RA CAPACITY CONFIRMATION BETWEEN AND OCCIDENTAL POWER SERVICES, INC.
Exhibit
10.16
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CONFIDENTIAL
TREATMENT
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REQUESTED
PURSUANT TO RULE 24b-2
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Certain
portions of this exhibit have been omitted pursuant to a request
for
confidential treatment under Rule 24b-2 of the Securities Exchange
Act of
1934. The omitted materials have been filed separately with the Securities
and Exchange Commission.
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BETWEEN
MMC
ENERGY NORTH AMERICA, LLC
AND
OCCIDENTAL
POWER SERVICES, INC.
This
Long
Form Resource Adequacy (“RA”) Capacity Confirmation (“Confirmation Agreement”)
shall confirm and effectuate the agreement reached on January 23, 2007 (the
“Confirmation Effective Date”) between MMC Energy North America, LLC (“MMC” or
“Seller”) and Occidental Power Services, Inc. (“OPSI” or “Buyer”), each
individually a “Party” and together the “Parties”, in which Seller agrees to
provide to Buyer the right to the RA capacity product described herein (the
“Product”). Subject to the terms and conditions of this Confirmation Agreement,
Seller shall sell to Buyer and Buyer shall purchase from Seller the Product
as
specified below. Capitalized terms used but not otherwise defined in this
Confirmation Agreement have the meanings described in the Tariff (as defined
below).
ARTICLE
1
DEFINITIONS
| 1.1 |
“Applicable
Laws” means any law, rule, regulation, order, decision, judgment, or other
legal or regulatory determination by any Governmental Body having
jurisdiction over one or both Parties or this Transaction, including
without limitation, the Tariff.
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| 1.2 |
“Bankrupt”
means with respect to any entity, such entity (i) files a petition
or
otherwise commences, authorizes or acquiesces in the commencement
of a
proceeding or cause of action under any bankruptcy, insolvency,
reorganization or similar law, or has any such petition filed or
commenced
against it, (ii) makes an assignment or any general arrangement for
the
benefit of creditors, (iii) otherwise becomes bankrupt or insolvent
(however evidenced), (iv) has a liquidator, administrator, receiver,
trustee, conservator or similar official appointed with respect to
it or
any substantial portion of its property or assets, or (v) is generally
unable to pay its debts as they fall
due.
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| 1.3 |
“Business
Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank
holiday. A business day shall open at 8:00 a.m. and close at 5:00
p.m.
local time for the relevant Party’s principal place of business. The
relevant Party, in each instance unless otherwise specified, shall
be the
Party from whom the notice, payment or delivery is being sent, and
by whom
the notice or payment or delivery is to be
received.
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| 1.4 |
“Buyer”
has the meaning specified in the introductory paragraph
hereof.
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[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
1
| 1.5 |
“CAISO”
means the California Independent System Operator, or its
successor.
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| 1.6 |
“CAISO
Control Area” has the meaning specified in the
Tariff.
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| 1.7 |
“CAISO
Controlled Grid” has the meaning specified in the
Tariff.
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| 1.8 |
“Capacity
Replacement Price” means (a) the price paid for any Replacement Capacity
purchased by Buyer pursuant to Section 5.3
hereof, plus costs reasonably incurred by Buyer in purchasing such
Replacement Capacity, or (b) absent a purchase of any Replacement
Capacity, the market price for such Designated RA Capacity not provided
at
the Delivery Point.
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| 1.9 |
“Confirmation
Agreement” has the meaning specified in the introductory paragraph
hereof.
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| 1.10 |
“Confirmation
Effective Date” has the meaning specified in the introductory paragraph
hereof.
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| 1.11 |
“Contingent
Firm RA Product” has the meaning specified in Section 3.3
hereof.
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| 1.12 |
“Contract
Price” means, for any Monthly Delivery Period, the product of the RA
Capacity Flat Price and the Price Shape for such
period.
