth in the applicable PG&E tariff, or if none, then as set forth in Section 23, subject to final review of the justness and reasonableness of the cost to be imposed on NCPA by the FERC. L~v~r~ .....~ t.,~ ~L~t ~ 20~ ~s?]~ Once the Parties have reached agreement on a plan for construction or installation of the new or upgraded Interconnection Facilities and other Upgrade Facilities, and their Cost and th~allocation thereof, or these matters are otherwise determined, the Parties shall enter into a Special Facilities Agreement as provided in Appendix E; provided, that in the event that PG&E deems it necessary to begin construction of the Upgrade Facilities prior to the resolution of a dispute, PG&E shall have the right to develop a Special Facility Agreement and file such agreement unilaterally with the FERC pursuant to Section 33. 27 7.2 Ratings for Points of Interconnection 7.2.1 Interconnection Capacity The Interconnection Capacity of existing Points of Interconnection are as stated in Appendix A. The Interconnection Capacity of a new or modified Point of Interconnection shall be established in accordance with this Section 7 and agreed to by the Parties before NCPA may schedule power through the new Point of .Interconnection in excess of the Interconnection Capacity asserted by PG&E or increasescheduled power flows beyond the previously established Interconnection Capacity of an existing Point of Interconnection. Appendix A shall be modified to reflect changes in Interconnection Capacity accomplished pursuant to this Section 7. 7.2.2 Settin~ In~erconnection Capacity Unless agreed otherwise by the Parties, the Interconnection Capacity at each Point of Interconnectimn shall be set equal to the lesser of either: (a) kW Demand requested for that Point of Interconnection in the Completed Application pursuant to Section 7.1; or [Need to discuss how growing City demand is accommodated. Does this kW demand requested mean the physical capacity installed? In the past, multi- year forecasts were prepared with the understanding that PG&E would provide the necessary interconnection at some cost. The procedure contemplated here sets up the potential for delays on PG&E’s part to delay growth and development within the cities, simply through 28 their failure to respond. Its also unclear whether this becomes an annual battle or a longer term plan horizon can be accommodated.] (b) the maximum demand specified for that Point of Interconnection in NCPA’s annual load projection submitted in accordance with Section 9 of this Agreement; provided, that in no case shall the Interconnection Capacity at any Point of Interconnection be set greater than the actual electrical capability of that Point of Interconnection. If PG&E has any dispute, question or concern about the maximum demand specified in NCPA’s annual load projection, it shall submit such matters to the E&O committee for resolution by that committee or as otherwise provided in Section 23. The Interconnection Capacities set forth in Appendix A represent the capacity at each Point of Interconnection as of the date this Agreement is executed by the Parties, or the date it is filed with FERC, whichever first occurs. They are subject to any assumptions and conditions specified in Appendix A and are further subject to change based on actions and decisions of the ISO which may have system impacts that affect this Interconnection Capacity. Whenever the Interconnection Capacity is increased or decreased, PG&E shall promptly file an amended Appendix A at the FERC. Electric capabilities of Points of Interconnection shall be determined by PG&E by the non-discriminatory application of its generally 29 applicable transmission planning criteria, as filed annually with FERC. The specification of Interconnection Capacities for the Points of Interconnection shall not by itself obligate PG&E to provide transmission service to NCPA or any NCPA Member Customer for such Points or to keep transmission capacity available on its Electric System for NCPA or any NCPA member Customer in.any amounts up to, including, or in excess of the Interconnection Capacities. Provision of transmission service, including the making of system upgrades as may be needed for such service, shall be subject t’o the terms and conditions of the ISO Tariff and the PG&E Transmission Owner Tariff or PG&E Wholesale Distribution Tariff, as applicable. 7.2.3 Consequences of Exceeding Interconnection Capacity Power deliveries to NCPA or any NCPA Member Customer at any Point of Interconnection shall not exceed the Interconnection Capacity specified in Appendix A for that Point of Interconnection at any time. In the event that power deliveries exceed the Interconnection Capacity, the Parties, at either Party’s request, shall meet to determine the reason that the Interconnection Capacity was exceeded. If the Parties determine that such an event was not due to an Uncontrollable Force or Emergency on the Electric System of NCPA or the NCPA Member Customer and is reasonably likely to occur again in the 3O future, NCPA shall at PG&E’s request initiate procedures pursuant to Section 7.1 for the Interconnection Capacity of that Point of Interconnection to be~ increased to an amount sufficient to avoid its capacity being exceeded in the future. If the Partie, s fail to agree, within thirty (30) calendar days after the initial meeting, that the Interconnection Capacity must be increased, the matter, at either Party’s request, may be submitted to Dispute Resolution pursuant to Section 23. I t If " Chan~es at Point(s) of Intercor~nection Unless otherwise provided in this Agreement or agreed between the Parties, in the event that changes in delivery voltage or relocation of facilities are necessary in accordance with Good Utility Practice on one Party’s (First Party’s) side of a Point of Interconnection, such changes shall be made by the First Party at its own expense or at the expense of a responsible 31 Third Party. Except as agreed by the Parties, or unless otherwise provided in this Agreement, under such circumstances corresponding, changes on the other Party’s side of each Point of Interconnection shall be at the other. Party’s expense (or at a r~sponsible Third Party’s expense) unless those changes are made primarily for the First Party’s benefit and at the first Party’s written request. If the Parties fail to.agree on a Cost .allocation, the dispute shall be resolved through the dispute resolution procedures set forth in Section 23. ~-~-~7.4 Unused Point(s) of Interconnection 7.5.1. If, for any reason, power flows effectively cease through a Point(s)of Interconnection for more than thirty (30) calendar days, PG&E may serve written notice informing NCPA of PG&E’s intention to declare the Point(s) of Interconnection abandoned. Upon receipt of such notice, NCPA will have ten (10) Business Days to respond. In its response, NCPA must either: (i) inform PG&E that the Point(s) of Interconnection has been abandoned, in which case PG&E may open the Point(s) of Interconnection and remove all PG&E-owned Interconnection Facilities; or (ii) provide a date by Which deliveries of power through the Point(s) of Interconnection will resume; provided, that such date is no longer than thirty (30) calendar days after the date of such response; or (iii) request that the Point(s) of Interconnection be retained, and that the Parties enter into an agreement pursuant to which NCPA will compensate PG&E for the 32 reasonable Costs associated with reserving t.he Point(s) of Interconnection. If NCPA fails to resume deliveries within thirty (30). calendar days under (ii), or to enter into an appropriate agreement under (iii), PG&E may open the Point of Interconnection and remove its Interconnection Facilities from. the site without further notice. Appendix A shall be modified to reflect any changes under this Section 7.5. 7.5.2 In the event that all or any portion of any facilities reinforced or constructed at the request of NCPA or an NCPA Member Customer and paid for by PG&E to provide or maintain a Point of Interconnection under this Agreement become idle because one or more Points of Interconnection become unused and abandoned by voluntary discontinuance by NCPA or as provided in Section 7.5.1, NCPA shall pay cancellation charges to PG&E. PG&E shall determine the amount of such charges, taking into account the following items as appropriate: (a) the undepreciated portion of Costs incurred by PG&E, ~ ~-~ thc~c ~ ....~ .....not ~ ~’" ~= in the reinforcement or construction of such facilities to the extent they are not needed to serve other customers of PG&E; (b) the removal Cost less the salvage value of any such facilities that are proposed to be removed, if any facilities are to be removed; and (c) any other relevant considerations. For purposes of such determination, depreciation shall be calculated in accordance with PG&E’s standard.accounting practices. Such cancellation charges shall be payable by NCPA 33 notwithstanding any termination of this Agreement, unless otherwise agreed by the Parties 8 ¯ OPERATING PROVISIONS 8.1 Power Delivery Standard Power delivered is commonly designated as three phase alternating current, at nominal 60 Hertz, and at the nominal voltage described in Appendix A for each Point of Interconnection. Normalvariations in voltage and frequency shall be permitted pursuant to Good UtilityPractice. 8.2 Coordination Of O~erations The Parties shall coordinate their switching operations on their respective Electric Systems: (i) as directed by the ISO; or (ii) to the extent consistent with (i) above as requested by their respective operators; or (iii) in the event of an Emergency, either pursuant to directionsfrom the ISO or flymutua agreed Emergency orders o~,~ ~.~ ~ ab~cnce of .... ~ Parties shall endeavor to coordinate their activities in the operation and maintenance of these facilities in order to minimize any adverse effects of those activities on each other. 34 Reporting Significant Events Each Party shall promptly report to the 9em-t-yISO any Emergency or other significant operating event reasonably likely to affect operation of the other Party’s Electric System at each Point of Interconnection in accordance with the ISO Tariff by ~Ic~ Each Party, upon request and on a case-by- case basis for reasonable cause related to operating conditions, shall provide to the other Party Electric System operating information, such as loading on lines and equipment and levels of operating voltages and electric power factors. In the event of interruptions of electric service at any Point of Interconnection, the Party causing the interruption shall report to the othcr PartyISO the nature of the event, actions being taken to restore electric service, and the estimated time until restoration of electric service. 8.4 Operation Pursuant to Good Uti,lity Practice Good Utility Practice shall be the general standard for performance related to Electric System operation by the Parties under this Agreement. 35 All of the Parties shall plan and operate their respective Electric System in accordance with Good Utility Practice and’endeavor to minimize electrical disturbances on the Electric Systems of the other Parties. .No Party shall be obligated to operate in a manner contrary to that Good Utility Practice. 8.5 Protective Devices NCPA and NCPA Member Customers shall, consistent with Good Utility Practice, install, modify, set and adjust the protective relaying equipment associated with facilities within their Electric Systems. Such settings and adjustments shall be Utility Practice. 8.6 Requirements for Generators O~erated by NCPA--t-ka~ by ~o~ whic~ ~ .......~ to no~=,~ =~~ a,,~-~ NCPA shall enter into a control area arrangement with the ISO for generating facilities connected to the ISO controlled grid. 8.7 Requirements for NCPA Member Customer O~eratin~ 36 Backup, Generation NCPA shall require coordinate operations involving backup generation facilities of Mmember Customers or third parties .within the Member Customer~ Service 8.8 Remote Telemetry Units NCPA shall install, operate and maintain remote telemetry units at all Points of Interbonnection and at such other locations on NCPA’s Electric System in accordance with the 8.9 Continuity of Service 8.9.1 O~erational Actions to Maintain Continuity Each Party may take actions that are reasonable and consistent with ISO operating orders, tariffs, ISO Protocols, and Good Utility Practice if necessary to maintain continuity of service between the Parties. Such actions may 37 include, but are not limited to, opening or closing circuit breakers or other components of the interconnections. 8.9.2 Unscheduled Interruptions Either Party may temporarily interrupt or reduce any service, or temporarily separate all or any part of the facilities of its Electric System from the other Party’s Electric System, if that Party determines, consistent.with ISO operating orders, tariffs, ISO Protocols, or Good Utility Practice at any time that: (i) an emergency condition exists; (ii) the action is necessary or desirable to prevent a hazard to life or.property; or (iii) the operation of the Party’s Electric System is suspended, interrupted or interfered with as a result of an Uncontrollable Force. In the event a unilateral action is taken under (i), (ii) or (iii) above, and it is later determined the action was arbiirary or capricious in nature, the offending party shall be liable for all damaqes suffered by the non offending party. In the event of such interruption or reduction in service, the Parties shall restore full service on a basis comparable to the restoration of other public service and safety facilities, and, in any event, as directed by the authorized emergency response officials. 8.9.3 Scheduled Interruptions All scheduled interruptions of service shall be made as directed by the ISO or as mutually agreed by the Parties. Whenever possible, the Parties shall endeavor to give 38 seventy-two (72) hours advance notice of any such interruption, reduction or separation, and its probable duration. 8.9.4 Interruption by Protective Devices PG&E, in conjunction with the ISO, utilizes automatic protective devices in order to assist in maintaining the integrity and reliability of its Electric System and to protect its customers from damage, injury or prolonged outages. Service on PG&E’s Electric System is subject to interruption in the event of operation of such devices. In the event of such interruption, service will be restored consistent with Good Utility Practice and the protocols used at the time by the ISO. In addition, NCPA may be required to install protection devices at Points of Interconnection in accordance with Good Utility Practice as established by ISO requirements. [SHOULD THIS BE TIED TO ISO TARIFF INSTEAD?] ..... r ......~ ......far as 39 part f the faoz part ^-f the sary ~,.’a 8~-_~-~8.10 Underfrequency Load Shedding The Parties recognize that Good Utility Practice requires that automatic load shedding by under-frequency relays be provided in the event load requirements of the ISO Control Area exceed power supplies ,instantaneously available to meet those requirements. NCPA shall install and shall operate and 40 maintain in service high -~^~ ~_~.i ,~ .....~ ....[DOESNT EXISTING IA REQUIRE HIGH SPEED DIGITAL??] under-frequency load shedding equipment in accordance with its obligations to the ISO. ~ Such load ......... ~ ~n~w .......shall bc dcsigned to~w ..... .....~- at ....i ....is may r-vis~ its s 41 42 8~q~8.11 Test Period for Interconnections The. Parties shall cooperate in the testing of the Points of Interconnection and of NCPA’s facilities prior to becoming operable consistent with Good Utility Practice. 