HomeMy WebLinkAboutStaff Report 3564
City of Palo Alto (ID # 3564)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 3/18/2013
City of Palo Alto Page 1
Summary Title: Approval of Electric Master Agreements
Title: Adoption of a Resolution Approving, and Authorizing the City Manager
to Negotiate and Execute, Electric Master Agreements and Delegating the
Authority to Transact Under the Master Agreements
From: City Manager
Lead Department: Utilities
Recommendation
Staff recommends that the Council adopt the attached resolution, which approves of several
Edison Electric Institute (EEI) Master Power Purchase & Sale Agreements with electricity
suppliers, and authorizes the City Manager or his designee to:
1. Negotiate and execute the new or amended and restated Master Agreements with the
following electricity suppliers:
a. BP Energy Company;
b. Cargill Power Markets, LLC;
c. Exelon Generation Company, LLC;
d. Iberdrola Renewables, LLC;
e. NextEra Energy Power Marketing, LLC;
f. PacifiCorp;
g. Powerex Corp;
h. Shell Energy North America (US), L.P.; and
i. Turlock Irrigation District.
and
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2. Execute one or more transactions under the Master Agreements with one or more of the
above suppliers to procure and/or sell electricity supplies and related services sufficient to
meet the City’s forecast electricity load and regulatory requirements, subject to the
following limitations:
a. The date for delivery of the electricity for each transaction shall not exceed 36
months from the date the transaction is executed;
b. The delivery date for any transaction shall not extend beyond December 2027;
c. The maximum aggregate transaction limit under each Master Agreement shall be
$50 million;
d. All transactions are subject to the Palo Alto Municipal Code; and
e. All transactions are subject to the City’s Energy Risk Management Policies,
Guidelines and Procedures.
Staff will seek Council approval prior to execution of any transaction outside of the above
limitations.
Executive Summary
An active set of creditworthy counterparties is essential to ensure that the City meets its
electric supply portfolio planning objectives, internal risk management controls, and external
operational and regulatory requirements. Approval of the recommended Master Agreements
provides an extensive set of electric suppliers, with which to transact in a timely and
competitive manner ensuring that the City’s objectives are met efficiently. Executing the
Master Agreements does not commit the City to execute any transactions under any of the
agreements, but allows for transactions to be executed in the future.
The nine proposed Master Agreements were negotiated under terms and conditions acceptable
to the City and have been reviewed and approved in substantial form by the City Attorney’s
Office. Due to each agreement’s significant length, staff has elected not to attach copies to this
staff report. The proposed Master Agreements are provided for in Attachment E.
Background
Over the next three years, the City’s portfolio of long-term resources—including the contract
with the Western Area Power Administration, the Calaveras Hydroelectric Project, and long-
term renewables executed under Power Purchase Agreements—is expected to meet about 75%
of the City’s electric supply needs, based on average hydro conditions. The remaining 25% of
the City’s needs are purchased from the daily wholesale energy market, which can have huge
variations in price. In addition, due to variations in hydro conditions, the amount exposed to
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market prices can be up to half of the City’s needs. All daily purchases and/or sales required to
meet the City’s needs are currently carried out by the City’s Scheduling Coordinator, the
Northern California Power Agency (NCPA). If the City desires to purchase and/or sell energy
beyond a month in term, it must do so on its own through its own suppliers.
The Long-term Electric Acquisition Plan (LEAP) includes objectives to serve the City’s electric
load at competitive and predictable costs (Staff Report 2710). The City meets these objectives
by procuring fixed-price electricity quantities in a diversified, systematic fashion over a rolling
36-month period (i.e., laddering). The laddering strategy minimizes the City’s exposure to daily
market price variations. To implement the laddering strategy and to facilitate obtaining
competitive price quotes from wholesale suppliers, the City established Master Agreements
with a set of pre-qualified suppliers.
In July 2002 the City Auditor made recommendations in its “Assessment of Utility Risk
Management Procedures” to improve the City of Palo Alto Utilities’ (CPAU) energy procurement
process. The report recommended that Master Agreements with suppliers be approved by the
Council with clearly defined dollar, volume and duration limits and with clearly defined
transaction types that staff is authorized to execute under the agreements.
In 2004, Council approved a set of electric Master Agreements (Ordinance #4812) with several
electric commodity suppliers which would enable the City and the supplier to transact energy
and electricity related products to meet load. Under the same ordinance, Council delegated
authority to the City Manager to transact under the agreements subject to certain conditions
and restrictions. Subsequently, in 2007 Council approved a new set of Master Agreements
(Ordinance #4953), with the following suppliers:
a. ConocoPhillips Company;
b. Shell Energy North America (formally Coral Power);
c. Sempra Energy Trading Corporation;
d. BP Energy Company;
e. JP Morgan Ventures Energy Corporation;
f. Powerex Corporation; and
g. Pacific Summit Energy, LLC.
Several transactions have been executed under the existing Master Agreements and a summary
of such transactions by counterparty to date is provided in Attachment C. Table 1 summarizes
the City’s existing committed forward electricity transactions and energy volumes. As of
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February 4, 2013, transactions worth $14.6 million have been executed with existing suppliers
for deliveries during the period February 2013 through March 2015.
Table 1: Outstanding Electric Transactions as of 2/4/13 – Cost ($M) and Volumes (MWh)
FY 2013 FY 2014 FY 2015 Total Outstanding
$M $M $M $M
Powerex $ 2.1 $ 4.4 $ 0 $ 6.5
Shell Energy North America $ 0.5 $ 2.4 $ 5.2 $ 8.1
TOTAL $ 2.6 $ 6.8 $ 5.2 $ 14.6
MWh MWh MWh MWh
Powerex 59,605 110,220 - 169,825
Shell Energy North America 5,760 49,560 113,190 168,510
TOTAL 65,365 159,780 113,190 338,335
Changes in regulatory requirements related to commodity trading as result of the Dodd-Frank
Act; uncertainty with regards to the cost and regulations associated with cap-and-trade for
energy imported in to California; and changes to regulations around providing capacity resource
adequacy products to meet the CAISO’s reliability requirements have resulted in fewer
suppliers willing to transact and therefore reduced product liquidity in the market.
Of the seven Master Agreements approved in 2007, only Powerex,1 Shell and BP remain active
counterparties. The other counterparties have either ceased doing business in California, have
been acquired by another entity, no longer meet the City’s Risk Management supplier eligibility
criteria, or are not responsive to requests for bids issued by the City. As a result, the City
currently has two active counterparties willing and able to meet the City’s electric supply needs;
hence the need for new suppliers.
When Council approved the most recent set of Master Agreements in 2007, staff indicated it
would issue a new Request for Proposals (RFP) in 2012 or earlier if the pool of active suppliers is
not sufficient to carry out competitive solicitations. To that end, an RFP was issued in March
2012 to solicit interest from new and existing suppliers to sign Master Agreements.
1 Powerex has temporarily ceased trading with public load serving entities in California, including Palo Alto,
pending clarification of the Dodd-Frank Act and the Commodity Futures Trading Commission regulations on swap
transactions.
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Attachment D is a copy of the RFP, which includes the eligibility requirements and evaluation
process.
The selection of suppliers was conducted in a fair and competitive manner with negotiated
agreements, to the extent possible, being similar and equitable. The proposed set of Master
Agreements complies with the Wholesale Commodity Contracts provisions as provided for in
the Palo Alto Municipal Code: Chapter 2.30 Contracts and Purchasing Procedures (Ordinance
#4827) and transactions executed under the agreements shall adhere to the Council-approved
Energy Risk Management Policies, including the Approved Product List (Attachment B).
Discussion
The City’s exposure to the wholesale energy market is expected to decrease significantly
beyond 2016, as the City continues to pursue an aggressive Renewable Portfolio Standard
(RPS). However, even after 2016 when the plan is for the City’s annual electric needs to be met
through long-term renewables and existing hydroelectric resources, the City will still need to
buy and sell energy in certain months to balance load and resources. In addition, due to
significant variations in hydroelectric and renewable resources, there may be a need to buy
extra energy or sell additional surplus energy to meet needs consistent with energy risk
management objectives. Intra-month wholesale market purchases and sales will continue to be
carried out through NCPA to meet variations in load and generation resources on an hourly
basis.
Further, to meet compliance requirements under California’s RPS requirements and/or the
City’s carbon neutrality goals, the City may need to purchase short-term renewable energy, and
the proposed Master Agreements allows for such transactions. In addition, the Master
Agreements provide for the ability to buy and/or sell resource adequacy (reliability) capacity
products.
Description of a Master Agreement
The proposed Master Agreements are based on the 2000 Edison Electric Institute (EEI) Master
Power Purchase and Sale Agreement. A Master Agreement is similar to a blanket purchase
order, and includes the general terms and conditions that govern transactions. Executing a
Master Agreement does not commit the City to execute any transaction nor is it a promise of
business by the City or by the supplier. Each transaction for part of the City’s monthly, annual,
or multi-year electricity requirements is completed through competitive bidding, as evidenced
by a completed Confirmation Agreement document.
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The Master Agreement consists of a Base Contract and a Cover Sheet, which lists special
provisions negotiated between the City and the supplier. Addenda and/or exhibits to the
Master Agreements include a Confirmation Agreement, definition of basic energy and capacity
products, and several exhibits for product specific transactions including renewable energy
certificates and resource adequacy products.
Each Master Agreement may be terminated at any time by either party according to the terms
of the agreement. Termination of the Master Agreement cancels the supplier’s ability to bid on
further transactions until a new Master Agreement is executed. Any transaction executed
under the Master Agreement prior to termination will remain in place until the final electricity
delivery date, unless an event of default has transpired. In the event of default by a supplier,
the City has the option to terminate any remaining transactions that were executed under the
Master Agreement, but not yet delivered.
The City may suspend the privilege of bidding on individual transactions with any supplier due
to poor counterparty credit or transaction limits, a supplier credit downgrade event, supplier
default or suspected default, or where inclusion in the solicitation would not comply with the
law or City policies, guidelines, rules or procedures.
Each Master Agreement contains extensive credit protection provisions for both counterparties
to minimize risks associated with transacting for energy on a forward basis. Additionally,
internal controls and limits are put in place to minimize credit risk and ensure adherence to the
Master Agreement provisions.
All transactions under the Master Agreements will be executed by staff in accordance with the
Council-approved Energy Risk Management Policies, including the Approved Product List and
Energy Risk Management Guidelines and Procedures. These procedures are monitored by the
Energy Risk Manager and the Utilities Risk Oversight and Coordination Committee to ensure
that risks inherent in the energy industry are managed prudently. Staff provides Council with
an update of all executed transactions under the Master Agreements in the quarterly Energy
Risk Management reports.
Transaction Volume and Dollar Authority
The transaction volumes executed under the Master Agreements are a function of the electric
market prices and the City’s forecasted and actual volume of electricity needs. Currently,
electricity can be purchased for between $40 and $60 per megawatt-hour (MWh) for deliveries
during the next several years. The City’s expected net market purchase volumes are currently
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about 300,000 MWh per year,2 which translates to an annual net commodity cost of about $12
million to $18 million. Since electricity prices are volatile and the amount of electricity to be
purchased under the Master Agreements is dependent on hydro conditions, it is conceivable
that the market purchase cost could double from expected levels. Table 2 provides an
illustration of market purchase cost under various scenarios and shows the annual cost of
electricity market purchases can range between $12 and $28 million over the next five years.
Table 2: 5 Year Projected Electric Market Purchase Cost ($M)
FY 2013
$M
FY 2014
$M
FY 2015
$M
FY 2016
$M
FY 2017
$M
Expected Hydro and Market Prices $ 13.7 $ 11.5 $ 13.3 $ 12.3 $ 12.3
Change in Market Purchase Cost
under High Prices and Expected Hydro + $ 0.1 + $ 1.6 + $ 3.5 + $ 5.9 + $ 4.9
Change in Market Purchase Cost
under Dry Hydro Conditions + $ 1.9 + $ 7.9 + $ 5.6 + $ 6.8 + $ 7.7
Market Purchase Cost under
Dry Hydro & High Market Prices $ 16.1 $ 23.5 $ 24.9 $ 27.9 $ 28.0
Additionally, the Master Agreements may be utilized to execute other types of transactions to
meet RPS, carbon neutrality and resource adequacy requirements. Table 3 is a summary of the
annual aggregate transaction volumes based on adverse conditions for hydroelectric and
renewable resources and market prices for brown energy and renewable products.
2 The net volume of market purchases is expected to fall substantially in the coming years as additional long-term
renewable energy resources are added to the City’s supply portfolio.
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Table 3: 5 Year Projected Electric Transactions Cost under Adverse Conditions ($M)
FY 2013
$M
FY 2014
$M
FY 2015
$M
FY 2016
$M
FY 2017
$M
Market Purchase Cost under Dry
Hydro & High Market Prices $ 16.1 $ 23.5 $ 24.9 $ 27.9 $ 28.0
Short-term Renewables to Meet RPS –
Adverse Price Risk + $ 0.0 + $ 0.0 + $ 0.9 + $ 1.5 + $ 1.3
Unbundled RECs to Meet Carbon
Neutrality – Adverse Price Risk + $ 1.5 + $ 1.5 + $ 1.5 + $ 1.5 + $ 1.5
Resource Adequacy Products –
Adverse Price Risk + $ 0.0 + $ 1.1 + $ 2.4 + $ 2.6 + $ 2.8
Total Cost under Adverse Conditions $ 17.6 $ 26.1 $ 29.7 $ 33.5 $ 33.6
While the City has selected nine suppliers with whom to sign Master Agreements, it is
conceivable that only a few suppliers may ultimately provide the most competitive prices, and
some may merge or leave the industry, resulting in transactions being concentrated among
fewer qualified suppliers. Staff recommends an aggregate maximum transaction limit of $50
million for the term of each Master Agreement. This limit gives staff the flexibility it needs in
case electricity costs increase above expectations or if some of the suppliers are unable to
continue to do business with the City or do not offer the best prices. It also sets a monetary
limit on the transactions that is less than the total anticipated five-year purchase cost, thus
ensuring supplier diversity.
Outstanding (previously committed) transactions as identified in Table 1 with Powerex and
Shell, will be governed by the amended and restated Master Agreement and shall not be
included in the $50 million transaction limit.
Alternatives
Council could elect not to approve one or more of the proposed contracts. However, doing so
would limit the ability of staff to competitively bid and diversify electricity supplies.
Council could elect to approve the contracts with different contract limits, however, lower
limits could reduce the ability of staff to competitively bid and diversify electricity supplies or
could require staff to return to Council to increase the limits on certain Master Agreements
within the terms of the Master Agreements thereby potentially delaying transactions. Staff
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does not recommend higher limits at this time. Should higher limits be necessary due to
unforeseen circumstances, staff would request Council change contract limits in the future.
Lastly, Council could elect to not approve any of the contracts and instead utilize NCPA to carry
out all transactions beyond one month in term (in addition to the intra-month transactions it
currently does). This alternative, while viable, would require that the City implement several
new agreements with NCPA and develop cross agency controls and limits to ensure that NCPA
carries out the function in a manner consistent with the City’s municipal code requirements and
risk management objectives.
Resource Impact
Approval of the recommendation will not impact the Fiscal Year 2013 budget. Transactions
with deliveries extending beyond the approved budget horizon are contractual commitments
designed to meet expected load requirements. These purchases will be supported by Electricity
Fund retail revenues with retail rates determined by Council.
Policy Implications
Authorizing the City Manager to buy and sell electricity to meet load obligations under the
Master Agreements conforms to existing Council-approved Energy Risk Management Policies
and the Palo Alto Municipal Code. Further, the recommendation is consistent with the Council-
approved LEAP Objectives and Utilities Strategic Plan objective to manage supply cost by
negotiating supply contracts to minimize financial risk.
Environmental Review
Adoption of the resolution approving Master Agreements and delegating electricity
procurement responsibilities to the City Manager under certain limitations does not constitute
a project for the purposes of the California Environmental Quality Act.
Attachments:
Attachment A: Resolution Authorizing City Manager to Execute Master Agreements
(PDF)
Attachment B: Authorized Products Under Energy Risk Management Policies (PDF)
Attachment C: Electric Master Agreement Transaction by Counterparty Summary (PDF)
Attachment D: Summary of RFP #145153 Electric Master Agreement Scope and
Evaluation (PDF)
Attachment E: Master Agreements (PDF)
*NOT YET APPROVED*
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ATTACHMENT A
Resolution No. _____
Resolution of the Council of the City Of Palo Alto Authorizing the City
Manager to Purchase a Portion of the City’s Electricity Requirements
from Certain Prequalified Electricity Suppliers Under Specified Terms
and Conditions During Calendar Years 2013 Through 2027, Inclusive
SECTION 1. The City Council finds, as follows:
A. By Resolution Number 9152, adopted in March 2011, the Council
approved the Long-term Electric Acquisition Plan (LEAP) with the following objectives noted in
Staff Report Number 9152: (1) three primary energy portfolio objectives (“Objectives”),
including the objective to manage supply portfolio cost uncertainty to meet rate and reserve
objectives; (2) a strategy to manage market price exposure by maintaining and adequate pool
of creditworthy suppliers; and diversifying supply purchases across commitment date, start
date, duration, suppliers and pricing terms in alignment with rate stability objectives and
reserve guidelines; and (3) an implementation task to conduct a request for proposals (RFP) for
new electric master agreement counterparties.
B. In accordance with LEAP, the City must annually purchase and, incidental
to purchases, sell electricity and related services to meet the needs of its electric customers by
contracting for terms varying from less than one month to three years. The City's Energy Risk
Management Policies, noted in Staff Report Number 2916, provide that the City will purchase
only that quantity of electricity which meets its load requirements at the time a transaction is
executed.
C. By Ordinance No. 4953, adopted in 2007, the City has one or more
outstanding purchase transactions, costing in the aggregate $12.6 million, which are scheduled
to be delivered in FYs 2013 – 2015. These transactions will be subject to new or amended and
restated EEI Master Power Purchase and Sale Agreements (each a “Master Agreement”).
D. By Resolution No. 9272, adopted in July 2012, the Council approved the
Energy Risk Management Policies, which provides for the City Manager’s oversight and
controls necessary to manage several risks that are inherent in transacting in wholesale
electric commodity products, and which establishes a Council-approved list of electric
commodity products that staff may transact in under the Master Agreements.
E. In March 2012, the City conducted an RFP process to establish Master
Agreements for electricity purchases. Electricity suppliers BP Energy Company, Cargill Power
Markets, LLC, Exelon Generation Company, LLC, Iberdrola Renewables, LLC, NextEra Energy
Power Marketing, LLC, PacifiCorp, Powerex Corp., Shell Energy North America (US), L.P., and
the Turlock Irrigation District have been determined to possess the minimum financial and
*NOT YET APPROVED*
2
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legal qualifications and business experience required to be eligible to do business with the
City.
F. The City intends to purchase electricity and related services and products
from one or more of these pre-qualified suppliers for delivery during calendar years 2013
through 2027, inclusive, provided the supplier, with whom the City may negotiate one or more
specific transactions, continues to be qualified and otherwise eligible to do business with the
City.
The Council of the City of Palo Alto does RESOLVE as follows:
SECTION 2. The Council hereby approves of, and authorizes the City Manager
on behalf of the City to negotiate and sign, new or amended and restated Master Agreements
with the electric suppliers, referred to in Section 1.E, and further authorizes the City Manager
or his designee, the Director of Utilities, to negotiate one or more individual purchase
transactions, sales incidental to purchases, and electricity-related services, including, but not
limited to, negotiating contracts, addenda, confirmations and transactions for resource
adequacy and renewable energy credits. The authorization shall extend to individual
transactions executed under any number of Master Agreements with the referenced suppliers;
provided, however, (a) the maximum expenditure under any Master Agreement shall not
exceed $50 million in the aggregate and, with respect to outstanding transactions for $12.6
million, referred to in Section 1.C, the respective amounts will not be applied against the
maximum expenditure established herein; and (b) the maximum term of any transaction shall
not exceed three (3) years, commencing on the date of execution of the transaction. The
preceding sentence notwithstanding, the City may enter into a transaction greater than three
(3) years with any referenced supplier, if the Council first grants its approval to negotiate such
transaction.
SECTION 3. No Master Agreement and any related transaction entered into
with any qualified supplier, executed by the City Manager or his designated representative and
approved as to form by the City Attorney, under the authority of this ordinance shall extend
beyond December 31, 2027.
//
//
//
//
//
//
*NOT YET APPROVED*
3
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SECTION 4. The Council hereby finds that this ordinance is exempt from the
provisions of the California Environmental Quality Act pursuant to Section 15061(b)(3) of the
California Environmental Quality Act Guidelines, because it can be seen with certainty that
there is no possibility of significant environmental effects occurring as a result of the adoption
of this ordinance.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:
_____________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
_____________________________ ______________________________
Senior Asst. City Attorney City Manager
______________________________
Director of Administrative Services
______________________________
Director of Utilities
Attachment B
City of Palo Alto Energy Risk Management Policy
Approved July 2012; Resolution Number 9272
Excerpted Authorized Product Policy
The Council has delegated to the City Manager the authority to transact under Council
approved Master Agreements. The purpose of the Authorized Products Policy is to
ensure that products transacted under the Master Agreements are consistent with the
needs of CPAU and fall within the authority granted by the Council to the City Manager.
The following products and/or transactions are approved to be executed under the
Master Agreements:
A. Purchase of physical fixed price, index-based price, call options, capped-price or
collar-priced energy, natural gas, capacity, transportation, basis and transmission
products to meet load requirements;
B. Sale of physical fixed price or index-based price energy, natural gas, capacity, storage,
and transmission incidental to load;
C. Purchase of electric heat rate products to meet load;
D. Purchase and Sale of Renewable Energy Credits with or without bundled energy;
E. Purchase of Gas storage;
F. Purchase and Sale of Electric Ancillary Services;
G. Purchase and sale of local and system capacity to meet the City’s resource adequacy
requirement;
H. Fixed price or index-priced purchases and sales to substitute the use of higher cost
resources with lower cost market alternatives;
I. Fixed price or index-priced forward purchases and sales of transmission and
transmission rights to meet contractual obligations or to dispose of surplus capacity;
and
J. Purchase of physical call options and physical collars.
ATTACHMENT C
Summary of Electric Master Agreement Transactions
As of 2/4/2013
Electricity Procurement Summary for FY 2005 through FY 2015 as of 2/4/13 – Cost ($M) and Volumes (MWh)
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
$M $M $M $M $M $M $M $M $M $M $M
BP Energy Company $ - $ 3.5 $ 2.7 $ 4.7 $ - $ 0.2 $ 2.4 $ 2.6 $ 3.2 $ - $ -
Duke Energy $ 4.4 $ 2.7 $ - $ - $ - $ - $ - $ - $ - $ - $ -
JP Morgan $ - $ - $ - $ 1.3 $ 3.4 $ 5.4 $ - $ - $ - $ - $ -
Powerex $ - $ - $ - $ 1.1 $ 6.2 $ 3.2 $ 4.0 $ 6.7 $ 7.8 $ 4.4 $ -
Sempra $ 2.5 $ 3.4 $ 10.0 $ 10.0 $ 5.2 $ 2.0 $ 2.6 $ - $ - $ - $ -
Shell Energy North
America (formerly
Coral Power)
$ 3.6 $ 13.9 $ 6.7 $ 13.0 $ 18.7 $ 9.2 $ 6.9 $ 2.6 $ 1.0 $ 2.1 $ 5.2
TOTAL $ 10.5 $ 23.5 $ 19.3 $ 30.2 $ 33.5 $ 20.0 $ 15.8 $ 11.9 $ 12.0 $ 6.5 $ 5.2
MWh MWh MWh MWh MWh MWh MWh MWh MWh MWh MWh
BP Energy Company - 54,160 46,080 70,590 - 6,080 41,960 61,130 84,260 - -
Duke Energy 86,400 38,840 - - - - - - - - -
JP Morgan - - - 18,600 51,960 109,200 - - - - -
Powerex - - - 17,145 65,685 58,185 61,535 131,400 218,530 110,220 -
Sempra 47,560 86,660 157,855 149,235 79,935 41,850 44,180 - - - -
Shell Energy North
America (formerly
Coral Power)
91,100 307,425 162,145 247,280 308,260 174,265 126,435 43,920 28,730 49,560 113,190
TOTAL 225,060 487,085 366,080 502,850 505,840 389,580 274,110 236,450 331,520 159,780 113,190
ATTACHMENT D
Electric Master Agreement - Request for Proposal (RFP) Number 145143
Issued March 2012
Summary of Scope of Services, Eligibility and Evaluation Criteria
1. Description of the City of Palo Alto
The City of Palo Alto (the “City”) is a chartered city located in the San Francisco Bay
Area in northern California. The City provides utility services to customers within its
boundaries through its Utilities Department, under the management of the Director
of Utilities, who reports to the City Manager. The City Manager reports to the City
Council. Electricity rates for customers are set by the City Council.
The City has a peak capacity demand of 190 MW and an annual energy demand of
~1,000 GWh, of which ~60% is currently satisfied through a variety of long-term
resources, including rights to output of the Calaveras hydroelectric plant, a contract
for the purchase of power generated by the Central Valley Project, acquired from
the Western Area Power Administration, and various renewable energy resources
agreements needed to meet the City’s Renewable Portfolio Standard “(RPS”)
requirements. The remaining portions of the City’s energy needs are satisfied by
market purchases with existing energy Counterparties.
The City is a member of the Northern California Power Agency (“NCPA”), which acts
on behalf of the City as its scheduling coordinator and billing agent.
The City’s electricity acquisition activities are governed by the Palo Alto Municipal
Code’s competitive solicitation process requirements and the City’s contract
procurement policies and procedures, ordinances, resolutions, rules, and energy risk
management policies, guidelines and procedures. Information relating to the City’s
RFP, the proposals submitted, and the award of power contracts are made publicly
available upon request consistent with the California Constitution, Article 1, Section
3, and the California Public Records Act, California Government Code section 6250 et
seq., unless an exemption from disclosure applies (e.g., trade secret, proprietary
business and other types of confidential information that otherwise meets
applicable legal requirements may be exempt from disclosure to the public).
Palo Alto’s financial condition is sound; Standard & Poor’s (S&P) and Moody’s ratings
of the City’s General Obligation bonds are AAA and Aaa, respectively. All utility
revenue bonds’ ratings by S&P are also AAA, while Moody’s ratings are Aa2 and Aa3,
respectively. The City’s latest Comprehensive Annual Financial Report (CAFR) for
fiscal year 2010-11 and prior years may be reviewed at:
http://www.cityofpaloalto.org/depts/asd/financial_reporting.asp. Information relating to the
Palo Alto Utilities Department may be found at: http://www.cpau.com/ and
information related to the City’s municipal code may be found at:
http://www.cityofpaloalto.org/government/municipalcode.html.
2. Description of the RFP’s Purposes & Related Transactions
Under this Request for Proposals (“RFP”), the City seeks to negotiate and enter into
one or more EEI Master Power Purchase & Sale Agreements (the “Master
Agreement”) with multiple Suppliers to facilitate the expeditious execution of
wholesale energy purchase and sale transactions needed to meet the City’s current
and future power needs in a fair and competitive manner. The term “Bidder” means
an entity providing a proposal to execute a Master Agreement with the City under
this RFP, and the terms “Supplier” and “Counterparty” means any entity with which
the City has an executed Master Agreement.
The City has proposed certain modifications to the EEI contract, as set forth in the
attached Cover Sheet to the EEI contract (the “Cover Sheet”). The EEI contract and
the Cover Sheet are collectively referred to as the “Master Agreement.” Electronic
files, containing the Master Agreement and other relevant documents related to this
RFP may be found at:
http://www.cityofpaloalto.org/depts/asd/current_solicitations.asp
Under the terms of the executed Master Agreements, the City contemplates
executing a variety of power purchase and sale transactions in order to meet its
obligations as a load serving entity in California. Transactions and services
contemplated include, but are not limited to: physical energy and capacity forward
contracts; capacity only contracts; resource adequacy products; physical options;
locational basis products; transmission-related products/services; renewable energy
products to meet RPS; ancillary service products; hydroelectric power production
hedges; energy storage products or services; gas tolling agreements; AB32
compliance products such as carbon allowances or offsets; and other energy related
products and services .
A Supplier’s eligibility to conduct new business with the City under an executed
Master Agreements is subject to certain City internal risk exposure limits and other
criteria determined by the City’s energy risk management policies, procedures and
guidelines, which may be amended periodically to reflect changing conditions in the
marketplace.
3. RFP Eligibility and Evaluation Criteria
The City will determine a Bidder’s eligibility and evaluate Bidders’ proposals based
upon the information provided in the written proposals, interviews of selected
Bidders, if any, and information regarding Bidders that is publicly available to the
City and ability to meet the requirements set forth in 3.1 and 3.2.
3.1. Credit Worthiness: The City requires all Bidders meet the City’s
creditworthiness requirements and guidelines, as described below, in order to
be eligible to submit a Proposal. A Bidder’s failure to meet the City’s
creditworthiness requirements as of the date and time the proposal is
submitted or any time during the RFP evaluation and selection period will be
grounds for rejection of the proposal, and the Bidder shall be deemed ineligible
for an award of a Master Agreement.
3.1.1. The Bidder, if it is publicly rated, must have an investment grade credit
rating to qualify and be eligible for consideration of an award of a Master
Agreement by the City. An “investment grade credit rating” is a rating of
BBB- [or higher] by S&P, Baa3 [or higher] by Moody’s, or an equivalent
credit rating.
3.1.2. If the Bidder is not publicly rated, then the corporate entity which will be
providing credit support to the Bidder must possess an investment grade
credit rating, as described in Section 3.1.1. The Bidder must also provide
the City with a corporate guarantee (the guarantee of its parent
corporation or an equivalent) in order to permit the City to address the
potential credit exposure presented by the Bidder’s financial condition.
3.2. Required Contractual Provisions: The Bidder must agree to abide by the terms
and conditions of the Master Agreement, as listed below, in order to be eligible
to submit a proposal and receive an award of contract. The relevant EEI
contract sections are provided for ease of reference purposes.
3.2.1. A representation or warranty with respect to the Defaulting Party’s
financial statement or position that is false or misleading in any material
respect is an event of default (EEI contract Section 5.1).
3.2.2. The Federal Energy Regulatory Commission’s revocation of the
Counterparty’s (Party A’s) authorization to make sales at market-based
rates is an event of default (EEI contract Section 5.1).
3.2.3. A contract termination provision that does not provide a defaulting party
with any termination payment or settlement amount (one-way
termination payments (EEI contract Section 5.2).
3.2.4. Provisions for setoffs with affiliates (EEI contract Section 5.6b).
3.2.5. Provisions for netting payments and cash-out mechanisms (EEI contract
Sections 5.3 and 6.8).
3.2.6. Audited financial statements of the Bidder or the entity providing credit
support to the Bidder, which shall be provided to the City on an annual
basis (EEI contract Section 8.2a).
3.2.7. Additional credit assurances shall be provided in the event the
creditworthiness of the Counterparty (or entity providing credit support)
deteriorates (EEI contract Section 8.2d).
3.2.8. Governing law shall be the laws of California (EEI contract Section 10.6).
3.2.9. The venue for dispute resolution shall be Santa Clara County, California
(EEI contract Section 10.6).
3.3. Other Evaluation Criteria: Bidders will also be evaluated based on their
willingness to fully comply with the City’s proposed Master Agreement
provisions as provided for in the Cover Sheet; experience in providing energy
related services in California; City’s experience of past delivery and service
levels with the Bidder; financial qualifications in addition to the requirements
set forth in Section 3.1; reliance on off-balance sheet financing as part of
conducting business; and other relevant criteria.
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FIRST AMENDED AND RESTATED MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This First Amended and Restated Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the
following date: __, 2013, which Master Agreement hereby amends and restates in its entirety that certain Master Power
Purchase and Sale Agreement dated February 8, 2004, as amended (“Effective Date”). The Master Agreement, together
with the exhibits, schedules, annexes and any written supplements hereto, the Party A Tariff, any designated collateral,
credit support or margin agreement or similar arrangement between the Parties and all Transactions (including any
confirmations accepted in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this
Master Agreement are the following:
Name: BP Energy Company (“Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: Contract Administration
BP Energy Company (“BP” or “Party A”)
201 Helios Way
Houston, Texas 77079
Phone: (713) 323-2000
Facsimile: (713) 323-0203
Duns: 62-527-5755
Federal Tax ID Number: 36-3421804
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Manager, Credit
Phone: (713) 323-2370
Facsimile: (713) 323-6335
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City, Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Confirmations:
Attn: Confirmations – Power
Phone: (713) 323-3806
Facsimile: (281) 227-8470
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Invoices:
Attn: Power Accounting
Phone: (713) 323-7590
Facsimile: (713) 323-0203
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
Scheduling:
Attn: Scheduling
Phone: (713) 323-5262
Facsimile: (713) 323-7909
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
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Payments:
Attn: Power Accounting
Phone: (713) 323-7590
Facsimile: (713) 323-0203
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK: JPMorgan Chase Bank, NA
New York, NY
ABA: 021000021
ACCT: 826078354
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Manager Credit
Phone: (713) 323-2370
Facsimile: (713) 323-6335
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Electric Rate Schedule No. 1, Dated: August 1, 2010, Docket Number ER10-1790
Party B Tariff: N/A
Article One
General Definitions Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by substituting “U.S. $” for “$U.S.” in line 1.
Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
Section 1.12 is amended by deleting in the fourth line the word “issues” and replacing it with the
word “issuer”.
Section 1.23(ii), in the second sentence, insert the following text after the word “hereunder”:
“or to obtain the Product at a more advantageous price or advantageous terms and conditions from
a third party supplier”
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Section 1.24 is amended by adding before the period at the end thereof the following: “in
accordance with Section 5.2”.
Section 1.27 is amended by inserting the phrase “and in an amount” in the third line after the word
“form” and before the word “acceptable”.
Section 1.28 is amended by adding before the period at end thereof the following: “in accordance
with Section 5.2”.
Section 1.45 is amended by inserting the word “guarantee” after the word “Credit” and by adding
the following sentence to the end of that provision:
“Party B shall be deemed to have complied with any request from Party A for
Performance Assurance by furnishing a copy of a resolution adopted by Party B’s City
Council within a reasonable period of time after receipt of such request, determining that
Party B’s retail rates are set at levels sufficiently high to recover all costs of providing
electric service to Party B’s retail electric customers, including the costs incurred by
Party B under all Transactions executed under this Agreement.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or a
Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered a Potential Event of Default unless and until
the applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the word
“purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at Buyer’s
option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line; and
(b) deleting the phrase “at Seller’s option” in the fifth line and inserting after the word “liability”
in the ninth line the following: “provided, further, if the Seller is unable after using commercially
reasonable efforts to resell all or a portion of the Product not received by the Buyer, the Sales
Price with respect to such unsold Product shall be deemed equal to zero (0).”
Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before the
period at the end thereof the following: “, as determined in accordance with Section 5.2.”
