Exhibit 10.3.7
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
SECOND IMPERIAL GEOTHERMAL COMPANY
I, Xxxxx X. Xxxxx, Secretary of Second Dravo Geothermal, Inc. do hereby
certify that the foregoing Special Power of Attorney is an exact duplicate of
that executed on the 15th of April 1985.
In Witness Whereof, I hereby set my hand this 7th day of May 1985.
/s/ Xxxxx X. Xxxxx
----------------------------
Secretary
Subscribed and sworn to before me this 7th day of May 1985.
/s/ Xxxxxx X. Xxxxxxx
----------------------------
Notary Public
I, Xxxxxxx X. Xxxxxxxx, Secretary of Dravo Constructors, Inc. do hereby
certify that the foregoing Power Purchase Contract between Southern California
Edison Company and Second Imperial Geothermal Company is an exact duplicate of
the original which is maintained by Dravo Constructors, Inc.
In Witness Whereof, I have hereunto set my hand and seal of said
corporation this 7th day of May, 1985.
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxxx, Secretary
Secretary
Sworn and subscribed to before me this 7th day of May, 1985.
/s/ Xxxxx X. Xxxxx
----------------------------
Notary Public
TABLE OF CONTENTS
-----------------
SECTION TITLE PAGE
------- ----- ----
1 PROJECT SUMMARY 1
GENERAL TERMS AND CONDITIONS
2 DEFINITIONS 2
3 TERM 8
4 GENERATING FACILITY 9
5 OPERATING OPTIONS 18
6 ELECTRIC LINES AND ASSOCIATED
EASEMENTS 18
7 METERING 19
8 POWER PURCHASE PROVISIONS 21
9 PAYMENT AND BILLING PROVISIONS 47
10 TAXES 49
11 TERMINATION 49
12 LIABILITY 49
13 INSURANCE 52
14 UNCONTROLLABLE FORCES 55
15 NONDEDICATION OF FACILITIES 57
16 PRIORITY OF DOCUMENTS 57
17 NOTICES OF CORRESPONDENCE 57
18 PREVIOUS COMMUNICATIONS 58
19 NONWAIVER 58
20 SUCCESSORS AND ASSIGNS 58
21 EFFECT OF SECTION HEADINGS 59
22 GOVERNING LAW 59
23 MULTIPLE ORIGINALS 59
24 TRANSMISSION AND INTERCONNECTION 59
SIGNATURES 62
APPENDIX A
APPENDIX B
APPENDIX C
ii
1. PROJECT SUMMARY
This Contract is entered into between Southern California Edison
Company ("Edison") and Second Imperial Geothermal Company ("Seller"). Seller is
willing to construct, own, or lease, and operate a Qualifying Facility and sell
electric power to Edison and Edison is willing to purchase electric power
delivered by Seller to Edison at the Point of Interconnection pursuant to the
terms and conditions set forth as follows:
1.1 All Notices shall be sent to Seller at the following address:
Second Imperial Geothermal Company
c/o Dravo Constructors, Inc.
000 Xxxx Xxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: S.D. Hayward
1.2 Seller's Generating Facility:
a. Nameplate Rating: 44,000 kW.
b. Location: Heber, California
c. Type (check one):
Cogeneration Facility
---
x Small Power Production Facility
---
d. Delivery of power to Edison at a nominal 230,000 volts.
e. Seller shall commence construction of the Generating
Facility by February, 1998.
f. Generating Facility Designation: Imperial Geothermal
Unit 2.
1.3 Edison Customer Service District:
Eastern Division
Palm Springs District
Palm Springs, California
1.4 Location of Edison Operating Switching Center:
Xxxxxx Substation
1.5 Contract Capacity: 40,000 kW
1.5.1. Estimated as-available capacity: OkW.
1.6 Expected annual production: 280,000,000 kW
1.7 Expected Firm Operation: May, 1989.
1.8 Contract term: 30 years.
1.9 Operating Options pursuant to Section 5: (Check One)
x Operating Option I. Excess Generator output dedicated to
--- Edison. No electric service or standby service required
from Edison.
1.10 The Capacity Payment Option selected by Seller pursuant to
Section 8.1 shall be: (Check One)
Option A - As-available capacity based upon:
---
Standard Offer No. 1 Capacity Payment Schedule, or
---
Forecast of Annual As-Available Capacity Payment
--- Schedule.
The as-available capacity price (first year):
$ kw-yr. (Appendix A)
-----------
x Option B - Firm Capacity (Check One)
---
2
x Standard Offer No. 2 Capacity Payment
---
Schedule in effect at time of Contract execution.
____Standard Offer No. 2 Capacity Payment Schedule in effect at
time of Firm Operation of first generating unit.
1.11 The Energy Payment Option selected by Seller pursuant to
Section 8.2 shall be: (Check One)
x Option 1 - a Forecast of Annual Marginal Cost of Energy in
--- effect at date of execution of this Contract. (Appendix B)
Option 2 - Levelized Forecast of Marginal Cost of Energy
--- in effect at date of execution of this Contract.
Levelized Forecast for expected date of Firm
Operation is (cent)/kWh. If Seller's Generating
Facility is an oil/natural gas fueled cogenerator,
Seller may not select Option 2.
For the energy payment refund pursuant to Section 8.5 under
Option 2, Edison's Incremental Cost of Capital is 15%.
Seller may change once between Options 1 and 2, provided
Seller delivers written notice of such change at least 90
days prior to the date of First operation:
For Option 1 or 2, Seller elects to receive the following
percentages in 20% increments, the total of which shall
equal 100%:
3
100 Percent of Forecast of Marginal Cost of Energy (Annual
--- or Levelized), not to exceed 20% of the annual forecast
for oil/ natural gas fueled cogenerators, and
0 Percent of Edison's published avoided cost of energy
--- based on Edison's full avoided operating costs as
updated periodically and accepted by the Commission.
Option 3 - Incremental Energy Rate. Seller may select:
---
Forecast of Incremental Energy Rate in effect at date
--- of execution of this Contract (Appendix C),
or
A range in increments of 100 Btu/kWh above and below
--- the forecast of incremental energy rates for each
year during the First Period of the Contract Term as
follows:
Year Range Year Range Year Range
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
------------ ---------- ---------- ----------- ---------- ----------
1.12 Metering Location (Check one)
4
Seller elects metering location pursuant to Section 7 as
follows:
x Edison's side of the Point of Interconnection
---------
Seller's side of the Point of Interconnection.
Loss compensation factor is equal to ______
pursuant to Section 7.2.
GENERAL TERMS & CONDITIONS
2. DEFINITIONS
When used with initial capitalizations, whether in the singular or in
the plural, the following terms shall have the. following meanings:
2.1 Adjusted Capacity Price: The $/kW-yr capacity purchase
price based on the Capacity Payment Schedule in effect
at time of Contract execution for the time period
beginning on the date of Firm Operation for the first
generating unit and ending on the date of termination or
reduction of Contract Capacity under Capacity Payment
Option B.
2.2 Appendix A: Forecast of Annual As Available Capacity
Payment Schedule.
2.3 Appendix B: Forecast of Annual Marginal Cost of Energy
2.4 Appendix C: Forecast of Incremental Energy Rates.
2.5 Capacity Payment Schedule(s): Published capacity payment
schedule(s) as authorized by the Commission for
as-available or firm capacity.
5
2.6 Cogeneration Facility: The facility and equipment which
sequentially generate thermal and electrical energy as
defined in Title 18, Code of Federal Regulations,
Section 292.202.
2.7 Commissions: The Public Utilities Commission of the
State of California.
