Exhibit 10.3.5
AMENDMENT NO. 1
TO
POWER PURCHASE AND SALES AGREEMENT
BETWEEN
CHEVRON U.S.A. INC.
AND
SOUTHERN CALIFORNIA EDISON
TABLE OF CONTENTS
Section Title Page
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1 PARTIES 1
2 RECITALS 1
3 AGREEMENT 3
4 EFFECTIVE DATE 3
5 AMENDMENT TO SECTION 4 3
6 AMENDMENT TO SECTION 14 3
7 AMENDMENT TO SECTION 15 7
8 AMENDMENT TO SECTION 34 18
9 EFFECT OF THIS AMENDMENT XX. 0 00
00 XXXXXXXXX XXXXXX 21
AMENDMENT NO. 1 TO
POWER PURCHASE AND SALES AGREEMENT BETWEEN
HEBER GEOTHERMAL COMPANY AND
SOUTHERN CALIFORNIA EDISON COMPANY
1. PARTIES
The Parties to this Amendment No. 1 to the Power Purchase and Sales
Agreement, hereinafter referred to as Amendment No. l, are Heber Geothermal
Company, a California partnership, hereinafter referred to as "HGC" and Southern
California Edison Company, a California corporation, hereinafter referred to as
"Edison," hereinafter sometimes referred to individually as "Party" and
collectively as "Parties."
2. RECITALS
This Amendment No. 1 is made with reference to the following facts,
among others:
2.1 On August 26, 1983, Edison and Chevron U.S.A Inc. executed the
Power Purchase and Sales Agreement to provide the terms and conditions for the
sale by Chevron and purchase by Edison of capacity and energy delivered to the
Point of Interconnection from a 47 MW (net) electrical generating facility
located at Heber, California utilizing geothermal steam as the prime mover
energy source.
2.2 On August 26, 1983, Chevron assigned and HGC assumed Chevron's
right, title and interest in the Power Purchase and Sales Agreement between
Chevron and Edison, dated August 26, 1983.
2.3 On March 16, 1984, Chevron and HGC issued a Notice of Intention to
Proceed to Edison. The Notice of Intention to Proceed stated Chevron and HGC's
desire to construct the facilities necessary to proceed with the Power Purchase
and Sales Agreement, dated August 26, 1983.
2.4 The Public Utilities Commission of the State of California has
issued Decision No. 00-00-000, which authorized the long-term power-purchase
contract, to be known as Standard Offer No. 4, which established the terms and
conditions of the sale of power produced by Qualifying Facilities and the
purchase by Edison of electrical energy therefrom.
2.5 The Parties wish to provide definitive terms for the exercise of
Seller's option to deliver Net Energy to the Point of Interconnection pursuant
to the terms of Section 34.3 of the Power-Purchase and Sales Agreement by
electing to pay for the upgrade of Edison's 115/92 kV substation facility and
agreeing to pay the flat monthly transmission service cost, as specified in
Section 34.3 of the Power-Purchase and Sales Agreement, commencing on August 1,
1985.
2.6 The Parties, therefore, desire to amend the Agreement to modify the
provisions covering (i) payments by Edison for energy, (ii) payments by Edison
for capacity and (iii) transmission cost to be paid by HGC as Seller.
3. Agreement: The Parties agree to amend the Power Purchase and Sales
Agreement as follows:
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4. Effective Date: This Amendment No. 1 shall become effective upon
execution by the Parties and consent by Chevron U.S.A., Inc., represented by its
agent Chevron Resources Company.
5. Amendment to Section 4:
The last sentence in Section 4.4 is deleted in its entirety and
replaced with the following:
The prior written notice requirement in this Section 4.4 will apply in
the event Edison reduces Seller's capacity as outlined in Sections 12.2, 13.3
and 15.4.1.3.
6. Amendment to Section 14:
Section 14 is deleted in its entirety and replaced with the following:
Seller shall receive a monthly payment for Net Energy received and
accepted by Edison at the Point of Interconnection pursuant to the provisions of
this Section 14.
14.1 Net Energy Payments - First Period
14.1.1 During the First Period of the Contract Term, which shall be
defined as the first 10 years of the Contract Term commencing upon date of
Firm Operation but not later than five years from the date of execution of this
Contract, Seller shall be paid a Monthly Energy Payment for Net Energy received
and accepted by Edison at the Point of Interconnection. The Monthly Energy
Payment shall be based on the Energy Payment Option selected by the Seller prior
to the date of Firm Operation. The Energy Payment Options shall be selected by
the Seller prior to the date of Firm Operation in increments of 10% with a total
equal to 100%.
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[100] % Energy Payment Option No. 1 -- Forecast of Annual
Marginal Cost of Energy in effect at the date of
execution of this Amendment No. 1. (Appendix B)
[0] % Energy Payment Option No. 2 -- Edison's Avoided
Operating Cost.