Article Two
Transaction Terms
and Conditions
The following is added as a separate second paragraph of Section 2.2:
“Party A and Party B confirm that this Master Agreement shall apply to, and shall supersede and
replace in its entirety, the Master Power Purchase and Sale Agreement dated February 8, 2004, as
subsequently amended. The Parties further agree that any transaction for the purchase or sale of
electric energy, capacity or other related products which is entered into before, on or after the
Effective Date of this First Amended and Restated Master Agreement shall be governed by this
First Amended and Restated Master Agreement, and is part of the single integrated agreement
between the Parties, consistent with the first paragraph of this Section 2.2.
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Section 2.3 is amended by striking the word “may” from the first line thereof and replacing it with
the word “shall.”
For purposes of Section 2.3, all references to Seller shall be instead to Party A.
X Optional provision in Section 2.4. If not checked, inapplicable.
Section 2.4 is amended to delete the phrase “either orally or” from the seventh line.
Section 2.5 is amended to delete from the beginning of the first sentence the phrase “Unless a
Party expressly objects to a Recording (defined below) at the beginning of a telephone
conversation, each” and replacing it with the word “Each”.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and all
Transactions may not be orally amended or modified, including by Recording pursuant to Section
2.5.”
Article Three
Section 3.3 shall be amended by deleting from the last sentence the words “resume performance
of” and replacing them with the word “make-up”.
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. Notwithstanding, and in addition to the remedies
provided pursuant to Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver
or receive all or part of the Product pursuant to a Transaction for a period of three (3) of
more consecutive days, and such failure is not excused under the terms of the Product, by
Force Majeure, by the other Party’s failure to perform or by agreement of the Parties, then
upon one (1) Business Day prior notice, and for so long as the non-performing Party fails to
perform, the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice from
the non-performing Party at least one (1) Business Day prior to the date upon which the
non-performing Party intends to resume its performance; provided that, if the performing
Party has entered into a replacement contract with a term of 31 days or less, the performing
Party may resume performance at the end of the term of such replacement contract.
Remedies available under this provision to the performing Party are in addition to, not in
replacement of, other remedies specified in this Agreement.”
Insert the following as new Section 4.4:
“Section 4.4 Mitigation. Each Party has a duty to mitigate damages under this Agreement
and will use commercially reasonable efforts to minimize any damages it may incur resulting from
the other Party’s performance or nonperformance hereunder.”
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Insert the following as new Section 4.5:
“Section 4.5 Exclusivity. So long as any failure of Seller to schedule or deliver, or any
failure of Buyer to schedule or receive, a Product hereunder does not constitute or result in an
Event of Default as defined in Article 5 hereof, the remedies specified in this Article 4 shall be the
exclusive remedies available to Buyer for any failure of Buyer to schedule or receive a Product
hereunder, and no other liability under any theory of law or equity shall attach in connection with
such failure.”
Article Five
Events of Default;
Remedies
Cross Default provision of Section 5.1(g) shall apply for both Party A’s Guarantor and Party B.
Cross Default amount shall be $150,000,000 with respect to Party A’s Guarantor and $20,000,000
with respect to Party B.
Section 5.1 is amended by adding new subsections “(i)”, “(j)”, “(k)” and “(l)”, which read as
follows:
“(i) during any consecutive 90 day period, there have occurred five (5) or more “Seller
Failures” as that term is used in Section 4.1, under any or all Transactions, regarding
which the Seller shall be deemed to be the Defaulting Party and Buyer shall also be
entitled to its remedies under Section 4.1;
(j) during any consecutive 90 day period, there have occurred five (5) or more “Buyer
Failures” as that term is used in Section 4.2 under any or all Transactions, regarding
which the Buyer shall be deemed to be the Defaulting Party and Seller shall also be
entitled to its remedies under Section 4.2;
(k) a representation or warranty with respect to the Defaulting Party’s financial statement or
position that is false or misleading in any material respect; and
(l) revocation by the Federal Energy Regulatory Commission of Party A’s authorization to
make sales at market-based rates.”
Section 5.2 is amended by adding the following sentence to the end of that provision:
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs, if
any, resulting from the termination of this Agreement, the Settlement Amount shall be
zero, notwithstanding any provision of this Agreement to the contrary.”
Section 5.3 is amended by inserting the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to Article Eight”,
between the words “that are due to the Non-Defaulting Party”, and “plus any and all other
amounts” in the sixth line thereof.
Section 5.4, delete the phrase “two (2)” and insert the phrase “three (3)”
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Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Agreement unless otherwise
specified as follows: Option B is amended as set forth in Section 5.2 and Article 10
below. Notwithstanding any provision to the contrary contained in this Agreement, the
Non-Defaulting Party shall not be required to pay to the Defaulting Party any amount
under Article 5 until the Non-Defaulting Party receives confirmation satisfactory to it in
its reasonable discretion (which may include an opinion of its counsel) that all other
obligations of any kind whatsoever of the Defaulting Party and any of its Affiliates to
make any payments to the Non-Defaulting Party or any of its Affiliates under this
Agreement or otherwise have been fully and finally performed.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate of
a Party shall be treated as if they owed by or to the Party itself for purposes of set-off.”
Article Six Section 6.2, on the third line, delete “later of the twentieth (20th) day of each month, or”
Section 6.3, in the first sentence, delete the words, “twelve (12) months and insert “two (2) years”.
Section 6.3, in the fifth sentence, delete the words “two (2)” and insert the words “three (3)”.
Section 6.3, in the seventh sentence, delete the words, “twelve (12) months and insert “two (2)
years”.
Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” and inserting in
their place the word “shall”.
Article Eight 8.1 Party A Credit Protection
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of Palo
Alto Enterprise Fund
___ Option C
Credit Assurances from Party B, Section 8.1(b)
___ Not Applicable
X Applicable
Collateral Threshold for Party B, Section 8.1(c)
X Not Applicable
___ Applicable
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Party B Independent Amount: N/A
Party B Rounding Amount: N/A
Party B Minimum Transfer Amount: N/A
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s underlying rating, determined
without reference to third party credit enhancement, on its utility revenue bonds (“Debt”) by
S&P or Moody’s is respectively below BBB- or Baa3, or (ii) both S&P and Moody’s refuse to
rate Party B’s Debt, or (iii) Party B’s City Council no longer has the legal authority under the
Act, as defined by Schedule M, to adjust electric rates as necessary to recover Party B’s costs
of providing retail electric service to its customers.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
__ Option A
X Option B Specify: Audited financial statements to be provided by Party A shall be for
Party A and any corporate parent or entity providing credit support. Option B shall be
modified by deleting all references to “consolidated” therein.
___ Option C
Credit Assurances from Party A, Section 8.2(b):
___ Not Applicable
X Applicable
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Collateral Threshold for Party A, Section 8.2(c ):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the lower of: (i) the
amount specified in the table below under the relevant heading opposite the lower of the ratings at
that time assigned by Standard & Poor’s Rating Services, a division of The McGraw Hill
Companies, Inc. (“S&P”) or Moody’s Investors Services, Inc. (“Moody’s”) to the long term,
senior, unenhanced, unsecured debt securities of Party A’s Guarantor, and (ii) the Guarantee
Amount provided by Party A’s Guarantor set forth in Section 8.2(e); provided, that (a) if the long
term, senior, unenhanced, unsecured debt securities of Party A’s Guarantor is no longer rated by
one of S&P or Moody’s, the Threshold with respect to Party A will be zero and (b) if an Event of
Default or Potential Event of Default with respect to Party A has occurred and is continuing, the
Threshold with respect to such party shall be zero.
S&P Rating Moody’s Rating Threshold
AAA through AA- Aaa through Aa3 $60,000,000
A+ through A A1 through A2 $20,000,000
A- through BBB+ A3 through Baa1 $10,000,000
BBB through BBB- Baa2 through Baa3 $5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $250,000
Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A’s
Guarantor falls below BBB- from S&P or Baa3 from Moody’s or if the unenhanced,
unsecured senior long-term debt obligations of Party A’s Guarantor ceases to be rated by
either S&P or Moody’s.
Guarantor for Party A, Section 8.2(e):
X Guarantor for Party A: BP Corporation North America Inc., or any additional, substitute
or replacement Guarantor that is acceptable to Party B in Party B’s sole discretion.
Guarantee Amount: $10,000,000
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Article Ten Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and 3,
with “upon ten (10) days prior written notice”.
Section 10.2 shall be amended by adding a new sub-section (xiii) as follows:
“Notwithstanding any provision in this Agreement to the contrary, all information,
statements, reports and similar materials, conveyed by Party A orally or in writing in
response to a bid solicitation document [invitation for bids or request for proposals or
combination thereof] of Party B to demonstrate Party A or its Guarantor’s financial
condition or ability to perform, are true and accurate in all material respects when
provided and such representation is deemed to be repeated and reaffirmed as of the date
of entry into and delivery of each Transaction without the need for any further action by
either Party.”
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.4 shall be amended by inserting the phrase “To the extent permitted by law” at the
beginning of each of the first two sentences.
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal to
or higher than that of such Party or the Guarantor as of the Effective Date, if any, for such Party,
or (y) the obligations of such Affiliate are guaranteed by such Party or its Guarantor, if any, in
accordance with a guaranty agreement in form and substance satisfactory to the other Party, and
(iii) transfer or assign this Agreement to any person or entity succeeding to all or substantially all
of the assets of such Party whose creditworthiness is equal to or higher than that of such Party or
its Guarantor, if any, as of the Effective Date.”
Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand,
cause of action, dispute and controversy arising out of or relating to this Agreement, the
Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the
Northern District of the State of California; provided, however, that if the federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa Clara,
State of California.”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
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Section 10.10 of the Master Agreement is replaced in its entirety with the following:
"10.10 Bankruptcy Issues. The Parties acknowledge and agree that (i) all Transactions constitute
or shall be deemed to constitute "forward contracts" within the meaning of the United States
Bankruptcy Code (the “Bankruptcy Code”);; (ii) all payments made or to be made by one Party to
the other Party pursuant to this Agreement are "settlement payments" within the meaning of the
Bankruptcy Code; and (iii) all transfers of Performance Assurance by one Party to the other Party
under this Agreement are "margin payments" within the meaning of the Bankruptcy Code.”
Confidentiality
Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to the California Constitution Article 1,
Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq. (“Public
Records Act”) in regard to the documents comprising this Master Agreement and the
Transactions, which items may constitute public records subject to inspection and
copying by the public under the authority of the California Constitution and the Public
Records Act. Party B shall, consistent with those laws, , use reasonable efforts to provide
Party A with notice of any third party request to inspect and copy any of the documents
that comprise this Master Agreement and the Transactions, which Party A might deem
confidential and exempt from disclosure, in order that Party A may timely seek to protect
those documents from disclosure to the third party. Party A acknowledges and agrees
that Party B shall not be liable to Party A if Party B makes disclosure in accordance with
the California Constitution and/or the Public Records Act before Party A has timely
obtained an order to prevent Party B from making the requested disclosure to the third
party.”
A new Section 10.12 shall be added to Article 10 as follows:
“10.12. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as agent of the other Party.”
A new Section 10.13 shall be added to Article 10 as follows:
Dispute Resolution. Except with respect to payment disputes which shall be resolved in
accordance with Section 6.3 of this Agreement, in the event of any controversy or claim, whether
based in contract, tort, or otherwise, arising out of or based upon, or relating to this Agreement or
the scope, breach, termination or validity of each of them (a “Dispute”), the Parties will resolve
such Dispute in the following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle the
Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.13.3 Additional Rights. (A) If the Dispute is not resolved through mediation within ninety
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.
(90) Days after the first meeting of the Parties and mediator(s), or such additional time, if any, that
the Parties mutually agree to in writing, or (B) if at any time during the resolution of any Dispute
pursuant to the dispute resolution provisions set forth in this Section 10.13, either Party reasonably
believes that despite good faith efforts no resolution of the Dispute is likely, after such Party
provides written notice to the other Party with respect to same; either Party shall be free to pursue
any and all legal actions and remedies as it may deem necessary.
Add the following provisions as a new Section 10.14:
10.14: “The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most stringent standard
permissible under applicable law. As to the Parties, it is understood and agreed that the standard
is the “Mobile-Sierra public interest” standard of review, as stated by the United States Supreme
Court in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County,
Nos. 06-1457, 128 S.Ct. 2733 (2008), and consistent with the order of the Supreme Court in NRG
Power Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-674, 130 S.Ct.
693 (2010) (“NRG Order”). As to all other persons, the Parties intend and agree that the same
standard, to the maximum degree as may be made applicable to other than the Parties, apply, to
the maximum degree permitted under the NRG Order.”
The following provision is added as a new Section 10.15:
“10.15 The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this Agreement
is signed by the Parties and at the time of entering into any particular Transaction, including, but
not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et seq.) and related
regulations (Title 20, Sections 2900 – 2930 of the California Code of Regulations), as amended, to
the extent such laws and regulations, including SB 1368 and related regulations, apply or are
deemed to apply to this Agreement and any Transaction. To the extent SB 1368 and related
regulations require Party B as a local publicly owned electric utility to submit a compliance filing
in accordance with such laws, Party A, upon the request of Party B, shall in good faith provide
promptly to Party B (to the extent Party B lacks such information) the information to the extent
Party A has knowledge of or access to such information.”
The following provision is added as Section 10.16:
“10.16 Utility Disclaimer. Each Party agrees that the other Party is not a “utility” as such term is
used in 11 U.S.C. Section 366, and each Party agrees to waive and not to assert the applicability of
the provisions of 11 U.S.C. Section 366 in any bankruptcy proceeding involving such Party, and
further agrees that the other Party is not a provider of last resort.”
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The following provision is added as Section 10.17:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each Disrupted
Day.
If the Parties have not specified a fallback Floating Price, then the Parties
will endeavor, in good faith and using commercially reasonable efforts, to
agree on a substitute Floating Price, taking into consideration, without
limitation, guidance, protocols or other recommendations or conventions
issued or employed by trade organizations or industry groups in response
to the Market Disruption Event and other prices published by the Price
Source or alternative price sources with respect to the Delivery Point or
comparable Delivery Points that may permit the Parties to derive the
Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on a
substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the Parties
agree on a substitute Floating Price for such day, the substitute Floating
Price agreed upon by the Parties will remain the Floating Price without
adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first Trading
Day on which the Market Disruption Event first occurred or existed,
then the Floating Price for each Disrupted Day shall be determined by
taking the arithmetic mean of quotations requested from four leading
dealers in the relevant market that are unaffiliated with either Party and
mutually agreed upon by the Parties (“Specified Dealers”), without
regard to the quotations with the highest and lowest values, subject to
the following qualifications:
o If exactly three quotations are obtained, the Floating Price for
each such Disrupted Day will be the quotation that remains after
disregarding the quotations having the highest and lowest
values.
o If fewer than three quotations are obtained, the Floating Price for
each such Disrupted Day will be the average of the quotations
obtained.
o If the Parties cannot agree upon four Specified Dealers, then each
of the Parties will, acting in good faith and in a commercially
reasonable manner, select up to two Specified Dealers separately,
and those selected dealers shall be the Specified Dealers.
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price
shall be the Floating Price for such Disrupted Day, notwithstanding the
subsequent publication or announcement of a Delayed Floating Price by
the relevant Price Source or any quotations obtained from Specified
Dealers.
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o If the Parties cannot agree upon four Specified Dealers, then each
of the Parties will, acting in good faith and in a commercially
reasonable manner, select up to two Specified Dealers separately,
and those selected dealers shall be the Specified Dealers.
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price
shall be the Floating Price for such Disrupted Day, notwithstanding the
subsequent publication or announcement of a Delayed Floating Price by
the relevant Price Source or any quotations obtained from Specified
Dealers.
"Determination Period" means each calendar month a part or all of which is within the
Delivery Period of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the Floating
Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin of
reference, including an Exchange or RTO, containing or reporting or making generally
available to market participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the
relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
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"Trading Day" means a day in respect of which the relevant Price Source ordinarily would
announce, publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floating Price published, announced or made
available on a given day and used or to be used to determine a relevant price is
subsequently corrected by the relevant Price Source (i) within 30 days of the original
publication, announcement or availability, or (ii) in the case of RTO Transactions only,
within such longer time period as is consistent with the RTO’s procedures and guidelines,
then either Party may notify the other Party of that correction and the amount (if any) that is
payable as a result of that correction. If, not later than thirty (30) days after publication or
announcement of that correction, a Party gives notice that an amount is so payable, the
Party that originally either received or retained such amount will, not later than three (3)
Business Days after such notice is effective, pay, subject to any applicable conditions
precedent, to the other Party that amount, together with interest at the Interest Rate for the
period from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that correction.
Notwithstanding the foregoing, corrections shall not be made to any Floating Prices agreed
upon by the Parties or determined based on quotations from Specified Dealers pursuant to
paragraph (a) above unless the Parties expressly agree otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to four (4)
decimal places. If the fifth (5th) decimal number is five (5) or greater, then the fourth (4th)
decimal number shall be increased by one (1), and if the fifth (5th) decimal number is less
than five (5), then the fourth (4th) decimal number shall remain unchanged.
A new Section 10.18 is added as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products; provided, however, that nothing in this Agreement, including
this Section 10.18, prohibits the Parties from engaging in Transactions that are or may be
determined to be swaps if they so desire. Party B is a commercial entity engaged in the business
of delivering electricity to retail customers and buying electricity products with the intention of
routinely taking delivery in order to provide service to its retail electric customers."
Schedule M ___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter
and municipal ordinances under which Party B was created, organized and authorized to
enter into this Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the term
“Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo Alto
Enterprise Fund and the Act under which such Fund was established to determine, for its
purposes under this Agreement, that such Fund meets this definition of Special Fund.”
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Part C Part C of Schedule M is amended by adding the phrase “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part D Section 3.4 is modified by deleting “and (ii) an opinion of counsel” in line 8 through the end of
such sentence.
Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause ‘(ii)’ of this provision shall be deemed to have arisen
during a fiscal period of Governmental Entity or Public Power System for which
such budgetary approval or certification of its obligations under this Master
Agreement is required to be in effect and an Event of Default shall be deemed to
have occurred for purposes of Section 5.1 under which Governmental Entity or
Public Power System shall be treated as the Defaulting Party.”
Part F ___ Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
Schedule P
SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator
transaction pursuant to the CAISO Tariff as amended from time to time for which the only excuse
for failure to deliver or receive is an “Uncontrollable Force” (as defined in the CAISO Tariff)
called by the CAISO in accordance with the CAISO Tariff.
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE) 0700-
2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade shall mean a trade between Scheduling
Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
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Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an alternate
Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any similar
description means with respect to a Transaction, a Product that is or will be scheduled as firm
energy consistent with the most recent rules adopted by the WECC for which the only excuses for
failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force as provided
in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's public utility or
statutory obligations to its customers. Notwithstanding any other provision in this Agreement, if
Seller exercises its right to interrupt to meet its public utility or statutory obligations, Seller shall
be responsible for payment of damages for failure to deliver firm energy as provided in Article 4
of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which products,
terms, conditions and definitions shall be documented in an Resource Adequacy Form of
Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager. The form of any REC
purchase and/or sale transaction shall be mutually agreed to by the Parties.
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IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A: BP Energy Company
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keane
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI nor
NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for its
use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
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CITY OF PALO ALTO RFP # __________
MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date: _____ __,
2013 (“Effective Date”). The Master Agreement, together with the exhibits, schedules, annexes and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or
margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted
in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this Master Agreement are
the following:
Name: Cargill Power Markets, LLC (“Counterparty ” or
“Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: Contract Administration
Phone: 952-984-4113
Facsimile:952-984-3627
E-mail: Rachel_Welch@cargill.com
Duns 01-286-1725
Federal Tax ID Number: 41-1889936
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Gene Becker
Phone: 952-984-3158
Facsimile: 952-984-3627
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City, Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn:powerinvoices@cargill.com
Phone: 952-984-3947
Facsimile: 952-367-0920
E-mail: powerinvoices@cargill.com
Duns 01-286-1725
Federal Tax ID Number: 41-1889936
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Day Ahead Pre-Scheduling:
Attn: Power Scheduler
Phone: 952-984-4019
Facsimile: 952-984-3763
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
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CITY OF PALO ALTO RFP # __________
Real Time Scheduling:
Attn: Power Scheduler
Phone: 952-984-4019
Facsimile: 952-984-3763
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Payments:
Attn: Accounts Receivable
Phone: 952-984-3947
Facsimile: 952-367-0920
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK JP Morgan Chase Bank, NA
ABA: 021000021
ACCT: 51-01913
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: ETM Credit Manager
Phone: 952-94-3430/4257
Facsimile: 952-249-4216
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Electric Rate Schedule No. 1, dated __Sept. 17, 2010____________, Docket Number:
ER_10_-_2712__-_000__
Party B Tariff: N/A
Article One
General Definitions Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by adding after “the price” in line 1 the words “, including any and all
AB 32 fees, which shall not be a basis for changing the Contract Price” and substituting “U.S. $”
for “$U.S.” in line 1
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CITY OF PALO ALTO RFP # __________
Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
Section 1.12 is amended by deleting in the fourth line the word “issues” and replacing it with the
word “issuer”.
Section 1.24 is amended by adding before the period at the end thereof the following: “in
accordance with Section 5.2”.
Section 1.27 is amended by inserting the phrase “and in an amount” in the third line after the
word “form” and before the word “acceptable”.
Section 1.27 is amended by deleting the phrase “or a foreign bank with a U.S. branch” and
replacing it with the phrase “or a U.S. branch of a foreign bank.”
Section 1.28 is amended by adding before the period at end thereof the following: “in accordance
with Section 5.2”.
Section 1.45 is amended by adding the following sentence at the end of that provision:
“Party B shall be deemed to have complied with any request from Party A for the
provision of Performance Assurance by furnishing a copy of a resolution adopted by
Party B’s City Council within 90 (ninety) days after receipt of such request, determining
that Party B’s retail rates are set at levels sufficiently high to recover all costs of
providing electric service to Party B’s retail electric customers, including the costs
incurred by Party B under all Transactions executed under this Agreement.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or
a Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered a Potential Event of Default unless and until
the applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the
word “purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at
Buyer’s option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line, and
(b) deleting the phrase “at Seller’s option” in the fifth line and inserting in their place the
following: “absent a sale, assuming a sale could not have been made in a commercially
reasonable manner.”
Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before
the period at the end thereof the following: “, as determined in accordance with Section 5.2.”
Section 1.60 is amended by inserting the words “in writing” immediately following the words
“agreed to”.
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CITY OF PALO ALTO RFP # __________
Article Two
Transaction Terms
and Conditions
Section 2.1 shall be amended by deleting the second sentence thereof.
For purposes of Section 2.3, Party B requires that all Transactions be confirmed in writing.
Accordingly, the provision is amended by striking the word “may” from the first line thereof and
replacing it with the word “shall.”
For purposes of Section 2.3, all references to Seller shall be instead to Party A. All references to
Buyer shall be instead to Party B.
X Optional provision in Section 2.4. If not checked, inapplicable.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and
all Transactions may not be orally amended or modified, including by Recording pursuant
to Section 2.5.”
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. In addition to the remedies provided pursuant to
Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part
of the Product pursuant to a Transaction for a period of three (3) or more consecutive days,
and such failure is not excused under the terms of the Product, by Force Majeure, by the
other Party’s failure to perform or by agreement of the Parties, then upon one (1) Business
Day’s prior written notice, and for so long as the non-performing Party fails to perform,
the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice
from the non-performing Party at least one (1) Business Day prior to the date upon which
the non-performing Party intends to resume its performance; provided that, if the
performing Party has entered into a replacement contract with a term of 31 days or less,
the performing Party may resume performance at the end of the term of such replacement
contract. Remedies available under this provision to the performing Party are in addition
to, not in replacement of, other remedies specified in this Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply for both Party A and Party B.
Cross Default amount for Party A shall be $100,000,000, and for Party B shall be
$20,000,000.
Section 5.1(g) is amended by inserting, “or any Affiliate of such Party” after the first appearance
of the word “Party” in subsections (i) and (ii)..
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CITY OF PALO ALTO RFP # __________
Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semi-
colon, and adding new subsections “(i),” “(j)" , “(k)” and “(l)”, which read as follows:
"(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;"
"(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
"(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading; or"
“(l) revocation by the Federal Energy Regulatory Commission of Party A’s authorization to
make sales and market-based rates.”
Section 5.2 is amended in line 3 by changing “right (i) to” to “right to (i)” and by adding the
following sentence to the end of that provision:
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs,
if any, resulting from the termination of this Agreement, the Settlement Amount shall be
zero, notwithstanding any provision of this Agreement to the contrary.”
Section 5.3 is amended by inserting the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to
Article Eight”, between the words “that are due to the Non-Defaulting Party,”, and “plus
any and all other amounts” in the sixth line thereof.
Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Master Agreement unless
otherwise specified as follows: Option B is amended as set forth in Article 10 below.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate
of a Party shall be treated as if they were owing by or to the Party itself for purposes of
set-off.”
Article Six Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” in line 3 and
inserting in their place the word “shall”.
Article Eight 8.1 Party A Credit Protection
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CITY OF PALO ALTO RFP # __________
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund
___ Option C
Credit Assurances from Party B, Section 8.1(b)
X Not Applicable
___ Applicable
Collateral Threshold for Party B, Section 8.1(c)
X Not Applicable
___ Applicable
Party B Independent Amount: N/A
Party B Rounding Amount: N/A
Party B Minimum Transfer Amount: N/A
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s underlying rating, determined
without reference to third party credit enhancement, on its utility revenue bond ("Debt") by
S&P or Moody's is respectively below BBB- or Baa3, or (ii) both S&P and Moody's refuse
to rate Party B's Debt, or (iii) Party B’s City Council no longer has the legal authority under
the Act, as defined by Schedule M, to adjust electric rates as necessary to recover Party B’s
costs of providing retail electric service to its customers.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
__ Option A
X Option B Specify: Audited Financial statements to be provided by Party A as described
in Section 8.2(a) shall be for Party A or parent entity, if any, providing credit support.
___ Option C
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CITY OF PALO ALTO RFP # __________
Credit Assurances from Party A, Section 8.2(b):
_X __ Not Applicable
Applicable
Collateral Threshold for Party A, Section 8.2(c ):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the lesser of the
Guaranty amount and the amount specified in the table below under the relevant heading
opposite the lower of the ratings at that time assigned by Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc. (“S&P”) or Moody’s Investors Service, Inc., a
subsidiary of Moody’s Corporation (“Moody’s”) to the long term, senior, unenhanced, unsecured
debt securities or obligations of Party A’s Guarantor; provided, that (a) if the long term, senior,
unenhanced, unsecured debt securities of Party A’s Guarantor is no longer rated by one of S&P
or Moody’s, the Threshold with respect to Party A will be zero dollars and (b) if an Event of
Default or Potential Event of Default with respect to Party A has occurred and is continuing, the
Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
A- or above A3 or above $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $250,000
Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A’s
Guarantor falls below BBB- from S&P or Baa3 from Moody's or if the unenhanced,
unsecured senior long-term debt securities or obligations of Party A’s Guarantor ceases
to be rated by either S&P or Moody's.
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CITY OF PALO ALTO RFP # __________
Guarantor for Party A, Section 8.2(e):
X Guarantor for Party A: Cargill, Inc
Guarantee Amount: $5,000,000
Article Ten
Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and
3, with “, which termination shall be effective immediately upon receipt of written notice
thereof”.
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.2 shall be amended by deleting the “and” at the end of sub-section 10.2(xi), replacing
the period at the end of subsection 10.2(xii) with a semi-colon, and adding a new sub-section
(xiii) as follows:
“Notwithstanding any provision in this Agreement to the contrary, all information, statements,
reports and similar materials, conveyed by Party A orally or in writing in response to a bid
solicitation document [invitation for bids or request for proposals or combination thereof] of
Party B to demonstrate Party A’s financial condition, are true and accurate in all material
respects. Any representation made by Party A regarding its financial performance or condition
or that of its corporate parent (“Financial Representation”) as an inducement to Party B during
the solicitation, bidding or negotiation of any transaction entered into under this Master
Agreement shall be deemed to be repeated and reaffirmed, as of the date of the applicable
Transaction Confirmation and to be incorporated as a representation of Party A or related party,
who makes the Financial Representation in that Transaction Confirmation without the need for
any further action by either Party; and”
Section 10.4 shall be amended by inserting the phrase "To the extent permitted by law," at the
beginning of each of the first two sentences, and substituting the word, “each” for “Each” after
the insertion of each such phrase.
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal
to or higher than that of such Party or the Guarantor as of the Effective Date and the date of
entering into each Transaction under this Agreement, if any, for such Party, or (y) the obligations
of such Affiliate are guaranteed by such Party or its Guarantor, if any, in accordance with a
guaranty agreement in form and substance satisfactory to the other Party, and (iii) transfer or
assign this Agreement to any person or entity succeeding to all or substantially all of the assets of
such Party whose creditworthiness is equal to or higher than that of such Party or its Guarantor,
if any, as of the Effective Date and the effective date of any such transfer or assignment.
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Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand,
cause of action, dispute and controversy arising out of or relating to this Agreement, the
Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the
Northern District of the State of California; provided, however, that if the federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa
Clara, State of California.”
Section 10.8 is modified by adding before the word “constitute” in line four of Section 10.8, “,
the bid solicitation document (invitation for bids or request for proposals, or combination
thereof) and all financial and other information, explanations, statements, reports provided by
one party to the other in connection therewith”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
Section 10.10 shall be amended to include the at the end of the first sentence:
“as amended by the Bankruptcy Code Amendments of 2005, and that each believes that it is a
“forward contract merchant” under statutory and decisional law in effect as of the Effective
Date”
Confidentiality
X Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to California Constitution Article 1,
Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq.
(“Public Records Act”) in regard to the documents comprising this Master Agreement
and the Transactions, which items may constitute public records subject to inspection
and copying by the public under the authority of the California Constitution and the
Public Records Act. Party B shall, consistent with those laws, use reasonable efforts to
provide Party A with notice of any third party request to inspect and copy any of the
documents that comprise this Master Agreement and the Transactions, which Party A
might deem confidential and exempt from disclosure, in order that Party A may timely
seek to protect those documents from disclosure to the third party. Party A
acknowledges and agrees that Party B shall not be liable to Party A if Party B makes
disclosure in accordance with the California Constitution and/or the Public Records Act
before Party A has timely obtained an order to prevent Party B from making the
requested disclosure to the third party.”
A new Section 10.12 shall be added to Article 10 as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as the agent of the other Party.”
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A new Section 10.13 shall be added to Article 10 as follows:
10.13 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope,
breach, termination or validity of each of them (a “Dispute”), the Parties will resolve such
Dispute in the following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
10.13.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if any, that the
Parties mutually agree to in writing, either Party shall be free to pursue any and all legal actions
and remedies as it may deem necessary.
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A new Section 10.14 shall be added to Article 10 as follows:
10.14: “The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this
Agreement is signed by the Parties and at the time of entering into any particular Transaction,
including, but not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et
seq.) and related regulations (Title 20, Sections 2900 – 2930 of the California Code of
Regulations), as amended, to the extent such laws and regulations, including SB 1368 and related
regulations, apply or are deemed to apply to this Agreement and any Transaction. To the extent
SB 1368 and related regulations require Party B as a local publicly owned electric utility to
submit a compliance filing in accordance with such laws, Party A, upon the request of Party B,
shall in good faith provide promptly to Party B (to the extent Party B lacks such information) the
information to the extent Party A has knowledge of or access to such information, and shall work
cooperatively with and provide commercially reasonable assistance to Party B in Party B’s
compliance with such laws. A failure by Party A to provide such information which is within
its possession or knowledge shall constitute a default under this Agreement.”
A new Section 10.15 shall be added to Article 10 as follows:
10.15: “The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most stringent standard
permissible under applicable law. As to the Parties, it is understood and agreed that the standard
is the “Mobile-Sierra public interest” standard of review, as stated by the United States Supreme
Court in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish
County, Nos. 06-1457, 128 S.Ct. 2733 (2008), and consistent with the order of the Supreme
Court in NRG Power Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-
674, 130 S.Ct. 693 (2010) (“NRG Order”). As to all other persons, the Parties intend and agree
that the same standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.”
A new Section 10.16 shall be added to Article 10 as follows:
10.16 ““AB 32 fees” means the regulatory assessments, charges, fees imposts and/or taxes
imposed upon and required to be paid by suppliers of energy in accordance with the Global
Warming Solutions Act of 2006, Chapter 488, Statutes 2006, including, without limitation, the
Compliance Offset Protocols, which shall be included (or be deemed included to the extent they
are not expressly included) in the Contract Price, defined in Section 1.10 of the General Terms
and Conditions, and that are in effect as of the Effective Date of this Agreement and/or the date
the Parties enter into each Transaction hereunder.”
A new Section 10.17 shall be added to Article 10 as follows:
10.17 Imaged Agreement. Any original executed Agreement, Confirmation or other related
document may be photocopied and stored on computer tapes and disks (the “Imaged
Agreement”). The Imaged Agreement, if introduced into evidence on paper, the Confirmation, if
introduced as evidence in automated facsimile form, the Recording, if introduced as evidence in
its original form and as transcribed onto paper, and all computer records of the foregoing, if
introduced as evidence in printed format, in any judicial, arbitration, mediation, or administrative
proceedings, will be admissible as between the Parties to the same extent and under the same
conditions as other business records originated and maintained in documentary form. Neither
Party shall object to the admissibility of the Recording, the Confirmation or the Imaged
Agreement (or photocopies of the transcription of the Recording, the Confirmation or the Imaged
Agreement) on the basis that such were not originated or maintained in documentary form under
either the hearsay rule, the best evidence rule or other rule of evidence.
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A new Section 10.18 is added to Article 10 as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products; provided, however, that nothing in this Agreement,
including this Section 10.18, prohibits the Parties from engaging in Transactions that are or may
be determined to be swaps if they so desire. Party B is a commercial entity engaged in the
business of delivering electricity to retail customers and buying electricity products with the
intention of routinely taking delivery in order to provide service to its retail electric customers. "
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A new Section 10.19 is added to Article 10 as follows:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each
Disrupted Day.
If the Parties have not specified a fallback Floating Price, then the
Parties will endeavor, in good faith and using commercially reasonable
efforts, to agree on a substitute Floating Price, taking into consideration,
without limitation, guidance, protocols or other recommendations or
conventions issued or employed by trade organizations or industry
groups in response to the Market Disruption Event and other prices
published by the Price Source or alternative price sources with respect
to the Delivery Point or comparable Delivery Points that may permit the
Parties to derive the Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on
a substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the Parties
agree on a substitute Floating Price for such day, the substitute Floating
Price agreed upon by the Parties will remain the Floating Price without
adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first Trading
Day on which the Market Disruption Event first occurred or existed,
then the Floating Price for each Disrupted Day shall be determined by
taking the arithmetic mean of quotations requested from four leading
dealers in the relevant market that are unaffiliated with either Party
and mutually agreed upon by the Parties (“Specified Dealers”),
without regard to the quotations with the highest and lowest values,
subject to the following qualifications:
o If exactly three quotations are obtained, the Floating Price for
each such Disrupted Day will be the quotation that remains
after disregarding the quotations having the highest and lowest
values.
o If fewer than three quotations are obtained, the Floating Price
for each such Disrupted Day will be the average of the
quotations obtained.
o If the Parties cannot agree upon four Specified Dealers, then
each of the Parties will, acting in good faith and in a
commercially reasonable manner, select up to two Specified
Dealers separately, and those selected dealers shall be the
Specified Dealers.