2.8 Contracts: This document and Appendices, as amended from
time to time.
2.9 Contract Capacity: The electric power producing
capability of the Generating Facility which is committed
to Edison.
2.10 Contract Capacity Price: The capacity purchase price
from the Capacity Payment Schedule approved by the
Commission for Capacity Payment Option B.
2.11 Contract Term: Period in years commencing with date of
Firm Operation for the first generating unit(s) during
which Edison shall purchase electric power from Seller.
2.12 Current Capacity Price: The $/kw-yr capacity price
provided in the Capacity Payment Schedule determined by
the year of termination or reduction of Contract
Capacity and the number of years from such termination
or reduction to the expiration of the Contract Term for
Capacity Payment Option B.
2.13 Edison: The Southern California Edison Company.
6
2.14 Edison Electric System Integrity: The state of operation
of Edison's electric system in a manner which is deemed
to minimize the risk of injury to persons and/or
property and enables Edison to provide adequate and
reliable electric service to its customers.
2.15 Emergency: A condition or situation which in Edison's
sole judgment affects Edison Electric System Integrity.
2.16 Energy: Kilowatthours generated by the Generating
Facility which are purchased by Edison at the Point of
Interconnection.
2.17 Firm Operation: The date agreed on by the parties to the
PPA on which each Facility is determined to be a
reliable source of generation and on which such unit can
be reasonably expected to operate continuously at its
effective rating (expressed in kW). Firm Operation shall
be demonstrated by a seventy-two (72) hour continuous
demonstration test at 85% of the Contract Capacity.
2.18 First Period: The period of the Contract Term specified
in Section 3.1.
2.19 Forced Outages: Any outage other than a scheduled outage
of the Generating Facility that fully or partially
curtails its electrical output.
7
2.20 Generating Facility: All of Seller's generators,
together with all metering, protective and other
associated equipment and improvements, necessary to
produce electrical energy at Seller's Facility and
deliver such power to the Interconnecting Utility's
electric system, excluding associated land, land rights,
and interests in land.
2.21 Generator: The generator(s) and associated prime
mover(s), which are a part of the Generating Facility.
2.22 Incremental Heat Rate(s): Those Edison system values
expressed in Btu/kWh by time of delivery for the Summer
and Winter Periods which are authorized and adopted by
the Commission to be used in the calculation of Edison's
published avoided cost of energy.
2.23 Interconnecting Utility: The electric utility, or any
other utility which takes delivery of electrical energy
generated by the Generating Facility.
2.24 KVAR: Reactive kilovolt-ampere, a unit of measure of
reactive power.
2.25 Operate: To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection,
operation, use, management, replacement, retirement,
reconstruction, and
8
maintenance of and for the Generating Facility in
accordance with applicable California utility standards
and good engineering practices.
2.26 Operating Representatives: Individual(s) appointed by
each Party for the purpose of securing effective
cooperation and interchange of information between the
Parties in connection with administration and technical
matters related to this Contract.
2.27 Parties: Edison and Seller.
2.28 Party: Edison or Seller.
2.29 Peak Months: Those months which the Edison annual system
peak demand could occur.
Currently, but subject to change with notice, the peak months for the
Edison system are June, July, August, and September.
2.30 Point of Interconnection: The point where the electrical
energy generated by the Seller, at the Generating
Facility, is delivered to the Edison electric system.
2.31 Protective Apparatus: That equipment and apparatus
installed by Seller and/or Interconnecting Utility
necessary for proper and safe operation of the
Generating Facility in parallel with the Interconnecting
Utility's electric system.
9
2.32 Qualifying Facility: Cogeneration or Small Power
Production Facility which meets the criteria as defined
in Title 18, Code of Federal Regulations, Section
292.201 through 293.207.
2.33 Second Period: The period of the Contract Term specified
in Section 3.2.
2.34 Seller: The Party identified in Section 1.0.
2.35 Seller's Facility: The premises and equipment of Seller
located as specified in Section 1.2.
2.36 Small Power Production Facility: The facilities and
equipment which use biomass, waste, or Renewable
Resources, including wind, solar, geothermal, and water,
to produce electrical energy as defined in Title 18,
Code of Federal Regulations, Section 292.201 through
292.207.
2.37 Summer Period: Defined in Edison's Tariff Schedule No.
Tou-8 as now in effect or as may hereafter be authorized
by the Commission.
2.38 Tariff Schedule No. TOU-8: Edison's time-of-use energy
tariff for electric service exceeding 500 kW, as now in
effect or as may hereafter be authorized by the
Commission.
2.39 Uncontrollable Forces: Any occurrence beyond the control
of a Party which causes that Party to be unable to
perform its
10
obligations hereunder and which a Party has been unable
to overcome by the exercise of due diligence, including
but not limited to flood, drought, earthquake, storm,
fire, pestilence, lightning and other natural
catastrophes, epidemic, war, riot, civil disturbance or
disobedience, strike, labor dispute, action or inaction
of legislative, judicial, or regulatory agencies, or
other proper authority, which may conflict with the
terms of this Contract, or failure, threat of failure or
sabotage of facilities which have been maintained in
accordance with good engineering and operating practices
in California.
2.40 Winter Period: Defined in Edison's Tariff Schedule No.
TOU-8 as now in effect or as may hereafter he authorized
by the Commission.
3. TERM
This Contract shall be effective upon execution by the Parties and
shall remain effective until either Party gives 90 days prior written notice of
termination to the other Party, except that such notice of termination shall not
be effective to terminate this Contract prior to expiration of the Contract Term
specified in Section 1.8.
11
3.1 The First Period of the Contract Term shall commence
upon date of Firm Operation but not later than five
years from the date of execution of this Contract.
a. If the Contract Term specified in Section 1.8 is 15
years, the First Period of the Contract Term shall
be for five years.
b. If the Contract Term specified in Section 1.8 is 20,
25, or 30 years, the First Period of the Contract
Term shall be for 10 years.
c. For Energy Payment Option 3 only, the First Period
of the Contract Term shall be 15 years, but shall
not extend beyond 1998.
3.2 The Second Period of the Contract Term shall commence
upon expiration of the First Period and shall continue
for the remainder of the Contract Term.
4. GENERATING FACILITY
4.1 Ownership
The Generating Facility shall be owned or leased by Seller.
4.2 Design
4.2.1 Seller, at no cost to Edison, shall:
a. Design the Generating Facility.
12
b. Acquire all permits and other approvals necessary
for the construction, operation, and maintenance of
the Generating Facility.
c. Complete all environmental impact studies necessary
for the construction, operation, and maintenance of
the Generating Facility.
4.2.2 Edison shall have the right to:
a. Review the design of the Generating Facility's
electrical system. Such review shall be required if
necessary to maintain Edison Electric System
Integrity when in parallel with the Edison electric
system. Such review may include, but not be limited
to the Generator, governor, excitation system,
synchronizing equipment, protective relays, and
neutral grounding. The Seller shall be notified in
writing of the outcome of the Edison review within
30 days of the receipt of all specifications for the
Generating Facility's electrical system. Any flaws
perceived by Edison in the design shall be described
in Edison's written notice.
x. Xxxxxx shall have the right to request modifications
to the design of the Generating Facility's
electrical system. Such modifications shall be
required if necessary to maintain
13
Edison Electric System Integrity when in parallel with
the Edison electric system.
4.3 Construction
Edison shall have the right to review, consult with, and make
recommendations regarding Seller's construction schedule and to
monitor the construction and start-up of the Project. Seller shall
notify Edison, at least one year prior to Firm Operation, of
changes in Seller's Construction Schedule which may affect the
date of Firm Operation.