14.1.2 Seller shall be paid a Monthly Energy Payment for Net Energy
received and accepted by Edison at the Point of Interconnection during each
month in the First Period of the Contract Term pursuant to the following
formula:
Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x E
Where A = kWh purchased by Edison during on-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
B = kwh purchased by Edison during mid-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison during off-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
D = The sum of:
(i) the appropriate time-differentiated energy price from the
Forecast of Annual Marginal Cost of Energy, multiplied by the decimal
equivalent of the percentage of the forecast specified in Section 14.1.1, and
(ii) the appropriate time-differentiated energy price from Edison's Avoided
Operating Cost multiplied by the decimal equivalent of the percentage of
Edison's Avoided Operating Cost specified in Section 14.1.1.
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E = Energy Loss Adjustment Factor For Remote Generating Sites*
14.2 Net Energy Payments - Second Period
During the Second Period of the Contract Term, which shall be defined
as the period commencing upon expiration of the First Period and continuing for
the remainder of the Contract Term, Seller shall be paid a Monthly Energy
Payment for Net Energy received and accepted by Edison at the Point of
Interconnection based on Edison's Avoided Operating Cost. The Monthly Energy
Payment shall be calculated by the following formula:
Monthly Energy Payment = kWh purchased by Edison for each on-peak, mid-peak, and
off-peak time period defined in Edison's Tariff Schedule No. TOU-8
x Edison's Avoided Operating Cost by time of delivery for each time
period
x Energy Loss Adjustment Factor For Remote Generating Sites*
7. Amendment to Section 15:
Section 15 is deleted in its entirety and replaced with the following:
Seller shall sell to Edison and Edison shall purchase from Seller
Capacity pursuant to the Capacity Payment Option selected by the Seller in
Section 15.1.
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* The Energy Loss Adjustment Factor For Remote Generating Sites shall be 1.0,
subject to adjustment by Commission orders and rulings.
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15.1 The Seller hereby elects Option B from the following Capacity
Payment Options:
[ ] Option A - As-Available capacity based upon Forecast of Annual
As-Available Capacity Payment Schedule (Appendix A).
[X] Option B - Firm Capacity
Capacity Payment Schedule contained in Edison's Standard Offer No. 2
for Firm Power Purchases in effect at the time of Amendment No. 1 execution.
Capacity Price (Firm Capacity): $147/kW--Year.
15.2.1 Capacity Payment Option A -- As Available Capacity.
If Seller selects Capacity Payment Option A, Seller shall be paid a
Monthly Capacity Payment calculated pursuant to the following formula:
Monthly Capacity Payment = (A x D) + (B x D) + (C x D)
Where A = kWh purchased by Edison during on-peak periods defined in Edison's
Tariff Schedule No. TOU-8.
B = kWh purchased by Edison during mid-peak periods defined in Edison's
Tariff Schedule No. TOU-8.
C = kWh purchased by Edison during off-peak periods defined in Edison's
Tariff Schedule No. TOU-8.
D = The appropriate time differentiated capacity price from the Forecast
of Annual As-Available Capacity Payment Schedule (Appendix A) or the
Capacity Payment Schedule contained in Edison's Standard Offer No. 1
for As-
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Available Power Purchases, as updated periodically and accepted by the
Commission.
15.2.1.1 During the First Period of the Contract Term, the formula
shall be computed with D equal to the appropriate time-differentiated capacity
price from the Forecast of Annual As-Available Capacity Payment Schedule
(Appendix A).
15.2.1.2 During the Second Period of the Contract Term, the formula
shall be computed with D equal to the appropriate time-differentiated capacity
price from the Capacity Payment Schedule contained in Edison's Standard Offer
No. 1 for As-Available Power Purchase as updated periodically and accepted by
the Commission, but not less than the greater of (i) the appropriate
time-differentiated capacity price from the Forecast of Annual As-Available
Capacity Payment Schedule (Appendix A) in effect at the end of the First Period,
or (ii) the appropriate time-differentiated capacity price from the Capacity
Payment Schedule contained in Edison's Standard Offer No. 1 for As-Available
Power Purchases for the beginning of the Second Period.
15.2.2 Capacity Payment Option B - Firm Capacity Purchase
If Seller selects Capacity Payment Option B, Seller shall provide to
Edison for the Contract Term the Capacity specified in Section 3.6, or as
adjusted pursuant to Section 13.3, and Seller shall be paid as follows:
15.2.2.1 If Seller meets the performance requirements set forth in
Section 15.2.2.2, Seller shall be paid a Monthly Capacity Payment, beginning
from the date of
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Firm Operation equal to the sum of the on-peak, mid-peak, and off-peak Capacity
Period Payments. Each capacity period payment is calculated pursuant to the
following formula:
Monthly Capacity Period = A x B x C x D Payment
Where A = Capacity Price specified in Section 15.1 based on the
Capacity Payment Schedule contained in Edison's Standard
Offer No. 2 for Firm Power Purchases in effect at the time of
Amendment No. 1 execution.