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CITY OF PALO ALTO RFP # __________
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price
shall be the Floating Price for such Disrupted Day, notwithstanding the
subsequent publication or announcement of a Delayed Floating Price by
the relevant Price Source or any quotations obtained from Specified
Dealers.
"Determination Period" means each calendar month a part or all of which is within
the Delivery Period of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the
Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin of
reference, including an Exchange or RTO, containing or reporting or making
generally available to market participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the
relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
"Trading Day" means a day in respect of which the relevant Price Source ordinarily
would announce, publish or make available the Floating Price.
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CITY OF PALO ALTO RFP # __________
(b) Corrections to Published Prices. If the Floating Price published, announced or
made available on a given day and used or to be used to determine a relevant price is
subsequently corrected by the relevant Price Source (i) within 30 days of the
original publication, announcement or availability, or (ii) in the case of RTO
Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that
correction and the amount (if any) that is payable as a result of that correction. If,
not later than thirty (30) days after publication or announcement of that correction, a
Party gives notice that an amount is so payable, the Party that originally either
received or retained such amount will, not later than three (3) Business Days after
such notice is effective, pay, subject to any applicable conditions precedent, to the
other Party that amount, together with interest at the Interest Rate for the period
from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that
correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from
Specified Dealers pursuant to paragraph (a) above unless the Parties expressly agree
otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to
four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then
the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th)
decimal number is less than five (5), then the fourth (4th) decimal number shall
remain unchanged.
Schedule M ___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter
and municipal ordinances under which Party B was created, organized and authorized to
enter into this Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the
term “Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo
Alto Enterprise Fund and the Act under which such Fund was established to determine,
for its purposes under this Agreement, that such Fund meets this definition of Special
Fund.”
Part C Part C of Schedule M is amended by adding the phrase in line 7 “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part D Section 3.4 is modified by inserting a period after “Master Agreement” in line 7 and deleting the
rest of the sentence.
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CITY OF PALO ALTO RFP # __________
Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause (ii) of this provision shall be deemed to have arisen
during a fiscal period of Governmental Entity or Public Power System for
which such budgetary approval or certification of its obligations under this
Master Agreement is required to be in effect and an Event of Default shall be
deemed to have occurred for purposes of Section 5.1 under which
Governmental Entity or Public Power System shall be treated as the Defaulting
Party.”
Part F ___ Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
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Schedule P SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule
coordinator transaction pursuant to the CAISO Tariff as amended from time to time for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the
CAISO Tariff) called by the CAISO in accordance with the CAISO Tariff.
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE)
0700- 2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade shall mean a trade between
Scheduling Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any
similar description means with respect to a Transaction, a Product that is or will be scheduled as
firm energy consistent with the most recent rules adopted by the WECC for which the only
excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force
as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's
public utility or statutory obligations to its customers. Notwithstanding any other provision in this
Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy
as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
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CITY OF PALO ALTO RFP # __________
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which
products, terms, conditions and definitions shall be documented in an Resource Adequacy Form
of Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager. The form of any REC
purchase and/or sale transaction shall be mutually agreed to by the Parties.
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CITY OF PALO ALTO RFP # __________
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A:
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
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CITY OF PALO ALTO RFP # __________
MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date: _____ __,
2013 (“Effective Date”). The Master Agreement, together with the exhibits, schedules, annexes and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or
margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted
in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this Master Agreement are
the following:
Name: Exelon Generation Company, LLC.
(“Counterparty ” or “Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Street: 100 Constellation Way,
Suite 500C
City/State: Baltimore, MD Zip: 21202
Attn: Contract Administration
Phone: 410-470-3738
Facsimile: 443-213-3556
Duns: 19-674-8938
Federal Tax ID Number: 23-2990190
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: General Counsel
Phone: 410-470-3500
Facsimile: 443-213-3556
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City, Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn: Billing Group
Phone: 410-470-3737
Facsimile: 410-468-3540
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Day Ahead Pre-Scheduling:
Attn: Scheduling Desk
Phone: 410-468-3530
Facsimile: 410-468-3540
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
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Real Time Scheduling:
Attn: Scheduling Desk
Phone: 410-468-3530
Facsimile: 410-468-3540
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Payments:
Attn: Payments Group
Phone: 410-470-3737
Facsimile: 410-468-3540
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK: M&T Bank
ABA: 022000046
ACCT: 191-9007-8
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Credit Risk Department
Phone: 410-470-2946
Facsimile: 410-470-6200
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Electric Tariff Dated: April 30, 2010 Docket Number: ER10-1145 Original
Vol. No. 2
Party B Tariff: N/A
Article One
General Definitions Section 1.1 shall be amended by adding the following new sentence at the end of the current
provision: “With respect to Party A, Baltimore Gas & Electric Company, CNEGH Holdings,
LLC, CNE Gas Holdings, LLC, CNEG Holdings, LLC, Constellation NewEnergy-Gas Division,
LLC, CNE Gas Supply, LLC, PECO Energy Company, Commonwealth Edison Company and
shall not be considered an Affiliate.”
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Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by substituting “U.S. $” for “$U.S.” in line 1.
Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
Section 1.12 is amended by deleting in the fourth line the word “issues” and replacing it with the
word “issuer”.
Section 1.24 is amended by adding before the period at the end thereof the following: “in
accordance with Section 5.2”.
Section 1.27 is amended by inserting the phrase “and in an amount” in the third line after the
word “form” and before the word “acceptable”.
Section 1.28 is amended by adding before the period at end thereof the following: “in accordance
with Section 5.2”.
Section 1.45 is deleted and replaced in its entirety with:
“Performance Assurance” means collateral in the form of either cash, Letter(s) of Credit, or other
security acceptable to the Requesting Party acting in its commercially reasonable discretion.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or
a Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered a Potential Event of Default unless and until
the applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the
word “purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at
Buyer’s option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line, and
(b) deleting the phrase “at Seller’s option” in the fifth line and inserting in their place the
following: “absent a sale, assuming a sale could not have been made in a commercially
reasonable manner.”
Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before
the period at the end thereof the following: “, as determined in accordance with Section 5.2.”
Section 1.60 is amended by inserting the words “in writing” immediately following the words
“agreed to”.
Article Two
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Transaction Terms
and Conditions
Section 2.1 shall be amended by deleting the second sentence thereof.
For purposes of Section 2.3, Party B requires that all Transactions be confirmed in writing.
Accordingly, the provision is amended by striking the word “may” from the first line thereof and
replacing it with the word “shall.”
For purposes of Section 2.3, all references to Seller shall be instead to Party A.
X Optional provision in Section 2.4. If not checked, inapplicable.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and
all Transactions may not be orally amended or modified, including by Recording pursuant
to Section 2.5.”
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. In addition to the remedies provided pursuant to
Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part
of the Product pursuant to a Transaction for a period of three (3) or more consecutive days,
and such failure is not excused under the terms of the Product, by Force Majeure, by the
other Party’s failure to perform or by written agreement of the Parties, then upon one (1)
Business Day’s prior written notice, and for so long as the non-performing Party fails to
perform, the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice
from the non-performing Party at least one (1) Business Day prior to the date upon which
the non-performing Party intends to resume its performance; provided, however, that if the
performing Party has entered into a replacement contract with a term of thirty-one (31)
days or less (“Short-Term Replacement Contract”), the performing Party may, upon
written notice to the non-performing Party, elect to postpone the resumption of
performance hereunder until the completion of such Short-Term Replacement Contract.
Remedies available under this provision to the performing Party are in addition to, not in
replacement of, other remedies specified in this Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply for both Party A and Party B.
Cross Default amount for Party A shall be $100,000,000 and Party B shall be
$20,000,000.
Section 5.1(g) is amended by inserting, “or any Affiliate of such Party” after the first appearance
of the word “Party” in subsections (i) and (ii).
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Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semi-
colon, and adding new subsections “(i),” “(j)" , “(k)” and “(l)”, which read as follows:
"(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;"
"(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
"(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading; or"
“(l) revocation by the Federal Energy Regulatory Commission of Party A’s authorization to
make sales and market-based rates.”
Section 5.2 is amended in line 3 by changing “right (i) to” to “right to (i)” and by adding the
following sentence to the end of that provision:
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs,
if any, resulting from the termination of this Agreement, the Settlement Amount shall be
zero, notwithstanding any provision of this Agreement to the contrary.”
Section 5.3 is amended by inserting the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to
Article Eight”, between the words “that are due to the Non-Defaulting Party,”, and “plus
any and all other amounts” in the sixth line thereof.
Section 5.6 Closeout Setoff
__ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Master Agreement unless
otherwise specified as follows: Option B is amended as set forth in Article 10 below.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate
of a Party shall be treated as if they owed by or to the Party itself for purposes of set-
off.”
Article Six Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” in line 3 and
inserting in their place the word “shall”.
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Article Seven Section 7.1, shall be amended by (i) deleting in the fifteenth line the words, “UNLESS
EXPRESSLY HEREIN PROVIDED”, (ii) adding in the nineteenth line the words
PROVIDED, HOWEVER, NOTHING IN THIS SECTION SHALL AFFECT THE
ENFORCEABILITY OF THE PROVISIONS OF THIS AGREEMENT EXPRESSING
ALLOWING FOR SPECIAL DAMAGES, INCLUDING BUT NOT LIMITED TO
REMEDIES FOR FAILURE TO DELIVER/RECEIVE IN SECTIONS 4.1 AND 4.2, AND
CALCULATION AND PAYMENT OF THE TERMINATION PAYMENT IN SECTIONS
5.2 AND 5.3.” immediately after the words “ANY INDEMNITY PROVISION OR
OTHERWISE”, and (iii) adding at the end of the last sentence the words “AND ARE NOT
PENALTIES”.
Article Eight 8.1 Party A Credit Protection
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund
___ Option C
Credit Assurances from Party B, Section 8.1(b)
X Not Applicable
___ Applicable
Collateral Threshold for Party B, Section 8.1(c)
___ Not Applicable
X___ Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party B, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
utility revenue bonds of Party B; provided, that (a) both S&P and Moody's refuse to rate Party
B's utility revenue bonds Threshold with respect to Party B will be zero dollars, (b) Party B’s
City Council no longer has the legal authority under the Act, as defined by Schedule M, to adjust
electric rates as necessary to recover Party B’s costs of providing retail electric service to its
customers, the Threshold with respect to such party shall be zero dollars, and (c) if an Event of
Default or Potential Event of Default with respect to Party B has occurred and is continuing, the
Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AAA Aaa $30,000,000
AA- through AA+ Aa3 through Aa1 $25,000,000
A through A+ A2 through A1 $10,000,000
A- A3 $ 5,000,000
BBB+ and below (or rating Baa1 and below (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s)
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Party B Independent Amount: N/A
Party B Rounding Amount: $100,000
Party B Minimum Transfer Amount: $250,000
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s underlying rating, determined
without reference to third party credit enhancement, on its utility revenue bond ("Debt") by
S&P or Moody's is respectively below BBB+ or Baa1, or (ii) both S&P and Moody's refuse
to rate Party B's Debt, or (iii) Party B’s City Council no longer has the legal authority under
the Act, as defined by Schedule M, to adjust electric rates as necessary to recover Party B’s
costs of providing retail electric service to its customers.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
__ Option A
X Option B Specify: Audited financial statements to be provided by Party A as described
in Section 8.2(a) shall be for Party A or parent entity, if any, providing credit support.
___ Option C
Credit Assurances from Party A, Section 8.2(b):
_X__ Not Applicable
Applicable
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Collateral Threshold for Party A, Section 8.2(c ):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
long term, senior, unenhanced, unsecured debt securities or obligations of Party A; provided, that
(a) if the long term, senior, unenhanced, unsecured debt securities of Party A is no longer rated
by one of S&P or Moody’s, the Threshold with respect to Party A will be zero dollars and (b) if
an Event of Default or Potential Event of Default with respect to Party A has occurred and is
continuing, the Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
A- or above A3 or above $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $250,000
Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A falls
below BBB- from S&P or Baa3 from Moody's or if the unenhanced, unsecured senior
long-term debt securities or obligations of Party A ceases to be rated by either S&P or
Moody's.
Guarantor for Party A, Section 8.2(e):
X Guarantor for Party A: _Not Applicable
Guarantee Amount: Not Applicable
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A new Section 8.4 shall be added to Article 8 as follows:
“Collateral Threshold Disputes. For the purposes of this Section 8.4, Party A is deemed to be the
“Calculation Agent” with respect to its obligations under Section 8.1(c), and Party B is deemed
to be the “Calculation Agent” with respect to its obligations under Section 8.2(c). All
calculations made by the Calculation Agent may be independently confirmed by the other Party
in its sole discretion. In the event that the Parties’ initial calculations are inconsistent and the
amount owed disputed, the undisputed amount will be used to determine payment obligations
and, if then due, paid by the relevant Party. The Parties shall endeavor to resolve any such
dispute in good faith. If the Parties are unable to resolve such dispute with a commercially
reasonable time, the Parties shall mutually select a dealer in the applicable commodity to act as
Calculation Agent with respect to the issue in dispute. The failure of either Party to perform its
obligations as Calculation Agent, as applicable, hereunder shall not be construed as an Event of
Default under this Agreement, and the sole remedy of the other Party with respect to such failure
will be the right, upon notice to the Calculation Agent and provided that such failure is
continuing, to designate itself or a third party as a replacement Calculation Agent.”
Article Ten
Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and
3, with “, which termination shall be effective immediately upon receipt of written notice
thereof”.
Section 10.2 (ix) is amended to read in its entirety as follows: “(ix) (1) it is, or it shall be
deemed for all purposes to be, a “forward contract merchant” within the meaning of the United
States Bankruptcy Code; (2) it is an “eligible contract participant” as such term is defined in the
Commodity Exchange Act, as amended 7 U.S.C. § 1 (a) (12); and (3) it is an “eligible
commercial entity” as such term is defined in the Commodity Exchange Act, as amended 7
U.S.C. § 1 (a) (11).”
Section 10.2 shall be amended by deleting the “and” at the end of sub-section 10.2(xi), replacing
the period at the end of subsection 10.2(xii) with a semi-colon, and adding a new sub-section
(xiii) as follows:
“Notwithstanding any provision in this Agreement to the contrary, all information, statements,
reports and similar materials, conveyed by Party A orally or in writing in response to a bid
solicitation document [invitation for bids or request for proposals or combination thereof] of
Party B to demonstrate Party A’s financial condition, are true and accurate in all material
respects. Any representation made by Party A regarding its financial performance or condition
or that of its corporate parent (“Financial Representation”) as an inducement to Party B during
the solicitation, bidding or negotiation of any transaction entered into under this Master
Agreement shall be deemed to be repeated and reaffirmed, as of the date of the applicable
Transaction Confirmation and to be incorporated as a representation of Party A or related party,
who makes the Financial Representation in that Transaction Confirmation without the need for
any further action by either Party; and”
Section 10.4 shall be amended by inserting the phrase "To the extent permitted by law," at the
beginning of each of the first two sentences, and substituting the word, “each” for “Each” after
the insertion of each such phrase.
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CITY OF PALO ALTO RFP # __________
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal
to or higher than that of such Party or the Guarantor as of the Effective Date and the date of
entering into each Transaction under this Agreement, if any, for such Party, or (y) the obligations
of such Affiliate are guaranteed by such Party or its Guarantor, if any, in accordance with a
guaranty agreement in form and substance satisfactory to the other Party, and (iii) transfer or
assign this Agreement to any person or entity succeeding to all or substantially all of the assets of
such Party whose creditworthiness is equal to or higher than that of such Party or its Guarantor,
if any, as of the Effective Date and the effective date of any such transfer or assignment.
Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand,
cause of action, dispute and controversy arising out of or relating to this Agreement, the
Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the
Northern District of the State of California; provided, however, that if the federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa
Clara, State of California.”
Section 10.8 is modified by adding before the word “constitute” in line four of Section 10.8, “,
the bid solicitation document (invitation for bids or request for proposals, or combination
thereof) and all financial and other information, explanations, statements, reports provided by
one party to the other in connection therewith”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
Section 10.10 is deleted in its entirety and replaced with the following new section: “Bankruptcy.
The Parties acknowledge and agree that (i) any Transaction with a maturity date more than two
days after the date the Transaction is entered into constitutes a "forward contract" within the
meaning of the United States Bankruptcy Code (the “Bankruptcy Code”); (iii) all payments made
or to be made by one Party to the other Party pursuant to this Agreement are "settlement
payments" within the meaning of the Bankruptcy Code; and (iv) all transfers of Performance
Assurance by one Party to the other Party under this Agreement are "margin payments" within
the meaning of the Bankruptcy Code. Each Party further agrees that, for purposes of this
Agreement, the other Party is not a "utility" as such term is used in 11 U.S.C. Section 366, and
each Party agrees to waive and not to assert the applicability of the provisions of 11 U.S.C.
Section 366 in any bankruptcy proceeding wherein such Party is a debtor. In any such
proceeding, each Party further agrees to waive the right to assert that the other Party is a provider
of last resort."
Confidentiality
X Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
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CITY OF PALO ALTO RFP # __________
Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to California Constitution Article 1,
Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq.
(“Public Records Act”) in regard to the documents comprising this Master Agreement
and the Transactions, which items may constitute public records subject to inspection
and copying by the public under the authority of the California Constitution and the
Public Records Act. Party B shall, consistent with those laws, use reasonable efforts to
provide Party A with notice of any third party request to inspect and copy any of the
documents that comprise this Master Agreement and the Transactions, which Party A
might deem confidential and exempt from disclosure, in order that Party A may timely
seek to protect those documents from disclosure to the third party. Party A
acknowledges and agrees that Party B shall not be liable to Party A if Party B makes
disclosure in accordance with the California Constitution and/or the Public Records Act
before Party A has timely obtained an order to prevent Party B from making the
requested disclosure to the third party. A Party may disclose any one or more of the
commercial terms of a Transaction (other than the name of the other Party unless
otherwise agreed to in writing by the Parties) to any industry price source for the
purpose of aggregating and reporting such information in the form of a published
energy price index.”
A new Section 10.12 shall be added to Article 10 as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as the agent of the other Party.”
A new Section 10.13 shall be added to Article 10 as follows:
10.13 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope,
breach, termination or validity of each of them (a “Dispute”), the Parties will resolve such
Dispute in the following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.13.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if
any, that the Parties mutually agree to in writing, either Party shall be free to pursue any
and all legal actions and remedies as it may deem necessary.
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A new Section 10.14 shall be added to Article 10 as follows:
10.14: “The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this
Agreement is signed by the Parties and at the time of entering into any particular Transaction,
including, but not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et
seq.) and related regulations (Title 20, Sections 2900 – 2930 of the California Code of
Regulations), as amended, to the extent such laws and regulations, including SB 1368 and related
regulations, apply or are deemed to apply to this Agreement and any Transaction. To the extent
SB 1368 and related regulations require Party B as a local publicly owned electric utility to
submit a compliance filing in accordance with such laws, Party A, upon the request of Party B,
shall in good faith provide promptly to Party B (to the extent Party B lacks such information) the
information to the extent Party A has knowledge of or access to such information, and shall work
cooperatively with and provide commercially reasonable assistance to Party B in Party B’s
compliance with such laws. A failure by Party A to provide such information which is within
its possession or knowledge shall constitute a default under this Agreement.”
A new Section 10.15 shall be added to Article 10 as follows:
10.15: “The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the “Mobile-Sierra public
interest” standard of review, as stated by the United States Supreme Court in Morgan Stanley
Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Nos. 06-1457, 128 S.Ct.
2733 (2008), and consistent with the order of the Supreme Court in NRG Power Marketing, LLC,
et al., v. Maine Public Utilities Commission et al., No. 08-674, 130 S.Ct. 693 (2010) (“NRG
Order”). As to all other persons, the Parties intend and agree that the same standard, applies, to
the maximum degree permitted under the NRG Order.”
A new Section 10.16 is added as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy. Party B is a commercial entity engaged in the business of delivering
electric energy to its retail load and routinely makes or takes delivery of electric energy in order
to provide service to its retail electric customers."
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CITY OF PALO ALTO RFP # __________
The following Section shall be added as a new Section 10.17:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each
Disrupted Day.
If the Parties have not specified a fallback Floating Price, then the
Parties will endeavor, in good faith and using commercially reasonable
efforts, to agree on a substitute Floating Price, taking into consideration,
without limitation, guidance, protocols or other recommendations or
conventions issued or employed by trade organizations or industry
groups in response to the Market Disruption Event and other prices
published by the Price Source or alternative price sources with respect
to the Delivery Point or comparable Delivery Points that may permit the
Parties to derive the Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on
a substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the Parties
agree on a substitute Floating Price for such day, the substitute Floating
Price agreed upon by the Parties will remain the Floating Price without
adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first Trading
Day on which the Market Disruption Event first occurred or existed,
then the Floating Price for each Disrupted Day shall be determined by
taking the arithmetic mean of quotations requested from four leading
dealers in the relevant market that are unaffiliated with either Party
and mutually agreed upon by the Parties (“Specified Dealers”),
without regard to the quotations with the highest and lowest values,
subject to the following qualifications:
o If exactly three quotations are obtained, the Floating Price for
each such Disrupted Day will be the quotation that remains
after disregarding the quotations having the highest and lowest
values.
o If fewer than three quotations are obtained, the Floating Price for
each such Disrupted Day will be the average of the quotations
obtained.
o If the Parties cannot agree upon four Specified Dealers, then each of the Parties will,
acting in good faith and in a commercially reasonable manner, select up to two
Specified Dealers separately, and those selected dealers shall be the Specified
Dealers.
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CITY OF PALO ALTO RFP # __________
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price
shall be the Floating Price for such Disrupted Day, notwithstanding the
subsequent publication or announcement of a Delayed Floating Price by
the relevant Price Source or any quotations obtained from Specified
Dealers.
"Determination Period" means each calendar month a part or all of which is within
the Delivery Period of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the
Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin of
reference, including an Exchange or RTO, containing or reporting or making
generally available to market participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the
relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
"Trading Day" means a day in respect of which the relevant Price Source ordinarily
would announce, publish or make available the Floating Price.
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CITY OF PALO ALTO RFP # __________
(b) Corrections to Published Prices. If the Floating Price published, announced or
made available on a given day and used or to be used to determine a relevant price is
subsequently corrected by the relevant Price Source (i) within 30 days of the
original publication, announcement or availability, or (ii) in the case of RTO
Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that
correction and the amount (if any) that is payable as a result of that correction. If,
not later than thirty (30) days after publication or announcement of that correction, a
Party gives notice that an amount is so payable, the Party that originally either
received or retained such amount will, not later than three (3) Business Days after
such notice is effective, pay, subject to any applicable conditions precedent, to the
other Party that amount, together with interest at the Interest Rate for the period
from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that
correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from
Specified Dealers pursuant to paragraph (a) above unless the Parties expressly agree
otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to
four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then
the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th)
decimal number is less than five (5), then the fourth (4th) decimal number shall
remain unchanged.
The following Section shall be added as a new Section 10.18.
“Imaged Agreement. Any original executed Agreement, Confirmation or other
related document may be photocopied and stored on computer tapes and disks
(the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence
on paper, the Confirmation, if introduced as evidence in automated facsimile
form, the Recording, if introduced as evidence in its original form and as
transcribed onto paper, and all computer records of the foregoing, if introduced
as evidence in printed format, in any judicial, arbitration, mediation or
administrative proceedings, will be admissible as between the Parties to the
same extent and under the same conditions as other business records originated
and maintained in documentary form. Neither Party shall object to the
admissibility of the Recording, the Confirmation or the Imaged Agreement (or
photocopies of the transcription of the Recording, the Confirmation or the
Imaged Agreement) on the basis that such were not originated or maintained in
documentary form under either the hearsay rule, the best evidence rule or other
rule of evidence.”
Schedule M ___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
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CITY OF PALO ALTO RFP # __________
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter
and municipal ordinances under which Party B was created, organized and authorized to
enter into this Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the
term “Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo
Alto Enterprise Fund and the Act under which such Fund was established to determine,
for its purposes under this Agreement, that such Fund meets this definition of Special
Fund.”
Part C Part C of Schedule M is amended by adding the phrase in line 7 “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part D Section 3.4 is modified by inserting a period after “Master Agreement” in line 7 and deleting the
rest of the sentence.
Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause (ii) of this provision shall be deemed to have arisen
during a fiscal period of Governmental Entity or Public Power System for
which such budgetary approval or certification of its obligations under this
Master Agreement is required to be in effect and an Event of Default shall be
deemed to have occurred for purposes of Section 5.1 under which
Governmental Entity or Public Power System shall be treated as the Defaulting
Party.”
Part F ___ Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
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CITY OF PALO ALTO RFP # __________
Schedule P SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule
coordinator transaction pursuant to the CAISO Tariff as amended from time to time for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the
CAISO Tariff) called by the CAISO in accordance with the CAISO Tariff.
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE)
0700- 2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade shall mean a trade between
Scheduling Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any
similar description means with respect to a Transaction, a Product that is or will be scheduled as
firm energy consistent with the most recent rules adopted by the WECC for which the only
excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force
as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's
public utility or statutory obligations to its customers. Notwithstanding any other provision in this
Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy
as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
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CITY OF PALO ALTO RFP # __________
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which
products, terms, conditions and definitions shall be documented in an Resource Adequacy Form
of Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager. The form of any REC
purchase and/or sale transaction shall be mutually agreed to by the Parties.
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CITY OF PALO ALTO RFP # __________
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A: Exelon Generation Company, LLC
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
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CITY OF PALO ALTO RFP # __________
MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date: _____ __,
2013 (“Effective Date”). The Master Agreement, together with the exhibits, schedules, annexes and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or
margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted
in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this Master Agreement are
the following:
Name: Iberdrola Renewables, LLC (“Counterparty ” or
“Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: Contract Administration
1125 NW Couch, Suite 700
Portland, OR 97209
Phone: 503-796-7034
Facsimile: 503-478-6394
Duns: 94-737-6422
Federal Tax ID Number: 93-1177933
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: IR Office of General Counsel
Phone: 503-796-7127 and 925-943-3103
Facsimile: 503-796-6904 and 925-943-3105
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City, Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn: Settlements/ Back Office
Phone: 503-796-6917
Facsimile: 503-746-6908
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Day Ahead Pre-Scheduling:
Attn: Pre-Scheduling
Phone: 503-796-7139
Facsimile: 503-796-6903
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
Real Time Scheduling:
Attn: Pre-Scheduling
Phone: 503-796-7139
Facsimile: 503-796-6903
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
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CITY OF PALO ALTO RFP # __________
Payments:
Attn: Settlements / Back Office
Phone: 503-796-6917
Facsimile: 503-796-6908
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK: JPMorgan Chase Bank, New York, NY
ABA: 021000021
ACCT: 816536437
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Director, Credit Risk
Phone: 503-241-3214
Facsimile: 503-796-6902
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Electric Rate Schedule No. 1, dated September 28, 2010, Docket Number: ER 10-2994
Party B Tariff: N/A
Article One
General Definitions Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by adding after “the price” in line 1 the words “, which shall not be
changed on the basis of any and all AB 32 fees” and substituting “U.S. $” for “$U.S.” in line 1.
Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
Section 1.12 is amended by deleting in the fourth line the word “issues” and replacing it with the
word “issuer” and adding “or with respect to Party B, Party B’s underlying rating, determined
without reference to third party credit enhancement, on its utility revenue bonds ("Debt") by S&P
or Moody's.
Section 1.24 is amended by adding the following after the word “Costs”: “calculated in a
commercially reasonable manner based on the prime rate of interest as published from time to
time under The Wall Street Journal for such period and such calculation will be equal to the net
present value of the economic gain to it.”
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CITY OF PALO ALTO RFP # __________
Section 1.27 is amended by inserting the phrase “and in an amount” in the third line after the word
“form” and before the word “acceptable”.
Section 1.28 is amended by adding the following after the word “Costs”: “calculated in a
commercially reasonable manner based on the prime rate of interest as published from time to
time under The Wall Street Journal for such period and such calculation will be equal to the net
present value of the economic loss to it.”
Section 1.45 is modified by deleting and replacing in its entirety, so the provision now reads:
“’Performance Assurance’ means collateral in the form of either cash, Letter(s) of Credit, or other
security, which form is determined by the Party issuing the collateral in its sole discretion and is
reasonably acceptable to the Requesting Party.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or
a Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered an Event of Default unless and until the
applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the
word “purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at
Buyer’s option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line, and
(b) deleting the phrase “at Seller’s option” in the fifth line and inserting in their place the
following: “absent a sale and (c) inserting “; provided, however if Seller is unable after using
commercially reasonable efforts to resell all or a portion of the Product not received by Buyer, the
Sales Price with respect to such unsold Product shall be deemed no greater than zero (0)” after
“commercially reasonable manner” in the sixth line.”
Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before the
period at the end thereof the following: “, as determined in accordance with Section 5.2.”
Article Two
Transaction Term
and Conditions
Section 2.3 is amended by (i) replacing all references to “Seller” with “Party A” and all references
to “Buyer” with “Party B”, (ii) replacing the first sentence with the following: “Party A will
confirm a Transaction by forwarding to Party B by facsimile within three (3) Business Days after
the Transaction is entered into a confirmation (“Confirmation”) substantially in the form of
Exhibit A, provided however, Confirmations applicable to Transactions of less than one week in
duration may be through an electronically recorded oral conversation, a written Confirmation
executed by both Parties, or a Confirmation not executed by both Parties but which is binding
under this Section 2.3.”
X Optional provision in Section 2.4. If not checked, inapplicable.
Section 2.4 is amended by replacing the word “orally” in the seventh line with the phrase “in the
Confirmation” and adding “a” before the word “writing”.
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CITY OF PALO ALTO RFP # __________
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in this
Master Agreement, including in this Article Two, this Master Agreement and any and all
Transactions may not be orally amended or modified, including by Recording pursuant to Section
2.5.”
Article Three Section 3.2 is hereby amended by adding the following to the end of the Section: “Product
deliveries shall be scheduled in accordance with the then-current applicable tariffs, protocols,
operating procedures and scheduling practices for the relevant region.”
Article Four
Remedies for Failure
to Deliver or
Receive
___ Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. Notwithstanding and in addition to the remedies provided
pursuant to Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or
part of the Product pursuant to a Transaction for a period of three (3) or more consecutive days,
and such failure is not excused under the terms of the Product, by Force Majeure, by the other
Party’s failure to perform or by agreement of the Parties, then upon one (1) Business Day’s prior
written notice, and for so long as the non-performing Party fails to perform, the performing Party
shall have the right to suspend its performance under such Transaction. In the event the
performing Party suspends performance pursuant to this Section 4.3, it shall not be obligated to
resume performance until it has received notice from the non-performing Party at least one (1)
Business Day prior to the date upon which the non-performing Party intends to resume its
performance; provided that, if the performing Party has entered into a replacement contract with a
term of 31 days or less, the performing Party may resume performance at the end of the term of
such replacement contract. Remedies available under this provision to the performing Party are in
addition to, not in replacement of, other remedies specified in this Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply for both Party A and Party B.
Cross Default amount for each shall be $50,000,000.
Section 5.1(g) is amended by inserting in lines 3 and 10 after “such Party”, “or, with respect to
Party A and any Guarantor, as such entity may change from time to time, of such Party”.
Section 5.1(f) is amended by adding the following: “or its Guarantor” immediately after the word
“Party” on the first line and changing “of such Party under this Agreement” to “of such entity
with respect to this Agreement” in line five.
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CITY OF PALO ALTO RFP # __________
Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semi-
colon, and adding new subsections “(i),” “(j)" , “(k)”, and “(l)” , which read as follows:
"(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;"
"(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
"(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading; or"
“(l) revocation by the Federal Energy Regulatory Commission of Party A’s authorization to
make sales and market-based rates.”
Section 5.2 is deleted in its entirety and replaced with the following:
“5.2 Effect of Event of Default. If at any time an Event of Default with respect to a Defaulting
Party has occurred and is continuing, the Non-Defaulting Party may do one or more of the
following: (a) withhold any payments due to the Defaulting Party under this Agreement; (b)
suspend performance due to the Defaulting Party under this Agreement; and/or (c) by giving not
more than twenty days’ notice, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions (each referred to as a
“Terminated Transaction”). The Non-Defaulting Party shall calculate in a commercially
reasonable manner a Settlement Amount for each such Terminated Transaction as of the Early
Termination Date (or, to the extent that in the reasonable opinion of the Non-Defaulting Party
certain of such Terminated Transactions are commercially impracticable to liquidate and
terminate or may not be liquidated and terminated under applicable law on the Early Termination
Date, then each such Transaction (individually, an “Excluded Transaction”) shall be terminated
as soon thereafter as reasonably practicable, and upon termination shall be deemed to be a
Terminated Transaction and the Termination Payment payable in connection with all such
Transactions shall be calculated in accordance with Section 5.3 below. The Gains and Losses for
each Terminated Transaction shall be determined by calculating the amount that would be
incurred or realized to replace or to provide the economic equivalent of the remaining payments
or deliveries in respect of that Terminated Transaction. The Non-Defaulting Party (or its agent)
may determine its Gains and Losses by reference to information either available to it internally or
supplied by one or more third parties including, without limitation, quotations (either firm or
indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant
market data in the relevant markets. Third parties supplying such information may include,
without limitation, dealers in the relevant markets, end-users of the relevant product, information
vendors and other sources of market information. If the Non-Defaulting Party’s aggregate
Gains exceed its aggregate Losses and Costs, if any, resulting from the termination of this
Agreement, the Settlement Amount shall be zero, notwithstanding any provision of this
Agreement to the contrary.”
Section 5.3 is amended by inserting (i) the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to Article
Eight”, between the words “that are due to the Non-Defaulting Party,”, and “plus any and all other
amounts” in the sixth line thereof and (ii) “No Termination Payment shall be due or payable to the
Defaulting Party for any Terminated Transaction.” after the last sentence.
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CITY OF PALO ALTO RFP # __________
Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Master Agreement unless
otherwise specified as follows: Affiliates, as it applies to Party A, shall be limited to
Party A’s non-regulated Affiliates only. Option B is amended as set forth in Article 10
below.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate of a Party
shall be treated as if they were owing by or to the Party itself for purposes of set-off.”
Article Six Section 6.4 is amended (a) by deleting “and owing to each other on the same date”.”
Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” in line 3 and
inserting in their place the word “shall”.
Article Seven The fifteenth and sixteenth lines of Section 7.1 are amended by deleting “UNLESS EXPRESSLY
HEREIN PROVIDED,”.
The following is added to the end of Article Seven:
"7.2. Disclaimer of Warranties. PARTY A AND PARTY B EACH ACKNOWLEDGES THAT
IT HAS ENTERED INTO THIS AGREEMENT AND IS CONTRACTING FOR THE ENERGY
TO BE SUPPLIED BASED SOLELY UPON THE EXPRESS REPRESENTATIONS AND
WARRANTIES HEREIN AND, SUBJECT THERETO, ACCEPTS SUCH ENERGY “AS-IS”
AND “WITH ALL FAULTS”. PARTY A AND PARTY B EACH EXPRESSLY DISCLAIMS
ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR
IMPLIED, RELATING TO SUCH ENERGY, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO CONFORMITY TO MODELS
OR SAMPLES, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE.”