4.4 Operation
4.4.1 The Generating Facility and Seller's Protective
Apparatus shall be operated and maintained in accordance
with applicable California utility industry standards
and good engineering practices with respect to
synchronizing, voltage and reactive power control.
Edison shall have the right to monitor operation of the
Project and may require changes in Seller's method of
operation if such changes are necessary, in Edison's
sole judgment, to maintain Edison Electric System
Integrity.
4.4.2 Seller shall notify in writing Edison's Operating
Representative at least 14 days prior to the initial
delivery of electrical energy
14
from the Generating Facility to the Point of
Interconnection. Edison shall have the right to have a
representative present.
4.4.3 Edison shall have the right to require Seller to curtail
or reduce the delivery of electrical energy from the
Generating Facility to the Point of Interconnection,
whenever Edison determines, in its sole judgment, that
such curtailment or reduction is necessary to facilitate
maintenance of Edison's facilities, or to maintain
Edison Electric System Integrity. Each Party shall
endeavor to correct, within a reasonable period, the
condition on its system which necessitates the
curtailment or reduction delivery of electrical energy
from the Generating Facility. The duration of the
curtailment or reduction of delivery of electrical
energy from the Generating Facility shall be limited to
the period of time such a condition exists.
4.4.4 Each Party shall keep the other Party's Operating
Representative informed as to the operating schedule of
their respective facilities affecting each other's
operation hereunder, including any reduction in Contract
Capacity availability. In addition, Seller shall provide
Edison with reasonable advance notice regarding its
scheduled outages including any reduction
15
Contract Capacity availability. Reasonable advance
notice is as follows:
SCHEDULED OUTAGE ADVANCE NOTICE
EXPECTIVE DURATION TO EDISON
Less than one day 24 Hours
One day or more
(except major overhauls) 1 Week
Major overhaul 6 Months
4.4.5 Notification by each Party's Operating Representative of
outage date and duration should be directed to the other
Party's operating Representative by telephone.
4.4.6 Seller shall not schedule major overhauls during Peak
Months.
4.4.7 Seller shall maintain an operating log at Seller's
Facility with records of: real and reactive power
production; changes in operating status, outages; and
any unusual conditions found during inspections. Changes
in setting shall also be logged for Generators which are
"block-loaded" to a specific kW capacity. In addition,
Seller shall maintain records applicable to the
Generating Facility, including the electrical
characteristics of the Generator and settings or
adjustments of the Generator control equipment.
Information maintained pursuant to this Section 4.4.7
shall be provided to Edison, within 30 days of Edison's
request.
16
4.4.8 The Seller warrants that the Generating Facility meets
the requirements of a Qualifying Facility as of the date
of initial delivery of electrical energy from the
Generating Facility to the Point of Interconnection and
continuing through the Contract Term.
4.4.9 The Seller warrants that the Generating Facility shall
at all times conform to all applicable laws and
regulations. Seller shall obtain and maintain any
governmental authorizations and permits for the
continued operation of the Generating Facility. If at
any xxxx Xxxxxx does not hold such authorizations and
permits, Seller agrees to reimburse Edison for any lots
which Edison incurs as a result of the Seller's failure
to maintain governmental authorization and permits.
4.4.10 At Edison's request, Seller shall make all reasonable
effort to deliver power at an average rate of delivery
at least equal to the Contract Capacity during periods
of Emergency. In the event that the Seller has
previously scheduled an outage coincident with an
Emergency, Seller shall make all reasonable efforts to
reschedule the outage. The notification periods listed
in Section 4.4.4 shall be waived by Edison if Seller
reschedules the Outage.
17
4.4.11 Seller shall demonstrate the ability to provide Edison
the specified Contract Capacity during the seventy-two
(72) hour continuous demonstration test prior to the
date of Firm Operation. Thereafter, at least once per
year at Edison's request, Seller shall demonstrate the
ability to provide Contract Capacity for a reasonable
period of time as required by Edison. Seller's
demonstration of Contract Capacity shall be at Seller's
expense and conducted at a time and pursuant to
procedures mutually agreed upon by the Parties. If
Seller fails to demonstrate the ability to provide the
Contract Capacity, the Contract Capacity shall be
reduced by agreement of the Parties pursuant to Section
8.1.2.6.
4.4.12 Seller shall maintain operating communications with the
Edison switching center designated by the Edison
Operating Representative. The operating communications
shall include, but not be limited to, system paralleling
or separation, scheduled and unscheduled shutdowns,
equipment clearances, levels of operating voltage or
power factors, and daily capacity and generation
reports.
4.5 Maintenance
18
4.5.1 Seller shall maintain the Generating Facility in
accordance with applicable California utility industry
standards and good engineering and operating practices.
Edison shall have the right to monitor such maintenance
of the Generating Facility. Seller shall maintain and
deliver a maintenance record of the Generating Facility
to Edison's Operating Representatives upon request.
4.5.2 Seller shall make a reasonable effort to schedule
routine maintenance during Off-Peak Months. Outages for
scheduled maintenance shall not exceed a total of 30
peak hours for the Peak Months.
4.5.3 The allowance for scheduled maintenance is as follows:
a. Outage periods for scheduled maintenance ( shall
not exceed 840 hours (35 days) in any l2-month
period. This allowance may be used in increments of
an hour or longer on a consecutive or
nonconsecutive basis.
b. 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
consecutively and only for major overhauls.
19
4.6 Any review by Edison, under the terms of this Contract,
of the design, construction, operation, or maintenance
of the Generating Facility is solely for the information
of Edison. By making such review, Edison makes no
representation as to the economic and technical
feasibility, operational capability, or reliability of
the Generating Facility. Seller shall in no way
represent to any third party that any such review by
Edison of the Generating Facility, including, but not
limited to, any review of the design, construction,
operation, or maintenance of the Generating Facility by
Edison, is a representation by Edison as to the economic
and technical feasibility, operational capability, or
reliability of said facilities. Seller is solely
responsible for economic and technical feasibility,
operational capability, and reliability thereof.
4.7 Edison shall have access to Seller's power-generating
facilities for the purpose of gathering technical
information and records. The technical information and
records shall include, but not be limited to, power
plant performance data an design, and operation and
maintenance data. Edison agrees not to interfere with
Seller's rules and regulations.
5. OPERATING OPTIONS
20
5.1 Seller shall Operate its Generating Facility pursuant to
the following options
a. Operating Option I: Seller dedicates the excess
Generator output to Edison with no electrical
service required from Edison.
6. ELECTRIC LINES AND ASSOCIATED EASEMENTS
6.1 Edison shall, as it deems necessary or desirable, build
electric lines, facilities and other equipment, both
overhead and underground, on and off Seller's Facility,
for the purpose of effecting the agreements contained in
this Contract. The physical location such electric
lines, facilities and other equipment on Seller's
Facility shall be determined by agreement of the
Parties.
6.2 Seller shall reimburse Edison for the cost of acquiring
property rights off Seller's Facility required by Edison
to meet its obligations under this Contract.
6.3 Seller shall grant to Edison, without cost to Edison,
and by an instrument of conveyance, acceptable to
Edison, rights of way, easements and other property
interests necessary to construct, reconstruct, use,
maintain, alter, add to, enlarge, repair, replace,
inspect and remove, at any time, the electric lines,
facilities or
21
other equipment, both overhead and underground,
which are required by Edison to effect the
agreements contained in the Contract. The rights of
ingress and egress at all reasonable times
necessary for Edison to perform the activities
contemplated in the Contract.
6.4 The electric lines, facilities, or other equipment
referred to in this Section 6 installed by Edison on or
off Seller's Facility shall be and remain the property
of Edison.