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| 1.13 |
“Contract
Quantity” means the total Unit Contract Quantity for all
Units.
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| 1.14 |
“CPUC”
means the California Public Utilities Commission or any successor
thereto.
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| 1.15 |
“CPUC
Decisions” means CPUC Decisions 00-00-000, 00-00-000, 00-00-000,
00-00-000, 00-00-000 and subsequent decisions related to resource
adequacy, as may be amended from time to time by the
CPUC.
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| 1.16 |
“Delivery
Period” has the meaning specified in Section 4.1
hereof.
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| 1.17 |
“Delivery
Point” has the meaning specified in Section 4.2
hereof.
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| 1.18 |
“Designated
RA Capacity” means, for each Unit, the amount of RA Capacity that Seller
provides to Buyer pursuant to this Confirmation that is certified
for
inclusion in RAR Showings and if applicable LAR Showings, in each
case as
determined or approved by the CPUC (and/or, to the extent authorized
by
the CPUC, by the CAISO) pursuant to the CPUC Decisions, or by an
LRA
having jurisdiction. Designated RA Capacity shall include those attributes
associated with the capacity identified in Article
2
and Article
3
hereof.
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| 1.19 |
“Downgrade
Event” shall mean, with respect to each of the Parties, either that such
Party no longer meets the credit requirements necessary to participate
in
markets operated by the CAISO or shall have become
Bankrupt.
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| 1.20 |
“Early
Termination Date” has the meaning set forth in Section 13.1
hereof.
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| 1.21 |
“Event
of Default” shall have the meaning set forth in Section 13.1
hereof.
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| 1.22 |
“Firm
RA Product” has the meaning specified in the Section 3.2
hereof.
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| 1.23 |
“Governmental
Body” means any federal, state, local, municipal or other government; any
governmental, regulatory or administrative agency, commission or
other
authority lawfully exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority
or power; and any court or governmental
tribunal.
|
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
2
| 1.24 |
“LAR”
means local area reliability, which is any program of localized resource
adequacy requirements established for jurisdictional LSE’s by the CPUC
pursuant to the CPUC Decisions, or by another LRA having jurisdiction
over
the LSE. LAR may also be known as local resource adequacy, local
RAR, or
local capacity requirement in other regulatory proceedings or legislative
actions.
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| 1.25 |
“LAR
Attributes” means, with respect to a Unit, any and all resource adequacy
attributes (or other locational attributes related to system reliability),
as may be identified from time to time by the CPUC, CAISO, LRA, or
other
Governmental Body having jurisdiction, associated with the physical
location or point of electrical interconnection of the Unit within
the
CAISO Control Area, that can be counted toward LAR, but exclusive
of any
RAR Attributes which are not associated with where in the CAISO Control
Area the Unit is physically located or electrically interconnected.
For
clarity, it should be understood that the LAR Attributes associated
with a
Unit by virtue of its location or point of electrical interconnection
may
change as the CAISO, LRA, or other Governmental Body, defines new
or
re-defines existing local areas and such change will not result in
a
change in payments made pursuant to this transaction.
|
| 1.26 |
“LAR
Showings” means the LAR compliance showings (or similar or successor
showings) an LSE is required to make to the CPUC (and, to the extent
authorized by the CPUC, to the CAISO) pursuant to the CPUC Decisions,
or
to an LRA having jurisdiction over the
LSE.
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| 1.27 |
“LRA”
means a Local Regulatory Authority, as defined in the
Tariff.
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| 1.28 |
“LSE”
means load-serving entity. LSEs may be an investor-owned utility,
an
electric service provider, a community aggregator or community choice
aggregator, or a municipality serving load in the CAISO Control Area
(excluding exports).
|
| 1.29 |
“Monthly
Delivery Period” means each calendar month during the Delivery
Period.
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| 1.30 |
“Monthly
RA Capacity Payment” has the meaning specified in Section 4.4
hereof.