Article Eight Party A Credit Protection
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund
___ Option C
Credit Assurances from Party B, Section 8.1(b)
Not Applicable
X Applicable
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Collateral Threshold for Party B, Section 8.1(c)
Not Applicable
X Applicable
If applicable, complete the following:
Party B Collateral Threshold: means with respect to Party B, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
underlying rating, determined without reference to third party credit enhancement, on its utility
revenue bond (“Debt”) of Party B; provided, that (a) if the Debt of Party B is no longer rated by
one of S&P or Moody’s, the Threshold with respect to Party B will be zero dollars and (b) if an
Event of Default or Potential Event of Default with respect to Party B has occurred and is
continuing, the Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AA+ or above Aa1 or above $45,000,000
A+ or above A1 or above $35,000,000
A- or above A3 or above $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party B Independent Amount: N/A
Party B Rounding Amount: $100,000
Party B Minimum Transfer Amount: $100,000
Downgrade Event, Section 8.1(d):
Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s Debt by S&P or Moody's is
respectively below BBB- or Baa3, or (ii) both S&P and Moody's refuse to rate Party B's Debt,
or (iii) Party B’s City Council no longer has the legal authority under the Act, as defined by
Schedule M, to adjust electric rates as necessary to recover Party B’s costs of providing retail
electric service to its customers.
Sections 8.1(d) is amended by inserting “or fails to maintain such Performance Assurance or
guaranty or other credit assurance for so long as the Downgrade Event is continuing” after
“receipt of notice” in the fifth lines.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
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8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
Option A
X Option B Specify: Audited financial statements to be provided by Party A as described
in Section 8.2(a) shall be for Party A or parent entity, if any, providing credit support.
Option C
Section 8.2(a), Option B is deleted in its entirety and replaced with the following:
“Option B: If requested by Party B, Party A shall deliver (i) a copy of the annual report
containing audited consolidated financial statements for such fiscal year for the Party specified on
the Cover Sheet and (ii) either a copy of the quarterly report containing unaudited consolidated
financial statements for such fiscal quarter, if available, or (b) a copy of the semi-annual report
containing unaudited consolidated financial statements for the first six months of the fiscal year
for the Party specified on the Cover Sheet. In all cases the statements shall be for the most recent
accounting period and shall be prepared in accordance with generally accepted accounting
principles and delivered pursuant to the times set forth for reporting by publicly traded companies
pursuant to the rules of such Party’s native national securities regulator (or if the Party is not a
publicly traded company, within 120 days of the fiscal year end in the case of (i) above, and
within 90 days of the applicable period of the fiscal year in the case of (ii) above); provided,
however, that should any such statements not be available on a timely basis due to a delay in
preparation or certification, such delay shall not be an Event of Default so long as the relevant
entity diligently pursues the preparation, certification and delivery of the statements. Delivery of
financial statements may be satisfied through public filing with the relevant national securities
regulator or by publication on the Party’s corporate website. In any event the only financial
statements that shall be issued by Party A shall be those of Iberdrola Renewables Holdings Inc.,
as such entity may change from time to time.”
Credit Assurances from Party A, Section 8.2(b):
Not Applicable
X Applicable
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Collateral Threshold for Party A, Section 8.2(c ):
Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, the lower of (i) the amount
specified in the table below under the relevant heading opposite the lower of the Credit Ratings at
that time assigned by Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc. (“S&P”) or Moody’s Investors Service, Inc., a subsidiary of Moody’s
Corporation (“Moody’s”) of Party A or Party A’s Guarantor; provided, that if Party A or Party
A’s Guarantor is no longer rated by one of S&P or Moody’s, the Threshold with respect to Party
A will be zero dollars, (ii) the amount of any dollar limit contained in a guaranty provided by
Party A’s Guarantor, if applicable, or (iii) zero, if an Event of Default or Potential Event of
Default with respect to Party A has occurred and is continuing.
S&P Rating Moody’s Rating Threshold
AA+ or above Aa1 or above $45,000,000
A+ or above A1 or above $35,000,000
A- or above A3 or above $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount:
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $100,000
Downgrade Event, Section 8.2(d):
Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A or Party
A’s Guarantor falls below BBB- from S&P or Baa3 from Moody's or if Party A or Party
A’s Guarantor ceases to be rated by either S&P or Moody's.
Sections 8.2(d) is amended by inserting “or fails to maintain such Performance Assurance or
guaranty or other credit assurance for so long as the Downgrade Event is continuing” after
“receipt of notice” in the fifth lines.
Guarantor for Party A, Section 8.2(e):
X Guarantor for Party A: Iberdrola Renewables Holdings Inc.
Guarantee Amount: $2,000,000
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Article Ten
Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and
3, with “, which termination shall be effective immediately upon receipt of written notice
thereof”.
Section 10.2(viii) is amended by adding to the end: “; information and explanations of the terms
and conditions of each such Transaction shall not be considered investment or trading advice or a
recommendation to enter into that Transaction; no communication (written or oral) received from
the other Party shall be deemed to be an assurance or guarantee as to the expected results of that
Transaction; and the other Party is not acting as a fiduciary for or an adviser to it in respect of that
Transaction;”.
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.4 shall be amended by inserting the phrase "To the extent permitted by applicable
law," at the beginning of each of the first two sentences, and substituting the word, “each” for
“Each” after the insertion of each such phrase.
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal to
or higher than that of such Party or the Guarantor as of the Effective Date and the date of entering
into each Transaction under this Agreement, if any, for such Party, or (y) the obligations of such
Affiliate are guaranteed by such Party or its Guarantor, if any, in accordance with a guaranty
agreement in form and substance satisfactory to the other Party, and (iii) transfer or assign this
Agreement to any person or entity succeeding to all or substantially all of the assets of such Party
whose creditworthiness is equal to or higher than that of such Party or its Guarantor, if any, as of
the Effective Date and the effective date of any such transfer or assignment.
Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand, cause of
action, dispute and controversy arising out of or relating to this Agreement, the Parties hereby
consent to the exclusive jurisdiction of the federal courts sitting in the Northern District of the
State of California; provided, however, that if the federal courts sitting in the Northern District of
the State of California refuse jurisdiction, the Parties agree to the exclusive jurisdiction of the
state courts sitting in the County of Santa Clara, State of California.”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
Section 10.10 shall be amended to include the at the end of the first sentence:
“as amended by the Bankruptcy Code Amendments of 2005; that all Transactions hereunder
constitute “forward contracts”, and that each believes that it is a “forward contract merchant”
under statutory and decisional law in effect as of the Effective Date”
Confidentiality X Confidentiality Applicable, subject Section If not checked, inapplicable.
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CITY OF PALO ALTO RFP # __________
10.11 as amended.
Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to California Constitution Article 1, Section 3, and
the California Public Records Act, Cal. Gov. Code § 6250 et seq. (“Public Records Act”) in
regard to the documents comprising this Master Agreement and the Transactions, which items
may constitute public records subject to inspection and copying by the public under the authority
of the California Constitution and the Public Records Act. Party B shall, consistent with those
laws, use reasonable efforts to provide Party A with notice of any third party request to inspect
and copy any of the documents that comprise this Master Agreement and the Transactions, which
Party A might deem confidential and exempt from disclosure, in order that Party A may timely
seek to protect those documents from disclosure to the third party. Party A acknowledges and
agrees that Party B shall not be liable to Party A if Party B makes disclosure in accordance with
the California Constitution and/or the Public Records Act before Party A has timely obtained an
order to prevent Party B from making the requested disclosure to the third party.”
A new Section 10.12 shall be added to Article 10 as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party is acting,
or is authorized to act, as the agent of the other Party.”
A new Section 10.13 shall be added to Article 10 as follows:
“10.13 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope, breach,
termination or validity of each of them (a “Dispute”), the Parties will resolve such Dispute in the
following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.13.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if any, that the
Parties mutually agree to in writing, either Party shall be free to pursue any and all legal actions
and remedies as it may deem necessary.”
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CITY OF PALO ALTO RFP # __________
A new Section 10.14 shall be added to Article 10 as follows:
“10.14 The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this Agreement
is signed by the Parties and at the time of entering into any particular Transaction, including, but
not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et seq.) and related
regulations (Title 20, Sections 2900 – 2930 of the California Code of Regulations), as amended,
to the extent such laws and regulations, including SB 1368 and related regulations, apply or are
deemed to apply to this Agreement and any Transaction. To the extent SB 1368 and related
regulations require Party B as a local publicly owned electric utility to submit a compliance filing
in accordance with such laws, Party A, upon the request of Party B, shall in good faith provide
promptly to Party B (to the extent Party B lacks such information) the information to the extent
Party A has knowledge of or access to such information, and shall work cooperatively with and
provide commercially reasonable assistance to Party B in Party B’s compliance with such laws.
A failure by Party A to provide such information which is within its possession or knowledge
shall constitute a default under this Agreement.”
A new Section 10.15 shall be added to Article 10 as follows:
“10.15 Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days during
a Determination Period (each day, a “Disrupted Day”), then: (i) the fallback Floating Price, if any,
specified by the Parties in the relevant Confirmation shall be the Floating Price for each Disrupted
Day; (ii) if the Parties have not specified a fallback Floating Price, then the Parties will endeavor,
in good faith and using commercially reasonable efforts, to agree on a substitute Floating Price,
taking into consideration, without limitation, guidance, protocols or other recommendations or
conventions issued or employed by trade organizations or industry groups in response to the
Market Disruption Event and other prices published by the Price Source or alternative price
sources with respect to the Delivery Point or comparable Delivery Points that may permit the
Parties to derive the Floating Price based on historical differentials; (iii) if the Parties cannot agree
on a substitute Floating Price on or before the fifth Business Day following the first Trading Day
on which the Market Disruption Event first occurred or existed, then the Floating Price for each
Disrupted Day shall be determined by taking the arithmetic mean of quotations requested from
four leading dealers in the relevant market that are unaffiliated with either Party and mutually
agreed upon by the Parties (“Specified Dealers”), without regard to the quotations with the highest
and lowest values, subject to the following qualifications: (a) if exactly three quotations are
obtained, the Floating Price for each such Disrupted Day will be the quotation that remains after
disregarding the quotations having the highest and lowest values; (b) if fewer than three
quotations are obtained, the Floating Price for each such Disrupted Day will be the average of the
quotations obtained; (c) if the Parties cannot agree upon four Specified Dealers, then each of the
Parties will, acting in good faith and in a commercially reasonable manner, select up to two
Specified Dealers separately, and those selected dealers shall be the Specified Dealers. Unless
otherwise agreed, if at any time the Parties agree on a substitute Floating Price for any Disrupted
Day, then such substitute Floating Price shall be the Floating Price for such Disrupted Day,
notwithstanding the subsequent publication or announcement of a Delayed Floating Price by the
relevant Price Source or any quotations obtained from Specified Dealers.
For purposes herein, the following definitions shall apply:
“Determination Period” means each calendar month a part or all of which is within the Delivery
Period of a Transaction.
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CITY OF PALO ALTO RFP # __________
“Exchange” means, in respect of a Transaction, the exchange or principal trading market specified
as applicable to the relevant Transaction.
“Floating Price” means a Contract Price specified in a Transaction that is based upon a Price
Source.
“Market Disruption Event” means, with respect to any Price Source, any of the following events:
(i) the failure of the Price Source to announce, publish or make available the specified Floating
Price or information necessary for determining the Floating Price for a particular day; (ii) the
failure of trading to commence on a particular day or the permanent discontinuation or material
suspension of trading in the relevant options contract or commodity on the Exchange, RTO or in
the market specified for determining a Floating Price; (iii) the temporary or permanent
discontinuance or unavailability of the Price Source; (iv) the temporary or permanent closing of
any Exchange or RTO specified for determining a Floating Price; or (v) a material change in the
formula for or the method of determining the Floating Price by the Price Source or a material
change in the composition of the Product.
“Price Source” means, in respect of a Transaction, a publication or such other origin of reference,
including an Exchange or RTO, containing or reporting or making generally available to market
participants (including by electronic means) a price, or prices or information from which a price is
determined, as specified in the relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
“Trading Day” means a day in respect of which the relevant Price Source ordinarily would
announce, publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floating Price published, announced or made
available on a given day and used or to be used to determine a relevant price is subsequently
corrected by the relevant Price Source (i) within 120 days of the original publication,
announcement or availability, or (ii) in the case of RTO Transactions only, within such longer
time period as is consistent with the RTO’s procedures and guidelines, then either Party may
notify the other Party of that correction and the amount (if any) that is payable as a result of that
correction. If, not later than thirty (30) days after publication or announcement of that correction,
a Party gives notice that an amount is so payable, the Party that originally either received or
retained such amount will, not later than three (3) Business Days after such notice is effective,
pay, subject to any applicable conditions precedent, to the other Party that amount, together with
interest at the Interest Rate for the period from and including the day on which payment originally
was (or was not) made to but excluding the day of payment of the refund or payment resulting
from that correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from Specified
Dealers pursuant to paragraph (a) above unless the Parties expressly agree otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to the four (4)
decimal places. If the fifth (5th) decimal number is five (5) or greater, then the fourth (4th) decimal
number shall be increased by one (1), and if the fifth (5th) decimal number is less than five (5),
then the fourth (4th) decimal number shall remain unchanged.”
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CITY OF PALO ALTO RFP # __________
A new Section 10.16 shall be added to Article 10 as follows:
“10.16 “AB 32 fees” means the regulatory assessments, charges, fees imposts and/or taxes
imposed upon and required to be paid by suppliers of energy in accordance with the Global
Warming Solutions Act of 2006, Chapter 488, Statutes 2006, including, without limitation, the
Compliance Offset Protocols, which shall not be a basis for changing the Contract Price, defined
in Section 1.10 of the General Terms and Conditions, and that are in effect as of the Effective
Date of this Agreement and/or the date the Parties enter into each Transaction hereunder.”
A new Section 10.17 shall be added to Article 10 as follows:
“10.17 The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most stringent standard
permissible under applicable law. As to the Parties, it is understood and agreed that the standard
is the “public interest” application of the “just and reasonable” standard of review, as stated by the
United States Supreme Court in Morgan Stanley Capital Group Inc. v. Public Utility District No.
1 of Snohomish County, Nos. 06-1457, 128 S.Ct. 2733 (2008), and consistent with the order of the
Supreme Court in NRG Power Marketing, LLC, et al., v. Maine Public Utilities Commission et
al., No. 08-674, 130 S.Ct. 693 (2010) (“NRG Order”). As to all other persons, the Parties intend
and agree that the same standard, to the maximum degree as may be made applicable to other
than the Parties, apply, to the maximum degree permitted under the NRG Order.”
A new Section 10.18 is added as follows:
"10.18 The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products; provided, however, that nothing in this Agreement, including
this Section 10.18, prohibits the Parties from engaging in Transactions that are or may be
determined to be commodity options or swaps if they so desire. Party B is a commercial entity
engaged in the business of delivering electricity to retail customers and buying electricity products
with the intention of routinely taking delivery in order to provide service to its retail electric
customers."
Schedule M ___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter and
municipal ordinances under which Party B was created, organized and authorized to enter into this
Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the term
“Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo Alto
Enterprise Fund and the Act under which such Fund was established to determine, for its purposes
under this Agreement, that such Fund meets this definition of Special Fund.”
Part C Part C of Schedule M is amended by adding the phrase in line 7 “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part D Section 3.4 is modified by inserting a period after “Master Agreement” in line 7 and deleting the
rest of the sentence.
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Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause (ii) of this provision shall be deemed to have arisen during a fiscal
period of Governmental Entity or Public Power System for which such budgetary
approval or certification of its obligations under this Master Agreement is required to be
in effect and an Event of Default shall be deemed to have occurred for purposes of
Section 5.1 under which Governmental Entity or Public Power System shall be treated as
the Defaulting Party.”
Part F Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
Schedule P SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
Schedule P, “Products and Related Definitions,” is modified by adding the following at the end:
“Other Products and Service Levels: If the Parties agree to a service level defined by a different
agreement (e.g., the WSPP Agreement, the ERCOT Wholesale Electricity Enabling Agreement,
etc.) for a particular Transaction, then, unless the Parties expressly state and agree that all the
terms and conditions of such other agreement will apply, such reference to a service level/product
shall be defined by such other agreement, including, if applicable, the regional reliability
requirements and guidelines as well as the excuses for performance, Force Majeure,
Uncontrollable Forces, or other such excuses applicable to such other agreement, to the extent
inconsistent with the terms of this Agreement, but all other terms and conditions of this
Agreement shall remain applicable including, without limitation, Section 2.2.”
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator
transaction pursuant to the CAISO Tariff, as amended from time to time, for which the only
excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the CAISO
Tariff) called by the CAISO in accordance with the CAISO Tariff.
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE) 0700-
2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
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“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
“Market Redesign” In the event the current definition of the Delivery Point set forth in
a Transaction is modified, redefined, replaced or eliminated in the transmission provider’s or
other applicable tariff, the Parties agree to promptly negotiate in good faith to designate an
alternate Delivery Point that reasonably approximates the characteristics of the originally
designated Delivery Point so that the Parties shall be in an economic position as close as
reasonably applicable after such designation as they were at the time the Parties entered into such
Transaction, or as mutually agreed to by the Parties.
"West Firm" means with respect to a Transaction, a Product that is or will be scheduled
as firm energy consistent with the most recent rules adopted by the WECC for which the only
excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force
as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's
public utility or statutory obligations to its customers. Notwithstanding any other provision in this
Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy
as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the WSPP Agreement as amended from time to time.
EXHIBIT A MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION
EXHIBIT B RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which
products, terms, conditions and definitions shall be documented in an Resource Adequacy Form
of Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager and such other internal
approvals as are appropriate to the Parties. The form of any REC purchase and/or sale transaction
confirmation shall be mutually agreed to by both Parties.
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CITY OF PALO ALTO RFP # __________
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party A: Iberdrola Renewables, LLC
By: ……………………………..
Name:
Title:
Date: _________, 2013
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: ________, 2013
Party A: Iberdrola Renewables, LLC
By: ……………………………..
Name:
Title:
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by City Manager
By: ……………………………..
Name: James Keene
Title: City Manager
Date: , 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
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CITY OF PALO ALTO RFP # __________
MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date: _____ __,
2013 (“Effective Date”). The Master Agreement, together with the exhibits, schedules, annexes and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or
margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted
in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this Master Agreement are
the following:
Name: NextEra Energy Power Marketing, LLC
(“Counterparty ” or “Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: Legal Department
700 Universe Blvd., CTR-JB
Juno Beach, FL 33408
Facsimile: (561) 625-7504
Duns 05-448-1341
Federal Tax ID Number: 65-0851428
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
N/A
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn: Manager, NEPM Accounting
Phone: 561-304-5820
Facsimile: 561-625-7651
E-mail: power_settlements@nexteraenergy.com
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Day Ahead Pre-Scheduling:
Attn: Scheduling Desk
Phone: (561) 625- 7100
Facsimile: (561) 625-7604
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
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CITY OF PALO ALTO RFP # __________
Real Time Scheduling:
Attn: Scheduling Desk
Phone: (561) 625- 7100
Facsimile: (561) 625-7604
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Payments:
Attn: Manager, NEPML Accounting
Phone: 561-304-5820
Facsimile: 561-625-7663
E-mail: power_settlements@nexteraenergy.com
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK Bank of America, N.A.
ABA: 0260-0959-3
ACCT: 3751227650
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Credit Manager
Phone: (561) 304-6178
Email: tradecredit@nexteraenergy.com
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Electric Rate Schedule 1, dated July 26, 2010, Docket Number: ER10-1971-000
Party B Tariff: N/A
Article One
General Definitions Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by adding after “the price” in line 1 the words “, including any and all
AB 32 fees” and substituting “U.S. $” for “$U.S.” in line 1
Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
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CITY OF PALO ALTO RFP # __________
Section 1.12 is amended by (i) deleting in the fourth line the phrase “as an issues rating” and
replacing it with the phrase “ the general corporate credit rating, long-term issuer rating, or
the utility revenue bond rating”; and (ii) inserting at the end the following sentence “The
standing guaranty of NextEra Energy, Inc. in favor of Party A’s Guarantor, dated as of
October 14, 1998, shall not be considered to constitute ‘third party credit enhancement’ for
purposes of this definition.”
Section 1.24 is amended by adding before the period at the end thereof the following: “in
accordance with Section 5.2”.
Section 1.27 is amended by deleting the phrase “in a form acceptable to the Party in whose favor
the letter of credit is issued” and replacing it with the phrase “to be issued substantially in the
form set forth in Exhibit A attached hereto, with such changes to the terms in that form as the
issuing bank may require and as may be acceptable to the beneficiary thereof. ”
Section 1.28 is amended by adding before the period at end thereof the following: “in accordance
with Section 5.2”.
Section 1.45 is amended by adding the following sentence at the end of that provision:
“Party B shall be deemed to have complied with any request from Party A for the
provision of Performance Assurance by furnishing a copy of a resolution adopted by
Party B’s City Council within a reasonable period of time after receipt of such request,
determining that Party B’s retail rates are set at levels sufficiently high to recover all
costs of providing electric service to Party B’s retail electric customers, including the
costs incurred by Party B under all Transactions executed under this Agreement.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or
a Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered a Potential Event of Default unless and until
the applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the
word “purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at
Buyer’s option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line, and
(b) deleting the phrase “at Seller’s option” in the fifth line and inserting in their place the
following: “absent a sale, assuming a sale could not have been made in a commercially
reasonable manner.”
Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before
the period at the end thereof the following: “, as determined in accordance with Section 5.2.”
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CITY OF PALO ALTO RFP # __________
Section 1.60 is amended by inserting the words “in writing” immediately following the words
“agreed to”.
Article Two
Transaction Terms
and Conditions
Section 2.1 shall be amended by deleting the second sentence thereof.
For purposes of Section 2.3, Party B requires that all Transactions be confirmed in writing.
Accordingly, the provision is amended by striking the word “may” from the first line thereof and
replacing it with the word “shall.”
For purposes of Section 2.3, all references to Seller shall be instead to Party A.
X Optional provision in Section 2.4. If not checked, inapplicable.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and
all Transactions may not be orally amended or modified, including by Recording pursuant
to Section 2.5.”
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. In addition to the remedies provided pursuant to
Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part
of the Product pursuant to a Transaction for a period of three (3) or more consecutive days,
and such failure is not excused under the terms of the Product, by Force Majeure, by the
other Party’s failure to perform or by agreement of the Parties, then upon one (1) Business
Day’s prior written notice, and for so long as the non-performing Party fails to perform,
the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice
from the non-performing Party at least one (1) Business Day prior to the date upon which
the non-performing Party intends to resume its performance; provided that, if the
performing Party has entered into a replacement contract with a term of 31 days or less,
the performing Party may resume performance at the end of the term of such replacement
contract. Remedies available under this provision to the performing Party are in addition
to, not in replacement of, other remedies specified in this Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply for both Party A’s Guarantor and
Party B. Cross Default amount for each shall be:
Party A’s Guarantor: $75,000,000
Party B: $20,000,000.
Section 5.1(g) is amended by inserting, “or any Affiliate of such Party” after the first appearance
of the word “Party” in subsections (i) and (ii)..
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CITY OF PALO ALTO RFP # __________
Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semi-
colon, and adding new subsections “(i),” “(j)" , “(k)” and “(l)”, which read as follows:
"(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;"
"(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
"(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading; or"
“(l) revocation by the Federal Energy Regulatory Commission of Party A’s authorization to
make sales and market-based rates.”
Section 5.2 is amended in line 3 by changing “right (i) to” to “right to (i)” and by adding the
following sentence to the end of that provision:
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs,
if any, resulting from the termination of this Agreement, the Settlement Amount shall be
zero, notwithstanding any provision of this Agreement to the contrary.”
Section 5.3 is amended by inserting the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to
Article Eight”, between the words “that are due to the Non-Defaulting Party,”, and “plus
any and all other amounts” in the sixth line thereof.
Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Master Agreement unless
otherwise specified as follows: Option B is amended as set forth in Article 10 below.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate
of a Party shall be treated as if they were owing by or to the Party itself for purposes of
set-off.”
Article Six Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” in line 3 and
inserting in their place the word “shall”.
Article Eight 8.1 Party A Credit Protection
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CITY OF PALO ALTO RFP # __________
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund
___ Option C
Credit Assurances from Party B, Section 8.1(b)
X Not Applicable
___ Applicable
Collateral Threshold for Party B, Section 8.1(c)
X Not Applicable
___ Applicable
Party B Independent Amount: N/A
Party B Rounding Amount: N/A
Party B Minimum Transfer Amount: N/A
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s Credit Rating is below BBB-
or Baa3, or (ii) both S&P and Moody's refuse to assign a Credit Rating to Party B's utility
revenue bond, or (iii) Party B’s City Council no longer has the legal authority under the Act,
as defined by Schedule M, to adjust electric rates as necessary to recover Party B’s costs of
providing retail electric service to its customers.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
__ Option A
X Option B Specify: NextEra Energy, Inc.
___ Option C
Credit Assurances from Party A, Section 8.2(b):
___ Not Applicable
X Applicable
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Collateral Threshold for Party A, Section 8.2(c ):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the amount specified in
the table below under the relevant heading opposite the lower of the Credit Ratings at that time
assigned by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.
(“S&P”) or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”)
of Party A’s Guarantor; provided, that (a) if the long term, senior, unenhanced, unsecured debt
securities of Party A’s Guarantor is no longer rated by one of S&P or Moody’s, the Threshold
with respect to Party A will be zero dollars and (b) if an Event of Default or Potential Event of
Default with respect to Party A has occurred and is continuing, the Threshold with respect to
such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
A- or above A3 or above $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $250,000
Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A’s
Guarantor falls below BBB- from S&P or Baa3 from Moody's or if Party A’s Guarantor
ceases to be rated by either S&P or Moody's.
Guarantor for Party A, Section 8.2(e):
X Guarantor for Party A: NextEra Energy Capital Holdings, Inc.
Guarantee Amount: Must equal amount of Party A’s Collateral Threshold as defined
in section 8.2(c) of this Cover Sheet.
Guaranty to be issued in the form attached hereto as Exhibit A.
Article Ten
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Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and
3, with “, which termination shall be effective immediately upon receipt of written notice
thereof”.
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.2 shall be amended by deleting the “and” at the end of sub-section 10.2(xi), replacing
the period at the end of subsection 10.2(xii) with a semi-colon, and adding a new sub-section
(xiii) as follows:
“Notwithstanding any provision in this Agreement to the contrary, all information, statements,
reports and similar materials, conveyed by Party A orally or in writing in response to a bid
solicitation document [invitation for bids or request for proposals or combination thereof] of
Party B to demonstrate Party A’s financial condition, are true and accurate in all material
respects. Any representation made by Party A regarding its financial performance or condition
or that of its corporate parent (“Financial Representation”) as an inducement to Party B during
the solicitation, bidding or negotiation of any transaction entered into under this Master
Agreement shall be deemed to be repeated and reaffirmed, as of the date of the applicable
Transaction Confirmation and to be incorporated as a representation of Party A or related party,
who makes the Financial Representation in that Transaction Confirmation without the need for
any further action by either Party; and”
Section 10.4 shall be amended by inserting the phrase "To the extent permitted by law," at the
beginning of each of the first two sentences, and substituting the word, “each” for “Each” after
the insertion of each such phrase.
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal
to or higher than that of such Party or the Guarantor as of the Effective Date and the date of
entering into each Transaction under this Agreement, if any, for such Party, or (y) the obligations
of such Affiliate are guaranteed by such Party or its Guarantor, if any, in accordance with a
guaranty agreement in form and substance satisfactory to the other Party, and (iii) transfer or
assign this Agreement to any person or entity succeeding to all or substantially all of the assets of
such Party whose creditworthiness is equal to or higher than that of such Party or its Guarantor,
if any, as of the Effective Date and the effective date of any such transfer or assignment.
Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand,
cause of action, dispute and controversy arising out of or relating to this Agreement, the
Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the
Northern District of the State of California; provided, however, that if the federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa
Clara, State of California.”
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Section 10.8 is modified by adding before the word “constitute” in line four of Section 10.8, “,
the bid solicitation document (invitation for bids or request for proposals, or combination
thereof) and all financial and other information, explanations, statements, reports provided by
one party to the other in connection therewith”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
Section 10.10 shall be amended to include the at the end of the first sentence:
“as amended by the Bankruptcy Code Amendments of 2005, and that each believes that it is a
“forward contract merchant” under statutory and decisional law in effect as of the Effective
Date”
Confidentiality
X Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to California Constitution Article 1,
Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq.
(“Public Records Act”) in regard to the documents comprising this Master Agreement
and the Transactions, which items may constitute public records subject to inspection
and copying by the public under the authority of the California Constitution and the
Public Records Act. Party B shall, consistent with those laws, use reasonable efforts to
provide Party A with notice of any third party request to inspect and copy any of the
documents that comprise this Master Agreement and the Transactions, which Party A
might deem confidential and exempt from disclosure, in order that Party A may timely
seek to protect those documents from disclosure to the third party. Party A
acknowledges and agrees that Party B shall not be liable to Party A if Party B makes
disclosure in accordance with the California Constitution and/or the Public Records Act
before Party A has timely obtained an order to prevent Party B from making the
requested disclosure to the third party.”
A new Section 10.12 shall be added to Article 10 as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as the agent of the other Party.”
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A new Section 10.13 shall be added to Article 10 as follows:
10.13 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope,
breach, termination or validity of each of them (a “Dispute”), the Parties will resolve such
Dispute in the following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.13.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if
any, that the Parties mutually agree to in writing, either Party shall be free to pursue any
and all legal actions and remedies as it may deem necessary.
A new Section 10.14 shall be added to Article 10 as follows:
10.14: “The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this
Agreement is signed by the Parties and at the time of entering into any particular Transaction,
including, but not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et
seq.) and related regulations (Title 20, Sections 2900 – 2930 of the California Code of
Regulations), as amended, to the extent such laws and regulations, including SB 1368 and related
regulations, apply or are deemed to apply to this Agreement and any Transaction. To the extent
SB 1368 and related regulations require Party B as a local publicly owned electric utility to
submit a compliance filing in accordance with such laws, Party A, upon the request of Party B,
shall in good faith provide promptly to Party B (to the extent Party B lacks such information) the
information to the extent Party A has knowledge of or access to such information, and shall work
cooperatively with and provide commercially reasonable assistance to Party B in Party B’s
compliance with such laws. A failure by Party A to provide such information which is within
its possession or knowledge shall constitute a default under this Agreement.”
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Section 10.14, Index Transactions, is added as follows:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each
Disrupted Day.
If the Parties have not specified a fallback Floating Price, then the
Parties will endeavor, in good faith and using commercially reasonable
efforts, to agree on a substitute Floating Price, taking into consideration,
without limitation, guidance, protocols or other recommendations or
conventions issued or employed by trade organizations or industry
groups in response to the Market Disruption Event and other prices
published by the Price Source or alternative price sources with respect
to the Delivery Point or comparable Delivery Points that may permit the
Parties to derive the Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on
a substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the Parties
agree on a substitute Floating Price for such day, the substitute Floating
Price agreed upon by the Parties will remain the Floating Price without
adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first Trading
Day on which the Market Disruption Event first occurred or existed,
then the Floating Price for each Disrupted Day shall be determined by
taking the arithmetic mean of quotations requested from four leading
dealers in the relevant market that are unaffiliated with either Party
and mutually agreed upon by the Parties (“Specified Dealers”),
without regard to the quotations with the highest and lowest values,
subject to the following qualifications:
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CITY OF PALO ALTO RFP # __________
If exactly three quotations are obtained, the Floating Price for each
such Disrupted Day will be the quotation that remains after
disregarding the quotations having the highest and lowest
values.
o If fewer than three quotations are obtained, the Floating Price
for each such Disrupted Day will be the average of the
quotations obtained.
o If the Parties cannot agree upon four Specified Dealers, then
each of the Parties will, acting in good faith and in a
commercially reasonable manner, select up to two Specified
Dealers separately, and those selected dealers shall be the
Specified Dealers.
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price shall
be the Floating Price for such Disrupted Day, notwithstanding the subsequent
publication or announcement of a Delayed Floating Price by the relevant Price
Source or any quotations obtained from Specified Dealers.
"Determination Period" means each calendar month a part or all of which is within
the Delivery Period of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the
Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other
origin of reference, including an Exchange or RTO, containing or reporting
or making generally available to market participants (including by electronic
means) a price, or prices or information from which a price is determined, as
specified in the relevant Transaction.
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CITY OF PALO ALTO RFP # __________
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
"Trading Day" means a day in respect of which the relevant Price Source ordinarily
would announce, publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floating Price published, announced or
made available on a given day and used or to be used to determine a relevant price
is subsequently corrected by the relevant Price Source (i) within 30 days of the
original publication, announcement or availability, or (ii) in the case of RTO
Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that
correction and the amount (if any) that is payable as a result of that correction. If,
not later than thirty (30) days after publication or announcement of that correction,
a Party gives notice that an amount is so payable, the Party that originally either
received or retained such amount will, not later than three (3) Business Days after
such notice is effective, pay, subject to any applicable conditions precedent, to the
other Party that amount, together with interest at the Interest Rate for the period
from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that
correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from
Specified Dealers pursuant to paragraph (a) above unless the Parties expressly
agree otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to
four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then
the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th)
decimal number is less than five (5), then the fourth (4th) decimal number shall
remain unchanged.
A new Section 10.15 shall be added to Article 10 as follows:
10.15: “The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most stringent standard
permissible under applicable law. As to the Parties, it is understood and agreed that the standard
is the “Mobile-Sierra public interest” standard of review, as stated by the United States Supreme
Court in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish
County, Nos. 06-1457, 128 S.Ct. 2733 (2008), and consistent with the order of the Supreme
Court in NRG Power Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-
674, 130 S.Ct. 693 (2010) (“NRG Order”). As to all other persons, the Parties intend and agree
that the same standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.”
A new Section 10.16 shall be added to Article 10 as follows:
10.16 ““AB 32 fees” means the regulatory assessments, charges, fees imposts and/or taxes
imposed upon and required to be paid by suppliers of energy in accordance with the Global
Warming Solutions Act of 2006, Chapter 488, Statutes 2006, including, without limitation, the
Compliance Offset Protocols, which shall be included (or be deemed included to the extent they
are not expressly included) in the Contract Price, defined in Section 1.10 of the General Terms
and Conditions, and that are in effect as of the Effective Date of this Agreement and/or the date
the Parties enter into each Transaction hereunder.”
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CITY OF PALO ALTO RFP # __________
A new Section 10.17 shall be added to Article 10 as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products. Party B is a commercial entity engaged in the business of
delivering electricity to retail customers and buying electricity products with the intention of
routinely taking delivery in order to provide service to its retail electric customers."