6.5 Edison shall have no obligation to seller for any delay
or cancellation due to inability to acquire a
satisfactory right of way, easements, or other property
interests.
7. METERING
7.1 All meters and equipment used for the measurement of
electric power for determining Edison's payments to
Seller pursuant to this Contract shall be provided,
owned, and maintained by Edison at Seller's expense in
accordance, with Edison's Tariff Rule No. 21.
7.2 The meters and equipment used for measuring the Energy
sold to Edison shall be located on the side of the Point
of Interconnection as specified by Seller in Section
1.12. If the
22
metering equipment is located on Seller's side of the
Point of Interconnection, then a loss compensation
factor agreed upon by the Parties shall be applied. At
the written request of the Seller, and at Seller's sole
expense, Edison shall measure actual transformer losses.
If the actual measured value differs from the agreed
upon loss compensation factor, the actual value shall be
applied prospectively.
7.3 For purposes of monitoring the Generator operation,
Edison shall have the right to require, at Seller's
expense, the installation of generation metering. Edison
may also require the installation of telemetering
equipment at Seller's expense for Generating Facilities
equal to or greater than 10 MW. Edison may require the
installation of telemetering equipment at Edison's
expense for Generating Facilities less than 10 MW.
7.4 Edison's meters shall be sealed and the seals shall be
broken only when the meters are to be inspected, tested,
or adjusted by Edison; Seller shall be given reasonable
notice of testing and have the right to have its
Operating Representative present on such occasions.
7.5 Edison's meters installed pursuant to this Contract
shall be tested by Edison, at Edison's expense, at least
once each year and at any
23
reasonable time upon request by either Party, at the
requesting Party's expense. If Seller makes such
request, Seller shall reimburse said expense to Edison
within thirty days after presentation of a xxxx
therefor.
7.6 Metering equipment found to be inaccurate shall be
repaired, adjusted, or replaced by Edison such that the
metering accuracy of said equipment shall be within two
percent. If metering equipment inaccuracy exceeds two
percent, the correct amount of Energy and Contract
Capacity delivered during the period of said inaccuracy,
and the appropriate compensation adjustments, shall be
estimated by Edison and agreed upon by the Parties.
8. POWER PURCHASE PROVISIONS
Prior to the date of Firm Operation, Seller shall be paid for
Energy only pursuant to Edison's published avoided cost of energy based on
Edison's full avoided operating cost as periodically updated and accepted by the
Commission. If at any time Energy can be delivered to Edison and Seller is
contesting the claimed jurisdiction of any entity which not issued a license or
other approval for the Project, Seller, in its sole discretion and risk, may
deliver Energy to Edison and for any Energy purchased by Edison Seller shall
receive payment from Edison for (i) Energy pursuant to this Section, and (ii)
as-available capacity based on capacity price from the Standard Offer No. 1
24
Capacity Payment Schedule as approved by the Commission. Unless and until all
required licenses and approvals have been obtained, Seller may discontinue
deliveries at any time.
8.1 Capacity Payments
Seller shall sell to Edison and Edison shall purchase
from Seller capacity pursuant to the Capacity Payment
Option selected by Seller in Section 1.10. The Capacity
Payment Schedules will be based on Edison's full avoided
operating costs as approved by the Commission throughout
the life of this Contract.
8.1.1 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 PAYMENTS = (A x D)+(B x D)+(C x D)
Where A = kWh purchased by Edison at the Point of
Interconnection during on-peak periods defined in
Edison's Tariff Schedule No. TOU-8
B = kWh purchased by Edison at the Point of Interconnection
during mid-peak periods defined in Edison's Tariff
Schedule No. TOU-8.
25
C = kWh purchased by Edison at the Point of Interconnection
during off-peak periods defined in Edison's Tariff
Schedule No. TOU-8.
D = The appropriate time differentiated capacity price from
either the Standard Capacity Payment Schedule or
Forecast of Annual As-Available Capacity Payment
Schedule as specified by Seller in Section 1.10.
8.1.1.1 If Seller specifies the Standard Offer No. 1 Capacity
Payment Schedule in Section 1.10, then the formula set
forth in Section 8.1.1 shall be computed with D equal to
the appropriate time differentiated capacity price from
the Standard Offer No. 1 Capacity Payment Schedule for
the Contract Term.
8.1.1.2 If Seller specifies the Forecast of Annual As-Available
Capacity Payment Schedule in Section 1.10, the formula
set forth in Section 8.1.1 shall be computed as follows:
a. During the First Period of the Contract Term D
shall equal the appropriate time differentiated
capacity price from the Forecast of Annual
As-Available Capacity Payment Schedule.
b. During the Second Period of the Contract Term, the
formula shall be computed with D equal to the
appropriate time
26
differentiated capacity price from Standard Offer
No. 1 Capacity Payment Schedule, but not less than
the greater of (i) the appropriate time
differentiated capacity price from the Forecast of
Annual As-Available Capacity Payment Schedule for
the last year of the First Period, or (ii) the
appropriate time differentiated capacity price from
the Standard Offer No. 1 Capacity Payment Schedule
for the first year of the Second Period.
8.1.2 Capacity Payment Option B -- Firm Capacity Purchase
If Seller selects Capacity Payment Option B, Seller
shall provide to Edison for the Contract Term the
Contract Capacity specified in Section 1.5, or as
adjusted pursuant to Section 8.1.2.7, and Seller shall
be paid as follows:
8.1.2.1 If Seller meets the performance requirements set forth
in Section 8.1.2.2, Seller shall be paid a Monthly
Capacity Payment, beginning from the date of 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 PERIOD CAPACITY PAYMENT = A x B x C x D
27
Where A = Contract Capacity Price specified in Section
1.10 based on the Standard Offer No. 2 Capacity
Payment Schedule as approved by the Commission and
in effect on the date of the execution of this
Contract.
B = Conversion factors to convert annual capacity
prices to monthly payments by time of delivery as
specified in Standard Offer No. 2 Capacity Payment
Schedule and subject to periodic modifications as
approved by the Commission.
C = Contract Capacity specified in Section 1.5.
D = Period Performance Factor, not to exceed 1.0,
calculated as follows:
(Period kWh purchased by Edison at the
Point of Interconnection limited by the
Period Performance Factor = level of Contract Capacity)
---------------------------
(0.8 x Contract Capacity x (Period Hours minus
Maintenance Hours Allowed in Section 4.5.))
8.1.2.2 Performance Requirements
To receive the Monthly Capacity Payment in Section
8.1.2.1, Seller shall provide the Contract Capacity in
each Peak Month for all on-peak hours as such peak hours
are defined in Edisons Tariff Schedule No. TOU-8 on file
with the Commission, except that Seller is entitled to a
20% allowance for Forced Outages for
28
each Peak Month. Seller shall not be subject to such
performance requirements for the remaining hours of the
year.
a. If Seller fails to meet the requirements specified
in Section 8.1.2.2, Seller, in Edison's sole
discretion, may be placed on probation for a period
not to exceed 15 months. If Seller fails to meet
the requirements specified in Section 8.1.2.2
during the probationary period, Edison may derate
the Contract Capacity to the greater of the
capacity actually delivered during the probationary
period, or the capacity at which Seller can
reasonably meet such requirements. A reduction in
Contract Capacity as a result of this Section
8.1.2.2 shall be subject to Section 8.1.2.6.
b. If Seller fails to meet the requirements set forth
in Section 8.1.2.2 due to a Forced Outage on the
Edison system or a request to reduce or curtail
delivery under Section 8.4, Edison shall continue
Monthly Capacity Payments pursuant to Capacity
Payment Option B. The Contract Capacity curtailed
shall be treated the same as scheduled maintenance
outages in the Calculation of the Monthly Capacity
Payment.