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| 1.31 |
“NERC/GADS
Protocols” means the North American Electric Reliability Council (NERC)
Generating Availability Data System (GADS) protocols, as may be updated
from time to time.
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| 1.32 |
“Non-Excusable
Event” means Seller's (a) negligence, (b) failure to perform its
obligations under this Confirmation, including, without limitation,
the
failure to cause the owner, operator or SC of a Unit to comply with
the
operations and maintenance standards specified in Section 8.2(f),
or (c) failure to comply, or cause the owner, operator or SC of the
Units
to comply, with the Tariff with respect to the Units providing RAR
Attributes and LAR Attributes, as
applicable.
|
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
3
| 1.33 |
“Outage”
means any CAISO approved disconnection, separation or reduction in
the
capacity of any Unit that relieves all or part of the offer obligations
of
the Unit consistent with the
Tariff.
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| 1.34 |
“Performance
Assurance” means collateral in the form of either cash, Letter(s) of
Credit or other security acceptable to the Requesting
Party.
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| 1.35 |
“Planned
Outage” shall have the meaning in CPUC Decisions, namely a planned,
scheduled, or any other Outage for the routine repair or maintenance
of
the Unit, or for the purposes of new construction work, and does
not
include any Outage designated as either forced or unplanned as defined
by
the CAISO or NERC/GADS protocols.
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| 1.36 |
“Price
Shape” means the Price Shape specified in the Monthly Payment Price Shape
Table in Section 4.4
hereof.
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| 1.37 |
“Product”
has the meaning specified in the introductory paragraph
hereof.
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| 1.38 |
“Prorated
Percentage of Unit Factor” means the percentage of RA Capacity, as
specified in Article
2
hereof, from the Unit that is dedicated to
Buyer.
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| 1.39 |
“RA
Availability” means, for each Unit, expressed as a percentage, (a) the
Unit's Designated RA Capacity for a Monthly Delivery Period, divided
by
(b) the Unit Contract Quantity, provided that a Unit's RA Availability
shall not exceed [***].
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| 1.40 |
“RA
Capacity” means the qualifying and deliverable capacity of the Unit for
RAR and LAR purposes for the Delivery Period, as determined by the
CAISO,
or other Governmental Body authorized to make such determination
under
Applicable Laws. RA Capacity encompasses both the RAR Attributes
and LAR
Attributes of the capacity provided by a
Unit.
|
| 1.41 |
“RA
Capacity Flat Price” means the price specified in the RA Capacity Flat
Price Table in Section 4.4
hereof.
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| 1.42 |
“RAR”
means the resource adequacy requirements established for LSEs by
the CPUC
pursuant to the CPUC Decisions, or by an LRA or other Governmental
Body
having jurisdiction.
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| 1.43 |
“RAR
Attributes” means, with respect to a Unit, any and all resource adequacy
attributes, as may be identified from time to time by the CPUC, LRA,
or
Governmental Body having jurisdiction, that can be counted toward
RAR,
exclusive of any LAR Attributes.
|
| 1.44 |
“RAR
Showings” means the RAR compliance showings (or similar or successor
showings) an LSE is required to make to the CPUC (and/or, to the
extent
authorized by the CPUC, to the CAISO), pursuant to the CPUC Decisions,
or
to an LRA having jurisdiction.
|
| 1.45 |
“Replacement
Capacity” has the meaning specified in Section 5.3
hereof.
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| 1.46 |
“Replacement
Unit” means a generating unit meeting the requirements specified in
Section 5.2
hereof.
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[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
4
| 1.47 |
“Resource
Category” shall be as described in the CPUC’s 2007
Filing Guide for System and Local Resource Adequacy (RA) Compliance
Filings,
as such may be modified, amended, supplemented or updated from time
to
time.
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| 1.48 |
“RMR
Agreement” has the meaning specified in Section 8.2(b)
hereof.