Schedule M ___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter
and municipal ordinances under which Party B was created, organized and authorized to
enter into this Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the
term “Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo
Alto Enterprise Fund and the Act under which such Fund was established to determine,
for its purposes under this Agreement, that such Fund meets this definition of Special
Fund.”
Part C Part C of Schedule M is amended by adding the phrase in line 7 “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part D Section 3.4 is modified by inserting a period after “Master Agreement” in line 7 and deleting the
rest of the sentence.
Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause (ii) of this provision shall be deemed to have arisen
during a fiscal period of Governmental Entity or Public Power System for
which such budgetary approval or certification of its obligations under this
Master Agreement is required to be in effect and an Event of Default shall be
deemed to have occurred for purposes of Section 5.1 under which
Governmental Entity or Public Power System shall be treated as the Defaulting
Party.”
Part F ___ Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
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CITY OF PALO ALTO RFP # __________
Schedule P SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule
coordinator transaction pursuant to the CAISO Tariff as amended from time to time for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the
CAISO Tariff) called by the CAISO in accordance with the CAISO Tariff.
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE)
0700- 2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade shall mean a trade between
Scheduling Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any
similar description means with respect to a Transaction, a Product that is or will be scheduled as
firm energy consistent with the most recent rules adopted by the WECC for which the only
excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force
as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's
public utility or statutory obligations to its customers. Notwithstanding any other provision in this
Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy
as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
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CITY OF PALO ALTO RFP # __________
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which
products, terms, conditions and definitions shall be documented in an Resource Adequacy Form
of Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager. The form of any REC
purchase and/or sale transaction shall be mutually agreed to by the Parties.
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CITY OF PALO ALTO RFP # __________
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A:
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
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CITY OF PALO ALTO RFP # __________
EXHIBIT A
IRREVOCABLE NON-TRANSFERABLE STANDBY LETTER OF CREDIT
DATE OF ISSUANCE: ____________________
[Address]
Re: Credit No.________________
We (the “Issuing Bank”) hereby establish our Irrevocable Non-Transferable Standby Letter of Credit in your
favor for the account of ________________ (“Account Party”), for the aggregate amount not exceeding ____________
United States Dollars ($______) (the “Initial Available Amount”), available to you (“Beneficiary”) at sight upon
demand at our counters at [specify location] on or before the expiration hereof against presentation to us of the
Beneficiary’s signed and dated statement referencing our Letter of Credit No. ________________, stating the amount of
the demand and reading as follows:
“An Event of Default (as defined in the Master Agreement dated as of _________ between Beneficiary and
Account Party, as the same may have been amended (the “Master Agreement”)) has occurred and is
continuing with respect to Account Party under the Master Agreement and Account Party has failed to make all
payments due and owing to Beneficiary in accordance with the terms of the Master Agreement.”
[OR]
“An Early Termination Date (as defined in the Master Agreement dated as of ________ between Beneficiary
and Account Party, as the same may have been amended (the “Master Agreement”)) has occurred as a result of
a Termination Event (as defined in the Master Agreement) and Account Party has failed to make all payments
due and owing to Beneficiary in accordance with the terms of the Master Agreement.”
The Initial Available Amount shall automatically be reduced by the amount of any and all drawings paid from
time-to-time through the Issuing Bank referencing this Letter of Credit No. ________ (as so reduced, the “Available
Amount”). Partial drawings and multiple presentations are permitted from time-to-time hereunder up to the then-
outstanding Available Amount.
This Letter of Credit shall expire _________________(____) days from the date of issuance, but shall
automatically extend without amendment for additional __________ (______)-day periods from such original expiration
date or any subsequent expiration dates, if Beneficiary and Account Party have not received, at least ninety (90) days
prior to any such expiration date, notice of our intention not to renew.
We hereby agree with you that documents drawn under and in compliance with the terms of this Letter of Credit
shall be duly honored upon presentation as specified.
The Issuing Bank shall have a reasonable amount of time, not to exceed three (3) banking days following the
date of its receipt of documents from Beneficiary, to examine the documents and determine whether to take up or refuse
the documents and to inform Beneficiary thereof accordingly.
Except so far as otherwise stated, this Letter of Credit is subject to the International Standby
Practices, I.C.C. Publication No. 590 (“ISP98”). As to matters not covered by ISP98, the laws of
the State of New York, without regard to the principles of conflicts of laws thereunder, shall govern
all matters with respect to this Letter of Credit.
This Letter of Credit may not be amended, changed or modified without the express written consent of the
Beneficiary, the Issuing Bank and the Account Party.
[BANK SIGNATURE]
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CITY OF PALO ALTO RFP # __________
EXHIBIT B
GUARANTY
THIS GUARANTY (this “Guaranty”), dated as of _____, ____ (the “Effective Date”), is made by NEXTERA
ENERGY CAPITAL HOLDINGS, INC. (“Guarantor”), in favor of the City of Palo Alto, California
(“Counterparty”).
RECITALS:
A. WHEREAS, Counterparty and Guarantor’s indirect, wholly-owned subsidiary NEXTERA ENERGY POWER
MARKETING, LLC (“Obligor”) have entered into, or concurrently herewith are entering into, that certain
Master Power Purchase and Sale Agreement [dated/entered into/effective as of] ______________ ______,
20__ (the “Underlying Agreement”); and
B. WHEREAS, Counterparty and Obligor may from time to time enter into one or more transactions pursuant and
subject to the terms of the Underlying Agreement (the “Transactions”), which Transactions would be
evidenced by one or more confirmations entered into by Obligor and Counterparty in accordance with the
Underlying Agreement (which documentation shall, together with the Underlying Agreement, collectively be
referred to hereinafter as the “Agreement”); and
C. WHEREAS, Guarantor will directly or indirectly benefit from the Transactions to be entered into between
Obligor and Counterparty pursuant to the Agreement.
NOW THEREFORE, in consideration of the foregoing premises and as an inducement for Counterparty’s execution,
delivery and performance of the Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Guarantor hereby agrees for the benefit of Counterparty as follows:
* * *
1. GUARANTY. Subject to the terms and provisions hereof, Guarantor hereby absolutely and
irrevocably guarantees the timely payment when due of all obligations owing by Obligor to Counterparty
arising pursuant to the Agreement on or after the Effective Date (the “Obligations”). This Guaranty shall
constitute a guarantee of payment and not of collection. The liability of Guarantor under this Guaranty shall
be subject to the following limitations:
(a) Notwithstanding anything herein or in the Agreement to the contrary, the maximum aggregate
obligation and liability of Guarantor under this Guaranty, and the maximum recovery from Guarantor
under this Guaranty, shall in no event exceed __________________ [spell out the dollar amount]
U.S. Dollars (U.S. $__________) (the “Maximum Recovery Amount”).
(b) The obligation and liability of Guarantor under this Guaranty is specifically limited to payments
expressly required to be made under the Agreement, as well as costs of collection and enforcement of
this Guaranty (including attorney’s fees) to the extent reasonably and actually incurred by the
Counterparty (subject in all instances, to the limitations imposed by the Maximum Recovery Amount
as specified in Section 1(a) above). In no event, however, shall Guarantor be liable for or obligated to
pay any consequential, indirect, incidental, lost profit, special, exemplary, punitive, equitable or tort
damages.
2. DEMANDS AND PAYMENT.
(a) If Obligor fails to pay any Obligation to Counterparty when such Obligation is due and owing under
the Agreement (an “Overdue Obligation”), Counterparty may present a written demand to Guarantor
calling for Guarantor’s payment of such Overdue Obligation pursuant to this Guaranty (a “Payment
Demand”).
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CITY OF PALO ALTO RFP # __________
(b) Guarantor’s obligation hereunder to pay any particular Overdue Obligation(s) to Counterparty is
conditioned upon Guarantor’s receipt of a Payment Demand from Counterparty satisfying the
following requirements: (i) such Payment Demand must identify the specific Overdue Obligation(s)
covered by such demand, the specific date(s) upon which such Overdue Obligation(s) became due
and owing under the Agreement, and the specific provision(s) of the Agreement pursuant to which
such Overdue Obligation(s) became due and owing; (ii) such Payment Demand must be delivered to
Guarantor in accordance with Section 9 below; and (iii) the specific Overdue Obligation(s) addressed
by such Payment Demand must remain due and unpaid at the time of such delivery to Guarantor.
(c) After issuing a Payment Demand in accordance with the requirements specified in Section 2(b) above,
Counterparty shall not be required to issue any further notices or make any further demands with
respect to the Overdue Obligation(s) specified in that Payment Demand, and Guarantor shall be
required to make payment with respect to the Overdue Obligation(s) specified in that Payment
Demand within five (5) Business Days after Guarantor receives such demand. As used herein, the
term “Business Day” shall mean all weekdays (i.e., Monday through Friday) other than any
weekdays during which commercial banks or financial institutions are authorized to be closed to the
public in the State of Florida or the State of New York.
3. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants that:
(a) it is a corporation duly organized and validly existing under the laws of the State of Florida and has
the corporate power and authority to execute, deliver and carry out the terms and provisions of the
Guaranty;
(b) no authorization, approval, consent or order of, or registration or filing with, any court or other
governmental body having jurisdiction over Guarantor is required on the part of Guarantor for the
execution and delivery of this Guaranty; and
(c) this Guaranty constitutes a valid and legally binding agreement of Guarantor, enforceable against
Guarantor in accordance with the terms hereof, except as the enforceability thereof may be limited by
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity.
4. RESERVATION OF CERTAIN DEFENSES. Without limiting Guarantor’s own defenses and
rights hereunder, Guarantor reserves to itself all rights, setoffs, counterclaims and other defenses to which
Obligor is or may be entitled arising from or out of the Agreement, except for defenses (if any) based upon
the bankruptcy, insolvency, dissolution or liquidation of Obligor or any lack of power or authority of Obligor
to enter into and/or perform the Agreement.
5. AMENDMENT OF GUARANTY. No term or provision of this Guaranty shall be amended,
modified, altered, waived or supplemented except in a writing signed by Guarantor and Counterparty.
6. WAIVERS AND CONSENTS. Subject to and in accordance with the terms and provisions of this
Guaranty:
(a) Except as required in Section 2 above, Guarantor hereby waives (i) notice of acceptance of this Guaranty; (ii)
presentment and demand concerning the liabilities of Guarantor; and (iii) any right to require that any action or
proceeding be brought against Obligor or any other person, or to require that Counterparty seek enforcement of
any performance against Obligor or any other person, prior to any action against Guarantor under the terms
hereof.
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CITY OF PALO ALTO RFP # __________
(b) No delay by Counterparty in the exercise of (or failure by Counterparty to exercise) any rights hereunder shall
operate as a waiver of such rights, a waiver of any other rights or a release of Guarantor from its obligations
hereunder (with the understanding, however, that the foregoing shall not be deemed to constitute a waiver by
Guarantor of any rights or defenses which Guarantor may at any time have pursuant to or in connection with
any applicable statutes of limitation).
(c) Without notice to or the consent of Guarantor, and without impairing or releasing Guarantor’s obligations under
this Guaranty, Counterparty may: (i) change the manner, place or terms for payment of all or any of the
Obligations (including renewals, extensions or other alterations of the Obligations); (ii) release Obligor or any
person (other than Guarantor) from liability for payment of all or any of the Obligations; or (iii) receive,
substitute, surrender, exchange or release any collateral or other security for any or all of the Obligations.
7. REINSTATEMENT. Guarantor agrees that this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if all or any part of any payment made hereunder is at any time avoided or
rescinded or must otherwise be restored or repaid by Counterparty as a result of the bankruptcy or insolvency
of Obligor, all as though such payments had not been made.
8. TERMINATION. Guarantor may terminate this Guaranty by providing a written termination notice
to Counterparty specifying the date upon which such termination will take effect (provided that no such
termination shall take effect prior to 5:00 p.m. (Eastern Prevailing Time) on the fifth (5th) Business Day after
the termination notice has been delivered to Counterparty in accordance with Section 9 hereof). Upon the
effectiveness of such termination, Guarantor shall have no further liability hereunder, except as may pertain
pursuant to the last sentence of this paragraph. No such termination shall affect Guarantor's liability with
respect to any Obligations arising under any Transactions entered into prior to the time such termination is
effective, which Obligations shall remain subject to this Guaranty.
Unless terminated earlier, this Guaranty and the Guarantor’s obligations hereunder will terminate automatically and
immediately [upon the [second] anniversary of the Effective Date/at 11:59:59 Eastern Prevailing Time [_______,
20__]]; provided, however, that no such termination shall affect Guarantor's liability with respect to any Obligations
arising under any Transactions entered into prior to the time the termination is effective, which Obligations shall remain
subject to this Guaranty.
9. NOTICE. Any Payment Demand, notice, request, instruction, correspondence or other document to
be given hereunder (herein collectively called “Notice”) by Counterparty to Guarantor, or by Guarantor to
Counterparty, as applicable, shall be in writing and may be delivered either by (i) U.S. certified mail with
postage prepaid and return receipt requested, or (ii) recognized nationwide courier service with delivery
receipt requested, in either case to be delivered to the following address (or to such other U.S. address as may
be specified via Notice provided by Guarantor or Counterparty, as applicable, to the other in accordance with
the requirements of this Section 9):
TO GUARANTOR: * TO COUNTERPARTY:
NextEra Energy Capital Holdings, Inc.
700 Universe Blvd.
Juno Beach, Florida 33408
Attn: Treasurer
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Attn: Senior Assistant City
Attorney/Utilities
[Tel: (561) 694-6204 -- for use in
connection with courier deliveries]
[Tel: (___) ___-___ -- for use in
connection with courier deliveries]
* (NOTE: Copies of any Notices to Guarantor under this Guaranty shall also be sent via facsimile to
ATTN: Contracts Group, Legal, Fax No. (561) 625-7504 and ATTN: Credit Department, Fax No.
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CITY OF PALO ALTO RFP # __________
(561) 625-7642. However, such facsimile transmissions shall not be deemed effective for delivery
purposes under this Guaranty.)
Any Notice given in accordance with this Section 9 will (i) if delivered during the recipient's normal business hours on
any given Business Day, be deemed received by the designated recipient on such date, and (ii) if not delivered during the
recipient's normal business hours on any given Business Day, be deemed received by the designated recipient at the start
of the recipient's normal business hours on the next Business Day after such delivery.
10. MISCELLANEOUS.
(a) This Guaranty shall in all respects be governed by, and construed in accordance with, the law of the
State of New York, without regard to principles of conflicts of laws thereunder (other than Sections 5-
1401 and 5-1402 of the New York General Obligations Law).
(b) This Guaranty shall be binding upon Guarantor and its successors and permitted assigns and inure to
the benefit of and be enforceable by Counterparty and its successors and permitted assigns.
Guarantor may not assign this Guaranty in part or in whole without the prior written consent of
Counterparty. Counterparty may not assign its rights or benefits under this Guaranty in part or in
whole without the prior written consent of Guarantor.
(c) This Guaranty embodies the entire agreement and understanding between Guarantor and
Counterparty and supersedes all prior agreements and understandings relating to the subject matter
hereof.
(d) The headings in this Guaranty are for purposes of reference only, and shall not affect the meaning
hereof. Words importing the singular number hereunder shall include the plural number and vice
versa, and any pronouns used herein shall be deemed to cover all genders. The term "person" as used
herein means any individual, corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated association, or government (or any agency or political subdivision thereof).
(e) Wherever possible, any provision in this Guaranty which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any one jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
(f) Counterparty (by its acceptance of this Guaranty) and Guarantor each hereby irrevocably: (i) consents
and submits to the exclusive jurisdiction of the United States District Court for the Southern District
of New York, or if that court does not have subject matter jurisdiction, to the exclusive jurisdiction of
the Supreme Court of the State of New York, New York County (without prejudice to the right of any
party to remove to the United States District Court for the Southern District of New York) for the
purposes of any suit, action or other proceeding arising out of this Guaranty or the subject matter
hereof or any of the transactions contemplated hereby brought by Counterparty, Guarantor or their
respective successors or assigns;; and (ii) waives (to the fullest extent permitted by applicable law)
and agrees not to assert any claim that it is not personally subject to the jurisdiction of the above-
named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Guaranty or the subject matter hereof may not
be enforced in or by such court.
(g) COUNTERPARTY (BY ITS ACCEPTANCE OF THIS GUARANTY) AND GUARANTOR EACH
HEREBY IRREVOCABLY, INTENTIONALLY AND VOLUNTARILY WAIVES THE RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED ON, OR
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CITY OF PALO ALTO RFP # __________
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS GUARANTY OR THE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSON RELATING HERETO
OR THERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO GUARANTOR’S
EXECUTION AND DELIVERY OF THIS GUARANTY.
* * *
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty on _____________, 20__, but it is effective as of
the Effective Date.
NEXTERA ENERGY CAPITAL HOLDINGS, INC.
By:_______________________________________
Name:____________________________________
Title:______________________________________
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MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date: _____ __,
2013 (“Effective Date”). The Master Agreement, together with the exhibits, schedules, annexes and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or
margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted
in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this Master Agreement are
the following:
Name: PacifiCorp (“Counterparty ” or
“Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: ______________________________
Phone: ________________________
Facsimile: ______________________
E-mail: ____________________________
Duns _________________________
Federal Tax ID Number: ____________
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: ___________________________
Phone: ____________________________
Facsimile: ______________________
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City, Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn: __________________________
Phone: _____________________________
Facsimile: _______________________
E-mail: _________________________
Duns __________________________
Federal Tax ID Number: ______________
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Day Ahead Pre-Scheduling:
Attn: _______________________________
Phone: _____________________________
Facsimile: ___________________________
E-mail: _____________________________
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
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Real Time Scheduling:
Attn: _______________________________
Phone: _____________________________
Facsimile: ___________________________
E-mail: _____________________________
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Payments:
Attn: ________________________________
Phone: ______________________________
Facsimile: ____________________________
E-mail: ______________________________
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK _______________________________
ABA: _______________________________
ACCT: ______________________________
Confirmation _________________________
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: _______________________________
Phone: _____________________________
Facsimile: ___________________________
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Electric Rate Schedule ___, dated ______________, Docket Number: ER__-___-___
Party B Tariff: N/A
Article One
General Definitions Section 1.1 is amended to add to the end thereof: “Notwithstanding the foregoing, in the case of
Party A, “Affiliate” means PacifiCorp and its direct and indirect subsidiaries.”
Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by adding after “the price” in line 1 the words “, which shall not be
changed on the basis of any and all AB 32 fees” and substituting “U.S. $” for “$U.S.” in line 1.
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Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
Section 1.12 is amended by deleting in the fourth line the word “issues” and replacing it with the
word “issuer”.
Section 1.24 is amended adding the following after “Costs”: “calculated in a commercially
reasonable manner based on the prime rate of interest as published from time to time under the
Wall Street Journal for such period and such calculation will be equal to the net present value of
the economic gain to it.” and by adding before the period at the end thereof the following: “in
accordance with Section 5.2”.
Section 1.27 is amended to read as follows:
"Letter(s) of Credit" means one or more irrevocable, transferable standby letters of credit issued
by a U.S. commercial bank with such bank having a credit rating of at least A from S&P and A2
from Moody's, and having total assets (net of reserves) of at least $10,000,000,000 and
acceptable to the Party in whose favor the letter of credit is issued, and the acceptance of the
issuing bank shall not be unreasonably withheld. Costs of a letter of credit shall be borne by the
applicant for such letter of credit.
Section 1.28 is amended by adding the following after “Costs”: "calculated in a commercially
reasonable manner based on the prime rate of interest as published from time to time under the
Wall Street Journal for such period and such calculation will be equal to the net present value of
the economic loss to it.” and by adding before the period at end thereof the following: “in
accordance with Section 5.2”.
Section 1.45 is amended by adding the following sentence at the end of that provision:
“Performance Assurance means collateral in the form of either cash, Letter(s) of Credit,
or other security, which form is determined by the Party issuing the collateral in its sole
discretion and is reasonably acceptable to the requesting Party.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or
a Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered an Event of Default unless and until the
applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the
word “purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at
Buyer’s option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line, and
(b) deleting the phrase “at Seller’s option” in the fifth line and inserting in their place the
following: “absent a sale, assuming a sale could not have been made in a commercially
reasonable manner.”
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Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before
the period at the end thereof the following: “, as determined in accordance with Section 5.2.”
Section 1.60 is amended by inserting the words “in writing” immediately following the words
“agreed to”.
Article Two
Transaction Terms
and Conditions
Section 2.1 shall be amended by deleting the second sentence thereof.
For purposes of Section 2.3, Party B requires that all Transactions be confirmed in writing.
Accordingly, the provision is amended by striking the word “may” from the first line thereof and
replacing it with the word “shall.”
For purposes of Section 2.3, all references to Seller shall be instead to Party A.
X Optional provision in Section 2.4. If not checked, inapplicable.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and
all Transactions may not be orally amended or modified, including by Recording pursuant
to Section 2.5.”
Article Three
Obligations and
Deliveries
Market Redesign. A new Section 3.4 shall be added as follows:
“3.4: Market Redesign. In the event the current definition of the Delivery Point set
forth in a Transaction is modified, redefined, replaced or eliminated in the Transmission
Provider’s or other applicable tariff, the Parties agree to promptly negotiate in good
faith to designate an alternate Delivery Point that reasonably approximates the
characteristics of the originally designated Delivery Point so that the Parties shall be in
the same economic position after such designation as they were at the time the Parties
entered into such Transaction, or as mutually agreed to by the Parties.”
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
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A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. In addition to the remedies provided pursuant to
Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part
of the Product pursuant to a Transaction for a period of three (3) or more consecutive days,
and such failure is not excused under the terms of the Product, by Force Majeure, by the
other Party’s failure to perform or by agreement of the Parties, then upon one (1) Business
Day’s prior written notice, and for so long as the non-performing Party fails to perform,
the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice
from the non-performing Party at least one (1) Business Day prior to the date upon which
the non-performing Party intends to resume its performance; provided that, if the
performing Party has entered into a replacement contract with a term of 31 days or less,
the performing Party may resume performance at the end of the term of such replacement
contract. Remedies available under this provision to the performing Party are in addition
to, not in replacement of, other remedies specified in this Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply for both Party A and Party B.
Cross Default amount for each shall be $70,000,000.
Section 5.1(g) is amended by inserting, “or any Affiliate of such Party” after the first appearance
of the word “Party” in subsections (i) and (ii).
Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semi-
colon, and adding new subsections “(i),” “(j)" , “(k)” and “(l)”, which read as follows:
"(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;"
"(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
"(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading; or"
“(l) revocation by the Federal Energy Regulatory Commission of Party A’s authorization to
make sales and market-based rates.”
Section 5.2 is amended in line 3 by changing “right (i) to” to “right to (i)” and by adding the
following sentence to the end of that provision:
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs,
if any, resulting from the termination of this Agreement, the Settlement Amount shall be
zero, notwithstanding any provision of this Agreement to the contrary.”
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Section 5.3 is amended by inserting the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to
Article Eight”, between the words “that are due to the Non-Defaulting Party,”, and “plus
any and all other amounts” in the sixth line thereof.
The following is added to the end of Section 5.4:
"Notwithstanding any provision to the contrary contained in this Agreement, the Non-
Defaulting Party shall not be required to pay to the Defaulting Party any amount under
Article 5 until the Non-Defaulting Party receives confirmation satisfactory to it acting in
its reasonable discretion (which may include an opinion of its counsel) that all other
obligations of any kind whatsoever of the Defaulting Party to make any payments to the
Non-Defaulting Party under this Agreement or otherwise which are due and payable as
of the Early Termination Date (including for these purposes amounts payable pursuant
to Excluded Transactions) have been fully and finally performed."
Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Master Agreement unless
otherwise specified as follows: Option B is amended as set forth in Article 10 below.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate
of a Party shall be treated as if they were owing by or to the Party itself for purposes of
set-off.”
Article Six
Payment and Netting 6.4 is amended by deleting “and owing to each other on the same date”.
Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” in line 3 and
inserting in their place the word “shall”.
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Article Seven
Limitations The fifteenth and sixteenth lines of Section 7.1 are amended by deleting "UNLESS
EXPRESSLY HEREIN PROVIDED,".
The following is added to the end of Article Seven:
"7.2. Disclaimer of Warranties. PARTY A AND PARTY B EACH ACKNOWLEDGE THAT
IT HAS ENTERED INTO THIS AGREEMENT AND IS CONTRACTING FOR THE
PRODUCTS BASED SOLELY UPON THE EXPRESS REPRESENTATIONS AND
WARRANTIES HEREIN AND, SUBJECT THERETO, ACCEPTS SUCH PRODUCTS “AS-
IS” AND “WITH ALL FAULTS”. PARTY A AND PARTY B EACH EXPRESSLY
DISCLAIM ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL,
EXPRESS OR IMPLIED, RELATING TO SUCH PRODUCTS, INCLUDING, WITHOUT
LIMITATION, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY, OR FITNESS FOR
ANY PARTICULAR PURPOSE. "
Article Eight 8.1 Party A Credit Protection
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund
___ Option C
Credit Assurances from Party B, Section 8.1(b)
Not Applicable
X Applicable
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Collateral Threshold for Party B, Section 8.1(c)
___ Not Applicable
_X_ Applicable
If applicable, complete the following:
Party B Collateral Threshold: means with respect to Party B, at any time the amount specified in
the table below under the relevant heading opposite the lower of the issuer ratings at that time
assigned by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.
(“S&P”) or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”)
to the General Obligation bonds of Party B; provided, that (a) if the General Obligation bonds of
Party B are no longer rated by S&P or Moody’s, the Threshold with respect to Party B will be
zero dollars and (b) if an Event of Default or Potential Event of Default with respect to Party B
has occurred and is continuing, the Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AA+ or above Aa1 or above $40,000,000
A+, AA- or AA A1, Aa3 or Aa2 $35,000,000
A- and A A3 and A2 $30,000,000
BBB+ Baa1 $25,000,000
BBB Baa2 $12,500,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $100,000
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s underlying issuer rating on its
General Obligation bonds by S&P or Moody's is respectively below BBB- or Baa3, or (ii)
both S&P and Moody's refuse to rate Party B's General Obligation bonds, or (iii) Party B’s
City Council no longer has the legal authority under the Act, as defined by Schedule M, to
adjust electric rates as necessary to recover Party B’s costs of providing retail electric service
to its customers.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
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8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
__ Option A
X Option B Specify: Audited financial statements to be provided by Party A as described
in Section 8.2(a) shall be for Party A or parent entity, if any, providing credit support.
___ Option C
Credit Assurances from Party A, Section 8.2(b):
___ Not Applicable
X Applicable
Collateral Threshold for Party A, Section 8.2(c ):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
long term, senior, unenhanced, unsecured debt securities or obligations of Party A; provided, that
(a) if the long term, senior, unenhanced, unsecured debt securities of Party A is no longer rated
by one of S&P or Moody’s, the Threshold with respect to Party A will be zero dollars and (b) if
an Event of Default or Potential Event of Default with respect to Party A has occurred and is
continuing, the Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AA+ or above Aa1 or above $40,000,000
A+, AA- or AA A1, Aa3 or Aa2 $35,000,000
A- and A A3 and A2 $30,000,000
BBB+ Baa1 $25,000,000
BBB Baa2 $12,500,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $100,000
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Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A or Party
A’s Guarantor falls below BBB- from S&P or Baa3 from Moody's or if the unenhanced,
unsecured senior long-term debt securities or obligations of Party A or Party A’s
Guarantor ceases to be rated by either S&P or Moody's.
Guarantor for Party A, Section 8.2(e):
X Guarantor for Party A: N/A______________________
Article Ten
Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and
3, with “, which termination shall be effective immediately upon receipt of written notice
thereof”.
Section 10.2(viii) is amended by adding to the end: “;information and explanations of the terms
and conditions of each such Transaction shall not be considered investment or trading advice or a
recommendation to enter into that Transaction; no communication (written or oral) received from
the other Party shall be deemed to be an assurance or guarantee as to the expected results of that
Transaction; and the other Party is not acting as a fiduciary for or an adviser to it in respect of
that Transaction;”
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.2 shall be amended by deleting the “and” at the end of sub-section 10.2(xi), replacing
the period at the end of subsection 10.2(xii) with a semi-colon, and adding a new sub-section
(xiii) as follows:
“Notwithstanding any provision in this Agreement to the contrary, all information, statements,
reports and similar materials, conveyed by Party A orally or in writing in response to a bid
solicitation document [invitation for bids or request for proposals or combination thereof] of
Party B to demonstrate Party A’s financial condition, are true and accurate in all material
respects. Any representation made by Party A regarding its financial performance or condition
(“Financial Representation”) as an inducement to Party B during the solicitation, bidding or
negotiation of any transaction entered into under this Master Agreement shall be deemed to be
repeated and reaffirmed, as of the date of the applicable Transaction Confirmation entered into as
the outcome of such bid, except as changed by Party A in writing, for example by updated
financial statements, and to be incorporated as a representation of Party A or related party, who
makes the Financial Representation in that Transaction Confirmation without the need for any
further action by either Party; and”
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Section 10.4 shall be amended by inserting the phrase "To the extent permitted by law," at the
beginning of each of the first two sentences, and substituting the word, “each” for “Each” after
the insertion of each such phrase.
The following is added to the end of Section 10.4: “In the event of any inconsistency between
the terms hereof and the terms of any FERC-filed tariff from which Party B purchases
transmission or transmission-related services from Party A’s transmission function, the terms of
such FERC-filed tariff shall prevail with respect to that purchase of transmission or transmission-
related services from Party A’s transmission function.
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) such Affiliate’s creditworthiness is equal
to or higher than that of such Party or the Guarantor as of the Effective Date and the date of
entering into each Transaction under this Agreement, if any, for such Party, or (y) the obligations
of such Affiliate are guaranteed by such Party or its Guarantor, if any, in accordance with a
guaranty agreement in form and substance satisfactory to the other Party, and (iii) transfer or
assign this Agreement to any person or entity succeeding to all or substantially all of the assets of
such Party whose creditworthiness is equal to or higher than that of such Party or its Guarantor,
if any, as of the Effective Date and the effective date of any such transfer or assignment.
Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand,
cause of action, dispute and controversy arising out of or relating to this Agreement, the
Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the
Northern District of the State of California; provided, however, that if the federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa
Clara, State of California.”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
Section 10.10 shall be amended to include the at the end of the first sentence:
“as amended by the Bankruptcy Code Amendments of 2005, and that each believes that it is a
“forward contract merchant” under statutory and decisional law in effect as of the Effective
Date”
Confidentiality
X Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
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Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to California Constitution Article 1,
Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq.
(“Public Records Act”) in regard to the documents comprising this Master Agreement
and the Transactions, which items may constitute public records subject to inspection
and copying by the public under the authority of the California Constitution and the
Public Records Act. Party B shall, consistent with those laws, use reasonable efforts to
provide Party A with notice of any third party request to inspect and copy any of the
documents that comprise this Master Agreement and the Transactions, which Party A
might deem confidential and exempt from disclosure, in order that Party A may timely
seek to protect those documents from disclosure to the third party. Party A
acknowledges and agrees that Party B shall not be liable to Party A if Party B makes
disclosure in accordance with the California Constitution and/or the Public Records Act
before Party A has timely obtained an order to prevent Party B from making the
requested disclosure to the third party.”
A new Section 10.12 shall be added to Article 10 as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as the agent of the other Party.”
A new Section 10.13 shall be added to Article 10 as follows:
10.13 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope,
breach, termination or validity of each of them (a “Dispute”), the Parties will resolve such
Dispute in the following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.13.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if
any, that the Parties mutually agree to in writing, either Party shall be free to pursue any
and all legal actions and remedies as it may deem necessary.
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A new Section 10.14 shall be added to Article 10 as follows:
10.14: “The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this
Agreement is signed by the Parties and at the time of entering into any particular Transaction,
including, but not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et
seq.) and related regulations (Title 20, Sections 2900 – 2930 of the California Code of
Regulations), as amended, to the extent such laws and regulations, including SB 1368 and related
regulations, apply or are deemed to apply to this Agreement and any Transaction. To the extent
SB 1368 and related regulations require Party B as a local publicly owned electric utility to
submit a compliance filing in accordance with such laws, Party A, upon the request of Party B,
shall in good faith provide promptly to Party B (to the extent Party B lacks such information) the
information to the extent Party A has knowledge of or access to such information, and shall work
cooperatively with and provide commercially reasonable assistance to Party B in Party B’s
compliance with such laws. A failure by Party A to provide such information which is within
its possession or knowledge shall constitute a default under this Agreement.”
A new Section 10.15 shall be added to Article 10 as follows:
10.15: “The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most stringent standard
permissible under applicable law. As to the Parties, it is understood and agreed that the standard
is the “Mobile-Sierra public interest” standard of review, as stated by the United States Supreme
Court in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish
County, Nos. 06-1457, 128 S.Ct. 2733 (2008), and consistent with the order of the Supreme
Court in NRG Power Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-
674, 130 S.Ct. 693 (2010) (“NRG Order”). As to all other persons, the Parties intend and agree
that the same standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.”
A new Section 10.16 shall be added to Article 10 as follows:
10.16 ““AB 32 fees” means the regulatory assessments, charges, fees imposts and/or taxes
imposed upon and required to be paid by suppliers of energy in accordance with the Global
Warming Solutions Act of 2006, Chapter 488, Statutes 2006, including, without limitation, the
Compliance Offset Protocols, which shall not be a basis for changing the Contract Price, defined
in Section 1.10 of the General Terms and Conditions, and that are in effect as of the Effective
Date of this Agreement and/or the date the Parties enter into each Transaction hereunder.”
A new Section 10.17 shall be added to Article 10 as follows:
“Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each
Disrupted Day.
If the Parties have not specified a fallback Floating Price, then the
Parties will endeavor, in good faith and using commercially reasonable
efforts, to agree on a substitute Floating Price, taking into consideration,
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CITY OF PALO ALTO RFP # __________
without limitation, guidance, protocols or other recommendations or
conventions issued or employed by trade organizations or industry
groups in response to the Market Disruption Event and other prices
published by the Price Source or alternative price sources with respect
to the Delivery Point or comparable Delivery Points that may permit the
Parties to derive the Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on
a substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the Parties
agree on a substitute Floating Price for such day, the substitute Floating
Price agreed upon by the Parties will remain the Floating Price without
adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first Trading
Day on which the Market Disruption Event first occurred or existed,
then the Floating Price for each Disrupted Day shall be determined by
taking the arithmetic mean of quotations requested from four leading
dealers in the relevant market that are unaffiliated with either Party
and mutually agreed upon by the Parties (“Specified Dealers”),
without regard to the quotations with the highest and lowest values,
subject to the following qualifications:
o If exactly three quotations are obtained, the Floating Price for
each such Disrupted Day will be the quotation that remains
after disregarding the quotations having the highest and lowest
values.
o If fewer than three quotations are obtained, the Floating Price
for each such Disrupted Day will be the average of the
quotations obtained.
o If the Parties cannot agree upon four Specified Dealers, then
each of the Parties will, acting in good faith and in a
commercially reasonable manner, select up to two Specified
Dealers separately, and those selected dealers shall be the
Specified Dealers.