9 SYSTEM PLANNING COORDINATION 9.1 ~iannin~ Process Pursuant to the ISO Tariff, including Section 3.2 thereof, PG&E conducts planning studies of its Electric System annually to identify System Reinforcements or other modifications to its Electric System necessary to serve the expected loads connected to its Electric System reliably. In order for PG&E to include the effects of growth of NCPA’s Electric System loads in its planning studies, NCPA shall provide PG&E with NCPA electric load planning data by January 15 of each year. NCPA electric load planning data shall contain NCPA’s best estimate of load growth for the next five year period for each Point of Interconnection, and shall be consistent with the forecast of NCPA’s Wholesale Electric Power Requirements. NCPA shall be responsible for participating in planning for the construction of any necessary System Reinforcements under this Agreement and, as provided in the ISO Tariff, shall be responsible for that portion of the Cost of such System Reinforcements that is attributable to the NCPA’s load growth or other factors related to the NCPA 43 Electric System.[ How is past underinvestment accounted for? e.g Lodi s~bstation.] 9.2 System Reinforcements If, as a result of its annual planning review process, PG&E determines, through studies conducted pursuant to the ISO Tariff, that a need exists pursuant to the ISO’s current planning process to construct System Reinforcements, and that such need is caused in part orin whole by growth of NCPA’s load or other NCPA Electric System-related factor, PG&E promptly shall notify NCPA. The Parties shall follow theapplicable procedures of the ISO Tariff and Section 7 and Appendix E [??] of this Agreement. i0 SIGNIFICANT REGULATORY OR OPERATIONAL CHANGE The~procedures set forth in this Section I0 will apply in the event of a Significant Regulatory Change or a Significant Operational Change as described below. i0.I Significant Regulatory Change I0.i.i Definition of Significant Regulatory Change A "Significant Regulatory Change," as this term is used in this Section 10, shall be deemed to occur if FERC, the ISO or successor entity, the CPUC, any other agency or court having jurisdiction, the California Legislature, or the United States Congress issues an order or decision or adopts or modifies a tariff, or enacts a law that: i significantly 44 interferes with the ability of either Party to perform any of its obligations or tasks under this Agreement in an economical manner or subjects it to significan£ risk as to its ability to recover its costs of such performance.;_ or ,~,’~ in PC&E’s ~"~+j~ ....... i0.I.2 Change in Functions or Scope The Parties recognize that there may be a change in the functions performed by the ISO or in the scope of the facilities under the operational control of the ISO, or the replacement of the ISO with a Regional Transmission Organization that may perform different functions or have a different scope than the ISO as of the Effective Date. Such a change shall not be deemed to be a Significant Regulatory Change unless the conditions described in Section i0.i.i above are satisfied.¯ Furthermore, the conditions describedin section I0.i.i shall not be deemed to be satisfied solely as a consequence of any transfer from PG&E to the ISO of any functions contemplated in this Agreement. In the event of any such transfer of functions, the parties will meet and mutually determine if modifications to this Interconnection Aqreement are required, and if necessary, negotiate an appropriate amendment to this aqreement -~-~ acccss to ~_m~.-way ~,~e~, 45 I0.2 Significant O~erational Change A "Significant Operational Change," as this term is used in this Section I0, shall consist of any of the following: (i) the acquisition by NCPA or an NCPA Member Customer of ownership or control of, or rights to, generation facilities within northern California or central California; (ii) any Party’s making or planning a new interconnection of its Electric System with the Electric System of a Third Party that has the potential for significantly affecting the operation of any other Party’s Electric System; (iii) installation of planned operation or a generation facility within the Electric System of an NCPA Member Customer where power or energy from such generation is intended to or may flow through a Point of Interconnection and onto PG&E’s Electric System; (iv) any other operational change proposed by a Party that could reasonably be expected to affect significantly the other Party’s Electric System; or (v) an action taken by the Control Area Operator which may cause a significant change in the way a Party operates or must operate its Electric System. 46 I0.3 Notification At any time during the term of this Agreement, if either Party anticipates the occurrence of a Significant RegulatoryChange-or Significant Operational Change, and if such change may reasonably be expected to affect materially either or both Parties’ obligations.or operations under this Agreement, such Party shall provide written notice to the other Party promptly, but to the extent possible, in no cvnnt no later than six months before such change is expected to occur.[NOTE THAT REGULATORY CHANGE CAN OCCUR ON VERY SHORT NOTICE AND SIX MONTHS MAY BE UNREALISTIC] The notice shall contain a description of the change, including expected time schedules. If the Party giving notice believes, that it will be necessary to amend this Agreement to address the anticipated change, then the notice to the other Party may include a proposal that the Parties meet, as provided in Section 10.4 hereof, in order to negotiate an appropriate amendment to this Agreement. 10.4 Amendment of Agreement This section reserves the right for ~E--both parties to make a FERC filing, even if dispute resolution procedures have been initiated but have not been concluded within a specified period of time. Following notification under Section 10.3, the Parties shall meet to discuss whether an amendment to this Agreement is necessary to address the Significant Regulatory Change or Significant Operational Change. Such amendment, if 47 any, shall be limited in scope to what is necessary to allow this Agreement to accommodate such change identified in the notice issued pursuant to Section 10.3. If the Parties agree that such an amendment to this Agreement is necessary, the Parties will proceed to negotiate such amendment. If the Parties have not reached agreement within sixty:(60) calendar days of the date of the first meeting, any unresolved issues shall be submitted for resolution through the dispute resolution procedures set forth in Section 23. Notwithstanding the above, if any issues remain unresolved as of ninety (90) calendar days before the change is scheduled to take place, then PG&E may, but is not required to, file an amendment to this Agreement with FERC unilaterally, pursuant to Section 205 of the FPA, and NCPA may exercise its rights under the FPA to protest or oppose such filing. If the Parties cannot agree that an amendment to this Agreement is necessary to allow this Agreement to accommodate the Significant Regulatory Change or Significant Operational Change, they shall submit such dispute to dispute resolution proceedings pursuant to Section 23; provided that if such dispute is not resolved as of ninety (90) calendar days before the change is scheduled to take place, then PG&E may, but is not required to, file an amendment to this Agreement with FERC unilaterally, as set forth in the paragraph above. 48 10.5 Studies of Significant Operational Change If a Party receiving notice from ~he other Party of a Significant Operational Change believes that the proposed change may reasonably be expected to affect the operation of its Electric System materially, it may request a study of any such Significant Operational Change to determine the potential for any adverse impacts and any potential avoidance or mitigation measures thereto. The Parties shall cooperate in providing information necessary to conduct such study. If PG&E determines that, in addition, a Facilities Study or System Impact Study is’ required, PG&E shall perform such study within the time and in the manner specified in Section 7. The study Costs associated with a proposal shall be the responsibility of the Party whose proposal or actions will Cause the Significant Operational Change, or will be shared by the Parties if the Control Area Operator is the one who causes or will cause the change; provided, that such Costs may be paid by a responsible Third Party. Any disputes over the necessity of particular studies or the Cost of such studies shall be resolved through the dispute resolution procedures set forth in Section 23. Upon completion of necessary studies, the Parties will each review the study result~ and discuss any recommendations for avoidance and/or mitigation of adverse impacts. 49 10.6 Miti~atiom and Oosts Subject to the ISO tariff and similar provisions in this area, which will govern if applicable, u~nless otherwise agreed by the Parties, the- Party whose proposal or action causes the Significant Operational Change ("Modifying Party") shall be responsible for compensating the other Party ("Affected Party") for the reasonable Cost, if any, of mitigating any adverse impact on the Affected Party’s Electric System caused by the change; provided, that such Costs may. be paid by a responsible Third Party. Any reasonable Cost incurred by the Affected Party in its cooperation with the Modifying Party shall be reimbursed by the Modifying Party. All avoidance or mitigation measures shall be completed and any compensation due to the Affected Party as a result of an unresolved adverse impact shall be agreed upon before the Significant Operational Change is made. Any dispute regarding the need for, the nature of, or the Cost of mitigating adverse impacts or compensating the Affected Party for those adverse impacts that cannot be mitigated shall be resolved through the dispute resolution procedures set forth in Section 23. [206 rights?] In the event that NCPA or an NCPA Member Customer proposes a Significant Operational Change that will.have the effect of significantly reducing the need for Interconnection Capacity at a Point 0f Interconnection, PG&E shall have the right to reduce the Interconnection Capacity in Appendix A; provided, 5O if NCPA desires to maintain such Interconnection Capacity, NCPA shall compensate PG&E for PG&E’s reasonable Costs thereof. Each Party shall bear its Costs for the results of or for mitigation of Significant Operational Changes caused by the ISO. 10.7 Failure,to Notify of Significant O~erational Changes Each Party has a duty to provide notice to the other Party of Significant Operational Changes planned for its Electric System that could reasonably be expected to have a material adverse impact on the Electric System of the other.If a Party implements a SignificantOperational Change without providing such notice, the affected Party shall have the right to open any affected Point of Interconnection if,-in its judgment, opening the Point of Interconnection is necessary to-protect the integrity of its Electric System, and the right to file with FERC under Sections 205 or 206 of the FPA seeking appropriate relief, including, but not limited to, amendment or termination of this Agreement. II INSTALLATION AND ACCESS Where it is necessary for PG&E to install any of its facilities on NCPA’s premises in order to accomplish an interconnection or otherwise to perform the duties contemplated by this Agreement, NCPA hereby grants to PG&E, for the term of this Agreement: (i) the right to make such installation along the 51 shortest reasonable route of sufficient width to provide full legal clearance from all structures now or hereafter erected on such property; an4 (ii) the.rights of ingress and egress from NCPA’s premises at all reasonable hours for any purposes reasonably connected with this Agreement. PG&E shall not be obligated to install such facilities unless ind until all necessary licenses, permits, certificates, or other governmental authorizations or approvals that may be necessary are obtained, and any necessary permanent rights-of-way and easements are granted, without cost to PG&E, at locations satisfactory to PG&E on and over NCPA’s property, or the property of others, for the installation of PG&E’s facilities~ Electric facilities belonging to PG&E that are installed on NCPA’s premises will be relocated only with the agreement of PG&E, which shall not be unreasonably withheld. NCPA shall pay PG&E the Cost, if any, of any such facility relocation. 12 METERING [IT IS OUR TENTATIVE VIEW THAT ALL OF SECTION 12 HAS BEEN SUPERSEDED BY THE AMSS AGREEMENT.DO YOU SEE ANY NEED TO KEEP THIS?] 12.1 Delivery Meters All real and reactive power deliveriesshall be metered at each Point of Interconnection with meters meeting the requirements of: (i) the ISO Tariff (Appendix J on the Effective Date, as it may be amended or superseded) for interconnections at 52 60 kV and above ("transmission interconnection"); and (ii) the PG&E Wholesale Distribution Tariff for interconnections below 60 kV ("distribution interconnection"). Any conflicts with regard to metering standards that may arise between this Agreement, the PG&E Wholesale Distribution Tariff, or the ISO Tariff shill be resolved consistent with the applicable tariff. Power deliveries shall be metered at delivery voltages described in Appendix A. At a minimum, the Responsible Meter Party shall meter all power flowing across each interconnection in either direction in accordance with the Agreement. The Parties shall cooperate in the installation and provision of access to the meters, as necessary for each Party to obtain the information needed to perform as contemplated under this Agreement. 12.2 Req~ire~nents for Meuers and Meter Maintenance .The Responsible Meter Party shall install and maintain metering equipment, in accordance with ISO standards, located at each Point of Interconnection which shall measure and record real and reactive power flows and shall be capable of recording flows in both directigns. Such "in" and "out" meters shall be designed to prevent reverse registration and measure and continuously record such deliveries. 12.3 Meter Reading and Access The Responsible Meter Party shall provide meter data in accordance with agreements between the ISO and NC?A.~-ee4 53 other Party shall grant the Responsible Meter Party such access to the other Party’s facilities as may be required for meter reading and/or the proper operation and maintenance of all revenue metering facilities. by thc ISO Tariff. system ..... 54 55 13 BILLING AND PAYMENT PG&E shall bill NCPA for the Costs of an Upgrade Facility and/or the monthly ownership Cost of an Upgrade Facility pursuant to Appendix E. 14 APPENDICES ZNCLUDED The following Appendices to this Agreement, as they may be revised from time to time by written agreement of the Parties or by order of FERC, are attached hereto and are incorporated by reference as if fully set forth herein: Appendix A -- Points of Interconnection Appendix B -- Time Periods 56 Appendix C -- Dispute Resolution and Arbitration Appendix D --Underfrequency Load and Generation Shedding Schedule Appendix E - Upgrade Facilities Appendix F - Billing and Payments Appendix G - Engineering and Operating Committee Appendix H - Special Facility Agreements 15 ACCOUNTING 15.1 Accounting Procedures PG&E and NCPA eachshall record relevant Costs and maintain its accounting records in accordance with generally accepted accounting.practices and the FERC Uniform System of Accounts. 