8.1.2.3 If Seller is unable to provide Contract Capacity due to
Uncontrollable Forces, Edison shall continue Monthly
Capacity
29
Payments for 90 days from the occurrence of the
Uncontrollable Force. Monthly Capacity Payments payable
during a period of interruption or reduction by reason
of an Uncontrollable Force shall be treated the same as
scheduled maintenance outages. An Uncontrollable Force
on the Interconnecting Utility's electrical system which
results in an interruption or a reduction in the
delivery of electrical energy generated by the
Generating Facility to the Point of Interconnection
shall be specifically excluded from the provisions of
this Section 8.1.2.3.
8.1.2.4 Hydroelectric facilities which have their Contract
Capacity based on five dry-year average, shall not have
their Contract Capacity derated when failure to meet the
requirements set forth in Section 8.1.2.2 is due solely
to the occurrence of a dry year which is drier than the
five dry-year average.
8.1.2.5 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 8.1.2.2
have been met, and (ii) the on-peak capacity factor
exceeds 85%.
30
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 8.1.2.2 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
Where the On-Peak Capacity Factor, not to exceed 1.0, is
calculated as follows:
(Period kWh purchased by Edison at the Point of
Interconnection limited by the level of Contract
Capacity)
--------------------------------------------------
On-Peak Capacity Factor = ((Contract Capacity) x (Period Hours minus
Maintenance Hours Allowed in Section 4.5))
B = Contract Capacity Price specified in Section 1.10
for Capacity Payment Option B
C = 1/12
D = Contract Capacity specified in Section 1.5
31
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 8.1.2.1 and the Monthly Capacity Bonus
Payment pursuant to this Section.
8.1.2.6 Capacity Reduction
a. Seller may reduce the Contract Capacity specified
in Section 1.5, provided that Seller gives Edison
prior written notice for a period determined by the
amount of Contract Capacity reduced as follows:
Amount of Contract Length of Capacity
Capacity Reduced Notice Required
-------------------- ------------------
25,000 kW or under l2 months
25,001 - 50,000 kW 36 months
50,001 - 100,000 kW 48 months
over 100,000 kW 60 months
b. Subject to Section 9.2, Seller shall refund to
Edison with interest at the current published
Federal Reserve Board three months prime commercial
paper rate an amount equal to the difference
between (i) the accumulated Monthly Capacity
Payments paid by Edison pursuant to Capacity
Payment Option B up to the time the reduction
notice is received by
32
Edison, and (ii) the total capacity payments which
Edison would have paid if based on the Adjusted
Capacity Price.
c. From the date the reduction notice is received to
the date of actual capacity reduction, Edison shall
make capacity payments based on the Adjusted
Capacity Price for the amount of Contract Capacity
being reduced.
d. Seller may reduce Contract Capacity without the
notice prescribed in Section 8.1.2.6(a), provided
that Seller shall refund to Edison the amount
specified in section 8.1.2.6(b) and an amount equal
to: (i) the amount of Contract Capacity being
reduced, times (ii) the difference between the
Current Capacity Price and the Contract Capacity
Price, times (iii) the number of years and
fractions thereof (not less than one year) by which
the Seller has been deficient in giving prescribed
notice. If the Current Capacity Price is less than
the Contract Capacity Price only payment under
Section 8.1.2.6(b) shall be due to Edison.
8.1.2.7 Adjustment to Contract Capacity The Parties may agree in
writing at any time to adjust the Contract Capacity.
Seller may reduce the Contract Capacity pursuant to
Section 8.1.2.6. Seller may increase the Contract
Capacity with Edison's approval and
33
thereafter receive payment for the increased capacity in
accordance with the Contract Capacity Price for the
Capacity Payment Option selected by Seller for the
remaining Contract Term.
8.1.2.8 For Capacity Payment Option B, Seller shall be paid for
capacity in excess of Contract Capacity based of the
as-available capacity price in Standard Offer No. 1
Capacity Payment Schedule, as updated and approved by
the Commission.
8.2 Energy Payments - First Period
During the First Period of the Contract Term, Seller
shall be paid a Monthly Energy Payment for the Energy
delivered by the Seller to Edison at the Point of
Interconnection pursuant to the Energy Payment Option
selected by Seller in Section 1.11, as follows.
8.2.1 Energy Payment Option 1 -- Forecast of Annual Marginal
Cost of Energy.
If Seller selects Energy Payment Option 1, then during
the First Period of the Contract Term, Seller shall be
paid a Monthly Energy Payment for Energy delivered by
Seller and purchased by Edison at the Point of
Interconnection during each month in
34
the First Period of the Contract Term pursuant to the
following formula:
MONTHLY ENERGY PAYMENT = (A x D) + (B x D) + (C x D)
Where A = kWh purchased by Edison at the Point of
Interconnection during on-peak periods defined
in Edison's Tariff Schedule No. TOU-8.
B = kWh purchased by Edison at the Point of
Interconnection during mid-peak periods defined
in Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison at the Point of
Interconnection 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 1.11, and (ii) the appropriate time
differentiated energy price from Edison's
published avoided cost of energy multiplied by
the decimal equivalent of the percentage of the
published energy price specified in Section
1.11.
35
8.2.2 Energy Payment Option 2 -- Levelized Forecast of
Marginal Cost of Energy. If Seller selects Energy
Payment Option 2, then during the First Period of the
Contract Term, Seller shall be paid a Monthly Energy
Payment for Energy delivered by Seller and purchased by
Edison at the Point of Interconnection each month during
the First Period of the Contract Term pursuant to the
following formula:
MONTHLY ENERGY PAYMENT = (A x D) + (B x D) + (C x D)
Where A = kWh purchased by Edison at the Point of
Interconnection during on-peak periods
defined in Edison's Tariff Schedule No. TOU-8.
B = kWh purchased by Edison at the Point of
Interconnection during mid-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison at the Point of
Interconnection 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 Levelized Forecast of Marginal Cost
of Energy, for the First Period of the Contract
Term multiplied by the decimal
36
equivalent of the percentage of the levelized
forecast specified in Section 1.11, and (ii) the
appropriate time differentiated energy price from
Edison's published avoided cost of energy
multiplied by the decimal equivalent of the
percentage of the published energy price specified
in Section 1.11.
8.2.2.1 Performance Requirement for Energy Payment Option 2
During the First Period when the annual forecast
referred to in Section 8.2.1 is greater than the
levelized forecast referred to in Section 8.2.2, Seller
shall deliver to Edison at least 70 percent of the
average annual kWh delivered to Edison during those
previous periods when the levelized forecast referred to
in Section 8.2.2 is greater than the annual forecast
referred to in Section 8.2.1 as resource conditions
permit for solar, wind, and hydro Generating Facilities
and excluding uncontrollable forces. If Seller does not
meet the performance requirements of this Section
8.2.2.1, Seller shall be subject to Section 8.5.
8.2.3 Energy Payment Option 3 - Forecast of Incremental Energy
Rate (IER)
If Seller selects Energy Payment Option 3, Seller shall
be paid a Monthly Energy Payment for Energy delivered by
Seller and
37
purchased by Edison at the Point of Interconnection each
month during the First Period of the Contract Term based
on the Forecast of Incremental Energy Rates authorized
by the Commission as specified in Section 1.11. The
Monthly Energy Payment for Energy delivered by Seller
and purchased by Edison at the Point of Interconnection
shall be calculated pursuant to the following formula:
MONTHLY ENERGY PAYMENT = (A x D) + (B x D) + (C x D)
Where A = kWh purchased by Edison at the Point of
Interconnection during on-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
B = kWh purchased by Edison at the Point of
Interconnection during mid-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison at the Point of
Interconnection during off-peak periods defined in
Edison's Tariff Schedule No, T0U-8.