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price
shall be the Floating Price for such Disrupted Day, notwithstanding the
subsequent publication or announcement of a Delayed Floating Price by
the relevant Price Source or any quotations obtained from Specified
Dealers.
"Determination Period" means each calendar month a part or all of which is within
the Delivery Period of a Transaction.
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CITY OF PALO ALTO RFP # __________
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the
Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin of
reference, including an Exchange or RTO, containing or reporting or making
generally available to market participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the
relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
"Trading Day" means a day in respect of which the relevant Price Source ordinarily
would announce, publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floating Price published, announced or
made available on a given day and used or to be used to determine a relevant price is
subsequently corrected by the relevant Price Source (i) within 30 days of the
original publication, announcement or availability, or (ii) in the case of RTO
Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that
correction and the amount (if any) that is payable as a result of that correction. If,
not later than thirty (30) days after publication or announcement of that correction, a
Party gives notice that an amount is so payable, the Party that originally either
received or retained such amount will, not later than three (3) Business Days after
such notice is effective, pay, subject to any applicable conditions precedent, to the
other Party that amount, together with interest at the Interest Rate for the period
from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that
correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from
Specified Dealers pursuant to paragraph (a) above unless the Parties expressly agree
otherwise.
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CITY OF PALO ALTO RFP # __________
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to
four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then
the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th)
decimal number is less than five (5), then the fourth (4th) decimal number shall
remain unchanged.”
A new Section 10.18 is added as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products; provided, however, that nothing in this Agreement,
including this Section 10.18, prohibits the Parties from engaging in Transactions that are or
maybe determined to be swaps if they so desire. Party B is a commercial entity engaged in the
business of delivering electricity to retail customers and buying electricity products with the
intention of routinely taking delivery in order to provide service to its retail electric customers.
Schedule M
___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter
and municipal ordinances under which Party B was created, organized and authorized to
enter into this Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the
term “Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo
Alto Enterprise Fund and the Act under which such Fund was established to determine,
for its purposes under this Agreement, that such Fund meets this definition of Special
Fund.”
Part C Part C of Schedule M is amended by adding the phrase in line 7 “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part D Section 3.4 is modified by inserting a period after “Master Agreement” in line 7 and deleting the
rest of the sentence.
Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause (ii) of this provision shall be deemed to have arisen
during a fiscal period of Governmental Entity or Public Power System for
which such budgetary approval or certification of its obligations under this
Master Agreement is required to be in effect and an Event of Default shall be
deemed to have occurred for purposes of Section 5.1 under which
Governmental Entity or Public Power System shall be treated as the Defaulting
Party.”
Part F ___ Add Section 8.4. If not checked, inapplicable.
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CITY OF PALO ALTO RFP # __________
Part G Part G does not apply.
Schedule P
SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule
coordinator transaction pursuant to the CAISO Tariff as amended from time to time for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the
CAISO Tariff) called by the CAISO in accordance with the CAISO Tariff.
Schedule P, “Products and Related Definitions” is modified by inserting the following
at its end:
“Other Products and Service Levels: If the Parties agree to a service level defined by a
different agreement (e.g., the WSPP Agreement, the ERCOT Wholesale Electricity Enabling
Agreement, etc.) for a particular Transaction, then, unless the Parties expressly state and agree
that all the terms and conditions of such other agreement will apply, such reference to a service
level/product shall be defined by such other agreement, including, if applicable, the regional
reliability requirements and guidelines as well as the excuses for performance, Force Majeure,
Uncontrollable Forces, or other such excuses applicable to such other agreement, to the extent
inconsistent with the terms of this Agreement, but all other terms and conditions of this
Agreement shall remain applicable.”
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE)
0700- 2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade shall mean a trade between
Scheduling Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
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CITY OF PALO ALTO RFP # __________
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any
similar description means with respect to a Transaction, a Product that is or will be scheduled as
firm energy consistent with the most recent rules adopted by the WECC for which the only
excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force
as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's
public utility or statutory obligations to its customers. Notwithstanding any other provision in this
Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy
as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which
products, terms, conditions and definitions shall be documented in an Resource Adequacy Form
of Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager and all other relevant
internal approvals of both parties. Party B’s execution of a Confirmation shall constitute a
statement by Party B that it has all required approvals. The form of any REC purchase and/or
sale transaction shall be mutually agreed to by the Parties.
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CITY OF PALO ALTO RFP # __________
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A:
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
FIRST AMENDED AND RESTATED MASTER POWER
PURCHASE AND SALE AGREEMENT
(EEl Version 2.1, modified 4/25/00)
AMENDED AND RESTATED COVER SHEET
This First Amended and Restated Master Power Purchase and Sale Agreement ("First Amended and Restated Master Agreement") is made as of the following date_____________________________ the (“Effective Date”), and amends, restates and supersedes in its entirety that certain Master Power Purchase and Sale Agreement made as of July 5, 2007
(“Master Agreement”). This First Amended and Restated Master Agreement, together with the exhibits, schedules,
annexes and any written supplements hereto, the Party A Tariff, any designated collateral, credit support or margin
agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted in
accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this First Amended and Restated
Master Agreement are the following:
Name: Powerex Corp. ("Powerex" or "Party A") Name: City of Palo Alto ("Counterparty" or "Party B")
All Notices:
Attn: Legal Services Department
Suite 1300 - 666 Burrard Street
Vancouver, B. C. V6G 2X8
Phone: 604.891.6090
Facsimile: 604.891.5006
Duns 25-330-1949
Federal Tax ID Number: 98-0164470
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Risk Manager
Phone: 604.891.5047
Facsimile: 604.891.5056
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn: Finance Dept.
Phone: 604.895.7018
Facsimile: 604.891.6011
Email: powerex.finance@powerex.com
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4255
Scheduling:
Attn: Schedulers
Phone: 604.891.6005
Facsimile: 604.891.5045
Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: (916) 781-4237/3636
Facsimile: (916) 781-4226
Payments:
Attn: Finance Department
Phone: 604.891.6063
Facsimile: 604.891.6011
Payments:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4255
1
Wire Transfer:
BNK: Wells Fargo Bank
ABA: 026005092 SWIFT PNBPUS3NNYC
Beneficiary’s Bank: Bank of Montreal
ACCT: 001 00040 4625335
Beneficiary’s Bank: Bank of Montreal
Bank Code: 001 Transit Code: 00040
ACCT: 4625335 SWIFT BOFMCAM2
Powerex Corp.
Wire Transfer:
Deposit to Northern California Power Agency, "to the
benefit of City of Palo Alto"
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 S.W. Oak Street, Suite 400
Portland, OR 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Credit Risk Dept.
Phone: (604) 895-7093
Facsimile: 604.891.5025
Credit and Collections:
Attn: Power Accounts Administrator
Northern California Power Agency
180 Cirby Way
Roseville, CA 95678
Phone: 916-781-4224/3636
Facsimile: 916-781-4255
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Director, Risk Management
Phone: (604) 891- 5047
Facsimile: (604) 891-5056
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City Attorney
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: FERC Rate Schedule No. 1, effective March 1, 2012, Docket No. ER11-2664-001
Party A shall provide to Party B a copy of its current Tariff and any and all amendments with its
bid in response to Party A's request for proposals and in any event no later than thirty (30) Days
before the execution of this Agreement.
Party B Tariff: N/A
ARTICLE ONE GENERAL DEFINITIONS
Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by adding after “the price” in line 1 the words, “, including any and
all AB 32 fees” and substituting “U.S. $” for “$U.S.” in line 1.
Section 1.11, line 3: after "Party" add "after using commercially reasonable efforts to
mitigate such costs".
Section 1.12 is revised to read as follows:
"1.12 "Credit Rating" means, with respect to Party A or Party A's Guarantor, if any,
on any date of determination, the rating then assigned by Moody's or S&P to its
senior unsecured, long-term debt obligations (not supported by insurance provider
enhancement) or if Party A or its Guarantor does not have a rating for its
senior unsecured long-term debt, then the issuer or corporate credit rating assigned
by S&P, or the issuer rating assigned by Moody's. With respect to Party B, on any
date of determination, the rating then assigned by Moody's or S&P to its utility
revenue bonds (not supported by insurance provider enhancement) or if Party B
does not have a rating for its utility revenue bonds, then the issuer or corporate
credit rating assigned by S&P, or the issuer rating assigned by Moody's. In the
event that a party or a party's Guarantor has multiple ratings, the lower rating
shall prevail.
Section 1.24, line 3: after "commercially reasonable manner" add "in accordance with Section
5.2".
Section 1.26, line 4: delete "plus two percent (2%)."
Section 1.27, line 3: after "in a form" add "and in an amount". Section 1.27 is revised by (A)
deleting the word "transferable" in the first line and replacing it with "non-transferable", (B)
adding the phrase ", a Canadian commercial bank" in the second line immediately after the
words "U.S. commercial bank", and (C) adding the phrase "and at least $10 billion in total
assets" in the third line immediately after the word "Moody's".
Section 1.28, line 3: after "commercially reasonable manner "add "and in accordance with
Section 5.2".
Section 1.44, line 1: delete "means the tariff, if any, specified in the Cover Sheet for Party B"
and replace with "is not applicable."
Section 1.45 is modified by deleting and replacing in its entirety, so the provision now reads:
“Performance Assurance means collateral in the form of either cash or Letter(s) of Credit, , which
form is determined by the Party issuing the collateral in its sole discretion and is reasonably
acceptable to the requesting party.”
Section 1.50: delete "2.4" and replace with "2.5".
Section 1.51, line 2: after "purchases" add "for delivery"; line 5: delete "at Buyer's option" and
replace with "absent a purchase".
Section 1.53, line 2: delete "at the Delivery Point"; line 5: after "third party" add "purchaser"
and delete "at Seller's option" and replace with "absent a sale, assuming a sale could not have
been made in a commercially reasonable manner."
Section 1.60, line 1: after "agreed to" add "in writing".
ARTICLE TWO TRANSACTION TERMS AND CONDITIONS
Section 2.2 is revised by deleting the sentence "Any inconsistency between any terms of
this First Amended and Restated Master Agreement and any terms of the Transaction
shall be resolved in favor of the terms of such Transaction." in the last two lines
Section 2.3, line 1: delete "may confirm" and replace with "shall confirm in
writing
Section 2.3 (throughout): substitute "Party A" for "Seller" and "Party B" for
"Buyer".
Section 2.3 is revised by (A) adding the following sentence as the first sentence of the
section: "The Parties agree that a written Confirmation is required for all Transactions of one
week or longer." and (B) adding the phrase ", provided Seller does not object to it
within two (2) Business Days of receipt", in the fifteenth line after the words "Buyer's
Confirmation shall".
X Optional provision in Section 2.4. If not checked,
inapplicable.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and
all Transactions may not be orally amended or modified, including by Recording pursuant to
Section 2.5.”
ARTICLE FOUR REMEDIES FOR FAILURE TO DELIVER/RECEIVE
X Accelerated Payment of Damages. If not checked, inapplicable.
Each of Section 4.1 and Section 4.2 are revised so that the words "five (5) Business Days" in
the fifth line of each section are deleted and replaced with "two (2) Business Days".
Section 4.3 is added to Article Four, as follows:
"4.3 Consequence of Failing to Deliver/Receive. Notwithstanding, and in addition to the
remedies provided pursuant to, Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule,
deliver or receive all or part of the Product pursuant to a Transaction for a period of three (3)
or more consecutive days, and such failure is not excused under the terms of the Product, by
Force Majeure, by the other Party's failure to perform or by agreement of the Parties, then
upon one (1) Business Day's prior written notice, and for so long as the non-performing Party
fails to perform, the performing Party shall have the right to suspend its performance under
such Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice from
the non-performing Party at least one (1) Business Day prior to the date upon which the non-
performing Party intends to resume its performance; provided that, if the performing Party
has entered into a replacement contract with a term of 31 days or less, the performing Party
may resume performance at the end of the term of such replacement contract. Remedies
available under this provision to the performing Party are in addition to, not in replacement
of, other remedies specified in this Agreement."
ARTICLE FIVE EVENTS OF DEFAULT; REMEDIES
X Cross Default provision of Section 5.1(g) shall apply for both Party A and Party B.
Cross Default amount for each shall be $45,000,000.
Section 5.l(c), line 4: after "the exclusive remedy for which" add", until the number of failures
to deliver/receive reaches the number set forth in Section 5.1(i) or Section 5.1(j)''.
Section 5.l(g), lines 3 and 10: after "such Party" add "or any Affiliate of such Party".
Section 5.1(i), Section 5.1(j), Section 5.1(k), Section 5.1(1) and Section 5.l(m) are added to
Section 5.1, as follows:
“(i): during any consecutive 90-day period, on five (5) or more calendar days, a "Seller
Failure(s)" (as that term is used in Section 4.1) has occurred under any and all
Transactions, regarding which the Seller shall be deemed to be the Defaulting Party and
Buyer shall also be entitled to its remedies under Section 4.1. For greater certainty, the
Parties agree that multiple Seller Failures occurring on one (1) calendar day shall be
considered only one (1) Seller Failure for the purposes of this section;
(j) during any consecutive 90-day period, on five (5) or more calendar days, a "Buyer
Failure(s)" (as that term is used in Section 4.2) has occurred under any or all
Transactions, regarding which the Buyer shall be deemed to be the Defaulting Party and
Seller shall also be entitled to its remedies under Section 4.2. For greater certainty, the
Parties agree that multiple Buyer Failures occurring on one (1) calendar day shall be
considered only one (1) Buyer Failure for the purposes of this section;
(k) a representation or warranty with respect to the Defaulting Party's financial statements
(consolidated or unconsolidated balance sheet, income statement and statement of cash
flow) or position that is false or materially misleading;
(1) revocation by the Federal Energy Regulatory Commission of Party A's authorization to
make sales at market-based rates; or
(m) a Letter of Credit Failure that is not cured within three (3) Business Days after the
occurrence thereof.”
Section 5.2, line 4: after "the right" add", but not the obligation"; line 14, add after the second
sentence, the following: "A calculation shall be deemed made in a commercially reasonable
manner if the Non-Defaulting Party has secured at least one competitive price quote, in writing,
from a third party energy seller, supplier or marketer. No Settlement Amount shall be due or
payable to the Defaulting Party for any Terminated Transaction. If the Non-Defaulting Party's
aggregate Gains exceed its aggregate Losses and Costs, if any, resulting from the termination of
this Agreement, the Settlement Amount shall be zero, notwithstanding any provision of this
Agreement to the contrary."
Section 5.3, line 6: after "Non-Defaulting Party" add "plus, at the option of the Non-Defaulting
Party, any cash or other form of security then available to the Defaulting Party pursuant to
Article Eight."; line 10, after last sentence, add "No Termination Payment shall be due or
payable to the Defaulting Party for any Terminated Transaction."
Section 5.6 Closeout Setoff
Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Agreement unless otherwise
specified as follows: Option B is amended as set forth in Article 10 below.
In line 2, after "Defaulting Party" add "otherwise". In line 8, add a new sentence: "At the Non
Defaulting Party's election, any and all obligations owing by or to an Affiliate of a Party shall be
treated as if such obligations owed by or to the Party itself for purposes of setoff."
Option C (No Setoff)
The following is added as a new Section 5.8:
"5.8 Letter of Credit Failure. For the purposes of this Article Five, "Letter of Credit
Failure" shall mean, with respect to a Party that has provided a Letter of Credit as
Performance Assurance.
(a) a failure to renew or substitute a Letter of Credit by no later than fifteen
Business Days prior to expiry thereof;
(b) the issuer of such Letter of Credit fails to maintain a long-term senior
unsecured debt or deposit rating of at least "A-" by S&P or at least "A3" by
Moody's and fails to maintain at least $10 billion in total assets;
(c) the issuer of the Letter of Credit fails to comply with or perform its obligations
under such Letter of Credit if such failure continues after the lapse of any
applicable grace period;
(d) the issuer of such Letter of Credit disaffirms, disclaims, repudiates or rejects, in
whole or in part, or challenges the validity of, such Letter of Credit;
(e) such Letter of Credit shall expire or terminate, or shall fail or cease to be in full
force and effect for purposes of this Agreement (other than in accordance with
its terms) at any time during the term of the Agreement or any outstanding
Transaction; or
(f) any event analogous to an event specified in Subsection 5.1(d) or (f) of
this Agreement occurs with respect to the issuer of such Letter of Credit.
However, no Letter of Credit Failure will occur with respect to a Letter of Credit after
the time such Letter of Credit is required to be cancelled or returned in accordance with
the terms of this Agreement."
ARTICLE SIX PAYMENT AND NETTING
Section 6.8, line 3: Delete "may by agreement of the Parties" and replace with "shall".
ARTICLE EIGHT CREDIT AND COLLATERAL REQUIREMENTS
8.1 Party A Credit Protection:
(a) Financial Information of Party B:
- Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of Palo Alto Enterprise Fund
- Option C
In Option B: line 1: delete "120 days" and replace with "180 days". In line 3 insert a period
(.) after the capitalized term "Cover Sheet" and delete the remainder of that sentence in its
entirety.
(b) Credit Assurances by Party B:
X Not Applicable
- Applicable
(c) Collateral Threshold for Party B:
____ Not Applicable
X Applicable
If applicable, complete the following:
Party B Collateral Threshold: means with respect to Party B, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
Credit Rating of Party B; provided, that (a) if the utility revenue bond of Party B is no longer
rated by one of S&P or Moody’s, the Threshold with respect to Party B will be zero dollars and
(b) if an Event of Default or Potential Event of Default with respect to Party B has occurred and
is continuing, the Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AA- or above Aa3 or above $25,000,000
A-, A or A+ A3, A2 or A1 $20,000,000
BBB+ Baa1 $10,000,000
BBB Baa2 $5,000,000
BBB- Baa3 $ 2,500,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party B Independent Amount: N/A
Party B Rounding Amount: $250,000
Party B Minimum Transfer Amount: $1.00
(d) Downgrade Event:
Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if(i) Party B's underlying Credit Rating
falls below BBB- or Baa3, as the case may be.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
Section 8.1(d) is revised so that the words "or a guaranty" in the fourth line after the words
"Performance Assurance" are deleted and the phrase "or fails to maintain such Performance
Assurance or other credit assurance for so long as the Downgrade Event is continuing" is added
in the fifth line after the phrase "within three (3) Business Days of receipt of notice".
8.2 Party B Credit Protection:
(a) Financial Information of Party A:
Option A
X Option B Specify: Audited Financial statements to be provided by Party A shall be for Party A or any corporate parent or entity providing credit support. Option B shall be modified by deleting all references to "consolidated" therein.
Option C
In Option B: line 1: Delete "120 days" and replace with"140 days" and replace
"60 days" in line 3 with "90 days".
(b) Credit Assurances by Party A:
X Not Applicable
Applicable
(c) Collateral Threshold for Party A:
Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the amount specified
in the table below under the relevant heading opposite the lower of: (i) Credit Ratings and
(ii) the amount of the dollar limit in the guarantee provided by Party A 's Guarantor;
provided, that (a) if Party A's Guarantor is no longer rated by one of S&P or Moody's, the
Threshold with respect to Party A will be zero, and (b) if an Event of Default or Potential
Event of Default with respect to Party A has occurred and is continuing, the Threshold with
respect to such party shall be zero.
S&P Rating Moody’s Rating Threshold
AA- or above Aa3 or above $25,000,000
A-,A or A+ A3, A2 or A1 $20,000,000
BBB+ Baa1 $10,000,000
BBB Baa2 $5,000,000
BBB- Baa3 $ 2,500,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $N/A
Party A Rounding Amount: $250,000
Party A Minimum Transfer Amount: $1.00
(d) Downgrade Event:
Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A or
Party A's Guarantor falls below BBB- from S&P or Baa3 from Moody's or if Party
A or Party A's Guarantor ceases to be rated by either S&P or Moody's, other than
due to repayment of indebtedness.
(e) Guarantor for Party A:
X Guarantor for Party A: British Columbia Hydro and Power
Authority
Guarantee Amount: In a form and amount as agreed to between the
Parties, and as subject to Section 8.2(c).
Section 8.2(c) is revised by adding the following paragraph after the first
paragraph:
Party A may at any time and from time to time (including at the time of a request by Party
B for Performance Assurance) give notice to Party B of its intent to increase the amount of
the guarantee provided by Party A's Guarantor up to the amount set forth in the table on the
Cover Sheet opposite the Credit Rating for Party A's Guarantor. No such increase shall
become effective until Party A shall have provided Party B with a new guaranty or an
amended guaranty (in form and substance acceptable to Party B). If the operation of the
foregoing results in the sum of Party A Performance Assurance and Party A's Collateral
Threshold being in excess of its Termination Payment plus Party A's Independent Amount,
if any, (rounding upwards for any fractional amount to the next Party A Rounding
Amount) Party A shall have the right to request Performance Assurance be reduced accordingly.
Section 8.2 (d) is revised so that the words "or a guaranty" in the fourth line after the
words "Performance Assurance" are deleted and the phrase "or fails to maintain such
Performance Assurance or other credit assurance for so long as the Downgrade Event is
continuing" is added in the fifth line after the phrase "within three (3) Business Days of
receipt of notice".
ARTICLE TEN MISCELLANEOUS
_ Confidentiality Applicable If not checked, inapplicable. Confidentiality does not apply.
Section 10.1, line 2: delete "upon (thirty) 30 days' prior written notice" and replace with "which
termination shall be effective immediately upon receipt of written notice thereof.”
Section 10.2 (xiii) is added to Article 10, as follows:
"Notwithstanding any provision in this Agreement to the contrary, all information,
statements, reports and similar materials, conveyed by Party A in writing in response to
a bid solicitation document [invitation for bids or request for proposals or combination
thereof] of Party B to demonstrate that Party A's financial condition, are true and
accurate in all material respects. Any written representation made by a Party regarding
its financial performance or condition or that of its corporate parent ("Financial
Representation") as an inducement to the other Party during the solicitation, bidding or
negotiation of any transaction entered into under this First Amended and Restated
Master Agreement shall be deemed to be repeated and reaffirmed, as of the date of the
applicable Transaction Confirmation and to be incorporated as a representation of the
Party making the Financial Representation into that Transaction Confirmation without
the need for any further action by either Party."
h
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.4, line 1: after "Each Party" add "to the extent permitted by applicable law".
Section 10.5, line 4: delete "without relieving itself from liability hereunder" and replace with
"provided that the assigning party agrees to remain liable for the obligations assigned to the
assignee"; line 6: delete clause (ii); line 8, change the numbering of clause (iii) to clause (ii), and
delete "transfer or assign ... of such Party" and replace with "transfer or assign this Agreement
to an Affiliate of such Party so long as either that Affiliate's credit rating equals or exceeds the
rating of the Party and/or the Guarantor as of the Effective Date or that Affiliate's obligation is
guaranteed by the Party or the Guarantor in accordance with a guaranty agreement to any person
or entity succeeding to all or substantially all of the assets of a party whose creditworthiness
rating equals or exceeds that of the Party and/or the Guarantor as of the Effective Date."
Section 10.6, line 4: delete "New York" and replace with "California."; Line 5, delete second
sentence and replace with: "With respect to any proceeding in connection with any claim,
counterclaim, demand, cause of action, dispute and controversy arising out of or relating to this
Agreement, the Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in
the Northern District of the State of California.”
Section 10.8, line 4: after "with Section 2.3)" add "line 18: delete 6th sentence; line 30: delete
last sentence and replace with "The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months."
Section 10.10 is replaced in its entirety, as follows:
"10.10 Bankruptcy Issues. The Parties acknowledge and agree that (i) any Transaction with a
maturity date more than two days after the date the Transaction is entered into constitutes a
"forward contract" within the meaning of the United States Bankruptcy Code (the "Bankruptcy
Code"); (ii) all payments made or to be made by one Party to the other Party pursuant to this
Agreement are "settlement payments" within the meaning of the Bankruptcy Code; and (iii) all
transfers of Performance Assurance by one Party to the other Party under this Agreement are
"margin payments" within the meaning of the Bankruptcy Code."
Section 10.11 shall be replaced in its entirety with the following:
"Party A acknowledges that Party B is subject to California Constitution Article 1, Section 3, and the
California Public Records Act, Cal. Gov. Code § 6250 et seq. (“Public Records Act”) in regard to the
documents comprising this Master Agreement and the Transactions, which items may constitute
public records subject to inspection and copying by the public under the authority of the California
Constitution and the Public Records Act. Party B shall, consistent with those laws, use reasonable
efforts to provide Party A with notice of any third party request to inspect and copy any of the
documents that comprise this Master Agreement and the Transactions, which Party A might deem
confidential and exempt from disclosure, in order that Party A may timely seek to protect those
documents from disclosure to the third party. Party A acknowledges and agrees that Party B shall not
be liable to Party A if Party B makes disclosure in accordance with the California Constitution and/or
the Public Records Act before Party A has timely obtained an order to prevent Party B from making
the requested disclosure to the third party.”
Section 10.12 is added to Article 10, as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party is
acting, or is authorized to act, as agent of the other Party."
Section 10.13 is added to Article 10, as follows:
10.13 Dispute Resolution. In the event of any controversy or claim, whether based in
contract, tort, or otherwise, arising out of or based upon, or relating to this Agreement or the
scope, breach, termination or validity of each of them (a "Dispute"), the Parties will resolve
such Dispute in the following manner:
(a) The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to
settle the Dispute. When a Party believes there is a Dispute, that Party will give the other
Party written notice describing the Dispute with reasonable particularity. Within thirty (30)
Days after receipt of such notice, the receiving Party will submit a written response to the
other Party.
(b) If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by
mediation. The form of mediation and the mediator(s) selected to resolve the Dispute shall
be acceptable to both Parties.
(c) If the Dispute is not resolved through mediation within ninety (90) Days after the
first meeting of the Parties and mediator(s), or such additional time, if any, that the Parties
mutually agree to in writing, either Party shall be free to pursue any and all legal actions and
remedies as it may deem necessary.
Section 10.14 is added to Article 10, as follows:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the relevant
Confirmation shall be the Floating Price for each Disrupted Day.
If the Parties have not specified a fallback Floating Price, then the Parties will
endeavor, in good faith and using commercially reasonable efforts, to agree on a substitute
Floating Price, taking into consideration, without limitation, guidance, protocols or other
recommendations or conventions issued or employed by trade organizations or industry groups
in response to the Market Disruption Event and other prices published by the Price Source or
alternative price sources with respect to the Delivery Point or comparable Delivery Points that
may permit the Parties to derive the Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the parties agree on a substitute Floating
Price for such day, then the Delayed Floating Price shall be the Floating Price for such
Disrupted Day. If a Delayed Price is issued by the Price Source in respect of a Disrupted Day
after the Parties agree on a substitute Floating Price for such day, the substitute Floating Price
agreed upon by the Parties will remain the Floating Price without adjustment unless the Parties
expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in each case, on or before
the fifth Business Day following the first Trading Day on which the Market Disruption Event
first occurred or existed,
then the Floating Price for each Disrupted Day shall be determined by taking the arithmetic
mean of quotations requested from four leading dealers in the relevant market that are
unaffiliated with either Party and mutually agreed upon by the Parties (“Specified Dealers”),
without regard to the quotations with the highest and lowest values, subject to the following
qualifications:
o If exactly three quotations are obtained, the Floating Price for each such Disrupted Day
will be the quotation that remains after disregarding the quotations having the highest and
lowest values.
o If fewer than three quotations are obtained, the Floating Price for each such Disrupted Day
will be the average of the quotations obtained.
o If the Parties cannot agree upon four Specified Dealers, then each of the Parties will, acting
in good faith and in a commercially reasonable manner, select up to two Specified Dealers
separately, and those selected dealers shall be the Specified Dealers.
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price shall be the Floating
Price for such Disrupted Day, notwithstanding the subsequent publication or announcement of a
Delayed Floating Price by the relevant Price Source or any quotations obtained from Specified
Dealers.
"Determination Period" means each calendar month a part or all of which is within the Delivery Period
of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading market specified as
applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based upon a Price
Source.
"Market Disruption Event" means, with respect to any Price Source, any of the following events:
(a) the failure of the Price Source to announce, publish or make available the specified Floating Price or
information necessary for determining the Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent discontinuation or material
suspension of trading in the relevant options contract or commodity on the Exchange, RTO or in the
market specified for determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified for determining a Floating
Price; or
(e) a material change in the formula for or the method of determining the Floating Price by the Price
Source or a material change in the composition of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin of reference,
including an Exchange or RTO, containing or reporting or making generally available to market
participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the relevant
Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
"Trading Day" means a day in respect of which the relevant Price Source ordinarily would announce,
publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floating Price published, announced or made available on a
given day and used or to be used to determine a relevant price is subsequently corrected by the relevant
Price Source (i) within 30 days of the original publication, announcement or availability, or (ii) in the
case of RTO Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that correction and the
amount (if any) that is payable as a result of that correction. If, not later than thirty (30) days after
publication or announcement of that correction, a Party gives notice that an amount is so payable, the
Party that originally either received or retained such amount will, not later than three (3) Business Days
after such notice is effective, pay, subject to any applicable conditions precedent, to the other Party that
amount, together with interest at the Interest Rate for the period from and including the day on which
payment originally was (or was not) made to but excluding the day of payment of the refund or
payment resulting from that correction. Notwithstanding the foregoing, corrections shall not be made
to any Floating Prices agreed upon by the Parties or determined based on quotations from Specified
Dealers pursuant to paragraph (a) above unless the Parties expressly agree otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to four (4) decimal
places. If the fifth (5th) decimal number is five (5) or greater, then the fourth (4th) decimal number
shall be increased by one (1), and if the fifth (5th) decimal number is less than five (5), then the fourth
(4th)] decimal number shall remain unchanged.
Section 10.15 shall be added to Article 10 as follows:
10.15: "The Parties acknowledge and agree that any purchase of power made pursuant to Party
B's Request for Proposals and under this Agreement and any Transaction shall be executed and
delivered in compliance with applicable laws and regulations in effect at the time this
Agreement is signed by the Parties and at the time of entering into any particular Transaction,
including, but not limited to, Senate Bill 1368 (California Public Utilities Code section 8340 et
seq.) and related regulations (Title 20, Sections 2900-2930 of the California Code of
Regulations), as amended, to the extent such laws and regulations, including SB 1368 and related
regulations, apply or are deemed to apply to this Agreement and any Transaction. To the extent
SB 1368 and related regulations require Party B as a local publicly owned electric utility to
submit a compliance filing in accordance with such laws, Party A, upon the request of Party B,
shall in good faith provide promptly to Party B (to the extent Party B lacks such information) the
information to the extent Party A has knowledge of or access to such information. A failure by
Party A to provide such information which is within its possession or knowledge shall constitute
a default under this Agreement."
Section 10.16 shall be added to Article 10 as follows:
10.16: “The Parties intend that the standard of review for changes to any rate, charge, classification,
term or condition of this Agreement at FERC shall be the most stringent standard permissible under
applicable law. As to the Parties, it is understood and agreed that the standard is the “Mobile-Sierra
public interest” standard of review, as stated by the United States Supreme Court in Morgan Stanley
Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Nos. 06-1457, 128 S.Ct.
2733 (2008), and consistent with the order of the Supreme Court in NRG Power Marketing, LLC, et
al., v. Maine Public Utilities Commission et al., No. 08-674, 130 S.Ct. 693 (2010) (“NRG Order”).
As to all other persons, the Parties intend and agree that the same standard, to the maximum degree as
may be made applicable to other than the Parties, apply, to the maximum degree permitted under the
NRG Order.”
Section 10.17 shall be added to Article 10 as follows:
10.17 ““AB 32 fees” means the regulatory assessments, charges, fees imposts and/or taxes imposed
upon and required to be paid by suppliers of energy in accordance with the Global Warming Solutions
Act of 2006, Chapter 488, Statutes 2006, including, without limitation, the Compliance Offset
Protocols, which shall be included (or be deemed included to the extent they are not expressly
included) in the Contract Price, defined in Section 1.10 of the General Terms and Conditions, and that
are in effect as of the Effective Date of this Agreement and/or the date the Parties enter into each
Transaction hereunder.”
Section 10.18 is added as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products; provided, however, that nothing in this Agreement, including
this Section 10.18 prohibits the Parties from engaging in Transactions that are or may be
determined to be swaps in they so desire. Party B is a commercial entity engaged in the business
of delivering electric energy to its retail customers and buying electricity products with the
intention of routinely taking delivery in order to provide service to its retail electric customers."
SCHEDULE M
- Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
X Add Section 3.6. If not checked, inapplicable.
- Add Section 8.6. If not checked, inapplicable.
A., pertaining to the definitions in Article One, is amended, in part, as follows:
"Act" is amended in its entirety, as follows: ""Act" means applicable California and local
laws, including but not limited to the California Constitution, the California Government
Code, the California Public Utilities Code, the Charter of the City of Palo Alto and the
Palo Alto Municipal Code under which Party B was created, organized and authorized to
enter into this First Amended Master Agreement and each Transaction hereunder."
"Special Fund", line 5: Add a second sentence, as follows: "For purposes of this
Schedule M, Party A acknowledges that Party B's Enterprise Fund meets the definition
of "Special Fund."
C., pertaining to the representations and warranties to Section 10.2, is amended, as follows:
Line 7: after "without limitation" add "and to the extent applicable,".
D., pertaining to Section 3.4, is amended, as follows:
Line 8: after "Agreement" add "to the extent the same are not codified in the Palo Alto
Municipal Code" and delete the rest of the paragraph, including clause (ii).
E., pertaining to the addition of Section 3.6, is amended, as follows:
Lines 8- 12 shall be amended in its entirety, as follows:
"any breach of clause (ii) herein shall be deemed to have arisen during a fiscal period
of Governmental Entity or Public Power System for which such budgetary approval or
certification of its obligations under this First Amended and Restated Master
Agreement is required to be in effect and an Event of Default shall be deemed to have
occurred for purposes of Section 5.1 under which Governmental Entity or Public
Power System shall be treated as the Defaulting Party."
G., pertaining to Section 10.6, does not apply.
SCHEDULE P PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the Federal Energy Regulatory Commission-approved tariff of
CAISO, including all CAISO protocols, as the same may be amended from time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule
coordinator transaction pursuant to the CAISO Tariff as amended from time to time for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the
CAISO Tariff) called by the CAISO in accordance with the CAISO Tariff.
“HLH (Heavy Load Hour)” is defined as energy delivered from hours ending (HE)
0700- 2200 Monday-Saturday, excluding NERC holidays, PPT.
“IST” means Inter-Scheduling Coordinator Trade shall mean a trade between
Scheduling Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“LLH (Light Load Hour)” is defined as energy delivered from hours ending (HE) 0100-
0600 and 2300-2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone Delivery Point” means the NP15 Zone; provided, however, if CAISO
implements trading hubs under a locational marginal pricing design during the Delivery Period,
the Delivery Point shall be the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 Zone.
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” or any
similar description means with respect to a Transaction, a Product that is or will be scheduled as
firm energy consistent with the most recent rules adopted by the WECC for which the only
excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force
as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's
public utility or statutory obligations to its customers. Notwithstanding any other provision in this
Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy
as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
EXHIBIT A FIRST AMENDED AND RESTATED MASTER POWER PURCHASE AND SALE
AGREEMENT CONFIRMATION LETTER
EXHIBIT B RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which products,
terms, conditions and definitions shall be documented in an Resource Adequacy Form of
Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager. The form of any REC
purchase and/or sale transaction shall be mutually agreed to by the Parties.