15.2 Audit Rights For good cause and upon reasonable notice, each Party shall have the right to audit, at its own expense, the relevant records of the other Party (including the relevant records of NCPA’s meters) for the limited purpose of determining whether the other Party is meeting its obligations under this Agreement. Such audits shall be limited to only those records reasonably required to determine compliance with this Agreement, and each Party agrees to disclose the information obtained in such audit only to those persons, whether employed by such Party or otherwise, that are directly involved in the administration of 57 this Agreement. Each Party agrees that under no circumstances will it use any information obtained .in such an audit for any commercial purpose or for any purpose other than assuring enforcement of this Agreement. The right to audit shall be limited to data for two prior years from the date of the final bil’ling for a matter or from the date of the questioned event, as applicable. 16 ADVERSE DETERMINATION OR EXPANSION OF OBLIGATIONS 16.1 Adverse Determination If, after the Effective Date of this Agreement, FERC or any other regulatory body, agency or court of competent jurisdiction determines that all or any part of this Agreement~ its operation or effect is unjust, unreasonable, unlawful, imprudent or otherwise not in the public interest, each Party shall be relieved of any obligations hereunder to the extent necessary to comply with or. eliminate such adverse determination. The Parties shall promptly enter into good faith negotiations in an @ttempt to achieve a mutually agreeable modification to this Agreement to address any such adverse determination. 58 16.2 Expansion of Obligations .[WE ARE NOT ENTHUSIASTIC ABOUT, THIS PROVISION. AMONG OTHER THINGSr IT SEEMS TO BE IN DIRECT VIOLATION OF THE STANISLAUS COMMITMENTS REQUIREMENT THAT SERVICE ,BE PROVIDED SUBJECT TO FERC RESOLUTION OF DISPUTES] If, after the Effective Date of this Agreement, FERC or any other regulatory body, agency or court of competent jurisdiction orders or determines that this Agreement should be interpreted, modified, or significantly extended in such a manner that PG&E or NCPA may be required to extend its obligations under this Agreement to a Third Party, or to incur significant new or different obligations to the other Party orto Third Parties not contemplatedby this Agreement, then the Parties shall be relieved of their obligations to the extent lawful and necessary to eliminate the effect of that order or determination, and the Parties shall attempt to renegotiate in good faith the-terms and conditions of the Agreement to restore the original balance of benefits and burdens contemplated as of the Effective Date. 16.3 Rene~otiation If, within three months after an order or decision as described in Sections 16.1 and 16.2, the Parties either: (i) do not agree that a renegotiation is feasible or necessary; or (ii) the Parties cannot agree to amend or supersede this . Agreement, then: (a) either Party may initiate dispute resolution in accordance with Section 23; or (b) PG&E may unilaterally file 59 with FERC an amendment of this A_agreement or a replacement agreement, or (C) NCPA may unilaterally file with FERC a complaint with FERC seeking amendment of this AGreement. in this Section, the term "Agreement" includes both this Agreement and any tariff, rate or rate schedule that in whole or in part results from or incorporates this Agreement. As used 17 ASSIGNMENT 17.1 NCPA Permitted Assignment No transfer or assignment of the rights, benefits or duties of NCPA or any NCPA Member Customer under this- Agreement, in whole or part, shall ~e effective without the prior written~consent of PG&E, which consent shall not be withheld unreasonably; provided, that PG&E’s consent shall not be required for assignments in connection with interests that arise by reason of any deed of trust, mortgage, indenture or security agreement granted or executed by NCPA or an NCPA Member Customer. 17.2 PG&E Pern~,itted Assignment This Agreement may not be assigned by PG&E without the written consent of NCPA, which shall not be withheld unreasonably; provided, that NCPA’s consent shall not be required (I) for any assignment that arises by reason of a deed of trust, mortgage, indenture or security agreement granted or executed by PG&E; or (2) in the case of an assignment to a successor in the ownership of all or a significant portion of PG&E’s transmission 6O system reason of a merger, ..............., ....~ ..........., .~I^ zpin off or foreclosure, so long as the successor agrees in writinq to provide the same services and so long as the successor is creditworthy. 17.3 Assignee’s Continuing Obligation Any successor, to or transferee or assignee of the rights or obligations of a Party, whether by voluntary transfer, judicial sale, foreclosure sale or otherwise, shall be subject to all terms and conditions of this Agreement to the same extent as though such successor, transferee, or assignee were an original Party. 18 CAPTIONS All indices, titles, subject headings, section titles and similar items are provided for the purpose of reference and convenience and are not intended to affect the meaning of the contents or scope of the Agreement. 19 CONSTRUCTION OF THE AGREEMENT Ambiguities or uncertainties in the wording of the Agreement shall not be construed for or against either Party. 20 CONTROL AND OWNERSHIP OF,FACILITIES The Electric System of a Party shall at all times be and remain in the exclusive ownership, possession and control of that 61 Party, except that operational control of PG&E’s system ~e--has been turned over to the ISO, or licensed or leased to that Party as provided in the license or lease, and nothing in this Agreement shall be construed to give the other Party any right of ownership, possession or control of all or any portion of that Electric System. All facilities owned and installed by one Party hereunder shall, unless otherwise agreed by the Parties, at all times be and remain the property of that Party. 21 COOPERATION AND RIGHT OF ACCESS AND INSPECTION Each Party shall give to the other all necessary permission to enable it to perform its obligations under the Agreement. Each Party shall give the other Party the right to have its agents, employees and representativeS, when accompanied by the agents, employees and representatives of the other Party, enter its premises at reasonable times and in accordanc~ with reasonable rules and regulations for the purpose of inspecting the property and equipment of the Party in a manner which is reasonable for assuring the performance of the Parties under the Agreement. 22 DEFAULT 22.1 Termination for Default If either Party breaches its obligations under this Agreement, such breach shall constitute an event of default. If 62 any Party defaults under this Agreement, the other Party may terminate this Agreement; provided, that prior to such termination the other Party must provide the defaulting Party with written notice stating: I) the Party’s intent to terminate; 2) the date of such intended termination; 3) the specific grounds for termination; 4) specific actions which the defaulting Party must take to cure the default, if any; and 5) a reasonable period of time, which shall not be less than sixty (60) calendar days, within which the defaulting Party may take action to cure the default and avoid termination, provided there is any action which can be taken to cure the default. Termination shall not become effective without obtaining any necessary authorization from FERC. Application of dispute resolution pursuant to Section 23 with regard to separate disputes shall not be deemed to limit the right to.terminate this Agreement under this Section 22.1. 22.2 Other Remedies for Default The remedy under Section 22.1 is not exclusive, and subject to the terms o-f Section 23, either Party also shall be entitled to pursue any other legal, equitable or regulatory rights and remedies it may have in response to a default by the other Party. 23 DISPUTE RESOLUTION The Parties shall make best efforts to resolve all disputes arising under this Agreement expeditiously and by good faith 63 negotiation. Where this Agreement specifically calls for resolution of disputes pursuant to Section 23, the Parties shall pursue dispute resolution according to the provisions of Appendix C. 24 GO%’ERNING LAW This Agreement shall be interpreted, governed by and construed under the laws of the State of California, as if executed and to be performed wholly within the State of California. 2 5 INDEMNITY 25.1 Definitions As used in this Section 25, with initial letters capitalized, whether in the singular or the plural, the following terms shall have the following meanings: 25.1.1 Accident Personal injury, death, property damage, or economic loss which (i)is sustained by a Third Party ("Claimant"), which is an ultimate use customer of a Party; (ii) arises out Of delivery of, or curtailment of, or interruption to electric service, including but not limited to abnormalities in frequency or voltage; and iii) results from either or both of the following: 64 a. the engineering, design, construction, repair, supervision, inspection, testing, protection, operation, maintenance, replacement, reconstruction, use, or ownership of either Party’s Electric System; or b. the performance or non-performance of either Party’s obligations under the Agreement. 25.1.2 Indemnitee A Party defined in Section 25.2.2. 25.1.3 Indemnitor A Party defined in Section 25.2.2. 25.2 Indemnity Duty If a Claimant makes a claim or brings an action. against a Party seeking recovery for loss, damage, costs or expenses resulting, from or arising out of an Accident against a Party, the following shall apply: 25.2.1 That Party shall defend any such c~aim or action brought against it, except as otherwise provided in this Section 26.2. 25.2.2 A Par.ty ("Indemnitor") shall hold harmless, defend and indemnify, to the fullest extent permitted by law, the other Party, its directors or members of its governing board, officers and employees ("Indemnitees"), upon request by the Indemnitees, for claims or actions brought against ~the Indemnitee allegedly resulting from Accidents caused by acts or omissions of the Indemnitor. 65 25.2.3 No Party shall be obligated to defend, hold harmless or indemnify the other Party, its directors or members of its governing board, officers and employees for accidents resulting from the farter’s grc~ negligence or willful misconduct.[CORRELATE WITH CHANGES MADE TO AMSS] 25.2.4 If a Party successfully enforces this indemnity, the Party against which enforcement is required shall pay all costs, including reasonable attorneys’ fees and other litigation expenses, incurred in such enforcement. 26 JUDGMENTS AND DETERMINATIONS When the terms of this Agreement provide that an action may or must be taken, or that the existence of a condition may be established based on a judgment or determination of a Party, such judgment shall be exercised or such determination shall be made reasonably and in good faith, and where applicable in accordance with Good Utility Practice, and shall not be arbitrary or capricious. 27 LIABILITY 27.1 Third Parties Nothing in this Agreement shall be construed to create any duty to, any standard of care with reference to, or any liability to, any Third Party unless expressly stated. 66 27.2 Between the Parties Except forits, willful action, or with respect to breach of this Agreement, or with respect to the indemnity duty under Section 25.2, no Party, nor its directors or members of its governing board, of $icers, employees or agents shall be liable to another Party for any loss, damage, claim, cost, charge or expense arising from or related to this Agreement. In the event of breach of this Agreement, neither Party, nor its directors or members of its governing board, officers, employees or agents shall be liable to the other Party for any co~sequential, special or indirect damages. 27.3 Protection of a Party’s Own Facilities Each Party shall be responsible for protecting its facilities from possible damage by reason of electrical disturbances or faults caused by the operation, faulty operation, or non-operation of another Party’s facilities, and such other Party shall not be liable for any such damage so caused; provided, this limitation on liability shall not extend to failure to observe the requirements of Section 8. 27.4 Liability for Interruptions Neither Party shall be liable to the other, and each Party hereby releases the other and its directors, members of its governing board, officers, employees and agents from and indemnifies them, to the fullest extent permitted by law, for any claim, demand, liability, loss or damage, whether direct, 67 indirect or consequential, incurred by either Party, which results from the interruption or curtailment in accordance with (i) this Agreement, (ii) Good Utility Practice, or (iii) as directed by the ISO, of power flows through a Point of Interconnection made available by PG&E under this Agreement, or of power flows made possible by reason of that Point of Interconnection, except as specified in section 8.9.2. 28 NO DEDICATION OF FACILITIES Any undertaking by either Party under any provision of this Agreement is rendered strictly as an accommodation and shall not constitute the dedication by the first Party of any part or all of its Electric System to the other, the public, or any Third Party. Any such undertaking by any Party under a provision of, .......v~ ~~I~ ~..,;~ this Agreement shall cease upon the termination of that Party’s obligations under this Agreement. 29 NO OBLIGATION TO OFFER SAME SERVICE TO OTHERS By entering into this Agreement to interconnect with NCPA or NCPA Member Customers and filing it with FERC, PG&E does not commit itself to furnish any like or similar undertaking to any other person or entity.[WE NOTE THAT THIS IS ALSO DIRECTLY CONTRARY TO THE STANISLAUS COMMITMENT OBLIGATIONSWould to ~~I ....~~ obligations] 68 30 NO PRECEDENT This Agreement establishes no precedent with regard to any other entity or agreement. Nothing contained in this Agreement shall establish any rights to or precedent for other arrangements as may exist, now or in future, between PG&E and NCPA for the provision of any interconnection arrangements or any form of electric service. 31 NO TRANSMISSION, DISTRIBUTION, POWER, ENERGY SALES OR ANCILLARY SERVICES PROVIDED PG&E does not under this Agreement undertake to provide or make available any transmission service, distribution service, power or energy sales or services, or Ancillary Services for NCPA or any NCPA Member Customer or any Third Party, except to the extent this agreement is inteqrated with separate agreements between NCPA and PG&E.. Any transmission service over PG&E’s system shall be provided through the ISO in accordance with the ISO Tariff and PG&E’s Transmission Owner Tariff. 32 NOTICES 32.1 Written Notices Any notice, request, declaration, demand, information, report, or item otherwise required, authorized or provided for in this Agreement shall be given in writing, except as otherwise provided in this Agreement, and shall be deemed 69 properly given if delivered personally or by electronic facsimile transmission, or sent by first class United States Mail or overnight or express mail service, postage or fees prepaid, to each of the persons specified below: (I) To NCPA: General Manager Northern California Power Agency 180 Cirby Way Roseville, CA 95678 with a copy to: Assistant General Manaqer - Power Management Northern California Power Agency 180 Cirby Way Roseville, CA 95678 and (2)To PG&E : Senior Vice President, Utility Operations Pacific Gas and Electric Company 77 Beale Street, Room 3237, B32 P.O. Box 770000 San Francisco, CA 94177 With a copy to: Director, Interconnection Services Department Pacific Gas and Electric Company 77 Beale Street, Room 1355, BI3J ¯ P.O. Box 770000 San Francisco, CA 94177 32.2 Changes of Notice Recipient Either Party may change its designation of the personwho is to receive notices on its behalf by giving the other Party notice thereof in the manner provided in this Section 70 32. No more than two persons shall be designated by a Party to receive notices. 