B = Conversion factors to convert annual capacity prices to
monthly payments by time of delivery as specified in Appendix
C and subject to periodic modifications as approved by the
Commission.
C = Capacity specified in Section 3.6 or as adjusted pursuant to
Section 13.3.
D = Period Performance Factor: (Period kWh Purchased by Edison
(Limited by the Level of
Period
Performance
Factor = Capacity))
------------------------------------------------------
(0.9 x Capacity x (Period Hours minus Allowable
Maintenance Hours )
The Period Performance Factor cannot exceed 1.0. When the allowable
maintenance hours equal the period hours, the Period Performance Factor shall
equal 1.0.
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15.2.2.2 Minimum Performance Requirement in Capacity Payment Option B
to Receive Full Capacity Payment:
a. The Capacity shall be available for all of the on-peak hours as
defined in Tariff Schedule No. TOU-8 in each of the Peak Months subject to a 20%
allowance for Forced Outages for each month.
b. There is no minimum performance requirement for the rest of the
year.
15.2.2.3 Capacity Bonus Payment. For Capacity Payment Option B, Seller
may receive a Capacity Bonus Payment as follows:
a. Bonus During Peak Months. For a Peak Month, Seller shall receive a
Capacity Bonus Payment if (i) the requirements set forth in Section 15.2.2.2
have been met, and (ii) the on-peak capacity factor exceeds 85%.
b. Bonus During Non-Peak Months
For a non-peak month, Seller shall receive a Capacity Bonus Payment if
(i) the requirements set forth in section 15.2.2.2 have been met, (ii) the
on-peak capacity factor for each Peak Month during the year was at least 85%,
and (iii) the on-peak capacity factor for the non-peak month exceeds 85%.
c. For any eligible month, the Capacity Bonus Payment shall be
calculated as follows:
Capacity Bonus Payment = A x B x C x D
Where A = (1.2 x On-Peak Capacity Factor) - 1.02
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Where the On-Peak Capacity Factor, not to exceed 1.0, is
calculated as follows:
On-Peak Capacity Factor = (Period kWh Purchased by Edison (Limited by the Level
of Capacity))
-----------------------------------------------------
[(Capacity) x (Period Hours minus Allowable
Maintenance Hours)]
B = Capacity Price specified in Section 15.1 for
Capacity Payment Option B
C = 1/12
D = Capacity specified in Section 3.6
d. When Seller is entitled to receive a Capacity Bonus Payment, the
Monthly Capacity Payment shall be the sum of the Monthly Capacity Payment
pursuant to Section 15.2.2.3 and the Monthly Capacity Bonus Payment pursuant to
this Section 15.2.2.3.
15.2.2.4 For Capacity Payment Option B, Seller shall be paid for
capacity in excess of Capacity as specified in Section 3.6, or as adjusted
pursuant to Section 13.3, based on as-available capacity price contained in
Edison's Standard Offer No. 1 for As-Available Power Purchases Capacity Payment
Schedule, as updated and approved by the Commission.
15.3 Scheduled Maintenance Allowances
The allowance for scheduled maintenance is as follows:
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15.3.1 Outage periods for scheduled maintenance shall not exceed 840
hours (35 days) in any 12-month period. This allowance may be used in increments
of an hour or longer on a consecutive or nonconsecutive basis.
15.3.2 Seller may accumulate unused maintenance hours on a year-to-year
basis up to a maximum of 1,080 hours (45 days). This accrued time must be used
only for major overhauls, as such major overhauls are reasonably defined by the
Seller.
15.4 Failure to Meet Minimum Performance Requirements
15.4.1 Except when caused by uncontrollable forces, if Seller fails to
meet the minimum performance requirements as set forth in Section 15.2.2.2. The
following shall apply:
15.4.1.1 Seller may be placed on probation for a period not to exceed
15 months or as otherwise agreed to by the Parties. During this period, the
monthly capacity payment will be based on the level of Capacity actually made
available as calculated in Section 15.2.2.1.
15.4.1.2 If Seller meets or demonstrates to Edison pursuant to Section
12.2 that it can meet its minimum requirement during the probationary period,
Edison shall reinstate regular capacity payments.
15.4.1.3 If Seller fails to meet its minimum requirements during the
probationary period Edison may derate the Capacity to the greater of the
Capacity actually made available when the minimum requirements stated in Section
15.2.2.2 were not met, or the Capacity at which Seller is reasonably likely to
meet the minimum
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requirements. In either case, the quantity by which the Capacity is reduced
shall be Considered terminated without prescribed notice as provided in Section
4.4.