IN WITNESS WHEREOF, the Parties have caused this First Amended and Restated Master Agreement to be duly executed as of
the date first above written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A: Powerex Corp.
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of representatives of
Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”) member companies to facilitate
orderly trading in and development of wholesale power markets. Neither EEI nor NEM nor any member company nor
any of their agents, representatives or attorneys shall be responsible for its use, or any damages resulting therefrom. By
providing this Agreement EEI and NEM do not offer legal advice and all users are urged to consult their own legal counsel
to ensure that their commercial objectives will be achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
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CITY OF PALO ALTO RFP #145153
THIRD AMENDED AND RESTATED MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
AMENDED AND RESTATED COVER SHEET
This Third Amended and Restated Master Power Purchase and Sale Agreement (“Third Amended and Restated Master
Agreement”) is entered into as of ________, 2013 (the “Effective Date”), and amends, restates and supersedes in its
entirety that certain Amended and Restated Master Power Purchase and Sale Agreement made as of February 8, 2004, as
amended on July 5, 2007 (“Amended and Restated Master Agreement”). This Third Amended and Restated Master
Agreement, together with the exhibits, schedules, annexes and any written supplements hereto, the Party A Tariff, any
designated collateral, credit support or margin agreement or similar arrangement between the Parties and all Transactions
(including any confirmations accepted in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.”
The Parties to this Third Amended and Restated Master Agreement are the following:
Name: Shell Energy North America (US), L.P. (“Shell
Energy” or “Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: Contracts North America
Street: 1000 Main, 12th Floor
City: Houston, Texas 77002
Phone: 877-504-2491
Facsimile: (713) 767-5414
Duns: 83-756-5548
Federal Tax ID Number: 76-0480645
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: (650) 329-2214
Facsimile: (650) 326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: General Counsel
Phone: (713) 767-5400
Facsimile: 713-230-2900
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City Attorney/Utilities
City of Palo Alto
Phone: (650) 329-2171
Facsimile: (650) 329-2646
Invoices:
Attn: Power Accounting
Phone: (713) 767-5400
Facsimile: (713) 767-5414
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
Real Time Scheduling:
Attn: 24 Hour Operations (Houston, Texas)
Phone: 1-800-267-2562
Facsimile: (713) 767-5415
Attn: 24 Hour Operations (San Diego, California)
Phone: 1-858-320-1500; Fax: 858-320-1550
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4237/3636
Facsimile: (916) 781-4226
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CITY OF PALO ALTO RFP #145153
Payments:
Attn: Power Accounting
Phone: (713) 767-5400
Facsimile: (713) 767-5414
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: (916) 781-4237/3636
Facsimile: (916) 781-4226
Wire Transfer:
BNK: Citibank, N.A.
ABA: 021000089
ACCT: 30603873
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK: U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Director – Credit Risk Management
Phone: 713-767-5400
Facsimile: 713-230-7925
Credit and Collections:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: (916) 781-4221/4224
Facsimile: (916) 781-4225
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: Rate Schedule FERC No. 1, dated December 2, 1995, Docket Number ER96-25-000, as amended
Party B Tariff: N/A
Article One
General Definitions Section 1.1 “Affiliates” is amended by adding the following to the end of the paragraph:
“Notwithstanding the foregoing with respect to Shell Energy, “Affiliates” shall mean Shell
Energy and its subsidiaries for purposes of Section 5.6 and Section 10.2(vi).”
Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 “Contract Price” is amended by substituting “U.S. $” for “$U.S.” in line 1.
Section 1.11 “Costs” is amended by adding the following after “Party” in the third line: “after
using commercially reasonable efforts to mitigate costs.”
Section 1.12 “Credit Rating” is amended by deleting in the fourth line the word “issues” and
replacing it with the word “issuer”.
Section 1.24 “Gains” is amended by adding before the period at the end thereof the following:
“in accordance with Section 5.2”.
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CITY OF PALO ALTO RFP #145153
Section 1.27 “Letter(s) of Credit” is amended by (a) deleting the phrase “or a foreign bank with a
U.S. branch” and replacing it with the phrase “or a U.S. branch of a foreign bank (which is not
an Affiliate of either Party)” and (b) inserting the phrase “and in an amount” in the third line
after the word “form” and before the word “acceptable”.
Section 1.28 “Losses” is amended by adding before the period at end thereof the following: “in
accordance with Section 5.2”.
Section 1.45 “Performance Assurance” is amended by deleting it and replacing it in its entirety
with the following:
“Performance Assurance” means collateral in the form of either cash or Letter(s) of Credit,
which form is to be determined by the Party issuing the collateral in its sole discretion and is
reasonably acceptable to the requesting Party.”
Section 1.46 “Potential Event of Default” is amended by adding before the period at the end
thereof the following:
“provided that the failure to comply with any requirement of this Third Amended and Restated
Master Agreement or a Transaction, including the requirements of Article 8, before the
expiration of the time period expressly specified for such compliance in this Third Amended and
Restated Master Agreement or the Transaction, if any, shall not be considered a Potential Event
of Default unless and until the applicable time period has expired without compliance”.
Section 1.50 “Recording” is amended by deleting the reference to “Section 2.4” and replacing it with
“Section 2.5”.
Section 1.51 “Replacement Price” is amended by (a) inserting the phrase “for delivery” in the
second line after the word “purchases” and before the phrase “at the Delivery Point”, and (b)
deleting the phrase “at Buyer’s option” in the fifth line and inserting in their place the following:
“absent a purchase”.
Section 1.53 “Sales Price” is amended by (a) deleting the phrase “at the Delivery Point” in the
second line; and (b) deleting the phrase “at Seller’s option” in the fifth line and inserting in place
thereof the following: “absent a sale, assuming a sale could not have been made in a
commercially reasonable manner.”
Section 1.56 “Settlement Amount” is amended by deleting the words “pursuant to Section 5.2”
and by adding before the period at the end thereof the following: “, as determined in accordance
with Section 5.2.”
Article Two
Transaction Terms
and Conditions
2.2 Governing Terms. Add the following as a separate second paragraph
The Parties confirm that this Master Agreement shall supersede and replace the following prior
master power purchase and sale agreements between the Parties:
(1) The WSPP Agreement
(2) The Amended and Restated Master Agreement referenced in the first paragraph of this
Agreement.
The Parties further agree that upon the satisfaction of the condition precedent set forth in Section
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CITY OF PALO ALTO RFP #145153
10.17, except as agreed between the Parties in writing, any Transaction for the purchase or sale
of electric energy, capacity or other related products which is entered into before, on and after
the Effective Date of this Third Amended and Restated Master Agreement shall be governed by
this Third Amended and Restated Master Agreement, and is part of this single integrated
agreement between the Parties consistent with the first paragraph of this Section 2.2.
For purposes of Section 2.3 Confirmation, Party B requires that all Transactions be confirmed in
writing. Accordingly, the provision is amended by striking the word “may” from the first line
thereof and replacing it with the word “shall.”
X Optional provision in Section 2.4. If not checked, inapplicable.
Section 2.4 is amended by deleting on the seventh line immediately after the words “unless
agreed to” the words “either orally or”.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in this
Master Agreement, including in this Article Two, this Master Agreement and any and all
Transactions may not be orally amended or modified, including by Recording pursuant to
Section 2.5.”
Article Three
Section 3.3 Force Majeure shall be amended by deleting from the last sentence the words
“resume performance of” and replacing them with the word “make up”.
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. Notwithstanding, and in addition to the remedies provided
pursuant to Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or
part of the Product pursuant to a Transaction for a period of three (3) or more consecutive days
during a Delivery Period, and such failure is not excused under the terms of the Product, by the
other Party’s failure to perform or by agreement of the Parties, then upon one (1) Business Day
prior notice, and for so long as the non-performing Party fails to perform, the performing Party
shall have the right to suspend its performance under such Transaction. In the event the
performing Party suspends performance pursuant to this Section 4.3, it shall not be obligated to
resume performance until it has received notice from the non-performing Party at least one (1)
Business Day prior to the date upon which the non-performing Party intends to resume its
performance; provided that, if the performing Party has entered into a replacement contract with
a term of 31 days or less, the performing Party may resume performance at the end of the term of
such replacement contract. Remedies available under this provision to the performing Party are
in addition to, not in replacement for, other remedies specified in this Third Amended and
Restated Master Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply to both Party A and Party B. The
Cross Default amount for each shall be $25,000,000.
Section 5.1(b) shall be amended by adding the words “and such breach has a material adverse
effect upon the Party to whom such representation or warranty was made”.
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CITY OF PALO ALTO RFP #145153
Section 5.1(g) shall be amended by (a) deleting in lines eight and nine the words “or becoming
capable of at such time of being declared” and (b) inserting, “or any Affiliate of such Party” after
the first appearance of the word “Party” in subsections (i) and (ii).
Section 5.1(h)(i) shall be amended by adding the words “and such breach has a material adverse
effect upon the Party to whom such representation or warranty was made”.
Section 5.1(h)(v), the last sentence, shall be amended by adding the words “made in connection
with this Third Amended and Restated Master Agreement” immediately after the words “any
guaranty”.
Section 5.1 shall be further amended by replacing the period at the end of subsection (h) with a
semi-colon, and adding new subsections “(i),” “(j)”, “(k)” and “(l)”, which read as follows:
“(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;”
“(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
“(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading; or”
“(l) with respect to Party A, FERC shall have revoked Party A’s authorization to make sales
of electricity at market-based rates;”
Section 5.2 Declaration of an Early Termination Date and Calculation of Settlement Amounts is
amended by: (a) deleting the last sentence and replacing it with the following:
“The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement
Amount for each such Terminated Transaction or group of Terminated Transactions as of the
Early Termination Date (or, to the extent that in the reasonable opinion of the Non-Defaulting
Party certain of such Terminated Transactions or group of Terminated Transactions are
commercially impracticable to liquidate and terminate or may not be liquidated and terminated
under applicable law on the Early Termination Date, then each such Transaction or group of
Terminated Transactions (individually, an “Excluded Transaction” and collectively, the
“Excluded Transactions”) shall be terminated as soon thereafter as reasonably practicable), and
upon termination shall be deemed to be a Terminated Transaction or group of Terminated
Transactions and the Termination Payment payable in connection with all such Terminated
Transactions or group of Terminated Transactions shall be calculated in accordance with Section
5.3 below. The Gains and Losses for each Terminated Transaction or group of Terminated
Transactions shall be determined by calculating, in a commercially reasonable manner, the
amount that would be incurred or realized to replace or to provide the economic equivalent of the
remaining payments or deliveries in respect of that Terminated Transaction or group of
Terminated Transactions. The Non-Defaulting Party (or its agent) may determine its Gains and
Losses by reference to information either available to it internally or supplied by one or more
third parties including, without limitation, quotations (either firm or indicative) of relevant rates,
prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant
markets. Third parties supplying such information may include, without limitation, dealers in
the relevant markets, end-users of the relevant product, information vendors and other sources of
market information. Notwithstanding the foregoing, the Non-Defaulting Party’s determination
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CITY OF PALO ALTO RFP #145153
of Gains and Losses for each Terminated Transaction or group of Terminated Transactions shall
be comparable to that which would have been obtained by comparing the value of the remaining
term, transaction quantities, and transaction prices under each Terminated Transaction or group
of Terminated Transactions had it not been terminated to the equivalent quantities and relevant
market prices for the remaining term which are reasonably expected to be available in the market
under a replacement contract for each Terminated Transaction or group of Terminated
Transactions; and (b) adding the following sentence to the end of that provision. If the Non-
Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs, if any, resulting from
the termination of this Third Amended and Restated Master Agreement, the Settlement Amount
shall be zero, notwithstanding any provision of this Third Amended and Restated Master
Agreement to the contrary.”
Section 5.3 Net Out of Settlement Amounts is amended by inserting the phrase “plus, at the
option of the Non-Defaulting Party, any cash or other form of security then available to the
Defaulting Party pursuant to Article Eight,” between the words “that are due to the Non-
Defaulting Party,” and “plus any and all other amounts” in the sixth line thereof.
Section 5.4 shall be amended by adding the following at the end:
“The Termination Payment shall bear interest at the Interest Rate from the date upon which
notice is effective until paid. Notwithstanding any provision to the contrary contained in this
Third Amended and Restated Master Agreement, the Non-Defaulting Party shall not be required
to pay to the Defaulting Party any amount under Article 5 until the Non-Defaulting Party
receives confirmation satisfactory to it acting in its reasonable discretion that all other
obligations of any kind whatsoever of the Defaulting Party to make any payments to the Non-
Defaulting Party or any of its Affiliates under this Third Amended and Restated Master
Agreement or otherwise which are due and payable as of the Early Termination Date (including
for these purposes amounts payable pursuant to Excluded Transactions) have been fully and
finally performed.”
Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Agreement unless otherwise
specified as follows: With respect to Shell Energy, “Affiliates” shall mean Shell Energy
and its subsidiaries.
___ Option C (No Setoff)
Section 5.7 shall be amended by deleting in the fifth line the number “ten (10)” and replacing it
with the number “twenty (20)”.
Article Six
Section 6.4 Disputes and Adjustments of Invoices shall be amended by deleting in the second
line the words “on the same date” and by adding in the third line the words “during any given
month” immediately after the words “all Transactions”.
Section 6.8 Transaction Netting is amended by deleting the words, “may by agreement of the
Parties,” and inserting in their place the word “shall”.
Article Seven Section 7.1 Limitations of Remedies, Liability and Damages shall be amended by (i) deleting in
the fifteenth line the words, “UNLESS EXPRESSLY HEREIN PROVIDED”, (ii) adding in the
nineteenth line the words “PROVIDED, HOWEVER, NOTHING IN THIS SECTION SHALL
AFFECT THE ENFORCEABILITY OF THE PROVISIONS OF SECTIONS 4.1 AND 4.2 OF
THIS THIRD AMENDED AND RESTATED MASTER AGREEMENT RELATING TO
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CITY OF PALO ALTO RFP #145153
REMEDIES FOR FAILURE TO DELIVER/RECEIVE, AND CALCULATION AND
PAYMENT OF THE TERMINATION PAYMENT IN SECTIONS 5.2 AND 5.3” immediately
after the words “ANY INDEMNITY PROVISION OR OTHERWISE”, and (iii) adding at the
end of the last sentence the words “AND ARE NOT PENALTIES”.
Article Eight 8.1 Party A Credit Protection:
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund; provided, however that such entity shall only be required to
deliver the financial statements indicated in Section 8.1(a)(i); no quarterly financial
statements shall be required.
___ Option C
Credit Assurances from Party B, Section 8.1(b)
X Not Applicable
___ Applicable
Collateral Threshold for Party B, Section 8.1(c)
X Not Applicable
___ Applicable
Party B Independent Amount: N/A
Party B Rounding Amount: N/A
Party B Minimum Transfer Amount: N/A
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s underlying rating, determined
without reference to third party credit enhancement, on its utility revenue bonds (“Debt”) by
S&P or Moody’s is below BBB+ or Baa1, or (ii) Party B’s Debt ceases to be rated by both
S&P and Moody’s, or (iii) Party B’s City Council no longer has the legal authority under the
Act, as defined by Schedule M, to adjust electric rates as necessary to recover Party B’s
costs of providing retail electric service to its customers.
Section 8.1(d) is amended by adding in the fifth line the phrase “or fails to maintain such
Performance Assurance or guaranty or other credit assurance for so long as the Downgrade
Event is continuing” immediately after the words “receipt of notice”.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
8.2 Party B Credit Protection:
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CITY OF PALO ALTO RFP #145153
Financial Information from Party A, Section 8.2(a):
X Option A
Option B Specify:
Option C:
Credit Assurances from Party A, Section 8.2(b):
Not Applicable
X Applicable
Collateral Threshold for Party A, Section 8.2(c):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, the lowest of (i) the amount
specified in the table below under the relevant heading opposite the highest of the ratings at that
time assigned by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies,
Inc. (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) to the long term, senior,
unenhanced, unsecured debt securities of Party A, or (ii) if an Event of Default with respect to
Party A has occurred and is continuing, the Threshold with respect to such Party shall be zero.
S&P Rating Moody’s Rating Threshold
AA- or above Aa3 or above $50,000,000
A- to A+ A3 to A1 $30,000,000
BBB+ Baa1 $25,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 2,500,000
Below BBB- Below Baa3 $ 0 (zero)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
Party A Minimum Transfer Amount: $250,000
Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A falls
below BBB- from S&P or Baa3 from Moody’s or if the unenhanced, unsecured senior
long-term debt obligations of Party A ceases to be rated by either S&P or Moody’s.
Section 8.2(d) is amended by adding in the fifth line the phrase “or fails to maintain such
Performance Assurance or guaranty or other credit assurance for so long as the Downgrade
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CITY OF PALO ALTO RFP #145153
Event is continuing” immediately after the words “receipt of notice”.
Guarantor for Party A, Section 8.2(e): Not Applicable
Guarantor for Party A: Not Applicable
Section 8.3 shall be amended by adding the following at the end:
“Notwithstanding the foregoing, (i) such rights and remedies may only be exercised upon
Performance Assurance provided by or on behalf of the Defaulting Party and in the possession
of, or maintained for the benefit of, the Non-Defaulting Party or its agent, (ii) the Non-
Defaulting Party may not exercise such rights and remedies against the Defaulting Party and/or
Performance Assurance provided by or on behalf of the Defaulting Party so long as the
Defaulting Party has paid all of its obligations under this Third Amended and Restated Master
Agreement then due, and (iii) the Secured Party may apply the proceeds of the collateral realized
upon the exercise of such rights and remedies in such order as it may elect.”
Article Ten
Miscellaneous Section 10.1 Term of Master Agreement is amended by replacing “upon (thirty) 30 days’ prior
written notice” in lines 2 and 3, with “, which termination shall be effective immediately upon
receipt of written notice thereof”.
Section 10.2 Representations and Warranties
Section 10.2(iii) shall be amended by adding the word “ordinance,” after the words “any law,” in
line 5 thereof.
Section 10.2(ix) shall be amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.2(xi) shall be amended by deleting the “and” at the end of sub-section 10.2(xi).
Section 10.2(xii) shall be amended by replacing the period at the end of subsection 10.2(xii) with
a semicolon as follows “; and”.
Section 10.2(xiii) Section 10.2 shall be further amended by adding the following provision:
“(xiii) Notwithstanding any provision in this Agreement to the contrary, all information,
statements, reports and similar materials, conveyed by either Party in writing with respect to an
invitation for bids, request for proposals or combination thereof, or in response to a bid
solicitation document, that demonstrates such Party’s financial condition, are true and accurate in
all material respects. Any representation made by a Party regarding its financial performance or
condition or that of its corporate parent, if any, (“Financial Representation”) as an inducement to
the other Party during the solicitation, bidding or negotiation of any Transaction entered into
under this Master Agreement, and shall be deemed to be repeated and reaffirmed, as of the date
of the applicable Transaction Confirmation and to be incorporated as a representation of each
Party who makes the Financial Representation in that Transaction Confirmation without the need
for any further action by either Party.”
Section 10.4 Indemnity shall be amended by inserting the phrase “To the extent not prohibited
by law” at the beginning of each of the first two sentences.
Section 10.5 Assignment shall be amended by deleting clause (ii) and the portion of clause (iii)
prior to the words “provided, however”, and replacing them with the following:
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CITY OF PALO ALTO RFP #145153
“(ii) transfer or assign this Third Amended and Restated Master Agreement to an Affiliate of
such Party so long as (x) such Affiliate’s creditworthiness is equal to or higher than that of such
Party or the Guarantor, if any, as of the Effective Date hereof, for such Party, or (y) the
obligations of such Affiliate are guaranteed by such Party or its Guarantor, if any, in accordance
with a guaranty agreement in form and substance satisfactory to the other Party; and
(iii) transfer or assign this Third Amended and Restated Master Agreement to any person or
entity succeeding to all or substantially all of the assets of such Party whose creditworthiness is
equal to or higher than that of such Party or its Guarantor, if any, as of the Effective Date
hereof.”
Section 10.6 Governing Law is amended by deleting the words “New York” from the fourth line
thereof and replacing them with the word “California.”
Further, Section 10.6 is amended by adding the following new sentence at the end thereof:
“With respect to any proceeding in connection with any claim, counterclaim, demand, cause of
action, dispute and controversy arising out of or relating to this Third Amended and Restated
Master Agreement, the Parties hereby consent to the exclusive jurisdiction of the federal courts
sitting in the Northern District of the State of California; provided, however, that if such federal
courts sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa Clara, State of
California.”
Section 10.8 General shall be amended by deleting the penultimate sentence in its entirety and
replacing it with the following sentences: “The indemnity provisions of this Third Amended and
Restated Master Agreement shall survive the termination of this Third Amended and Restated
Master Agreement for the period of the applicable statute of limitations. The audit provisions of
this Third Amended and Restated Master Agreement shall survive the termination of this Third
Amended and Restated Master Agreement for a period of twelve (12) months.”
Section 10.10 of the Master Agreement is replaced in its entirety with the following:
“10.10 Bankruptcy Issues. The Parties acknowledge and agree that (i) any Transaction with a
maturity date more than two days after the date the Transaction is entered into constitutes a
"forward contract" within the meaning of the United States Bankruptcy Code (the “Bankruptcy
Code”); (ii) all payments made or to be made by one Party to the other Party pursuant to this
Agreement are "settlement payments" within the meaning of the Bankruptcy Code; and (iii) all
transfers of Performance Assurance by one Party to the other Party under this Agreement are
"margin payments" within the meaning of the Bankruptcy Code.”
Confidentiality
X Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
Section 10.11 shall be replaced in its entirety with the following:
“Party A acknowledges that Party B is subject to California Constitution Article 1,
Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et seq.
(“Public Records Act”) in regard to the documents comprising this Third Amended and
Restated Master Agreement and the Transactions, which items may constitute public
records subject to inspection and copying by the public under the authority of the
California Constitution and the Public Records Act. Party B shall, consistent with those
laws, use reasonable efforts to provide Party A with notice of any third party request to
inspect and copy any of the documents that comprise this Third Amended and Restated
Master Agreement and the Transactions, which Party A might deem confidential and
exempt from disclosure, in order that Party A may timely seek to protect those
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CITY OF PALO ALTO RFP #145153
documents from disclosure to the third party. Party A acknowledges and agrees that
Party B shall not be liable to Party A if Party B makes disclosure in accordance with the
California Constitution and/or the Public Records Act before Party A has timely
obtained an order to prevent Party B from making the requested disclosure to the third
party.”
The following provision is added as Section 10.12:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each
Disrupted Day.
If the Parties have not specified a fallback Floating Price, then the
Parties will endeavor, in good faith and using commercially reasonable
efforts, to agree on a substitute Floating Price, taking into consideration,
without limitation, guidance, protocols or other recommendations or
conventions issued or employed by trade organizations or industry
groups in response to the Market Disruption Event and other prices
published by the Price Source or alternative price sources with respect
to the Delivery Point or comparable Delivery Points that may permit the
Parties to derive the Floating Price based on historical differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on
a substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the
Parties agree on a substitute Floating Price for such day, the substitute
Floating Price agreed upon by the Parties will remain the Floating Price
without adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first
Trading Day on which the Market Disruption Event first occurred or
existed,
then the Floating Price for each Disrupted Day shall be determined by
taking the arithmetic mean of quotations requested from four leading
dealers in the relevant market that are unaffiliated with either Party
and mutually agreed upon by the Parties (“Specified Dealers”),
without regard to the quotations with the highest and lowest values,
subject to the following qualifications:
o If exactly three quotations are obtained, the Floating Price for
each such Disrupted Day will be the quotation that remains
after disregarding the quotations having the highest and lowest
values.
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CITY OF PALO ALTO RFP #145153
o If fewer than three quotations are obtained, the Floating Price for
each such Disrupted Day will be the average of the quotations
obtained.
o If the Parties cannot agree upon four Specified Dealers, then each
of the Parties will, acting in good faith and in a commercially
reasonable manner, select up to two Specified Dealers
separately, and those selected dealers shall be the Specified
Dealers.
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price
shall be the Floating Price for such Disrupted Day, notwithstanding the
subsequent publication or announcement of a Delayed Floating Price by
the relevant Price Source or any quotations obtained from Specified
Dealers.
"Determination Period" means each calendar month a part or all of which is within
the Delivery Period of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the
Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin
of reference, including an Exchange or RTO, containing or reporting or making
generally available to market participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the
relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
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CITY OF PALO ALTO RFP #145153
"Trading Day" means a day in respect of which the relevant Price Source ordinarily
would announce, publish or make available the Floating Price.
(b) Corrections to Published Prices. If the Floating Price published, announced or
made available on a given day and used or to be used to determine a relevant price
is subsequently corrected by the relevant Price Source (i) within 30 days of the
original publication, announcement or availability, or (ii) in the case of RTO
Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that
correction and the amount (if any) that is payable as a result of that correction. If,
not later than thirty (30) days after publication or announcement of that correction, a
Party gives notice that an amount is so payable, the Party that originally either
received or retained such amount will, not later than three (3) Business Days after
such notice is effective, pay, subject to any applicable conditions precedent, to the
other Party that amount, together with interest at the Interest Rate for the period
from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that
correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from
Specified Dealers pursuant to paragraph (a) above unless the Parties expressly agree
otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to
four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then
the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th)
decimal number is less than five (5), then the fourth (4th)] decimal number shall
remain unchanged.
A new Section 10.13 is added as follows:
“10.13. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as agent of the other Party.”
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CITY OF PALO ALTO RFP #145153
A new Section 10.14 shall be added to Article 10 as follows:
10.14 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope,
breach, termination or validity of each of them (a “Dispute”), the Parties will resolve such
Dispute as set forth below; provided, however, that nothing in this Section 10.14 shall prevent or
preclude a Party from pursuing the rights and remedies set forth under Article Five.
10.14.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.14.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.14.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if any, that
the Parties mutually agree to in writing, either Party shall be free to pursue any and all legal
actions and remedies as it may deem necessary.
A new Section 10.15 shall be added to Article 10 as follows:
10.15: “The Parties acknowledge and agree that any purchase of power made pursuant to Party
B’s Request for Proposals under this Agreement as well as any Transaction hereunder shall be
executed and delivered in compliance with applicable laws and regulations in effect at the time
this Agreement is signed by the Parties and at the time any Transaction is executed, including
Senate Bill 1368 (California Public Utilities Code section 8340 et seq.) and Title 20, Sections
2900 et seq. of the California Code of Regulations, as amended, to the extent that such laws and
regulations, including SB 1368, apply or are deemed to apply to this Agreement and any
Transaction. To the extent said regulation requires Party B as a local publicly owned electric
utility to submit a compliance filing in accordance with such laws, Party A, upon the request of
Party B, shall in good faith promptly provide to Party B (to the extent Party B lacks such
information) the information to the extent Party A has knowledge of or access to such
information. A failure by Party A to provide such information which is within its possession or
knowledge shall constitute a default under this Agreement.”
A new Section 10.16 shall be added to Article 10 as follows:
“10.16 Mobile-Sierra. The Parties intend that the standard of review for changes to any rate,
charge, classification, term or condition of this Agreement at FERC shall be the most stringent
standard permissible under applicable law. As to the Parties, it is understood and agreed that the
standard of review shall solely be the application of the “Mobile-Sierra” public interest standard
of the “just and reasonable” standard of review, as stated by the United States Supreme Court in
United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956), and Federal Power
Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), and clarified by Morgan Stanley
Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527, 128 S.Ct. 2733
(2008); and consistent with the order of the Supreme Court in NRG Power Marketing, LLC, et
al., v. Maine Public Utilities Commission et al., No. 08-674, 130 S.Ct. 693 (2010) (“NRG
Order”). As to all other persons, the Parties intend and agree that the same standard, to the
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CITY OF PALO ALTO RFP #145153
maximum degree as may be made applicable to other than the Parties, apply, to the maximum
degree permitted under the NRG Order.
A new Section 10.17 is added as follows:
“10.17. Condition Precedent. It shall be a condition precedent to the effectiveness of this Third
Amended and Restated Master Agreement and each Transaction that Party A shall have received
a copy of a resolution authorizing Party B to enter into this Third Amended and Restated Master
Agreement with Party A.
A new Section 10.18 is added as follows:
"10.18. Commercial Entity. The Parties understand and agree that the Transactions under this
Agreement are physical transactions intended for delivery or deferred delivery, and that the
Parties contemplate making or taking physical delivery of electric energy; provided, however,
that the Parties understand that certain Transactions may be determined to be swaps by a third
party such as the Commodities Futures Trading Commission, regardless of either Party’s intent.
Party B is a commercial entity engaged in the business of delivering electricity to retail
customers and buying electricity products with the intention of routinely taking delivery in order
to provide service to its retail electric customers."
Schedule M ___ Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s) and
municipal ordinances under which Party B was created, organized and authorized to enter into
this Third Amended and Restated Master Agreement and each Transaction thereunder.
Part A is further amended by adding the following sentence to the end of the definition of the
term “Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo Alto
Enterprise Fund and the Act under which such Special Fund was established to determine, for
its purposes under this Third Amended and Restated Master Agreement, that such Special
Fund meets this definition of Special Fund.”
Part C Part C of Schedule M is amended by adding the phrase “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Part E X Section 3.6 under Part E of Schedule M applies; however, the portion of that provision
following the semicolon on the eighth line thereof is replaced in its entirety with the
following:
“any breach of clause ‘(ii)’ of this provision shall be deemed to have arisen during a fiscal
period of Governmental Entity or Public Power System for which such budgetary approval or
certification of its obligations under this Third Amended and Restated Master Agreement is
required to be in effect and an Event of Default shall be deemed to have occurred for
purposes of Section 5.1 under which Governmental Entity or Public Power System shall be
treated as the Defaulting Party.”
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Part F ___ Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
Schedule P
Products and
Related Definitions
SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
"CAISO Energy" means with respect to any Transaction, a Product under which the
Seller shall sell and the Buyer shall purchase a quantity of energy equal to the hourly
quantity without Ancillary Services (as defined in the Tariff) that is or will be scheduled
as a schedule coordinator to schedule coordinator transaction pursuant to the applicable
tariff and protocol provisions of the California Independent System Operator
Corporation ("CAISO") (as amended from time to time, the "Tariff") for which the only
excuse for failure to deliver or receive is an "Uncontrollable Force" (as defined in the
Tariff).
“HLH (Heavy Load Hour)” is defined as hours ending (HE) 0700 through HE 2200 PPT
Mondays through Saturdays, excluding NERC Holidays.
“IST” means “Inter-Scheduling Coordinator Trade” as defined in the Tariff.
“LLH (Light Load Hour)” is defined as hours ending HE 0100 through HE 0600 PPT and HE
2300 through HE 2400 Monday through Saturday, and all hours on Sundays and NERC
Holidays.
“NERC Holidays” for each year shall be the holidays for such year set forth or described on the
North America Electric Reliability Council (“NERC”) website at www.nerc.com.
“NP15 Zone Delivery Point” means the Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025).
“Other Products” If the Parties agree to a service level/product defined by reference to a different
agreement (for example, the WSPP Agreement) for a particular Transaction, then, unless the
Parties expressly state and agree that all the terms and conditions of such other agreement will
apply, such reference to a service level/product shall be as defined by such other agreement,
including if applicable, the regional reliability requirements and guidelines as well as the specific
excuses for performance, Force Majeure, Uncontrollable Forces, or other such excuses
applicable to such other agreement, to the extent inconsistent with the terms of this Agreement,
but all other terms and conditions of this Agreement remain applicable.
“PPT’ means Pacific Prevailing Time.
“Resource Adequacy (“RA”) Capacity” means with respect to a negotiated RA transaction, the
products, terms, conditions and definition set forth in an RA Confirm, substantially in the form
of Exhibit B, executed as of the Confirmation Effective Date.
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CITY OF PALO ALTO RFP #145153
"West Firm” or any similar description means with respect to a Transaction, a Product that is or
will be scheduled as firm energy consistent with the most recent rules adopted by the WECC for
which the only excuses for failure to deliver or receive are if an interruption is (i) due to an
Uncontrollable Force as provided in Section 10 of the WSPP Agreement; or (ii) where
applicable, to meet Seller's public utility or statutory obligations to its customers.
Notwithstanding any other provision in this Agreement, if Seller exercises its right to interrupt to
meet its public utility or statutory obligations, Seller shall be responsible for payment of damages
for failure to deliver firm energy as provided in Article 4 of this Agreement.
"WECC" means the Western Electricity Coordinating Council, formerly Western Systems
Coordinating Council, or its successor.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended from time
to time.
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning RA, which products, terms,
conditions and definitions shall be documented in an Resource Adequacy Form of Confirmation
(“RA Confirm”) or substantially similar form executed as of the Confirmation Effective Date
containing terms and conditions substantially similar to those set forth in the RA Confirm
attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs shall be subject to the approval of Party B’s City Manager. The form of any REC
purchase and/or sale transaction shall be mutually agreed to by the Parties.
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CITY OF PALO ALTO RFP #145153
IN WITNESS WHEREOF, the Parties have caused this Third Amended and Restated Master Agreement to be duly
executed as of the Effective Date.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: ____________, ____
Party A: Shell Energy North America (US), L.P.
By: ……………………………..
Name: ……………………………..
Title: ……………………………..
Date: ____________, ____
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ____________, ____
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: ____________, ____
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: ____________, ____
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.
THIS PAGE WAS INTENTIONALLY LEFT BLANKED.