32.3 Routine Notices Any notice of a routine character in connection with service under this Agreement or in connection with the operation of facilities shall be given in such a manner as the Partiesmay determine is appropriate from time to time, unless otherwise provided in this Agreement. 32.4 Reliance on Notice Each Party shall be entitled under this Agreement to rely on.the other Party’s notice when given (or not given, when a Party fails to provide notice within the time prescribed) as having all necessary approvals of that other Party’s management, Board of Directors or other governing body, and any notice (or failure to provide timely notice) hereunder shall be binding on the noticing Party and shall obligate that Party to make such payments or to perform such duties as are necessarily associated with the notice or, if a Party fails to provide timely notice, that.failure to give notice. 33 RESERVATION OF RIGHTS 33.1 Rate Chan~es Nothing contained herein shall be construed as affecting in any way PG&E’s right, either under this Agreement or under any rate schedule incorporating it, to make application to 71 FERC unilaterally for a change in rates, including rate methodolo~ and the terms and conditions of service, ¯under Section 205 of the Federal Power Act and pursuant to FERC’s rules and regulations promulgated thereunder. The term "rates" as used herein shall mean a statement of work or services as provided in Agreement, rates and charges for or in connection with thosethis services, and all classifications, practices, rules, regulations or contracts, including but not limited to this Agreement, which in any manner affect or relate to such services, rates and charges. Nothing contained herein shall be construed as affecting in any way the right of NCPA to oppose such a change under Section 205 or FERC’s rules and regulations or to exercise its rights under Section 206 of the Federal Power Act. -~ 2C ~ f ....La~" Scction 23. [WE SUGGEST REMOVING THIS PROVISION. IF SERVICE IS BEING TAKEN UNDER THE ISO TARIFF, WHAT BUSINESS IS IT OF PG&E’S 72 WHOM THE ISO THINKS WE SHOULD SERVE? MOREOVER, IT IS INCONSISTENT WITH THE STANISLAUS COMMITMENTS, WHICH REQUIRE SERVICE UNTIL FERC SAYS IT SHOULD NOT OCCUR, RATHER THAN LETTING PG&E MAKE THE FIRST REFUSAL] ~3~--~33.2 Governin~ Law This Agreement is made and entered into in the State of California. Interpretation of this Agreement and its performance and enforcement shall be determined in accordance with California law. Venue, to the extent not before the FERC, for any court action or proceeding concerning this Agreement shall lie in the City and County of San Francisco, California. 34 RESPONSIBILITY FOR PAYMENTS AND SECURITY 34.1 NCPA shall be fully responsible and liable to PG&E for payments to be made under this agreement. 34.2 The Parties shall perform unconditionally and fully each and every obligation which each has under this Agreement; provided, that this Agreement shall not restrict any right either Party may otherwise have to pledge any of its revenues, funds, assets, rights, property or interests therein. The other Party’s status as a creditor shall not be subordinate to the interest of ,any creditor, subject to any pledge or debt obligation, provision of law or existing obligations of a Party. 35 RULES AND REGULATIONS PG&E and NCPA may each establish and, from time to time, change such procedures, rules, or regulations as they shall determine are necessary in order to establish the methods of operation to be followed in the performance of this Agreement; provided, that any such procedure, rule, or regulation shall not be inconsistent with the provisions of this Agreement. If a .Party objects to a procedure, rule, or regulation established by .the other Party, it will notify the other Party and the Parties will endeavor to modify the procedure, rule, or regulation in order to resolve the objection. If the Parties cannot reach agreement, either Party may seek dispute resolution pursuant to Section 23. 36 SEVERABILITY If any term, covenant or condition of this Agreeme.nt or its application is held to be invalid as to any person, entity or circumstance, by FERC or any other regulatory body, or agency or court of competent jurisdiction, then such term, covenant or condition shall cease to have force and effect to theextent of that holding. In that event, however, all other terms, covenants and conditions of this Agreement and their application shall not be affected thereby, but shall remain in full force and effect unless and to the extent thai a regulatory agency or court of 74 competent jurisdiction finds that a provision is not separable from the invalid provision(s) of this Agreement. 37 CONTINUING RIGHTS OF NCPA UPON TERMINATION Upon termination of the Agreement, NCPA shall continue to have such rights, if any, to be connected to PG&E’s Electric System that are provided under law or regulation; provided, that the existence of this Agreement, after its termination, shall not be offered or used by either Party to establish or defeat the existence of any rights provided by law or regulation. Termination of this Agreement, if authorized by FERC, 4-9 ............ ~ ....., ~ v shall not terminate any other tariff or rate schedule which in whole or in part "~hich results from or incorporates this Agreement, unless authorized by FERC, to the extent not inconsistent with a Party’s aforementioned rights at law. After termination of this Agreement and any required FERC authorization of such termination, all obligations and rights provided under this Agreement or such tariff or rate schedule shall cease, and neither Party shall claim or assert any continuing right other than as may be provided by law or regulation. Such termination shall not affect rights and obligations of a continuing nature or for payment of money for goods or services provided prior to termination. This Section shall not be construed as a bar to the assertion by NCPA of any rights it may have to service following termination of this 75 Agreement,.independent and exclusive of the Agreement or any predecessor. 38 RIGHTS OF PG&E UPON TERMINATION Should FERC deny, condition, suspend or defer PG&E’s notice of termination, PG&E shall under no circumstances be required to maintain any interconnections or to provide any services, based in whole or in part on the existence of this Agreement, beyond the minimum time necessary for compliance with FERC’s denial, condition, suspension or deferral. 39 UNCONTROLLABLE FORCES A Party shall not be considered to be in default in the performance of any obligation under the Agreement (other than an obligation to make payments for bills previously rendered pursuant to the Agreement) when a failure of performance is the result of Uncontrollable Forces. 40 WAIVER OF .RIGHTS Any waiver at any time by any Party of its rights with respect to a default under the Agreement, or with respect to any other matter arising in connection with the Agreement, shall not constitute or bedeemed a waiver with respect to any subsequent default or other matter arising in connection with the Agreement. Any delay, short of the statutory period of limitations, in 76 asserting or enforcing, any right shall not constitute or be deemed a waiver. 41 ENTIRE AGREEMENT; AMENDMENTS ~~~-~-"~ .......,~ respect thereto. [NOTE THAT THE STRICKEN SENTENCE ESSENTIALLY DUPLICATES THE FOLLOWING SENTENCE. NCPA DOES NOT OBJECT TO A CAREFUL INTEGRATION PROVISION, BUT DOES NOT WISH TO AGREE THAT THIS IS THE ENTIRE AGREEMENT REGARDING TRANSMISSIONM WHICH WE BELIEVE NOT TO BE CORRECT.] This Agreement is intended to be the complete and exclusive statement of the terms of the Parties’ agreement which supersedes all prior and contemporaneous offers, promises, representations, negotiations, discussions, communications and contracts that may have been made in negotiation of .......~-’"~ ~ ....~......................... ~cct matter of this Agreement. No representation, covenant, or other matter, oral or written, which is not expressly set forth, incorporated, or referenced in this Agreement (except for other contracts and agreements, applicable laws, license obligations and regulations) shall be a part of, modify, or affect this Agreement, This Agreement may be modified by written agreement of the Parties. 77 42 NO THIRD PARTY RIGHTS OR OBLIGATION No right or obligation contained in this Agreement shall be applied or used for the benefit of any person or entity not a Party. 43 WARRANTY OF AUTHORITY Each Party warrants and represents that this Agreement has been duly authorized, executed and delivered.by such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, or similar laws effecting the enforcement 0f creditor’s rights and subject to equitable principles. 44 EXECUTION Executed this day of effective as set forth above. , 2001 but 78 NORTHERN CALIFORNIA POWER AGENCY By: Name: Title: PACIFIC GAS AND ELECTRIC COMPANY By: Name: Title: (attest)- (attest) (attest) (attest) CITY OF ALAMEDA By Authorized Representatlve CITY OF BIGGS By Authorized Representative CITY OF GRIDLEY By Authorized Representative CITY OF HEALDSBURG By Authorized Representative 79 CITY OF LODI (attest)By Authorized. Representative CITY OF LOMPOC (attest)By Authorized Representative (attest) CITY OF PALO ALTO By Authorized Representative ............... w ........tive CITY OF UKIAH (attest)By Authorized Representative (attest) PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE By Authorized Representative 80 Appendix A POINTS OF INTERCONNECTION Appendix A POINTS OF INTERCONNECTION (a)(b)(c)(d) InterconnectionNCPA Member Voltage CapacityCustomerDelivery Point (kV)(MW) Alameda Substation C and/or Substation J 115 72.1 Biggs Biggs Sub 60 6.0 Gridley Gridley Sub 60 9.1 Healdsburg Healdsburg Sub 60 17.3 Lodi Industrial Sub 60 124.5 Lompoc Lompoc Sub 115 26.9 Palo Alto Palo Alto Sub 115 208.3 Plumas-Sierra Quincy Sub 60 27.3 Ukiah Ukiah Sub 115 30.5 (a)(b)(c) Rate of ReceiptNCPA Resources Point oi~ Receipt (MW) Geo Plant 1 Geo Plant 2 Lakeville 66.6 Collierville Bellota 151.8 Alameda CTs Substation C and/or Substation J 37.5., Roseville CTs Western 36.9 Lodi CT Industrial 20.3 Graegle, Hydro Project Quincy Sub 0.4 STIG " NCPA STIG Substation 49.9 A-1 Appendix B TIME PERIODS Appendix B TIME PERIODS The on-peak and off-peak periods for purposes of this Agreement are : On-Peak:8:00 a.m. to I0:00 p.m. Monday through Saturday, except holidays Off-Peak: i0:00 p.m. to 6:00 a.m. Monday through Saturday; all day Sunday and holidays The holidays applicable to this Appendi~ B are as follow~: New Years Day; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; Christmas Day; and any other holidays designated by the Western System Coordinating Council or its successor, from time to time. B-I Appendix C DISPUTE RESOLUTION AND ARBITRATIO~ .Appendix C DISPUTE RESOLUTION AND ARBITRATION C. 1 NEGOTIATION AND MEDIATION As provided in Section 2.3, the Parties agree to seek settlement of all disputes arising under this Agreement by good faith negotiation before resorting to other methods of dispute resolution. In the event that negotiations have failed, but before initiating arbitration proceedings under this Appendix C, the Parties may by mutual assent decide to seek resolution of a dispute through mediation. If this occurs, the Parties shall meet and confer to establish an appropriate timetable for mediation, to pick a mediator, and to decide on any other terms and conditions that will govern the mediation. C.2 TECHNICAL ARBITRATION The Parties agree that it is in the best interest of both Parties to seek expedited resolution of arbitrable disputes that are technical in nature. Technical disputes may include, without limitation, disputes centered on engineering issues involving technical planning studies, the need for and Cost of Upgrade Facilities, and the Interconnection Capacity of a Point of Interconnection. Such technical issues may be resolved through expert application of established technical knowledge and by reference to Good Utility Practice and industry standards. C-I The Parryinitiating arbitration pursuant to Section C.3 below shall indicate in its notice to the other Party whether it regards the dispute to be technical in nature. If both Parties agree that a dispute is technical in nature, then the Parties shall meet and confer to develop an appropriate timetable and process for expedited resolution of the dispute by a neutral expert, or "technical arbitrator." If the Parties cannot agree that a dispute is technical in nature, or if they cannot agree on a neutral arbitrator, then the Parties shall submit the dispute to arbitration under the procedures set forth in Section C.3 below.[NOTE THAT THIS MAY BE ARGUED TO CUT FERC OUT OF SOME ISSUES WHEN THEY BELONG AT FERC -- DISCUSS] C.3 ARBITRATION C.3.1 Notices And Selection Of Arbitrators In the event that a dispute is subject to arbitration under Section 23, the aggrieved Party shall initiate arbitration by sending written notice to the other Party. Such notice shall identify the name and address of an impartial person to act as an arbitrator. Within I0 business days after receipt of such notice, the other Party shall ~ive a similar written notice stating the name and address of the second impartial person to act as an arbitrator. Each Party shall thensubmit to the two named arbitrators a list of the names and addresses of at least three persons for use by the two named arbitrators in the selection of the third arbitrator~ If the same name or names C-2 appear on both lists, the two named arbitrators shall appgint one of the persons namedon both lists as the third arbitrator. If no name .appears on both lists, the two named arbitrators shall select a third arbitrator from either list or independently of either list. If the two named arbitrators cannot agree on the selection of the third arbitrator, the third arbitrator shall be appointed by the Chief Judge of the United States District Court for the Northern District of California upon the joint request of the two named arbitrators. Each arbitrator selected under these procedures shall be a person experienced in the construction, design,, operation or regulation of electric power transmission facilities, as applicable to the issue(s) in dispute. C.4 PROCEDURES Within 15 business days after the appointment of the third arbitrator, or on such other date to which the Parties may agree, the arbitrators shall meet to determine the procedures that are to be followed in conducting the arbitration, including, without limitation, such procedures as may be necessary for the taking of discovery, giving testimony and submission of written arguments and briefs to the arbitrators. Unless otherwise mutually agreed by the Parties, the arbitrators shall determine such procedures based upon the purpose of the Parties in conducting an arbitration under Section 24 of the Agreement, specifically, the purpose of utilizing the least burdensome, least expensive and most expeditious dispute resolution procedures consistent with C-3 providing each Party with a fair and reasonable opportunity to be heard. !f the arbitrators are unable unanimously, to agree to the procedures to be used in the arbitration, the arbitration shall be governed by the Commercial Arbitration Rules of the American Arbitration Association. C.5 HEARING AND DECISION After giving the Parties due notice of hearing and a reasonable opportunity to be heard, the arbitrators shall hear the dispute(s) submitted for arbitration and shall render their decision with 90 calendar days after appointment of the third arbitrator or such other date selected upon the mutual agreement of the Parties. The arbitrators’ decision shall be made in writing and signed by any two of the three arbitrators. The decision shall be final and binding upon theParties; provided, under no circumstances are the arbitrators authorized to award any money damages in ~favor of either Party in renderinga decision and award. Judgment may be entered on the decision in any court of competent jurisdiction upon the application of either Party. C.6 EXPENSES . Each Party shall bear its own costs and the costs and expenses of the arbitrators shall be borne equally by the Parties. C-4 Appendix D UNDERFREQUENCY LOAD AND GENERATION SHEDDING SCHEDUL~ Appendix D UNDERFREQUENCY LOAD AND GENERATION SHEDDINGSCHEDULE The Underfrequency Load and Generation SheddingSchedule shall be updated by PG&E in accordance with ISO requirements or as required by Electric System conditions. E-20 interruptible customers 1st I 5.3% blockofload Trip Freq. (Hz) 59.65 59.10 Trip Time Delay (Cycles) 6 6 Reset Freq. (Hz) manual 59.95 Reset Time Delay (Min) 30+ Reclosin9 by control center manuallautomatic Applicable Footnotes a,b,f a, C Load automatically restored from Blocks 1 and 2 to correct fre~ 1 &2 1,1% blockofload 60.50 1 & 2 1.7% block of load 60.70 1 & 2 2.3% block of load 60.90 ’uenq overshoot. 