D = appropriate time differentiated energy price equal
to:
D = (i + ii + iii) x iv
Where (i) = the proportion of time express in hours oil is
expected to be the avoided fuel.
38
x = IER, converted to the appropriate time of delivery
for Winter/Summer Periods, expressed in Btu/kWh
x Price of boiler oil fuel, expressed in $/million
Btu used in Edison's published avoided cost of
energy
(ii) = The proportion of time expressed in hours gas is
expected to be the avoided fuel
= IER, converted to the appropriate time of delivery
for Winter/Summer Periods, expressed in Btu/kWh
x Gas IER conversion factor of 1.035
x Price of gas pursuant to Southern California Gas
Co. Tariff Schedule No. GN-5, expressed in $/
million Btu used in Edison's published avoided
cost of energy
(iii) = Variable Operating and Maintenance expense
expressed in(cent)/kWh as accepted by the
Commission
(iv) = Energy Loss Adjustment Factor as authorized by the
Commission
8.2.3.1 Seller may elect during the First Period to specify a
range in increments of 100 Btu/kwh above and below
Edison's Forecast of Incremental Energy Rates in effect
at the time of execution of this Contract as specified
in Section 1.11 for the basis of calculation of Seller's
Monthly Energy Payment.
39
a. If the Incremental Heat Rates for the Edison system
fall within the range of the forecast IER and
increments specified in Section 1.11, Seller's
Monthly Energy Payment shall be equal 100% of
Edison's published avoided cost of energy as
updated and authorized by the Commission pursuant
to the formula set forth in Section 8.3.
b. If the Incremental Heat Rates for the Edison system
fall outside the range of the forecast IER and
increments specified in Section 1.11, Seller's
Monthly Energy Payment shall be calculated pursuant
to the formula used in Section 8.2.3 using as the
IER the following value:
IER = Forecast IER + IER increments as specified in Section 1.11.
8.3 Energy Payments - Second Period
During the Second Period of the Contract Term, Seller
shall be paid a Monthly Energy Payment for Energy
delivered by Seller and purchased by Edison at the Point
of Interconnection at a rate equal to 100% of Edison's
published avoided cost of energy based on Edison's full
avoided operating cost as updated periodically and
accepted by the Commission, pursuant to the following
formula:
MONTHLY ENERGY PAYMENT = kWh purchased by Edison at the Point of Interconnection
for each on-peak, mid-peak, and
40
off-peak time period defined in Edison's Tariff
Schedule No. TOU-8
x Edison's published avoided cost of energy by time of
delivery for each time period.
8.4 Edison shall not be obligated to accept or pay for
Energy, and may request Seller whose Generating Facility
is one (1) MW or greater to discontinue or reduce
delivery of Energy, for not more than 300 hours annually
during off-peak hours when (i) purchases would result in
costs greater than those which Edison would incur if it
did not purchase Energy from Seller but instead utilized
an equivalent amount of Energy generated from another
Edison source, or (ii) the Edison Electric System demand
would require that Edison hydro-energy be spilled to
reduce generation.
8.5 Energy Payment Refund
If Seller elects Energy Payment Option 2, Seller shall
be subject to the following:
8.5.1 If Seller fails to perform the Contract
obligations for any reason during the First
Period of the Contract Term, or fails to meet
the performance requirements set forth in
Section 1.2.2.1, and at the time of such
failure to perform, the net present value of
the cumulative Energy payments received by
Seller pursuant
41
to Energy Payment Option 2 exceeds the net
present value of what Seller would have been
paid pursuant to Energy payment refund equal
to the difference in such net present values
in the year in which the refund is due. The
present value calculation shall be based upon
the rate of Edison's incremental cost of
capital specified in Section 1.11.
8.5.2 Not less than 90 days prior to the date Energy
is first delivered to the Point of
Interconnection, Seller shall provide and
maintain a performance bond, surety bond,
performance insurance, corporate guarantee, or
bank letter of credit, satisfactory to Edison,
which shall insure payment to Edison of the
Energy Payment Refund at any time during the
First Period. Edison may, in its sole
discretion accept another form of security
except that in such instance a 1-1/2 percent
reduction shall then apply to the levelized
forecast referred to in Section 8.2.2 in
computing payments for Energy. Edison shall be
provided with certificates evidencing Seller's
compliance with the security requirements in
this Section which shall also include the
requirement that Edison be given 90 days prior
written notice of the expiration of such
security.
42
8.5.3 If Seller fails to provide replacement
security not less than 60 days prior to the
date of expiration of existing security, the
Energy Payment Refund provided in Section 8.5
shall be payable forthwith. Thereafter,
payments for Energy shall be 100 percent of
the Monthly Energy Payment provided in Section
8.2.1.
8.5.4 If Edison at any time determines the security
to be otherwise inadequate, and so notifies
Seller, payments thereafter for Energy shall
be 100 percent of the Monthly Energy Payment
provided in Section 8.2.1. If within 30 days
of the date Edison gives notice of such
inadequacies, Seller satisfies Edison's
security requirements, Energy Payment Option 2
shall be reinstated. If Seller fails to
satisfy Edison's security requirements within
the 30-day period, the Energy Payment Refund
provided in Section 8 shall be payable
forthwith.
9. PAYMENT AND BILLING PROVISIONS
9.1 For Energy and capacity purchased by Edison:
9.1.1 Edison shall mail to Seller not later than
thirty days after the end of each monthly
billing period (1) a statement showing the
Energy and Contract Capacity delivered to
Edison during the on-peak, mid-peak, and
off-peak
43
periods, as those periods are specified in
Edison's Tariff Schedule No. TOU-8 for that
monthly billing period, (2) Edison's
computation of the amount due Seller, and (3)
Edison's check in payment of said amount.
9.1.2 If the monthly payment period involves
portions of two different published Energy
payment schedule periods, the monthly Energy
payment shall be prorated on the basis of the
percentage of days at each price.
9.1.3 If the payment period is less than 27 days or
greater than 33 days, the capacity payment
shall be prorated on the basis of the average
days per month per year.
9.1.4 If within thirty days of receipt of the
statement Seller does not make a report in
writing to Edison of an error, Seller shall be
deemed to have waived any error in Edison's
statement, computation, and payment, and they
shall be considered correct and complete.
9.2 Payments due to Contract Capacity Reduction
9.2.1 The Parties agree that the refund and payments
provided in Section 8.1.2.6 represent a fair
compensation for the reasonable losses that
would result from such reduction of Contract
Capacity.
44
9.2.2 In the event of a reduction in Contract
Capacity, the quantity, in kW, by which the
Contract Capacity is reduced shall be used to
calculate the refunds and payments due Edison
in accordance with Section 8.1.2.6, as
applicable.
9.2.3 Edison shall provide invoices to Seller for
all refunds and payments due Edison under this
section which shall be due within 60 days.
9.2.4 If Seller does not make payments as required
in Section 9.2.3, Edison shall have the right
to offset any amounts due it against any
present or future payments due Seller and may
pursue any other remedies available to Edison
as a result of Seller's failure to perform.
9.3 Energy Payment Refund
Energy Payment Refund is immediately due and
payable upon Seller's failure to perform the
contract obligations as specified in Section
8.5.