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CITY OF PALO ALTO RFP # __________
MASTER POWER PURCHASE AND SALE AGREEMENT
(EEI Version 2.1, modified 4/25/00)
COVER SHEET
This Master Power Purchase and Sale Agreement (“Master Agreement”) is made as of the following date: _____ __,
2013 (“Effective Date”). The Master Agreement, together with the exhibits, schedules, annexes and any written
supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or
margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted
in accordance with Section 2.3 hereto) shall be referred to as the “Agreement.” The Parties to this Master Agreement are
the following:
Name: Turlock Irrigation District(“Counterparty ” or
“Party A”)
Name: City of Palo Alto (“Counterparty” or “Party B”)
All Notices:
Attn: Resource Planning Department Manager
Phone: 209-883-8348
Facsimile: 209-656-2147
E-mail: wgmanuel@tid.org
Duns 046004933
Federal Tax ID Number: 94-6001460
All Notices:
Attn: Assistant Director, Resource Management
Department of Utilities
City of Palo Alto
250 Hamilton Avenue, 3rd Floor
Palo Alto, CA 94301
Phone: 650-329-2214
Facsimile: 650-326-1507
Duns: 17-892-8479
Federal Tax ID Number: 94-6000389
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Assistant General Manager, Resource
Planning Management and Rates
Phone: 209-883-8210
Facsimile: 209-656-2147
With additional Notices of an Event of Default or
Potential Event of Default to:
Attn: Senior Assistant City, Attorney/Utilities
City of Palo Alto
Phone: 650-329-2171
Facsimile: 650-329-2646
Invoices:
Attn: Michelle Gonzales
333 East Canal Drive
PO Box 949
Turlock, CA 95380
Phone: 209-883-8315
Facsimile: 209-656-2147
E-mail: mgonzales@tid.org
Duns 046004933
Federal Tax ID Number: 94-6001460
Invoices:
Attn: Power Accounts Administrator
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678-6420
Phone: (916) 781-4224/3636
Facsimile: (916) 781-4225
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CITY OF PALO ALTO RFP # __________
Day Ahead Pre-Scheduling:
Attn: Scheduling Department
Phone: 209-883-8399
Facsimile: 209-656-2195
E-mail:scheduling@tid.org
Day Ahead Pre-Scheduling:
Confirmations:
Attn: Pre-Scheduler Desk
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4211/4230/4232
Facsimile: 916-781-4255
Real Time Scheduling:
Attn: Scheduling Department
Phone: 209-883-8507
Facsimile: 209-656-2195
E-mail: scheduling@tid.org
Real Time Scheduling:
Attn: Chief Dispatcher/Scheduler
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Payments:
Attn: Michelle Gonzales
333 East Canal Drive
PO Box 949
Turlock, CA 95380
Phone: 209-883-8315
Facsimile: 209-656-2147
E-mail: mgonzales@tid.org
Payments:
Attn: Accounts Payable
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4237/3636
Facsimile: 916-781-4226
Wire Transfer:
BNK Bank of America
ABA: 0260-0959-3
ACCT: 0832280151
Wire Transfer:
Deposit to Northern California Power Agency, “to the
benefit of City of Palo Alto”
BNK U.S. Bank
ABA: 121122676
ACCT: 1-534-0216-2744
Attn: Cyndy Husebye
U.S. Bank
555 SW Oak Street, Suite 400
Portland, OR. 97204
Phone: 877-295-2509
Facsimile: 877-324-1680
Credit and Collections:
Attn: Don Swanson
333 East Canal Drive
PO Box 949
Turlock, CA 95380
Phone: 209-883-8209
Facsimile: 209-656-2158
Credit and Collections:
Attn: Power Accounts Analyst
Northern California Power Agency
651 Commerce Drive
Roseville, CA 95678
Phone: 916-781-4221/4224
Facsimile: 916-781-4255
The Parties hereby agree that the General Terms and Conditions are incorporated herein, as selected, modified and
amended by the following specific provisions, as provided for in such General Terms and Conditions:
Party A Tariff: N/A
Party B Tariff: N/A
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CITY OF PALO ALTO RFP # __________
Article One
General Definitions Section 1.4 “Business Day” Delete the first sentence and replace it to read as follows: “Business
Day” means any day except a Saturday, Sunday, the Friday immediately following the
Thanksgiving holiday or a Federal Reserve Bank Holiday.
Section 1.10 is amended by substituting “U.S. $” for “$U.S.” in line 1
Section 1.11 is amended by adding the following after “Party” in the third line: “after using
commercially reasonable efforts to mitigate costs”.
Section 1.12 is amended by deleting in the fourth line the word “issues” and replacing it with the
word “issuer”.
Section 1.24 is amended by adding before the period at the end thereof the following: “in
accordance with Section 5.2”.
Section 1.27 is amended by inserting the phrase “and in an amount” in the third line after the
word “form” and before the word “acceptable”.
Section 1.28 is amended by adding before the period at end thereof the following: “in accordance
with Section 5.2”.
Section 1.45 is replaced by the following sentence:
“Performance Assurance means collateral in the form of either cash or Letter(s) of
Credit, which form is to be determined by the Party issuing the collateral in its sole
discretion and is reasonably acceptable to the Requesting Party.”
Section 1.46 is amended by adding before the period at the end thereof the following:
“; provided that the failure to comply with any requirement of this Master Agreement or
a Transaction, including the requirements of Article 8, before the expiration of the time
period expressly specified for such compliance in this Master Agreement or the
Transaction, if any, shall not be considered a Potential Event of Default unless and until
the applicable time period has expired without compliance”.
Section 1.50 is amended by deleting the reference to “Section 2.4” and replacing it with “Section
2.5”.
Section 1.51 is amended by (a) inserting the phrase “for delivery” in the second line after the
word “purchases” and before the phrase “at the Delivery Point”, and (b) deleting the phrase “at
Buyer’s option” in the fifth line and inserting in their place the following: “absent a purchase”.
Section 1.53 is amended by (a) deleting the phrase “at the Delivery Point” in the second line, (b)
adding the words “and losses” after the words “transmission charges” in the fourth line and (c)
deleting the phrase “at Seller’s option” in the fifth line and inserting in their place the following:
“absent a sale, assuming a sale could not have been made in a commercially reasonable manner”.
Section 1.56 is amended by deleting the words “pursuant to Section 5.2” and by adding before
the period at the end thereof the following: “, as determined in accordance with Section 5.2”.
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Article Two
Transaction Terms
and Conditions
For purposes of Section 2.3, Party B requires that all Transactions be confirmed in writing.
Accordingly, the provision is amended by striking the word “may” from the first line thereof and
replacing it with the word “shall.”
For purposes of Section 2.3, all references to Seller shall be instead to Party A and all references
to Buyer shall be instead to Party B
X Optional provision in Section 2.4. If not checked, inapplicable.
A new Section 2.6 is added to Article Two, worded as follows:
“2.6 No Oral Agreements or Modifications. Notwithstanding anything to the contrary in
this Master Agreement, including in this Article Two, this Master Agreement and any and
all Transactions may not be orally amended or modified, including by Recording pursuant
to Section 2.5.”
Article Four
Remedies for Failure
to Deliver or
Receive
X Accelerated Payment of Damages. If not checked, inapplicable.
A new Section 4.3 is added to Article Four, worded as follows:
“4.3 Suspension of Performance. In addition to the remedies provided pursuant to
Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part
of the Product pursuant to a Transaction for a period of three (3) or more consecutive days,
and such failure is not excused under the terms of the Product, by Force Majeure, by the
other Party’s failure to perform or by agreement of the Parties, then upon one (1) Business
Day’s prior written notice, and for so long as the non-performing Party fails to perform,
the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to this
Section 4.3, it shall not be obligated to resume performance until it has received notice
from the non-performing Party at least one (1) Business Day prior to the date upon which
the non-performing Party intends to resume its performance; provided that, if the
performing Party has entered into a replacement contract with a term of 31 days or less,
the performing Party may resume performance at the end of the term of such replacement
contract. Remedies available under this provision to the performing Party are in addition
to, not in replacement of, other remedies specified in this Agreement.”
Article Five
Events of Default;
Remedies
X Cross Default provision of Section 5.1(g) shall apply for both Party A and Party B.
Cross Default amount for each shall be $20,000,000.
Section 5.1(g) is amended by inserting, “or any Affiliate of such Party” after the first appearance
of the word “Party” in subsections (i) and (ii)..
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CITY OF PALO ALTO RFP # __________
Section 5.1 is further amended by replacing the period at the end of subsection (h) with a semi-
colon, and adding new subsections “(i),” “(j)" , and “(k)” , which read as follows:
"(i) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Seller Failures” as that term is used in Section 4.1, under any or all Transactions,
regarding which the Seller shall be deemed to be the Defaulting Party, and Buyer shall
also be entitled to its remedies under Section 4.1;"
"(j) during any consecutive ninety (90) day period, there have occurred five (5) or more
“Buyer Failures” as that term is used in Section 4.2 under any or all Transactions,
regarding which the Buyer shall be deemed to be the Defaulting Party, and Seller shall
also be entitled to its remedies under Section 4.2;”
"(k) a representation or warranty with respect to the Defaulting Party's financial statement or
position that is false or materially misleading."
Section 5.2 is amended in line 3 by changing “right (i) to” to “right to (i)” and by adding the
following sentence to the end of that provision:
“If the Non-Defaulting Party’s aggregate Gains exceed its aggregate Losses and Costs,
if any, resulting from the termination of this Agreement, the Settlement Amount shall be
zero, notwithstanding any provision of this Agreement to the contrary.”
Section 5.3 is amended by inserting the phrase “plus, at the option of the Non-Defaulting Party,
any cash or other form of security then available to the Defaulting Party pursuant to Article
Eight”, between the words “that are due to the Non-Defaulting Party,”, and “plus any and all
other amounts” in the sixth line thereof.
Section 5.6 Closeout Setoff
___ Option A (Applicable if no other selection is made.)
X Option B - Affiliates shall have the meaning set forth in the Master Agreement unless
otherwise specified as follows: Option B is amended as set forth in Article 10 below.
___ Option C (No Setoff)
Section 5.6 is further amended by inserting before the last sentence in Option B:
“At the election of the Non-Defaulting Party, all obligations owing by or to an Affiliate
of a Party shall be treated as if they were owing by or to the Party itself for purposes of
set-off.”
Article Six Section 6.8 is amended by deleting the words, “may by agreement of the Parties,” in line 3 and
inserting in their place the word “shall”.
Article Eight 8.1 Party A Credit Protection
Credit and Collateral
Requirements
Financial Information from Party B, Section 8.1(a)
___ Option A
X Option B Specify: Audited financial statements for City of Palo Alto and for City of
Palo Alto Enterprise Fund
___ Option C
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CITY OF PALO ALTO RFP # __________
Credit Assurances from Party B, Section 8.1(b)
___ Not Applicable
X Applicable
Collateral Threshold for Party B, Section 8.1(c)
____ Not Applicable
X Applicable
If applicable, complete the following:
Party B Collateral Threshold: means with respect to Party B, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
long term, senior, unenhanced and not supported by any third party enhancement, debt securities
or obligations (“Debt”) of Party B; provided, that (a) if the Debt of Party B is no longer rated by
either S&P or Moody’s, the Threshold with respect to Party B will be zero dollars and (b) if an
Event of Default or Potential Event of Default with respect to Party B has occurred and is
continuing, the Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AA+ or above Aa1 or above $45,000,000
A+ A1 $35,000,000
A- A3 $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party B Independent Amount: $0
Party B Rounding Amount: $100,000
Downgrade Event, Section 8.1(d):
__ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party B only if (i) Party B’s underlying rating on Debt by
S&P or Moody's is respectively below BBB- or Baa3, or (ii) both S&P and Moody's refuse
to rate Party B's Debt, or (iii) Party B’s City Council no longer has the legal authority under
the Act, as defined by Schedule M, to adjust electric rates as necessary to recover Party B’s
costs of providing retail electric service to its customers.
Guarantor for Party B, Section 8.1(e): N/A
Guarantee Amount: N/A
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CITY OF PALO ALTO RFP # __________
8.2 Party B Credit Protection:
Financial Information from Party A, Section 8.2(a):
__ Option A
X Option B Specify: Audited financial statements to be provided by Party A as described
in Section 8.2(a) shall be for Party A.
___ Option C
Credit Assurances from Party A, Section 8.2(b):
___ Not Applicable
X Applicable
Collateral Threshold for Party A, Section 8.2(c ):
___ Not Applicable
X Applicable
If applicable, complete the following:
Party A Collateral Threshold: means with respect to Party A, at any time the amount specified in
the table below under the relevant heading opposite the lower of the ratings at that time assigned
by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation (“Moody’s”) to the
Debt of Party A; provided, that (a) if the Debt of Party A is no longer rated by either S&P or
Moody’s, the Threshold with respect to Party A will be zero dollars and (b) if an Event of
Default or Potential Event of Default with respect to Party A has occurred and is continuing, the
Threshold with respect to such party shall be zero dollars.
S&P Rating Moody’s Rating Threshold
AA+ or above Aa1 or above $45,000,000
A+ A1 $35,000,000
A- A3 $25,000,000
BBB+ Baa1 $15,000,000
BBB Baa2 $10,000,000
BBB- Baa3 $ 5,000,000
Below BBB- (or rating Below Baa3 (or rating $ 0 (zero)
suspended or withdrawn suspended or withdrawn
by both S&P and by both S&P and
Moody’s) Moody’s)
Party A Independent Amount: $0
Party A Rounding Amount: $100,000
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Downgrade Event, Section 8.2(d):
___ Not Applicable
X Applicable
If applicable, complete the following:
X It shall be a Downgrade Event for Party A only if the Credit Rating of Party A falls
below BBB- from S&P or Baa3 from Moody's or if the unenhanced, unsecured senior
long-term debt securities or obligations of Party A ceases to be rated by either S&P or
Moody's.
Guarantor for Party A, Section 8.2(e):
Guarantor for Party A: NA
Guarantee Amount: NA
Article Ten
Section 10.1 is amended by replacing “upon (thirty) 30 days’ prior written notice” in lines 2 and
3, with “, which termination shall be effective immediately upon receipt of written notice
thereof”.
Section 10.2 (ix) is amended by adding after the words, “it is”, the following, “or it shall be
deemed for all purposes to be”.
Section 10.2 shall be amended by deleting the “and” at the end of sub-section 10.2(xi), replacing
the period at the end of subsection 10.2(xii) with “; and”, and adding a new sub-section (xiii) as
follows:
“Notwithstanding any provision in this Agreement to the contrary, all information, statements,
reports and similar materials, conveyed by either Party orally or in writing in response to a bid
solicitation document [invitation for bids or request for proposals or combination thereof] of
either Party to demonstrate such Party’s financial condition, are true and accurate in all material
respects. Any representation made by such Party regarding its financial performance or
condition (“Financial Representation”) as an inducement to other Party during the solicitation,
bidding or negotiation of any transaction entered into under this Master Agreement shall be
deemed to be repeated and reaffirmed, as of the date of the applicable Transaction Confirmation
and to be incorporated as a representation of such Party or related party, who makes the Financial
Representation in that Transaction Confirmation without the need for any further action by either
Party.”
Section 10.4 shall be amended by inserting the phrase "To the extent permitted by law," at the
beginning of each of the first two sentences, and substituting the word, “each” for “Each” after
the insertion of each such phrase.
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CITY OF PALO ALTO RFP # __________
Section 10.5 shall be amended by deleting clause (ii) and the portion of clause (iii) prior to the
words “provided, however”, and replacing them with the following: “(ii) transfer or assign this
Agreement to an Affiliate of such Party so long as (x) at the time of transfer or assignment such
Affiliate’s creditworthiness is equal to or higher than that of such Party or its Guarantor, if any,
as of the Effective Date, or (y) the obligations of such Affiliate are guaranteed by such Party or
its Guarantor, if any, in accordance with a guaranty agreement in form and substance satisfactory
to the other Party, and (iii) transfer or assign this Agreement to any person or entity succeeding
to all or substantially all of the assets of such Party whose creditworthiness, at the time of
transfer or assignment, is equal to or higher than that of such Party or its Guarantor, if any, as of
the Effective Date”.
Section 10.6 is amended by deleting the words “New York” from the fourth line thereof and
replacing it with the word “California.”
Further, Section 10.6 is amended by deleting the last sentence thereof and replacing it with the
following sentence:
“With respect to any proceeding in connection with any claim, counterclaim, demand,
cause of action, dispute and controversy arising out of or relating to this Agreement, the
Parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the
Northern District of the State of California; provided, however, that if the federal courts
sitting in the Northern District of the State of California refuse jurisdiction, the Parties
agree to the exclusive jurisdiction of the state courts sitting in the County of Santa
Clara, State of California.”
Section 10.8 is modified by adding before the word “constitute” in line four of Section 10.8, “,all
financial and other information, explanations, statements, reports provided by one party to the
other in connection therewith”
Section 10.8 shall be amended by deleting its penultimate sentence in its entirety and replacing it
with the following sentences: “The indemnity provisions of this Agreement shall survive the
termination of this Agreement for the period of the applicable statute of limitations. The audit
provisions of this Agreement shall survive the termination of this Agreement for a period of
twelve (12) months.”
Section 10.10 shall be amended to include the at the end of the first sentence:
“as amended by the Bankruptcy Code Amendments of 2005, and that each believes that it is a
“forward contract merchant” under statutory and decisional law in effect as of the Effective
Date”
Confidentiality
X Confidentiality Applicable, subject Section
10.11 as amended.
If not checked, inapplicable.
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CITY OF PALO ALTO RFP # __________
Section 10.11 shall be replaced in its entirety with the following:
“Each Party acknowledges that the other Party is subject to California Constitution
Article 1, Section 3, and the California Public Records Act, Cal. Gov. Code § 6250 et
seq. (“Public Records Act”) in regard to the documents comprising this Master
Agreement and the Transactions, which items may constitute public records subject to
inspection and copying by the public under the authority of the California Constitution
and the Public Records Act. Each Party shall, consistent with those laws, use
reasonable efforts to provide the other Party with notice of any third party request to
inspect and copy any of the documents that comprise this Master Agreement and the
Transactions, which such other Party might deem confidential and exempt from
disclosure, in order that such Party may timely seek to protect those documents from
disclosure to the third party. Each Party acknowledges and agrees that other Party shall
not be liable to it if the other Party makes disclosure in accordance with the California
Constitution and/or the Public Records Act before it has timely obtained an order to
prevent the other Party from making the requested disclosure to the third party.”
A new Section 10.12 shall be added to Article 10 as follows:
"10.12. No Agency. In performing their respective obligations hereunder, neither Party
is acting, or is authorized to act, as the agent of the other Party.”
A new Section 10.13 shall be added to Article 10 as follows:
10.13 Dispute Resolution. In the event of any controversy or claim, whether based in contract,
tort, or otherwise, arising out of or based upon, or relating to this Agreement or the scope,
breach, termination or validity of each of them (a “Dispute”), the Parties will resolve such
Dispute in the following manner:
10.13.1 Negotiation. The Parties will attempt in good faith to resolve the Dispute promptly by
negotiations between duly authorized representatives of the Parties who have authority to settle
the Dispute. When a Party believes there is a Dispute, that Party will give the other Party written
notice describing the Dispute with reasonable particularity. Within thirty (30) Days after receipt
of such notice, the receiving Party will submit a written response to the other Party.
10.13.2 Mediation. If the Dispute is not resolved within forty-five (45) Days of the date of the
response given pursuant to Section 10.13.1, or such additional time, if any, that the Parties
mutually agree to in writing, the Parties shall try in good faith to settle the Dispute by mediation.
The form of mediation and the mediator(s) selected to resolve the Dispute shall be acceptable to
both Parties.
10.13.3 Additional Rights. If the Dispute is not resolved through mediation within ninety (90)
Days after the first meeting of the Parties and mediator(s), or such additional time, if
any, that the Parties mutually agree to in writing, either Party shall be free to pursue any
and all legal actions and remedies as it may deem necessary.
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CITY OF PALO ALTO RFP # __________
A new Section 10.14 shall be added to Article 10 as follows:
10.14: “The Parties acknowledge and agree that any purchase of power made by a Party under
this Agreement and any Transaction shall be executed and delivered in compliance with
applicable laws and regulations in effect at the time this Agreement is signed by the Parties and
at the time of entering into any particular Transaction, including, but not limited to, Senate Bill
1368 (California Public Utilities Code section 8340 et seq.) and related regulations (Title 20,
Sections 2900 – 2930 of the California Code of Regulations), as amended, to the extent such
laws and regulations, including SB 1368 and related regulations, apply or are deemed to apply to
this Agreement and any Transaction. To the extent SB 1368 and related regulations require a
Party (“Required Party”) as a local publicly owned electric utility to submit a compliance filing
in accordance with such laws, the other Party (“Providing Party”), upon the request of the
Required Party, shall in good faith provide promptly to the Required Party (to the extent the
Required Party lacks such information) the information to the extent Providing Party has
knowledge of or access to such information, and shall work cooperatively with and provide
commercially reasonable assistance to Required Party in Required Part’s compliance with such
laws. A failure by Providing Party to provide such information which is within its possession or
knowledge shall constitute a default under this Agreement.”
A new Section 10.15 shall be added to Article 10 as follows:
10.15: “The Parties intend that the standard of review for changes to any rate, charge,
classification, term or condition of this Agreement at FERC shall be the most stringent standard
permissible under applicable law. As to the Parties, it is understood and agreed that the standard
is the “Mobile-Sierra public interest” standard of review, as stated by the United States Supreme
Court in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish
County, Nos. 06-1457, 128 S.Ct. 2733 (2008), and consistent with the order of the Supreme
Court in NRG Power Marketing, LLC, et al., v. Maine Public Utilities Commission et al., No. 08-
674, 130 S.Ct. 693 (2010) (“NRG Order”). As to all other persons, the Parties intend and agree
that the same standard, to the maximum degree as may be made applicable to other than the
Parties, apply, to the maximum degree permitted under the NRG Order.”
A new Section 10.16 shall be added to Article 10 as follows:
10.16 “Notwithstanding anything in this Agreement to the contrary, with respect to a
Transaction , Buyer shall not be liable to pay Seller in addition to the Contract Price for any AB
32 fees as defined herein. “AB 32 fees” means the regulatory assessments, charges, fees imposts
and/or taxes imposed upon and required to be paid by suppliers of energy in accordance with the
Global Warming Solutions Act of 2006, Chapter 488, Statutes 2006, including, without
limitation, the Compliance Offset Protocols, which shall be included (or be deemed included to
the extent they are not expressly included) in the Contract Price, defined in Section 1.10 of the
General Terms and Conditions, and that are in effect as of the date the Parties enter into such
Transaction.”
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CITY OF PALO ALTO RFP # __________
A new Section 10.17 shall be added to Article 10 as follows:
The payment obligations of Party A to Party B under this Agreement shall be special, limited
obligations of Party A, and shall be payable as provided in the Bond Agreement from Revenues,
and not out of any other funds or moneys of Party A not pledged thereto. The payment
obligations of Party A under this Agreement shall not be payable from or secured by the general
fund or other moneys of Party A, and shall not constitute an indebtedness or obligation of Party
A for which the full faith and credit or taxing power of Party A are pledged. Party B shall not
have any right to compel any exercise of the taxing power of Party A to make any payments due
under this Agreement. For purposes of this Section 10.17, the capitalized term Bond Agreement
shall mean Turlock Irrigation District’s Resolution No. 86-164, adopted on May 20, 1986, as
supplemented and amended from time to time, and any successor such resolution or trust
agreement. For purposes of this Section 10.17, the capitalized term Revenues shall have the
meaning given such term in the Bond Agreement.
A new Section 10.18 is added as follows:
"The Parties understand and agree that the Transactions under this Agreement are physical
transactions for deferred delivery, and that the Parties contemplate making or taking physical
delivery of electric energy products; provided, however, that nothing in this Agreement,
including this Section 10.18, prohibits the Parties from engaging in Transactions that are or may
be determined to be swaps if they so desire. The Parties are both commercial entities engaged in
the business of delivering electric energy to its retail load and routinely makes or takes delivery
of electric energy in order to provide service to its retail electric customers."
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CITY OF PALO ALTO RFP # __________
A new Section 10.19 is added as follows:
Index Transactions. If the Contract Price for a Transaction is determined by reference to a
Price Source, then:
(a) Market Disruption. If a Market Disruption Event occurs on any one or more days
during a Determination Period (each day, a “Disrupted Day”), then:
The Fallback Floating Price, if any, specified by the Parties in the
relevant Confirmation shall be the Floating Price for each
Disrupted Day.
If the Parties have not specified a Fallback Floating Price, then the
Parties will endeavor, in good faith and using commercially reasonable
efforts, to agree on a substitute Floating Price, taking into consideration,
without limitation, guidance, protocols or other recommendations or
conventions issued or employed by relevant trade organizations or
industry groups in response to the Market Disruption Event and other
prices published by the Price Source or alternative price sources with
respect to the Delivery Point or comparable Delivery Points that may
permit the Parties to derive the Floating Price based on historical
differentials.
If the Price Source retrospectively issues a Floating Price in respect of a
Disrupted Day (a “Delayed Floating Price”) before the Parties agree on
a substitute Floating Price for such day, then the Delayed Floating Price
shall be the Floating Price for such Disrupted Day. If a Delayed Price is
issued by the Price Source in respect of a Disrupted Day after the Parties
agree on a substitute Floating Price for such day, the substitute Floating
Price agreed upon by the Parties will remain the Floating Price without
adjustment unless the Parties expressly agree otherwise.
If the Parties cannot agree on a substitute Floating Price and the Price
Source does not retrospectively publish or announce a Floating Price, in
each case, on or before the fifth Business Day following the first
Trading Day on which the Market Disruption Event first occurred or
existed, then the Floating Price for each Disrupted Day shall be
determined by taking the arithmetic mean of quotations requested from
four leading dealers in the relevant market that are unaffiliated with
either Party and mutually agreed upon by the Parties (“Specified
Dealers”), without regard to the quotations with the highest and lowest
values, subject to the following qualifications:
o If exactly three quotations are obtained, the Floating Price for
each such Disrupted Day will be the quotation that remains
after disregarding the quotations having the highest and lowest
values.
o If fewer than three quotations are obtained, the Floating Price
for each such Disrupted Day will be the average of the
quotations obtained.
o If the Parties cannot agree upon four Specified Dealers, then each
of the Parties will, acting in good faith and in a commercially
reasonable manner, select up to two Specified Dealers
separately, and those selected dealers shall be the Specified
Dealers.
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CITY OF PALO ALTO RFP # __________
Unless otherwise agreed, if at any time the Parties agree on a substitute
Floating Price for any Disrupted Day, then such substitute Floating Price shall
be the Floating Price for such Disrupted Day, notwithstanding the subsequent
publication or announcement of a Delayed Floating Price by the relevant Price
Source or any quotations obtained from Specified Dealers
"Determination Period" means each calendar month a part or all of which is within
the Delivery Period of a Transaction.
"Exchange" means, in respect of a Transaction, the exchange or principal trading
market specified as applicable to the relevant Transaction.
"Floating Price" means a Contract Price specified in a Transaction that is based
upon a Price Source.
"Market Disruption Event" means, with respect to any Price Source, any of the
following events:
(a) the failure of the Price Source to announce, publish or make available the
specified Floating Price or information necessary for determining the
Floating Price for a particular day;
(b) the failure of trading to commence on a particular day or the permanent
discontinuation or material suspension of trading in the relevant options
contract or commodity on the Exchange, RTO or in the market specified for
determining a Floating Price;
(c) the temporary or permanent discontinuance or unavailability of the Price
Source;
(d) the temporary or permanent closing of any Exchange or RTO specified
for determining a Floating Price; or
(e) a material change in the formula for or the method of determining the
Floating Price by the Price Source or a material change in the composition
of the Product.
"Price Source" means, in respect of a Transaction, a publication or such other origin of
reference, including an Exchange or RTO, containing or reporting or making
generally available to market participants (including by electronic means) a price,
or prices or information from which a price is determined, as specified in the
relevant Transaction.
“RTO” means any regional transmission operator or independent system operator.
“RTO Transaction” means a Transaction in which the Price Source is an RTO.
"Trading Day" means a day in respect of which the relevant Price Source ordinarily
would announce, publish or make available the Floating Price.
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CITY OF PALO ALTO RFP # __________
(b) Corrections to Published Prices. If the Floating Price published, announced or
made available on a given day and used or to be used to determine a relevant price is
subsequently corrected by the relevant Price Source (i) within 30 days of the
original publication, announcement or availability, or (ii) in the case of RTO
Transactions only, within such longer time period as is consistent with the RTO’s
procedures and guidelines, then either Party may notify the other Party of that
correction and the amount (if any) that is payable as a result of that correction. If,
not later than thirty (30) days after publication or announcement of that correction, a
Party gives notice that an amount is so payable, the Party that originally either
received or retained such amount will, not later than three (3) Business Days after
such notice is effective, pay, subject to any applicable conditions precedent, to the
other Party that amount, together with interest at the Interest Rate for the period
from and including the day on which payment originally was (or was not) made to
but excluding the day of payment of the refund or payment resulting from that
correction. Notwithstanding the foregoing, corrections shall not be made to any
Floating Prices agreed upon by the Parties or determined based on quotations from
Specified Dealers pursuant to paragraph (a) above unless the Parties expressly agree
otherwise.
(c) Rounding. When calculating a Floating Price, all numbers shall be rounded to
four (4) decimal places. If the fifth (5th) decimal number is five (5) or greater, then
the fourth (4th) decimal number shall be increased by one (1), and if the fifth (5th)
decimal number is less than five (5), then the fourth (4th) decimal number shall
remain unchanged.
Schedule M X Party A is a Governmental Entity or Public Power System
X Party B is a Governmental Entity, Schedule M Applicable
Part A Part A of Schedule M is amended by including the following definition for the term “Act”:
“Act” means the Constitution of the State of California, the California statute(s), charter
and municipal ordinances under which Party B was created, organized and authorized to
enter into this Master Agreement and each Transaction thereunder
Part A is further amended by adding the following sentence at the end of the definition of the
term “Special Fund”:
“Party A has conducted such investigation as it deems necessary of the City of Palo
Alto Enterprise Fund and the Act under which such Fund was established to determine,
for its purposes under this Agreement, that such Fund meets this definition of Special
Fund.”
Part C Part C of Schedule M is amended by adding the phrase in line 7 “and to the extent applicable,”
immediately following the word “limitation” in clause (i).
Notwithstanding anything herein to the contrary, Party B hereby acknowledges and agrees that
Party A has not made the representations and warranties described in (v)(a), (v)(b), (v)(c), and
(vi) of Part C of Schedule M.
Part D Section 3.4 is modified by inserting a period after “Master Agreement” in line 7 and deleting the
rest of the sentence.
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CITY OF PALO ALTO RFP # __________
Part E X Section 3.6 under Part E of Schedule M applies to Party B only; however, the portion of
that provision following the semicolon on the eighth line thereof is replaced in its
entirety with the following:
“any breach of clause (ii) of this provision shall be deemed to have arisen
during a fiscal period of Governmental Entity or Public Power System for
which such budgetary approval or certification of its obligations under this
Master Agreement is required to be in effect and an Event of Default shall be
deemed to have occurred for purposes of Section 5.1 under which
Governmental Entity or Public Power System shall be treated as the Defaulting
Party.”
Part F ___ Add Section 8.4. If not checked, inapplicable.
Part G Part G does not apply.
Schedule P SCHEDULE P
PRODUCTS AND RELATED DEFINITIONS
The following defined terms are added to Schedule P:
“CAISO” means the California Independent System Operator Corporation, or its
successor.
“CAISO Tariff” means the currently effective Federal Energy Regulatory Commission-
approved tariff of CAISO, including all CAISO protocols, as the same may be amended from
time to time.
“CAISO Energy” means a Transaction in which the Seller shall sell and the Buyer shall
purchase a quantity of Energy equal to the hourly quantity without Ancillary Services (as defined
in the CAISO Tariff) that is or will be scheduled as a schedule coordinator to schedule
coordinator transaction pursuant to the CAISO Tariff as amended from time to time for which the
only excuse for failure to deliver or receive is an “Uncontrollable Force” (as defined in the
CAISO Tariff) called by the CAISO in accordance with the CAISO Tariff.
“Heavy Load Hour” or “HLH”” is defined as the hours ending (HE) 0700- 2200
Monday-Saturday, excluding NERC holidays, PPT.
“Inter-Scheduling Coordinator Trade” or “IST” means a trade between Scheduling
Coordinators of Energy or Ancillary Services in accordance with the CAISO Tariff.
“Light Load Hour” or “LLH” is defined as the hours ending (HE) 0100- 0600 and 2300-
2400 Monday-Saturday, all day Sunday and NERC holidays, PPT.
“NP15 Zone” means the Existing Zone Generation NP15 Trading Hub (“NP15 EZ Gen
Hub”), as such trading hub is contemplated by the CAISO in its filing made to the FERC dated
March 15, 2005 (“Comprehensive Design Proposal for Inter-Scheduling Coordinator Trades
Under the California Independent System Operator Corporation’s Market Redesign and
Technology Upgrade, Docket No. ER02-1656-025”); provided further, if the NP15 EZ Gen Hub
(under any name) is not established as part of a market redesign that is implemented during the
Delivery Period, the Parties agree to promptly work together in good faith to designate an
alternate Delivery Point to reasonably approximate the characteristics of the NP-15 EZ Gen Hub.
“Other Products and Service Levels: If the Parties agree to a service level/product
defined by a different agreement (e.g., the WSPP Agreement, etc.) for a particular Transaction,
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CITY OF PALO ALTO RFP # __________
then such reference to a service level/product shall be defined by such other agreement,
including, if applicable, the regional reliability requirements and guidelines as well as the excuses
for performance, Force Majeure, Uncontrollable Forces, or other such excuses applicable to such
other agreement, to the extent inconsistent with the terms of this Agreement, but all other terms
and conditions of this Agreement shall remain applicable including, without limitation, Section
2.2.”
"West Firm", or “WSPP Schedule C” or “Schedule C” or “WSPPC-Firm” means with
respect to a Transaction, a Product that is or will be scheduled as firm energy consistent with the
most recent rules adopted by the WECC for which the only excuses for failure to deliver or
receive are if an interruption is due to an Uncontrollable Force as provided in Section 10 of the
WSPP Agreement.
"WECC" means the Western Electricity Coordinating Council, or its successor.
"WSPP Agreement" means the Western Systems Power Pool Agreement as amended
from time to time.
EXHIBIT A
MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER
EXHIBIT B
RESOURCE ADEQUACY (“RA”) CAPACITY
The Parties acknowledge and agree that after the execution of this Master Agreement, they may
enter into one or more contracts or confirmations concerning Resource Adequacy, which
products, terms, conditions and definitions shall be documented in an Resource Adequacy Form
of Confirmation (“RA Confirm”) or substantially similar form executed as of the Confirmation
Effective Date containing terms and conditions substantially similar to those set forth in the RA
Confirm attached at Exhibit B.
EXHIBIT C
RENEWABLE ENERGY CERTIFICATE (“REC”)
On or after the Effective Date, Party B may secure the appropriate authorization and approval to
buy and/or sell RECs (bundled and unbundled); provided, however, that the purchase and/or sale
of such RECs by Party B shall be subject to the approval of Party B’s City Manager. The form
of any REC purchase and/or sale transaction shall be mutually agreed to by the Parties.
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CITY OF PALO ALTO RFP # __________
IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above
written.
Party B: City of Palo Alto
Approval as to Form:
By: ……………………………..
Name: Grant Kolling
Title: Sr. Asst. City Attorney
Date: _________, 2013
Party A:
By: ……………………………..
Name: James Farrar
Title: Assistant General Manager, Planning & Rates
Date: ________, 2013
Party B: City of Palo Alto
Approval by City Manager:
By: ……………………………..
Name: James Keene
Title: City Manager
Date: ________, 2013
Party B: City of Palo Alto
Approval by Mayor:
By: ……………………………..
Name: James Keene, City Manager, for
Title: Mayor
Date: ________, 2013
Party B: City of Palo Alto
Approval by Administrative Services Director:
By: ……………………………..
Name: Lalo Perez
Title: Administrative Services Director
Date: _________, 2013
Party B: City of Palo Alto
Approval by Utilities Director:
By: ……………………………..
Name: Valerie Fong
Title: Utilities Director
Date: _______, 2013
DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of
representatives of Edison Electric Institute (“EEI”) and National Energy Marketers Association (“NEM”)
member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI
nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for
its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice
and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be
achieved and their legal interests are adequately protected.