30 sec.automatic 5 sec.automatic 25 sec.automatic a,c,d a,c,d a, c, d 5.9% block of load ,6.5% block of load 6.7% block of load 6.7% block of load 58.90 58.70 58.50 58.30 6 6 6 6 59.95 59.95 59.95 59.95 30+ 30+ 30+ 30+ manual/automatic manual/automatic manual/automatic manual/automatic a, c a,c a, c 8, C Additional automatic load-shedding to correct undeffrequency st 6=2.3% block of load 59,30 15 sec.59.30 7’1.7% block of load 59.50 30 sec.59.50 8"~2.0% block of load 59.50 1 min.59.50 30+ 30+ 30+ manual/automatic manual/automatic manual/automatic a, c a, c 8, c Round Mountain tie lines Captain Jack-Oiinda tie line Midway-Vince.nt tie lines Thermal power plants Hydro powerhouses 57.90 57,90 57.90 58.40 58.00 57.60 57.00 54.00 6O 60 6O 1.5 rain 30 sec 7.5 sec 45 manual manual manual manual manual . manual manual manual by system dispatcher by WAPA dispatcher by system dispatcher manual manual manual manual manual a a a e e e 9 a. Digital frequency relay is required. b. Requires a communication circuit to the control center (currently is used D-I for alarm only). c.Manual reclosing is preferable and will be used in manned stations and/or where SCADA is available. Automatic restoration shall begin no sooner than 30 minutes after the frequency has been restored to levels above 59.95 Hz and no faster than 2% of system load every 5 minutes. d.If the specified reset frequency is reached, automatic reclosing shall be used to restore this portion of the first and second blocks to prevent damage to generation units due to frequency overshoot. A second reset frequency, along with the appropriate time delay, may be employed to allow automatic restoration if there is no frequency overshoot. e.A 3 set-point digital-frequency relay with external time delay is used for separation of thermal plants. The 3 trip-frequency set points and trip-time delay settings are recommended for grid reliability. Lower trip settings and/or longer delays are preferable, if they are acceptable by the generation owner. f.The designated control center will notify E-20 customers to restore load, upon normal system frequency and approval from the TOC. g.If the hydro unit is connected to a distribution circuit, the distribution circuit breaker is tripped at 57 Hz. If the unit is involved in isolated operation, the unit is tripped at 54 Hz. D-2 Appendix E UPGRADE FACILITIES Appendix E UPGRADE FACILITIES [TO BE DISCUSSED: THIS CREATES A MODEL IN WHICH PG&E CAN CLAIM THAT NCPA IS OBLIGATED TO PAY FOR FACILITIES WHICH NCPA DOES NOT OWN ON THE PG&E GRID WHICH ARE ALLOCATED INCONSISTENTLY WITH FERC POLICY] E.I At least sixty (60) calendar days prior to the date on which NCPA is to commence payment of any Cost as a result of construction of an Upgrade Facility, PG&E shall determine and provide to NCPA: (i) an estimate of all Cost, broken down by major activities, which PG&E expects to incur; and (ii) a schedule indicating the approximate dates when PG&E expects to pay such Cost for each major activity included in the estimate. PG&E may revise the payment schedule from time to time as appropriate. E.I.2 The Special Facility Agreement shall include an estimate and schedule of Cost and payments as provided.bySection E.I, and NCPA shall advance such Cost to PG&E pursuant to such schedule, or any revisions to it. E.I.3 NCPA’s total payments to PG&E for work performed under a special facility agreement shall be for the actual Cost incurred by PG&E. PG&E shall document to NCPA the actual Cost incurred upon completion, and shall refund any amount overpaid by, or request any additional payment from, NCPA, with interest computed as provided in Section 35.19(a) of FERC’s Rules and Regulations, CFR § 35.19(a) (2) (iii). E-I E.1.4 Should NCPA seek a ruling from the Internal Revenue Service that NCPA’s payments under this subsection should be treated as non-taxable contributions-in-aid-of-construction, PG&E shall cooperate reasonably with NCPA in supporting NCPA’s filing with the Internal Revenue Service. E.I.5 NCPA shall have the right pursuant to Section 15 to review the supporting documents upon which PG&E bases its estimate of the. Cost of work to be advanced by NCPA pursuant to the Special Facility Agreement, as well as documents that show the actual Cost incurred by PG&E. E.2 ASSOCIATED FERC FILINGS If required by FERC or requested by NCPA, PG&E or the ISO acti~-in_q%-y on PG&E’s behalf shall file, or at its election may file, with FERC a Special Facility Agreement to document and seek approval of any Cost charged by PG&E to NCPA associated with any facility modifications, changes, reinforcements or advances contemplated by this Agreement. NCPA shall support this filing by an appropriate submittal to FERC stating its agreement with the charges; provided, that if the Parties are unable to agree on the need for an Upgrade Facility or the Cost of an Upgrade Facility or the amount thereof NCPA shall be responsible for, NCPA may oppose such PG&E filing. NCPA shall reimburse PG&E for PG&E’s reasonable expenses associated with making such filings with FERC; provided, that such reimbursement shall not be E-2 required in the event that NCPA successfully challenges PG&E’s filing. ~E.3 LIMITATIONS ON RESPONSIBILITY FOR UPGRADE COSTS E.3.1 No Double Collection PG&E may not charge NCPA for any Costs associated with Upgrade Facilities that have already been collected through rates paid by PG&E retail or wholesale customers or from a Third Party; provided, that this Section shall not preclude PG&E charging NCPA where refunds may be payable to those who originally paid~for such Costs. E~3.2 Equitable, Cost Sharing In the event that PG&E itself or a Third Party has an obligation to pay any portion of the Costs associated with Upgrade Facilities, then NCPA shall not be required to pay more than its equitable share of such Costs. E-3 Appendix F BILLING AND PAYMENTS .BILLING AND PAYMENTS at: NCPA shall pay PG&E Costs owed pursuant to this Agreement Pacific Gas and Electric Company Payment Processing Center Research Unit / B5A P.O. Box 770000 San Francisco, CA 94177 PG&E may change the place where payment is made by giving NCPA notice thereof as provided in Section 32. F.I PG&E shall prepare and submit bills to NCPA on or after the first business day of each calendar month. The Payment of any bill shall be due and must be received by PG&E not later than the 30th calendar day following the day on which NCPA receives the bill or, if that 30th day is a Saturday, Sunday or legal holiday, the next business day. Such date shall be referred to as the Payment Due Date. A bill shall be deemed delivered on the third business day afterthe postmarked date unless a copy of the bill is sent by electronic facsimile, in which case it shall be deemed delivered on the same day. If NCPA has a question concerning a bill, it may review the back-up data used in preparation of the bill to the extent that data is still available. F.2 If charges under this Agreement cannot be .determined accurately for preparing a bill, PG&E may use its best estimates F-I in preparing the bill and such estimated bill shall be paid by NCPA. Any estimated charges shall be labeled as such and PG&E shall, upon request, document the basis for the estimate used. Estimated bills shall be prepared and paid in the same manner as other’bills under this Agreement. F.3 If NCPA disputes all or any portion of a bill submitted by PG&E to NCPA, it nevertheless shall, not later than the Payment, Due Date of that bill, pay the bill in full. A dispute between either PG&E or NCPA and any Third Party shall not be a proper basis for withholding payment. Payments to PG&E of NCPA’s obligations arising under ~his Agreement are not subject to any reduction, whether by offset, payments into escrow, or otherwise, .except for routine adjustments or corrections as may be agreed, to by-the Parties or as expressly provided in this Agreement. F.4 When final and complete billing information becomes available and a charge is determined accurately or billing errors are identified and corrected, PG&E. shall promptly prepare and submit an adjusted bill to NCPA, and any additional payments by NCPA shall be made in accordance with the provisions of Appendix F. Refunds by PG&E shall be paid to NCPA not later than 30 calendar days after the dareof the adjusted bill. All adjustments or corrections of bills under this Agreement shall be subject to the interest provisions of Sections F.5 and F.6. F.5 Interest On an additional payment shall accrue from the Payment Due Date of the applicable bill and interest on a refund F-2 shall accrue from the date payment of .the applicable bill was received by PG&E. F.6 Any amount due under this Agreement which is not timely paid shall accrue interest from the date prescribed in Section F.5 until the date payment is made. The interest amount shall be determined using the interest rate applicable to any amount due during a.given month and shall be calculated using the methodology for refunds pursuant to Section 35.19(a) of FERC’s Regulations, 18 CFR § 35.19(a). This .interest rate shall not exceed the maximum interest rate permitted under California law. Interest shall be calculated for the period during which the payment is overdue or the period during which the refund is accruing interest. F.7 As provided in Section F.3, if any portion of a bill is disputed, NCPA shall pay the full amount, without offset or reduction, by the Payment Due Date. In addition, NCPA shall, on or before the Payment Due .Date, notify PG&E, in writing, of .the amount in dispute and the specific basis for the dispute. PG&E and NCPA shall endeavor, to resolve any billing dispute within 30 calendar days of PG&E’s receipt of NCPA’s notice of a dispute (or such extended period as the Parties may establish). If the Parties cannot agree, either Party may initiate dispute resolution pursuant to Section 23. F.8 If, after NCPA has paid the full amount of a disputed bill directly toPG&E, the results of dispute resolution pursuant F-3 to Section 23 include a determination that the amount due was different than the amount paid by NCPA, a refund by PG&E to NCPA shall include interest for the period from the date NCPA’s overpayment was received by PG&E to the date the refund is paid to NCPA. Likewise, an additional payment by NCPA to PG&E shall include interest for the period from the original Payment Due Date to the date NCPA’s additional payment is received by PG&E. Interest paid pursuant to this Section F.8 shall be at the rate determined pursuant to Section F.6. F.9 A Party’s failure to make any payment on or before the applicable Payment Due Date shall constitute a material breach of this Agreement if that failure is not corrected within seven business days after the other Party delivers written notice to non-paying Party. In such event, the Party not receiving payment shall be entitled to pursue any legal, equitable and regulatory rights and remedies it may have under this Agreement or otherwise. F-4 Appendix G ENGINEERING AND OPERATING COMMITTEE Appendix G ENGINEERING AND OPERATING COMMITTEE [DISCUSS FUNCTIONS IN LIGHT OF AMSS] G.I NCPA and PG&E shall establish an Engineering and Operating Committee. The Committee shall consist of two representatives designated in writing by each such Party. Each such Party shall also designate an alternate who may act instead of a representative at the option of that Party.’ Either such Party may at any time change its representatives or alternate on. the Committee and shall promptly notify the other such P&rty of any change in designation. Any representative, by written notice to the other Party, may authorize an alternate to act temporarily in their place. Each member of the Committee may invite other members of their organization or of another, as their advisors, to attend meetings of the Committee. The Committee shall elect a chairman each Year that shall alternate between the Pa~ties. G.2 The expenses of the members of the Committee, their alternates and advisors shall be borne by the Party they represent. Expenses incurred by the Committee in addition to those herein above mentioned shall be shared in a just and. reasonable manner agreed to by the Parties. The sharing of such expenses shall be agreed to prior to the time that such additional expenses are incurred. G~3 The Committee shall meet as required in cooperation with PG&E’s transmission planning staff to discuss the G-I availability of interconnection service requested by NCPA, or determined by PG&E. Such matters shall include but not ~be limited to the following: a. The Committee shall examine potential alternatives to provide NCPA’s request on PG&E’s determination of available interconnection service. b.The Committee shall determine the studies that need to be performed and the manner in which the Cost of such studies shall be allocated. c.In theevent studies are required as a result of a NCPA request for interconnection Service, NCPA may elect to make the studies in coordination with PG&E and the Parties will mutually agree on the parameters for the studies. d.For studies conducted by PG&E for which NCPA provides compensation, PG&E and NCPA will agree initially on the scope of such studies, study parameters, and the compensation required from NCPA. PG&E agrees to provide NCPA with written monthly progress reports, unless agreed otherwise. Subsequent changes to the study scope will be agreed to by NCPA. The Committee shall meet when such studies are completed and based on these studies, agree upon a plan for providing NCPA’s requested interconnection Service. The criteria for selecting such a plan shall be Good Utility Practice. G-2 G.4 The Committee shall meet upon the call of either Party. From time to time, to meet changing conditions, the Committee shall be responsible for reviewing and recommending operating procedures, standard practices and other matters affecting the interconnected operation of the Parties’ respective systems. Such matters shall include but not be limited tothe following: a. Examine and make recommendations on future Interconnec- tions in order to: i) ensure that the proposed Interconnection will be consistent with Good Utility Practice, 2) determine necessary additions or modifica- tion to equipment or operating procedures to ensure that PG&E’s system reliability and service to its customers will not be adversely affected, and 3) determine the allocation of