10. TAXES
10.1 Seller shall pay ad valorem taxes and other
taxes properly attributable to the Generating
Facility. If such taxes are assessed
45
or levied against Edison, Seller shall pay
Edison for such assessment or levy.
10.2 Seller shall pay ad valorem taxes and other
taxes properly attributed to land, land
rights, or interest in Land for the Generating
Facility. If such taxes are assessed or levied
against Edison, seller shall pay Edison for
such assessment or levy.
10.3 Seller or Edison shall provide information
concerning the Generating Facility to any
requesting taxing authority.
11. TERMINATION
11.1 This Contract shall terminate if Firm
Operation does not occur within 5 years of the
date of Contract execution.
12. LIABILITY
12.1 Each Party (First Party) releases the other
Party (Second Party), its directors, officers,
employees and agents from any loss, damage,
claim, cost, charge, or/expense of any kind or
nature (including any direct, indirect or
consequential loss, damage, claim, cost,
charge, or expense), including attorneys' fees
and other costs of litigation, incurred by the
First Party in connection with damage to
property of the First Party caused by or
arising out of the Second Party's
construction, engineering, repair,
supervision, inspection, testing, protection,
operation,
46
maintenance, replacement, reconstruction, use
or ownership of its facilities, to the extent
that such loss, damage, claim, cost, charge,
or expense is caused by the negligence of
Second Party, its directors, officers,
employees, agents, or any person or entity
whose negligence would be imputed to Second
Party.
12.2 Each Party shall indemnify and hold harmless
the other Party, its directors, officers, and
employees or agents from and against any loss,
damage, claim, cost, charge, or expense of any
kind or nature (including direct, indirect or
consequential loss, damage, claim, cost,
charge, or expense), including attorney's fees
and other costs of litigation, incurred by the
other Party in connection with the injury to
or death of any person or damage to property
of a third party arising out of the
indemnifying Party's construction,
engineering, repair, supervision, inspection,
testing, protection, operation, maintenance,
replacement, reconstruction, use, or ownership
of its facilities, to the extent that such
loss, damage, claim, cost, charge, or expense
is caused by the negligence of the
indemnifying Party, its directors, officers,
employees, agents, or any person or entity
whose negligence would be imputed to the
indemnifying Party; provided, however, that
each Party shall be solely responsible
47
for and shall bear all cost of claims brought
by its contractors or its own employees and
shall indemnify and hold harmless the other
Party for any such costs including costs
arising out of any workers compensation law.
Seller releases and shall defend and indemnify
Edison from any claim, cost, loss, damage, or
liability arising from any contrary
representation concerning the effect of
Edison's review of the design, construction,
operation, or maintenance of the Generating
Facility.
12.3 The provisions of this Section 12 shall not be
construed so as to relieve any insurer of its
obligations to pay any insurance claims in
accordance with the provisions of any valid
insurance policy.
12.4 Neither Party shall be indemnified under this
Section 12 for its liability or loss resulting
from its sole negligence or willful
misconduct.
13. INSURANCE
13.1 Until Contract is terminated, Seller shall
obtain and maintain in force as hereinafter
provided comprehensive general liability
insurance, including contractual liability
coverage, with a combined single limit of (i)
not less than $1,000,000 each occurrence for
Generating Facilities 100 kW or greater; (ii)
not less than $500,000 for each occurrence for
Generating Facilities
48
between 20 kW and 100 kW; and (iii) not less
than $100,000 for each occurrence for
Generating Facilities less than 20 kW. The
insurance carrier or carriers and form of
policy shall be subject to review and approval
Edison.
13.2 Prior to the date Seller's Generating Facility
is first operated in parallel with Edison's
electric system, Seller shall (i) furnish
certificate of insurance to Edison, which
certificate shall provide that such insurance
shall not be terminated nor expire except on
thirty days prior written notice Edison, (ii)
maintain such insurance in effect for so long
as Seller's Generating Facility is operated in
parallel with Edison's electric system, and
(iii) furnish to Edison an additional insured
endorsement with respect to such insurance in
substantially the following form:
"In consideration of the premium charged,
Southern California Edison Company (Edison) is
named as additional insured with respect to
all liabilities arising out of Seller's use
and ownership of Seller's Generating
Facility." "The inclusion of more than one
insured under this policy shall not operate to
impair the rights of one insured against
another insured and the coverages afforded by
this policy will apply as though separate
49
policies had been issued to each insured. The
inclusion of more than one insured will not,
however, operate to increase the limit of the
carrier's liability. Edison will not, by
reason of its inclusion under this policy,
incur liability to the insurance carrier for
payment of premium for this policy."
"Any other insurance carried by Edison which
may be applicable shall be deemed excess
insurance and Seller's insurance primary for
all purposes despite any conflicting
provisions in Seller's policy to the
contrary."
If the requirement of Section 13.2(iii)
prevents Seller from obtaining the insurance
required in Section 13.1, then upon written
notification by Seller to Edison Section
13.2(iii) shall be waived.
13.3 The requirements of this Section 13 shall not
apply to Seller who is a self-insured
governmental agency with established record of
self-insurance. Edison agrees to review
requests by Seller to waive the requirements
of this Section 13 for Seller, who is a
self-insured non-governmental agency with an
established record of self-insurance. Edison's
consent to such waiver shall not be
unreasonably withheld.
50
13.4 If Seller fails to comply with the provisions
of this Section 13, Seller shall, at its own
cost, defend, indemnify, and hold harmless
Edison, its directors, officers, employees,
agents, assigns, and successors in interest
from and against any and all loss, damage,
claim, cost, charge, or expense of any kind or
nature (including direct, indirect or
consequential loss, damage, claim, cost,
charge, or expense, including attorneys' fees
and other costs of litigation) resulting from
the death or injury to any person or damage to
any property, including the personnel and
property of Edison, to the extent that Edison
would have been protected had Seller complied
with all of the provisions of this Section 13.
14. UNCONTROLLABLE FORCES
14.1 Neither Party shall be considered to be in
default in the performance of any of the
agreements contained in this Contract, except
for obligations to pay money, when and to the
extent failure of performance shall be caused
by an Uncontrollable Force.
14.2 If either Party because of an Uncontrollable
Force is rendered wholly or partly unable to
perform its obligations under this Contract,
the Party shall be excused from whatever
performance
51
is affected by the Uncontrollable Force to the
extent so affected provided that:
(1) the nonperforming Party, within two weeks
after the occurrence of the
Uncontrollable Force, gives the other
Party written notice describing the
particulars of the occurrence,
(2) the suspension of performance is of no
greater scope and of no longer duration
than is required by the Uncontrollable
Force,
(3) the nonperforming Party uses its best
efforts to remedy its inability to
perform (this subsection shall not
require the settlement of any strike,
walkout, lockout or other labor dispute
on terms which, in the sole judgment of
the Party involved in the dispute, are
contrary to its interest. It is
understood and agreed that the settlement
of strikes, walkouts, lockouts or other
`labor disputes shall be at the sole
discretion of the Party having the
difficulty),
(4) when the nonperforming Party is able to
resume performance of its obligations
under this Contract, that Party shall
give the other Party written notice to
that effect, and
52
(5) capacity payments during such periods of
Uncontrollable Force on Seller's part
shall be governed by Section 8.1.2.3.
14.3 In the event that either Party's ability to
perform cannot be corrected when the
Uncontrollable Force caused by the actions or
inactions of legislative, judicial or
regulatory agencies or other proper authority,
this Contract may be amended to comply with
the legal or regulatory change which caused
the nonperformance.
If a loss of Qualifying Facility status occurs
due to an Uncontrollable Force and Seller
fails to make the changes necessary to
maintain its Qualifying Facility status, the
Seller shall compensate Edison for any
economic detriment incurred by Edison as a
result of such failure.