15.4.2 If Seller is prevented from meeting the minimum performance
requirement because of a schedule outage, a Forced Outage or an Emergency on the
Edison electric system, Edison shall continue to make capacity payments to
Seller. Under Option B, the calculations of capacity payments will treat hours
of Forced Outage and Emergency on the Edison system the same as scheduled
maintenance outages.
15.4.3 If deliveries are interrupted or reduced because of
uncontrollable forces, Edison shall continue to make capacity payments to Seller
for 90 days from the occurrence of the uncontrolled force event. Under Option B,
the calculation of capacity payments will treat hours of interruption or
reduction by reason of an uncontrollable force, the same as scheduled
maintenance outages with reductions in Capacity treated on a pro rata basis.
8. Amendment to Section 34:
Section 34 is deleted in its entirety and replaced with the following:
34.1 Edison, with Seller's assistance, shall seek to contract with
Interconnecting Utility and/or third parties in order to secure the most
economic transmission path and service costs for the delivery of Net Energy from
the Project to the Point of Interconnection during the Contract Term at terms
and conditions acceptable to Seller. Seller shall be responsible for all costs
including transmission losses, incurred in the delivery of the Net Energy from
the Project to the Point of Interconnection.
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The exact, mutually agreed-upon transmission service cost shall be established
prior to the Date of Firm Operation and may be adjusted periodically as
necessary. The transmission service payments shall consist of (i) a flat monthly
service charge expressed in dollars per kilowatt per month and (ii) transmission
losses expressed in percentage of Net Energy lost in the transmission of Net
Energy from the Project to the Point of Interconnection.
34.2 Notwithstanding Section 34.1, for the first five years of the
Contract Term, the Seller shall pay for the transmission of the Net Energy from
the Project to the Point of Interconnection at a transmission service cost based
on a method of transmission comparable to the method which is then in use or
would be negotiated for Edison's geothermal facilities at Brawley and Salton Sea
utilizing transmission facilities in existence at that point in time.
Power-exchange arrangements which are in effect or might be in effect for the
transmission of the energy generated at Edison's geothermal facilities at
Brawley and Salton Sea will apply to the provisions of this Section 34.2 only to
the extent there is uncommitted capacity available in such exchange arrangements
at the date of Firm Operation. The provisions of this Section 34.2 are subject
to the following conditions:
34.2.1 The date of initial delivery of Net Energy shall occur on or
before August 1, 1985. If Seller does not deliver Net Energy to the Point of
Interconnection by August __, 1985, Seller shall commence making the flat
monthly transmission service payments on August 1, 1985 to retain the benefit of
this Section 34.2.1.
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34.2.2 Seller shall upgrade Edison's 115/92 kV interconnection
substation with the Interconnecting Utility by increasing its capacity by 25,000
kVA prior to Date of Firm Operation. Seller shall pay the capital cost of the
upgrade and pay the monthly charges related to the upgrade facilities under the
terms and condition of Edison's Rule No. 2 H for added facilities. If the Seller
is unable to use the upgraded facilities, at any time, then Edison shall have
the right to use such facilities.
34.3 For the first five years of the Contract Term, the applicable
portion of the Interconnecting Utility electric system shall be considered part
of the Edison electric system for the application of Sections 15.4.2. and
15.4.3.
34.4 Edison shall prepare and mail a xxxx to Seller for the
transmission service payments provided for in Sections 34.1 and 34.2 within 30
days of the end of each month. Seller shall pay such bills within 20 calendar
days of the receipt of said xxxx. The provisions contained within Section 35
shall apply to the records generated in the preparation and mailing of such
xxxx.
9. Effect of this Amendment No. 1
Except as amended herein, all terms, covenants and conditions contained
in the Power Purchase and Sales Agreement shall remain in full force and effect.
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10. Signature Clause
The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 1 on behalf of the Party for whom
they sign. This Amendment No. 1 is hereby executed as of this 11th day of
December, 1984.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name Xxxxxx X. Xxxxx
Title Vice President
HEBER GEOTHERMAL COMPANY, A
PARTNERSHIP DRAVO ENERGY, INC.,
PARTNER
By /s/ X. X. Xxxxx
---------------------------------------
Name X. X. Xxxxx
-------------------------------------
Title
------------------------------------
CENTENNIAL GEOTHERMAL, INC., PARTNER
By /s/ Xxxxxx X'Xxxxx
---------------------------------------
Name Xxxxxx X'Xxxxx
-------------------------------------
Title
------------------------------------
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CHEVRON U.S.A., INC., REPRESENTED BY
ITS AGENT, CHEVRON RESOURCES
COMPANY HEREBY CONSENTS TO
AMENDMENT NO. 1
By /s/ C. Dohletron
---------------------------------------
Name C. Dohletron
Title Vice-President