Costs associated with the above additions or modifications. b.Review and recommend arrangements for metering, communication, scheduling, and dispatching which may be necessary for the interconnected operation of the Parties’ respective systems. c.Establish administrative and billing procedures which may be necessary for implementing various provisions of this Agreement. G.5 The Committee shall have no authority to modify any of the provisions of this Agreement. All actions, recommendations and reports shall become effective when signed, or otherwise approved, by all members of the Committee. Each Party’s representatives shall be afforded ample time to review relevant details priorto finalization of any action, recommendation or report and may request up to 30 days to review the material to be finalized. Appendix H -SPECIAL FACILITY AGREEMENTS Appendix H SPECIAL FACILITY AGREEMENTS The following special facility agreements exist as of the Effective Date and shall continue for the term provided in each agreement and shall be deemed a part of this Interconnection Agreement. H-I Attachment UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION PACIFIC GAS AND ELECTRIC COMPANY Docket No. ER01-2298-000 Docket No. ER02-358-000 SETTLEMENT AGREEMENT BETWEEN PACIFIC GAS AND ELECTRIC COMPANY, NORTHERN CALIFORNIA POWER AGENCY, THE CITY OF ROSEVILLE, CALIFORNIA CITY OF SANTA CLARA, CALIFORNIA AS SILICON VALLEY POWER, AND CALIFORNIA INDEPENDENT SYSTEM OPERATOR I.BACKGROUND AND INTRODUCTION On August 30, 2001, Pacific Gas and Electric Company ("PG&E") filed a Notice of Termination of the Interconnection Agreement dated September 14, 1983 between it and the Northern California Power Agency ("NCPA") and 10 of its member utilities, including the City of Roseville, ("the Current NCPA IA"), and a proposed replacement Interconnec~ion Agreement ("Replacement NCPA IA") between PG&E and NCPA. NCPA filed a Protest and Motion to Reject that filing on September 28, 2001. ¯ On November 16, 2001, PG&E filed a Notice of Termination of the 1983 Interconnection Agreement between it and the City of Santa Clara’s electric utility, Silicon Valley Power ("SVP") (the "Current SVP IA") and a proposed replacement Interconnection Agreement- ("Replacement SVP IA") between PG&E and SVP. SVP filed a Protest and Motion to Reject that filing on December 7, 2001 and an Amended Protest and Request for Rejection on December 10, 2001. On March 14, 2002, the Commission issued an order conditionally accepting the Notices of Termination and the replacement Interconnection Agreements, suspending their effectiveness until September 1, 2002. That order.directed that a technical conference be held to resolve issues regarding the effect of terminating the Current NCPA IA and the Current SVP IA on other agreements involving transmission service to NCPA, Roseville and SVP. On April 18, 2002, the Commission issued a Notice of Technical Conference. That Notice set the technical conference ordered by the Commission’s March 14 Order for May 1-3 and May 21-23, 2002, and directed that a list of issues be filed by April 25, 2002. Ca’re, merits may be fi!e~ following +,he tee!miCa!~t The other agreements, which are _aeffected or potentially affected by the termination of the Current NCPA and SVP IAs, are: l(_LLContract 2948A~_~_: "~er which PG&E ~e!ivers -,,w,o ^ ,:, .....:n~_ o.A SVP; +’.-~ r.~..,:..+~.~~ ~n .....~-o ,, .......+ (th "CO ’A;")(3)~ ,".....+:~- ,’+~ ,, ~erv,~.(th "SOTP"), ""~;~ ~ ....;’~° ~’~;" + .....;~; ......:~ ~..=+ ......e^..+~.~..., t~;¢~...~ ~ x~,~.~.~ c,~t;~’^....:~, and (4) the Grizzly This Settlement Agreement resolves issues related to how NCPA, RoseviIle and SVP loads and resources will be scheduled following termination and replacement of the Current IAs by the Replacement NCPA IA and the Replacement SVP IA, including how Contract 2948A will continued to be implementedafien of C.’mtract 29.’~&, the assignment of rights and obligations -2- under the COA from PG&E to NCPA, SVP and Roseville regarding the and infe:~-atlen regarding COTP ~.~, and how the SOTP and Grizzly Agreement will continue to be implemented. II.CERTAIN DEFINITIONS Contract 2948A COT__._~P Deemed Delivered shall mean Final Hour Ahead Schedule shall mean Final Real Time Schedules shall mean Grizzly Agreement shall mean Logical Meter shall mean Logical Meter Calculation shall mean NCPA shall mean Obligation shall mean Resources shall mean Scheduling Coordinator shall mean Scheduling Agent shall meanl for the purposes of this Agreement, the entity that provides Western Contract No. 2948 A CRD schedules, including Final Real Time Schedules, to PG&E on behalf of NCPA, Roseville, and SVP. SOTP shall mean -3- III.EFFECTIVE TERM The effective term of this Settlement Agreement as to NCPA and Roseville shall be from the date of termination of the Current NCPA IA and effectiveness of the Replacement NCPA IA, and as to SVP from the date of termination of the Current SVP IA and effectiveness of the Replacement SVP IA, until tlae later often (10) years from the effective date of this Agreement, o._Lr termination of the Replacement NCPA IA and Replacement SVP IA, as determined by FERC. The effect of this Settlement Agreement on the implementation of the other agreements described below is as described with respect to those agreements. -¸4- IV,DESCRIPTION OF TERMS OF SETTLEMENT AGREEMENT A.Principles underlying this Settlement Agreement. 1.This Settlement Agreement is contingent upon Commission acceptance of the termination of the Current NCPA IA and Current SVP IA effective September 1, 2002, as well as the agreement by NCPA, Roseville and SVP to designate c~,~,~..~;~, ¢-’-^~;-o~-,.~c’~ r,,c¢~o,,~........... e, ...............~ ._.~ /, as provided herein, as of September 1, 2002. Except as provided herein for Specific Agreements, NCPA, Roseville and SVP, through their respectively designated c~,~.~.,1:.. will schedule all Obligations and Resources for their own portfolios, and receive all,.,vv..-.v..,.,..:"*~ .,...."~a apprcve~FERC-approved ISO charges for such scheduling, Obligations, and Resources, unless otherwise specified in this Agreement. PG&E, through its designated Scheduling Coordinator, will schedule NCPA’s, Roseville’s and SVP’s Contract Rate of Delivery (CRD) and any SVP load as stated in Amendment No. 4 of the Grizzley Agreement, and associated load~ and receive all approved ISO charges for such scheduling under Westem Contract 2948A and act as ETC Facilitator for Path i 5 for SOTP deliveries, as set out below. -5- This Settlement Agreement may need to be revised in the event oflSO changes in its market design, congestion zones, or other changes affecting scheduling. In the event of such ISO changes, the parties will meet and confer to consider whether changes to this Settlement Agreement are required, and shall make necessary changes to the Settlement Agreement as mutually agreed. If agreement cannot be reached as to the need for or nature of possible future revisions, any party may seek arbitration of any " resulting dispute under the dispute resolution provisions of the Replacement IAs or under the dispute resolution provisions of the ISO Tariff, to the extent applicable to the dispute. Western Contract 2948A 1.There is a dispute between PG&E on the one hand and NCPA, Roseville, and SVP on the other regarding real-time scheduling fights under Western Contract 2948A following termination of the Current NCPA and SVP IAs. As a compromise and resolution of that dispute, PG&E agrees that NCPA, Roseville and SVP will have real time scheduling timeline rights, as described further below, through December 31, 2004. -6- o o o Specifically, pursuant to this Settlement Agreement, NCPA, Roseville and SVP, through their designated Sscheduling Aagent(s) shall have real time scheduling timeline rights to adjust their Western Contract 2948A CRD schedules, through December 31, 2004. Once the active half hour has begun, NCPA, Roseville and SVP may adjust their Western Contract 2948A schedules one time during the first 20 minutes of the active half- hourly scheduling period and PG&E, NCPA, Roseville, and SVP shall agree upon operating procedures including, but not limited to, providing PG&E with Day-Ahead and Hour-Ahead Schedules for the Western CRD. This requires further discussion. During such time that NCPA is designated as NCPA’s and Roseville’s _Sscheduling __Aagent !.~ Nr._’P,~. for purposes of this Agreement, NCPA’s and Roseville’s Day-Ahead and Hour-Ahead Schedules for the Western CRD shall be combined as one schedule in the same manner as has been the case since implementing real- time scheduling of Western CRD, and NCPA and Roseville shall be, accordingly, subject to the MW cap limitations and applicable charges specified in Section 6 on a combined basis. a.) PG&E will provide schedules that a~:count for NCPA members’s, Roseville’s and SVP’s Western CRD and the load associated with that Western CRD tow4t-l~ the ISO, in accordance with ttie then-applicable ISO Tariff timelines. -7- eb_:) PG&E, NCPA, Roseville and SVP, through their respectively designated Scheduling Coordinators, will coordinate, through SC to SC trades, all Western transactions other than Western CRD schedules in accordance with the then-applicable ISO timelines. The NCPA member, Roseville and SVP load associated with their CRD under Western Contract 2948A remains in PG&E’s scheduling portfolio and PG&E continues to pay all ISO charges without prejudice to its rights to seek recovery of any such charges, as set forth in Sections IV.B.6 and IV.B.7 below. The designated Scheduling Coordinators for PG&E, NCPA, Roseville and SVP will submit ~_Logical mMeter eCalculations to the ISO for approval. PG&E, Roseville, NCPA and SVP will utilize the ’-’__L]ogical -Mmeter’-’ arrangement to permit the load met by Western ¯ Contract 2948A CRD power to be reported by PG&E to the ISO. Western CRD-related load values will be the Final Real-Time s_Schedules ~ submitted by NCPA’s, Roseville’s, and SVP’s Scheduling Agent under ¯ this Seitlement Agreement~ and are D~teemed d__Delivered.’-’ {-4a. The ISO charges will be based on the ISO ~Tariff F~:~,e! Sc-taed,a~. For purposes of detemaining PG&E’s ISO charges, A_any changes made by the designated Scheduling ~ ...........or for NCPA~ Roseville and SVP associated with real-time .scheduling will be considered deviations from PG&E’s t-lae-Final Hour-Ahead Schedules for ISO settlement purposes.]-[-propose~ -8- o Subject to Section IV.B.3~, PG&E, NCPA, Roseville and SVP agree to a cap on real time schedule changes, as described below. bo PG&E, NCPA, Roseville and SVP agree to establish a scheduling change megawatt cap ("MW cap") -for the real time scheduling of SVP’s and NCPA’s Western Contract 2948A CRD. The MW cap does not prevent eifiaer-NCPA members, Roseville or SVP from maximizing theiri-rs use of theirits respective Western CRD allocation to follow theirit~s loads in real time. TheMW cap addresses the allocation of ISO costs among t-he-PG&E, NCPA, Roseville and SVP. IfNCPA members, Roseville or SVP exceeds theirit-s MW cap, then thevi~ will be responsible for ISO charges associated with that portion of the schedule change that exceeds the MW cap for the associated scheduling period(s). _PG&E is responsible for all ISO charges associated with Changes at or below, the MW cap. NCPA, Roseville and SVP are responsible for all. ISO charges associated with changes above the MW cap. The ISO will bill PG&E for the oharges associated with that portion of the real-time changes above the MW cap and PG&E will bill, and NCPA, Roseville and SVP agree to pay to PG&E, the ISO charges associated with that portion of any real-time schedule change that exceeds the MW cap. ~During normal operations, NCPA’s and Roseville’s combined Westem CRD MW cap for a real time scheduling change is 40 MW. During normal operations, SVP’s Western CRD MW cap for a real time scheduling change is 17 MW. -10- NCPA, Roseville and SVP may make a real time scheduling change to their respective Western CRD schedules for each half-hour scheduling period. During normal operations, if the change from the Final Hour Ahead Schedule is equal to or less than the MW cap, then all charges associated with the changes are PG&E’s responsibility. "I~AKE THIS OUT? During a forced outage .of a generation resource, outage of transmission facilities, outage of a contracted-for power resource, or loss of load, and upon 10 minutes’ prior notice to PG&E of the schedule change, the MW cap limit for the unscheduled outage for NCPA, Roseville and SVP will be equal to the scheduled megawatts for the generation resource, transmission facilities, contracted-for power resource forced out of service, loss of load, or the MW cap for each entity as set out in Paragraphs/VB.5~c and IV.B.5.d above, whichever is greater. The higher uhscheduled outage MW cap limit shall apply for each outage event until the next period that ISO Tariff will accommodate a schedule change, atter which the normal operations MW cap shall apply.[MATRIX] -11 - COTP ~..__~g~_~When SVP receives Western curtailment orders for its CRD, the real time MW cap change will be equal to the curtailment orders but shall not exceed 120 MW. SVP will notify PG&E of any such curtailment order within 30 minutes of being notified by Western. The CRD curtailment cap will remain in effect for each curtailment event until the next period that ISO Tariff will accommodate a schedule change, after which the normal operations MW cap shall apply. [MATRIX] PG&E reserves any Federal Power Act Section 205 rights it may have against Western to seek recovery of any and all charges PG&E receives from the ISO under Westem Contract 2948A. PG&E agrees not to exercise any Section 205 rights it may have to terminate the real time scheduling rights afforded through December 31, 2004 under this Settlement Agreement. Following termination of the Current NCPA IA and Current SVP IA, the designated Scheduling Coordinator for NCPA, Roseville and SVP will schedule their COTP entitlements and any related load or exports as described in this Settlement Agreement. COTP transactions will be scheduled in the c,~1.~,~,,i;.,, t,-, ....~;""÷"~," portfolios for NCPA’s: Roseville’s,~ and SVP’s designated ~ C,v, ordinate.rS._C__C. The Parties recognize that applicability of ISO fees, costs, -12- and protocols to schedules that use contract fights over transmission facilities, including COTP, that are in the ISO Control Area but that are not part of the ISO Controlled Grid, are matters on which the Parties do " not agree. The Parties also recognize that decisions may be issued in the future that may resolve these matters. The Parties will comply with any ¯ such applicable decisions where FERC or a court of competent jurisdiction renders them. Nothing in this Settlement Agreement is intended to prejudice the positions of the parties in tb, at--FERC Ddocket No. EL02-45 or any other reMted-proceedings with the respect to the issue of the applicability, or allocation of ISO charges for transactions using non-ISO The COA is an Encumbrance that the ISO will honor for t.he remainder of its term, in accordance with the ISO Tm’iff and Commission Orders. PG&E represents that NCPA, Roseville, and SVP have the right under the -13- COA to make schedule changes up to thirty ("30v) minutes before the .active hour. NCPA, Roseville, and SVP are not conceding, by this Agreement, that ISO Tafiffchanges alone modify their fights under the COA. PG&E will transfer its-obligation, and any associated rights, to provide schedule information under the COA regarding NCPA, Roseville, and SVP use of the COTP to NCPA, Roseville, and SVP, or their designated PG&E and the ISO will transfer or assign COTP contract reference numbers from PG&E’S scheduling portfolio to th,e portfolio of NCPA’s, Roseville’s and SVP’s designated e..