15. NONDEDICATION OF FACILITIES
Neither Party, by this Contract, dedicates any part of
its facilities involved in this Generating Facility to
the public or to the service provided under the
Contract, and such service shall cease upon termination
of the Contract.
16. PRIORITY OF DOCUMENTS
If there is a conflict between this document and any
Appendix, the provisions of this document shall govern.
Each Party shall notify the
53
other immediately upon the determination of the
existence of any such conflict.
17. NOTICES AND CORRESPONDENCE
All notices and correspondence pertaining to this
Contract shall be in writing and shall be sufficient if
delivered in person or sent by certified mail, postage
prepaid, return receipt requested, to Seller as
specified in Section 1.1, or to Edison as follows;
Southern California Edison Company
Xxxx Xxxxxx Xxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
All notices sent pursuant to this Section 17 shall be
effective when received, and each Party shall be
entitled to specify as its proper address any other
address in the United States upon written notice to the
other Party.
18. PREVIOUS COMMUNICATIONS
This Contract contains the entire agreement and
understanding between the Parties, their agents, and
employees as to the subject matter of this Contract, and
merges and supersedes all prior agreements, commitments,
representations, and discussions between the Parties. No
Party shall be bound to any prior obligations,
54
conditions or representations with respect to the
subject matter of this Contract.
19. NONWAIVER
None of the provisions of the Contract shall be
considered waived by either Party except when such
waiver is given in writing. The failure of either Edison
or Seller to insist in any one or more instances upon
strict performance of any of the provisions of the
Contract or to take advantage of any of its rights
hereunder shall not be construed as a waiver of any such
provisions or the relinquishment of any such rights for
the future, but the same shall continue to remain in
full force and effect.
20. SUCCESSORS AND ASSIGNS
Neither Party shall voluntarily assign its rights nor
delegate its duties under this Contract, or any part of
such rights or duties, without the written consent of
the other Party, except in connection with the sale or
merger of a substantial portion of its properties or
except an assignment to an Affiliate. "Affiliate" shall
mean a Party's parent, a Party's subsidiary or any
company of which a Party's parent is a parent. "Parent"
shall mean a company which owns directly or indirectly
more than 50% of the shares entitled to vote in an
election of directors of another company. Any such
55
assignment or delegation made without such written
consent shall be null and void. Consent for assignment
shall not be withheld unreasonably. Such assignment
shall include, unless otherwise specified therein, all
of Seller's rights to any refunds which might become due
under this Contract.
21. EFFECT OF SECTION READINGS
Section headings appearing in this Contract are inserted
for convenience only, and shall not be construed as
interpretations of text.
22. GOVERNING LAW
This Contract shall be interpreted, governed, and
construed under the laws of the State of California as
if executed and to be performed wholly within the State
of California.
23. MULTIPLE ORIGINALS
This Contract is executed in two counterparts, each of
which shall be deemed an original.
24. TRANSMISSION AND INTERCONNECTION
24.1 Seller shall be solely responsible, using all
reasonable efforts, to negotiate and conclude
all required transmission and interconnection
agreements with the Interconnecting Utility.
Such agreements shall provide for the
transmission of electrical
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energy generated by the Generating Facility to
the Point of Interconnection.
24.2 It is contemplated that these agreements shall
include:
24.2.1 An agreement between Seller and/or syndicate
(which includes Seller), and the
Interconnecting Utility to develop those
facilities, as determined by the
Interconnecting Utility, which are necessary
to transmit electrical energy generated by the
Generating Facility to the Point of
Interconnection. Such agreement shall be
executed no later than 36 months prior to the
expected date of Firm Operation as specified
in Section 1.7. Such agreement should include
the following terms:
a) Financial responsibility
b) Default/Remedies;
c) Facilities and scope of work associated
thereto; and
d) Scheduling provisions reflecting the
development of the facilities.
24.2.2 An agreement between Seller and the
Interconnecting Utility for the transmission
services necessary to transmit the electrical
energy generated by the Generating Facility to
the Point of Interconnection. Such an
agreement shall be executed no later
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than three months prior to the expected date
of Firm Operation as specified in Section 1.7.
24.2.3 An agreement between Seller and the
Interconnecting Utility for the
interconnection of the Generating Facility and
the Interconnecting Utility. Such agreement
shall be executed no later than three months
prior to the expected date of Firm Operation
as specified in Section 1.7.
24.2.4 Edison shall, in its reasonable judgement,
determine if the proposed arrangements
described in this Section 24.2 satisfies the
requirement of transmitting the electrical
energy generated by the Generating Facility to
the Point of Interconnection pursuant to the
dates and terms contained in this Contract.
24.3 Notwithstanding the provisions contained in
Section 24.2, Seller may pursue and/or develop
alternate means, routes or agreements for the
transmission of electrical energy generated by
the Generating Facility to the Point of
Interconnection. Should Seller obtain such
alternative means, routes or agreements,
Seller shall submit such alternative method to
Edison for review and approval at least six
months prior to the expected date of Firm
Operation as specified in Section 1.7. Edison
shall, in its reasonable judgement, determine
if the
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proposed alternative method satisfies the
requirement of transmitting the electrical
energy generated by the Generating Facility to
the Point of Interconnection pursuant to the
dates and terms contained in this Contract.
24.4 Should Seller be unable to comply with the
provisions contained in Section 24.2 and 24.3,
Seller shall have the option to either
terminate this Contract without penalty of any
type or abrogate its selection of Capacity
Payment Option in Section 1.10 and select in
its place Capacity Payment Option A, Forecast
of Annual As-Available Capacity Payment
Schedule. Further, should Seller select the
later alternative, Section 8.1.1.2 shall be
deleted in its entirety and replaced with the
following:
"If Seller specifies the Forecast of Annual
As-Available Capacity Payment Schedule
pursuant to Section 24.4, then the formula set
forth in Section 8.1.1 shall be computed as
follows:
a. During the First Period of the Contract
Term, D shall equal 70% of the appropriate
time differentiated capacity price from the
Forecast of Annual As-Available Capacity
Payment Schedule.
b. During the first five years of the Second
Period of the Contract Term, D shall equal 95%
of the appropriate time
59
differentiated capacity price from the
Forecast of Annual As-Available Capacity
Payment Schedule for the last year of the
First Period of the Contract Term.
c. For the remainder of the Contract Term, D
shall equal 70% of the appropriate time
differentiated capacity price from the
Forecast of Annual As-Available Capacity
Payment Schedule for the last year of the
First Period of the Contract Term."
24.5 Nothing in Section 24 shall be construed to
obligate Seller to enter into any transmission
or interconnection agreements, or to
participate in the financing and/or the
construction of any electrical power
transmission facility, except on terms and
conditions satisfactory to Seller, in its
reasonable judgement, nor to render Seller
subject to any penalty for failure to do so.
SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have executed
this Contract this 16th of April, 1985.
SOUTHERN CALIFORNIA EDISON COMPANY,
By /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------------------
XXXXXX X. XXXXX, XX.
Vice President
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SECOND IMPERIAL GEOTHERMAL COMPANY,
A PARTNERSHIP
SECOND IMPERIAL CONTINENTAL INC., PARTNER
By /s/ Xxxxxx X'Xxxxx
------------------------------------------
Name Xxxxxx X' Xxxxx
------------------------------------
Title
------------------------------------
SECOND DRAVO GEOTHERMAL, INC., PARTNER
By /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Name Xxxx X. Xxxxxxxx
------------------------------------
Title Attorney-in-Fact
------------------------------------
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