~n..l:... ~....~;~n÷~,.~ to accomplish this transfer. The ISO, pursuant to the assignment of scheduling obligations and associated rights under the COA Encumbrance, and in accordance with the ISO Tariff and Commission Orders, will allow the designated ...~a...n ....S__~_C for NCPA, Roseville and SVP to make schedule changes up to thirty("30") minutes before the active hour and the ISO, NCPA, Roseville, and SVP will agree on protocols to continue such real time scheduling. -]4- SOTP The designated ~.,~..a..l:.~ ~..--a:--,^-~c, for NCPA, Roseville and SVP shall assume responsibility for all ISO charges related to the scheduling of their COTP transactions, provided, however, the Parties agree that-as K, mik-M-19y Section IV.C. 1 of this Agreement sets forth how responsibilities for charges related to ~non-ISO Controlled Grid transactions will be assumed. This resolution of the scheduling issues for NCPA, Roseville and SVP regarding their COTP transactions will have no impact on any other COTP Participant. PG&E will maintain its role as ETC Fa6ilitator for Path 15. PG&E will act as the SC for NCPA, Roseville, and SVP solely for scheduling energy across Path 15 on NCPA’s, Roseville’s, and SVP’s behalf for the remaining term of the SOTP. -15- PG&E will take delivery from, or deliver to, NCPA, P, oseville, and SVP, or their designated SCs, via an SC to SC trade in the Zone in which Midway Substation is located (currently ZP26). PG&E will then-trade this energy back to, or take receipt from, NCPA, Roseville, and SVP, or their designated SCs, via an SC to SC trade at either (1) the Zones where NCPA, Roseville, and SVP have any point of interconnection with PG&E, or (2) the Zone where the Southern Terminus of COTP is located (currently NP 15). The determination of the Zones (specified as (1) or (2)) in which PG&E will trade the energy back to, or take receipt f_rorm, NCPA, Roseville, and SVP will be made by SVP, Roseville, NCPA, or th i d ign d SC rDt-._p.~" , ....., I. ....:A ~,~v* .....1-lt,l..,OOl"tO "1e r es ate s. t ..............: ...................,.,: .......a The designated SCZs ofNCPA, Roseville, and SVP will be responsible for all costs associated with the SOTP transactions, with the exception that PG&E will be responsible for any congestion-related charges,. E. Other Issues Sections are pending based upon whether or not there is a package settlement. NCPA, Roseville, SVP and PG&E each reserves its fights to resolve the question of PG&E’s obligations and NCPA’s, Roseville’s and SVP’s rights under the "Stanislaus Commitments." [These issues will be resolved in the unsettled portion of this docket. Should NCPA/SVP’s position prevail, PG&E will convey to the ISO pursuant to Section 2.4.4 of the ISO Tariff, any necessary operating instructions.] Roseville reserves the fight to resolve its issues regarding "pancaking" of transmission rates to Roseville in any appropriate forum. Roseville will not be a party to the NCPA Replacement IA, because Roseville is connected only to Western, not to PG&E. The Grizzly Agreement implementation of the termination of the SVP IA has been resolved through a separate amendment to the Grizzly Agreement. This has been designated as Amendment No. 4 to o~X,.Tz/c’,zD Griz ly Ag t~~ ,_.,... ......z reemen ._ CONDITIONS OF SETTLEMENT. 1.This Settlement Agreement among PG&E, NCPA, Roseville, SVP, Western and -17- the ISO is a resolution of contested issues and has no precedential effect beyond its specific terms. [Insert fi’om TO Settlement?] .......÷..a ~... cxr~,~ This Settlement Agreement is intended to be accepted by the Commission as ~ ;,..~......~,.÷, .....4" .....ul,. and a binding agreement on the Parties.~ -18- Respectfully Submitted, MARK D. PATRIZIO KERMIT R. KUBITZ By:, MARK D. PATRIZIO Pacific .Gas and Electric Company 77 Beale Street San Francisco, CA 94105 Telephone: (415) 973-6344 Attorneys for Pacific Gas and Electric Company By Attorneys for Northern California Power Agency By Attorneys for City of Santa Clara/Silicon Valley Power By. Attorneys for California Independent System Operator Corporation Dated: June __, 2002 By Attomeys for Western Area Power Administration By City of Roseville -19- Working Draft: 7/10/2002 Attachment E NORTHERN CALIFORNIA METERED SUBSYSTEM MEMBER OPERATIONS AGREEMENT Dated as of ., 2002 between NORTHERN CALIFORNIA POWER AGENCY ("NCPA") ’ and CITY OF ALAMEDA, CITY OF BIGGS, CITY OF GRIDLEY, CITY OF HEALDSBURG CITY OF LODI, CITY OF LOMPOC, CITY OF PALO ALTO, CITY OF UKIAH, PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE Working Draft: 7/10/2002 Attachment E WHEP,_EAS, the above captioned entities are currently securing and scheduling the transmission of electric power and energy through Pacific Gas and Electric (PG&E") under a Settlement Agreement Concerning FERC Docket No. EL89-34 and ER 90-355 between Pacific Gas & Electric and Northern California Power Agency ("IA") with PG&E dated November 26, 1991; and WHEREAS, PG&E filed a notice with the Federal Energy Regulatoi’y Commission to substantially alter its obligations to the Parties under the IA; and WHEREAS, the Parties have negotiated a substitute arrangement with the California Independent System Operator ("ISO") to procure and schedule necessary transmission services under a separate Metered Subsystem Agreement ("MSS Agreement"); and WHEREAS, Alameda, Biggs,’Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Ukiah, and Plumas, hereinafter collectively referred to as "Members" and individually as a "Member", now desire for NCPA to act as their Scheduling Coordinator ("SC") with the ISO under the MSS Agreement and ISO Tariff; and- WHEREAS, to operateas Scheduling Coordinator NCPA seeks agreement from its Members to assure the iSO that NCPA and its Members will operate their respective electrical systems, and be responsible for financial ob!igations, under the terms of the MSS Agreement and the ISO tariff; BE IT THEREFORE AGREEDTHAT: NCPA will provide scheduling coordinator services to the Members consistent with the MSS Agreement and in accordance with the relevar~t ISO Tariffprovisions. NCPA intends to continue to utilize NCPA’s System resources to follow the Load of NCPA Members, make economic resource decisions, and the intent of the NCPA and the ISO that any ISO charges will be charged to NCPA based on the principle of cost causation, with due regard for historic considerations, timing and transition issues, and other relevant factors. In return for those scheduling coordinator services, the Members agree to reimburse NCPA for all costs billed to NCPA by the California Independent System Operator in NCPA’s role as Scheduling Coordinator on behalf of the Members. In order to maintain the reliability of the interconnected electric systems encompassed by the WECC, the WECC RMS Agreement requires the ISO to require all Generators in its Control Area, including NCPA, to comply with certain WECC reliability criteria and to be subject to penalties imposed by the WECC Reliability Criteria.Agreement should they fail to do so, which requirements are set forth in Section 10.4 of the MSS Agreement. In turn, the Members also warrant that they wil! operate their electric systems in accordance with the terms and conditions of the MSS Agreement and the ISO tariff. Specifically, the Members shall operate and maintain all facilities forming any part of their systems, and shall be responsible for the supply of the Energy and Ancillary Services required to reliably provide electric service to the Loads connected to Members System within the ISO Control Area in accordance with Applicable Reliability Criteria, including WECC and NERC criteria. Working Draft: 7/10/2002 Attachment E This Member Operations Agreement shall remain in effect for term of the MSS Agreement referenced herein unless and until a Party provides notice to terminate in accordance with Section 3.2 below. Any Party may terminate its rights and obligations under this Member Operating Agreement by providing six months written notice to the other Parties. A Party providing notice to terminate in accordance with this section shall remain obligated to satisfy all financial obligations incurred hereunder prior to the effective date of termination. This Agreement may be executed in counterparts, each of which, when so executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall ¯ constitute one and the same Agreement. IN WITNESS WHEREOF, NCPA and the Members hereby enter into this Agreement, effective as to each Party upon its execution. Northern California Power Agency The City of Biggs, California By:By: Date:,2002 Date:,2002 The City of Alameda, California The City of Gridley, California By:By: Date:., 2002 Date:,2002 Working Draft: 7/10/2002 Attachment E The City of Healdsburg, California The City of Palo Alto, California By:By: Date:,2002 Date:., 2002 The City of Lodi, California The City of Ukiah California By:By: Date:,2002 Date:., 2002 The City of Lompoc, California Plumas Sierra Rural Electric Cooperative By:By: Date:., 2002 Date:,2002 FORREVIEW ONLY 7/10]0212:41 PM Attachment F. SCHEDULING COORDINATION PROJECT AGREEMENT This Agreement, dated as of ,2002, by and among the Northern CaliforniaPower Agency, a joint powers agency of the State of California (NCPA), and certain members of NCPA [list them]that have executed this Agreement (Participants) is entered into on the basis of the following 0.0 RECITALS: 0.1 0.2 0.3 0.4 0.5 NCPA, Silicon Valley Power (City of Santa Clara or Santa Clara), Pacific Gas and Electric Company (PG&E), Western Area Power Administration (Western), and the California Independent System Operator (CAISO) are parties to a Settlement Agreement (Settlement Agreement) [describe]; NCPA and Santa Clara are parties to Interconnection Agreements dated xxxxxxxx, with PG&E; The Participants desire NCPA to act as their Scheduling Coordinator as defined in Section yyyy of the Settlement Agreement; NCPA has staff and facilities capable of providing such Scheduling Coordination services more efficiently and economically than the Participants acting individually; and The Participants desire to equitably allocate the costs of NCPA’s provision of Scheduling Coordinationion Services; 0.6 NCPA and the Participants wish to enter into this Agreementto set forth the terms under which NCPA Will provide to the Participants the Scheduling Coordination Services described hereinafter; and 0.7 This Agreement does not in or of itself modify or supersede any NCPA project agreements, the NCPA Facilities Agreement, the NCPA Pooling Agreement, or any other agreements among NCPA and its members. NOW, THEREFORE, NCPA and the Participants hereby enter into this AGREEMENT 1.0 Definitions. 1.1 Agreement.This Scheduling Coordination Project Agreement. 1.1 Commission. The NCPA Commission. 1.2 1.3 1.4 Commissioner. A voting member of the Commission appointed by a Participant to represent that Participant. Committee. The NCPA SC Committee is an advisory committee to the Utility Directors and the NCPA Commission, composed of one representative appointed by each Participant. Scheduling Coordination Participation Percentage. The percentage share of each Participant in this Agreement as Set forth in Appendix A. 2 FOR REVIEW ONLY 7/10/02 12:41 PM 1.5 Scheduling Coordinationion Services. The services provided to the Participants by NCPA under this Agreement. 1.6 Participant. An NCPA member or associate member that is a signatory to this Agreement. 1.7 SCALD. System Control and Load Dispatch Costs as defined in the NCPA Annual Budget. 1.8 Service Schedules. All agreements between NCPA and the -Participant(s) relating to Scheduling Coordination services. 2.0 Purpose. The purpose of thisAgreement is to Set forth the terms and conditions under which NCPA will supply to the Participants Scheduling Coordination Services as the Participants may request under this Agreement. 3.0 NCPA Duties. NCPA shall perform as the Scheduling Coordinator in accordance with the CAISO tariff, suchduites shall include: : 3.1 Implement Participant schedules pursuant to the Settlement Agreement. 3.2 Obtain and maintain metering data to satisfy CAISO requirements 3.3 Review, validate; and reconcile CAISO charges and payments for services. Current CAISO charge types are listed in Appendix 3 FOR REVIEW ONLY 7/10/02 12:41 PM 3.4 3.5 B "ISO Settlement Charge Matrix", but are subject to change by the CAISO Make timely collection from participants and payment to CAISO for charges in accordance with the provisions of the CAISO tariff. 4.0 5.0 Participant Duties.. The duties of the Participants are: 4.1 Provide NCPA with load and resource schedules in accordance with the timelines sPecified in Appendix C "Participant Scheduling Protocols." 4.2 . Pay NCPA for net CAISO charges described in Section 3. 4.3 Provide staff and other assistance as may be required from time to time necessary for NCPA to fulfill its duties described in Section 3. 4.4 Indemnify NCPA in regard to Scheduling Coordination Services provided by the Agency. Billing and Payments 5.1 CAISO Estimated Invoice. NCPA will issue estimated invoices_to Participants 15 calendar days after the end of the trade month, with payment due thirty (30) calendar days thereafter. These invoices will be based on schedules, metering data, and estimates of power 4 FOR REVIEW ONLY 7/10/02 12:41 PM 5.2 prices (A/S costs etc.) for the CAISO charge types enumerated in Appendix B. CAISO Final Invoice. NCPA will issue final invoices for the CAISO charge types enumerated in Appendix B to Participants 15 calendar days after receipt of CAISO Final Invoices, with payment due thirty (30) calendar days thereafter. If the CAISO Final Invoice results in a credit amount due to any Participant, NCPA will apply the balance to the Participant’s next Scheduling Coordination invoice otherwise due to NCPA unless otherwise directed by a Participant. ¸5.4 NCPA Costs. Monthly billing statements prepared by NCPA shall be sent to each Participant showing the Participant’s share of SCALD costs and other expenses relating to this Agreement incurred by NCPA for the previous month. This information may be provided on monthly bill’mg statements prepared by NCPA pursuant to other Project Agreements. Each Participant’s share of such costs and expenses shall be based on that Participant’s Schedule Coordination Participation Percentage contained in Appendix A. Application of Working Capita! Account. NCPA may apply a Participant’s share of the Working Capital Account to the payment of any portion of a CAISO invoice related to services provided to that Participant. Application of such funds shall not relieve the Participant from any continuing late payment charges pursuant to Section 5.5. 5 FOR REVIEW ONLY 7/10/02 12:41 PM 5.5 5.6 Late Payments.Amounts shown on each billing statement are due and payable at terms noted on the invoice, but not later than thirty (30) days after the date of the billing statement except that any amount due on a Friday, holiday or weekend may be paid on the following working day. Any amount due-and not paid by a Participant shall bear interest at Bank of America Prime plus 2% - [get wording from PA or FA]. Settlement Data. NCPA will make settlement data, including underlying data received from the ISO, available to the Participants. Procedures and formats for the provision of such data will be as estabiished by the Participants and NCPA from time to time and specified in Appendix D, "Settlement Data". The data will include, but not be limited to, a listing of the ISO SC charge types and NCPA’s allocation methodology, and load and power cost data used for NCPA estimated and actual bills. The Participants shall have the right to audit this data at a mutually.agreeable time. 6.0 Defaults 6.1 Failure To Pay. If any Participant fails to pay any amount due to NCPA within thirty (30) days of the date of the billing statement enumerating such amounts, the Participant is in default under this Agreement. 6 FOR REVIEW ONLY 7/10/02 12:41 PM 7.0 6.2 6.3 6.4 6.5 6.6 Other Agreements. If a Participant is in default under any other agreement with NCPA, it shall also be considered in default of this Agreement. Cure Period. Upon written notice by NCPA, a Participant shall cure any default within five (5) working days. Cure of Defaults. A default pursuant to Section 6.1 shall be cured by the payment of any monies due NCPA, including any late payment charges pursuant to Section 5.4, repayment of any funds drawn from the Working Capital Account pursuant to Section 6.6, and repayment to each Participant of any step-up payments made pursuant to Section 6.7. Suspension of Scheduling Coordination Service. NCPA shall suspend the provision of Scheduling Coordination Service to any Participant with a default which has not been cured within the Cure Period. Step-Up Provisions. In the event that a Participant’s share of the Working Capital Account is insufficient to cover all CAISO invoices related to Scheduling Coordination Services provided to a defaulting Participant, the non-defaulting Participants shall each pay a share of those costs proportionate to their Scheduling Coordination Participation Percentage. Such payments shall be limited to yyyyyyyy [25 Yo like Project Agreements]. CAISO Security Deposit 7.1 " Any security or other deposit required by the CAISO shall be provided by each Participant prior to the date NCPA provides any ¯ Scheduling Coordination Services. 7 FOR REVIEW ONLY 7/10]02 12:41 PM Any increases in security or other deposits required by CAISO may be provided by NCPA from the Working Capital Account, and NCPA shall invoice theParticipants within ten (10) working days for the amounts, in proportion to their Scheduling Coordination Participation Percentage, necessary to reimburse the account. 8.’0 Working Capital Account 8.1 Initial Amount. Within thirty (30) days of the effective date of this Agreement, each Participant shall deposit in the Working Capital " Account an amount equal to their three highest months of their projected ISO invoices for the succeeding twelve (12) months. 8.~Periodic Reviews. Prior to the effective date of this agreement and at least quarterly thereafter, NCPA shall review the balance of the Working Capital Account to ensure the aggregate amount is equal to the most current projection of the next following three highest months of each Participant’s projected ISO invoices for the succeeding twelve months. Any funds in excess of one hundred ten per cent (110%) of this amount shall be credited to the Participants. If the funds on deposit in the Working Capital Account are less than ninety per cent (90%) ofthis amount, NCPA shall prepare a billing statement to the Participants who shall remit such funds within thirty (30) days of the invoice date. 8.3 Emergency Additions. In the event that the funds in the Working Capital Account are insufficient to allow payment of an ISO invoice, the Agency shall notify Participants and then prepare and send a special or emergency assessment to the Participants. FOR REVIEW ONLY 7/10/02 12:41 PM 8.4 Return of Funds. On the termination of this Agreement or the withdrawal of a Participant, the affected Participant or Participants may apply to NCPA for the return of their share of Working Capital Account funds ninety (90) days after the effective date of such termination or withdrawal. NCPA shall, in its sole discretion, estimate the then outstanding liabilities of the Participant, including any estimated contingent liabilities and retain all such funds until all such liabilities have been fully paid or otherwise. satisfied. NCPA may apply any remaining Working Capital Account funds to any remaining obligation of such Participant(s) ’ including but not limited to revised CAISO invoices. 9.0 NCPA Administrative Costs 9.1 SCALD Allocation. Prior to the begimling of each NCPA fiscal year for which no budget has been adopted and for each fiscal year for which a budget will be adopted, NCPA shall prepare an allocation of SCALD costs between the services provided pursuant to this Agreement, the Facilities Agreement and the Pooling Agreement. This allocation shall be made on the basis of cost causation. For the NCPA Fiscal Year beginning July 1, 2002, this allocation shall be deemed to be 1/3 (one-third) of SCALD costs to this Agreement, 1/3 (one’third) of SCALD costs to the Facilities Agreement, and ¯1/3 (one-third) of SCALD costs to the Pooling Agreement. 9.2 Annual Budget. Prior to the beginning of each NCPA fiscal year for which no budget has been adopted and for each fiscal year for which a budget will be adopted, NCPA shall give notice to each Participant of the Participant’s projected share of the costs and 9 FOR REVIEW ONLY 7/10/02 12:41 PM 9,3¸ expenses that NCPA estimates it will incur in the administration of this Agreement. SCALD costs, allocated to this Agreement pursuant to Section 9.1 shall be allocated to the Participants by Scheduling Coordination Participation Percentage. Scheduling Coordination Participation Percentage. The initial Scheduling Coordination Participation Percentage shall be as specified in Appendix A. For each NCPA Fiscal Year subsequent to the fiscal year beginning July 1, 2002, NCPA shall compute Scheduling Coordination Participation Percentage on the following basis: 9.3.1 9.3.2 9.3.3 9.3.4 A Base Scheduling Coordination Percentage for each Participant shall be computed on the basis of net load by the method described in Pooling Scheduie PA 4.01. The Base Scheduling Coordination Percentage shall be reduced for each Participant by an amount proportional to the net value of any staff or other support it provides. Such amounts will be as specified in the NCPA Budget for that fiscal year.. The Scheduling Coordination Participation Percentages shall then be normalized for all remaining Participants such that the total equals 100%. A revised Appendix A reflecting the Scheduling Coordination Participation Percentages computed pursuant to this Section shall be approved by the Commission at the same time the annual NCPA Budget is approved. Administration of Agreement 10 FOR REVIEW ONLY 7/10/02 12:41 PM 10.1 10.2 10.3 10.4 NCPA - The Commission has overall responsibility for the administration of this Agreement. SC Committee 10.2.1 Duties. The SC Committee is an advisory committee to the Utility Directors and the Commission and shall perform those duties and functions as directed from time to time by the Utility Directors or Commission. 10.2.2 Ad Hoc Committees. The SC Committee may appoint an ad hoc working group to work on specific tasks to be accomplished in a specific time frame. Upon completion of their assigned task, the ad hoc group shall report back to the SC Committee. NCPA Commission Governance Of The Project. 10.3.1 Commission Meetings. The Commission shall hold its annual meeting and other meetings in accordance with provisions of the Joint Powers Agreement. 10.3.2 Quorum. A quorum of the Commission, for purposes of acting upon matters relating to this Agreement, shall consist of those Commissioners, or their designated alternates, representing a numerical majority of the Participants, or, in the absence of such, those Commissioners representing Participants having a combined SC Partici ~ation Percentage of greater than fifty percent (50%). Voting 10.4.1 Agreement Voting. Each Participant shall have the right to cast one vote with respect to matters pertaining to this Agreement. Actions of the Commission with regard .to this 11 FOR REVIEW ONLY 7/10/02 12:41 PM Agreement shall be effective only upon a majority vote subject to the following exceptions: (a) Upon demand of any Participant, at any meeting of the Commission, the vote on any issue relating to this Agreement, shall be based upon the Participants" Marketing Participation Percentages. Each Participant shall have a number of votes equal to its SC Participation Percentage. Actions of the Commission shall be effective only upon an affirmative vote of sixty five percent (65%) or. more of the total votes to Which all Participants are entitled. (b) Any Participant may veto a discretionary action of the Participants relating to this Agreement that was not taken by a sixty five percent (65%) or more vote, within ten (10) days following mailing of notice of such Commissioners’ action by giving written notice of veto to NCPA, unless at a meeting of the Commissioners or alternates called for the purpose of considering the veto, held within thirty (30) days after such veto notice, the holders of SC Participation Percentages totaling sixty five per.cent (65%) or more shall vote to override the veto. (c) The sixty five percent (65%) affirmative vote required for action pursuant to this section shall be reduced by the amount that the voting rights of any Participant exceed thirty five percent (35%), but such sixty five percent (65%) shall not be ~educed below a majority in interest. 11.0 ’Term and Termination 12 FOR REVIEW ONLY 7/10/02 12:41 PM 11.1 11.2 11.3 11.4 Term. This Agreement shall become effective on the date on which it has been duly executed by NCPA and by six (6) other signatories, but not later than September 1, 2002 and shall continue in effect until terminated by consent of all of the signatories. Termination and Partial Termination. Any signatory may withdraw from the Agreement by submitting notice, in writing, to all other signatories at least three (3) months in advanc,e of the effective date of such withdrawal. Withdrawal by any signatory shall not terminate this Agreement as to the remaining signatories except that withdrawal by NCPA will terminate thisAgreement on the effective date of such withdrawal. Withdrawal by any signatory will not terminate any ongoing obligations resulting from this Agreement until such obligations are satisfied. Such termination shall be reflected in a revised Appendix A. Continuing Obligations. Withdrawal or termination by any signatory will not terminate any ongoing obligations resulting from this Agreement until such obligations are satisfied.-A signatory withdrawing from this Agreement pursuant to Section 11.2 shall reimburse NCPA for any costs resulting from withdrawal, including but not limited to recomputations of schedules and appendices to this Agreement, removal of communication equipment and data transmission facilities, or similar incidental costs. Termination for Default. In the event that a default by a Participant remains uncured for one (1) month, NCPA may by thirty (30) days written notice terminate that Participant from the Agreement. Termination of a signatory will not terminate any ongoing 13 FOR REVIEW ONLY 7/10/02 12:41 PM obligations resulting from this Agreement until such obligations are satisfied. Such termination shall be reflected in a revised Appendix A. 12.0 Confidentiali _ty. Participants and NCPA will keep all information made available to them in connection with this Agreement confidential, to the extent possible, consistent with applicable laws. 13.0 14.0 New Participants. New Participants may be added to this Agreement by a vote of the Commission in accordance with Section 10 and execution and delivery of this Agreement by the new Participant. The addition of a new Participant shall be reflected in a revised Appendix A. Several Obligation. The liabilities and obligations of the parties to this Agreement are several and not joint. 15.0 Amendments. Except where this Agreement specifically provides otherwise, this Agreement may be amended only by written instrument executed by the parties with the same formality as this Agreement. Appendices to this Agreement may be modified by unanimous action of the NCPA Commission. 1610 Severability. In the event that any of the terms, covenants or conditions of this Agreement or the application of any such term, covenant or condition, shall be held invalid as to any person or circumstance by any court having jurisdiction, all other terms, covenants or conditions of this Agreement and their application shall not be affected thereby, but shall 14 FOR REVIEW ONLY 7/10/02 12:41 PM remain in force and effect unless the court holds that such provisions are not severable from all other provisions of this Agreement. 17.0 Governing Law. This Agreement shall be interpreted, governed by, and construed under the laws of the State of California. 18.0 19.0 Headings. All indexes, titles, subject headings, section rifles and similar items are provided for the purpose of convenience and are not intended to be inclusive, definitive, or affect the meaning of the contents of this Agreement or the scope thereof. Notices. Any notice, demand or request required or authorized by this Agreement to be given to any Participant shall be in writing, and shall either be personally delivered to a representative of the Participant on the Commission or transmitted to the Participant at the address shown on the signature pages hereof. The designation of such address may be changed at any time by written notice given to the Secretary of the Commission who shall thereupon give written notice of such change to each Participant. 20.0 Warranty Of Authority. Each Participant represents and warrants that it has been duly authorized by all requisite approval and action to execute and deliver this Agreement and that this Agreement is a binding and valid agreement enforceable in accordance with its terms as to the Participant. 15 FOR REVIEW ONLY 7/10/02 12:41 PM 21.0 I I I Counterparts. This Agreement may be executed in any number of counterparts, and each executed counterpart shall-have the same force. and effect as an original instrument and as if all the signatories to all of .the counterparts had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon, and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages. 16 FOR REVIEW ONLY 7/10/02 12:41 PM IN WITNESS WHEREOF, NCPA and each Participant has, by the signature of its duly authorized representative shown below, executed and delivered a counterpart of this Agreement. NORTHERN CALIFORNIA POWER AGENCY CITY OF ALAMEDA By:. Its: Date: Address:180 Cirby Way Roseville, CA 95678 By:. Its: Date: Address: 2000 Grand Street Alameda, CA 94501 CITY OF BIGGS CITY OF GRIDLEY By: Its: Date: Address:464-B B Street Biggs, CA 95917 By~ Its: Date: Address:685 Kentucky Street Gridley, CA 95948 CITY OF HEALDSBURG CITY OF LODI By: Its: Date: By: Its: Date: 17 FOR REVIEW ONLY 7/10/02 12141 PM Address:126 Matheson Street Healdsburg, CA 95448 Address:221 West Pine Street Lodi, CA 95241 CITY OF LOMPOC CITY OF PALO ALTO By:. Its: Date: Address:100 Civic Center Plaza Lompoc, CA 93438 By:. Its: Date: Address:250 Hamilton Avenue Palo Alto, CA 94301 PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE CITY OF REDDING By: Its: Date: Address:P. O. Box 2000 Portola, CA 96122 CITY OF ROSEVILLE By: Its: Date: Address:760 Parkview Avenue Redding, CA 96001 CITY OF SANTA CLARA By: Its: Date: Address:311 Vernon Street Roseville, CA 95678 By: Its: Date: Address:1500 Warburton Avenue Santa Clara, CA 95080. 18 FOR REVIEW ONLY 7/10/02 12:41 PM TURLOCK IRRIGATION DISTRICT CITY OF UKIAH By:. Its: Date: Address:333 East Canal Drive Turlock, CA 95380 By:. Its: Date: Address:300 Seminary Avenue Ukiah, CA 95482 19 FOR REVIEW ONLY 7/10/02 12:41 PM APPENDIX A SCHEDULING COORDINATOR PARTICIPATION PERCENTAGES 1 FOR REVIEW ONLY 7/10/02 12:41 PM APPENDIX B ISO CHARGE TYPE. MATRIX FOR REVIEW ONLY 7/10/02 12:41 PM APPENDIX C PARTICIPANT SCHEDULING PROTOCOLS 3 FOR REVIEW ONLY 7/10/02 12:41 PM APPENDIX D SETTLEMENT DATA .4 FOR REVIEW ONLY 7/10/02 12:41 PM