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| 1.49 |
“Scheduling
Coordinator” or “SC” has the meaning defined in the
Tariff.
|
| 1.50 |
“Seller”
has the meaning specified in the introductory paragraph hereof.
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| 1.51 |
“Supply
Plan” means the supply plans, or similar or successor filings, that each
Scheduling Coordinator representing RA Capacity submits to the CAISO,
LRA,
or other Governmental Body, pursuant to Applicable Laws, in order
for that
RA Capacity to count for its RAR Attributes or LAR
Attributes.
|
| 1.52 |
“Tariff”
means the tariff and protocol provisions of the CAISO, as amended
or
supplemented from time to time.
|
| 1.53 |
“Transaction”
has the meaning specified in the introductory paragraph
hereof.
|
| 1.54 |
“Unit”
or “Units” shall mean the generation assets described in Article
2
hereof (including any Replacement Units), from which RA Capacity
is
provided by Seller to Buyer.
|
| 1.55 |
“Unit
Contract Quantity” means the quantity of RA Capacity for a Unit as of the
Confirmation Effective Date, as specified in Section 4.3
hereof.
|
ARTICLE
2
UNIT
INFORMATION
[***]
ARTICLE
3
RESOURCE
ADEQUACY CAPACITY PRODUCT
During
the Delivery Period, Seller shall provide the Product to Buyer pursuant to
the
terms of this Confirmation. The Product shall (a) include both RAR Attributes
and LAR Attributes, and (b) be a Firm RA Product or a Contingent Firm RA
Product, as selected below. The Product does not confer to Buyer any right
to
the electrical output from the Units, other than the right to include the
Designated RA Capacity associated with the Contract Quantity in RAR Showings,
LAR Showings if applicable, and any other capacity or resource adequacy markets
or proceedings as specified in this Confirmation. Specifically, no energy or
ancillary services associated with any Unit is required to be made available
to
Buyer as part of this Transaction and Buyer shall not be responsible for
compensating Seller for Seller's commitments to the CAISO required by this
Confirmation. Seller retains the right to sell any RA Capacity from a Unit
in
excess of that Unit’s Contract Quantity, and any RAR Attributes or LAR
Attributes not otherwise sold under this Confirmation.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
5
3.1 RAR
and LAR Attributes
Seller
shall provide Buyer with the Designated RA Capacity and the RAR Attributes
and
LAR Attributes from each Unit, as measured in MWs. For each Monthly Delivery
Period, a Unit's Designated RA Capacity shall be equal to the product of (x)
the
Unit's RA Capacity, after reflecting adjustments for Outages, if any, as
determined by the CPUC (and, to the extent authorized by the CPUC, by the
CAISO), or by an LRA having jurisdiction, and (y) the Unit's Prorated Percentage
of Unit Factor, provided that the total amount of Designated RA Capacity from
all Units shall not exceed the Contract Quantity.
3.2 o
Firm
RA
Product
Seller
shall provide Buyer with Designated RA Capacity from the Units in the amount
of
the Contract Quantity. If the Units are not available to provide the full amount
of the Contract Quantity for any reason other than Force Majeure, including
without limitation any Outage or any adjustment of the RA Capacity of any Unit,
Seller shall provide Buyer with Designated RA Capacity from one or more
Replacement Units pursuant to Section 5.2
hereof.
[***]
3.3 X
Contingent Firm RA Product
Seller
shall provide Buyer with Designated RA Capacity from the Units in the amount
of
the Contract Quantity. If the Units are not available to provide the full amount
of the Contract Quantity because of a Non-Excusable Event, Seller shall provide
Buyer with Designated RA Capacity from one or more Replacement Units pursuant
to
Section 5.2
hereof.
In such case, if Seller fails to provide Buyer with replacement Designated
RA
Capacity from Replacement Units pursuant to Section 5.2,
then at
Buyer’s option, (a) Seller shall be liable for damages pursuant to Section
5.4
hereof,
or (b) Seller shall indemnify Buyer for penalties or fines pursuant to Section
5.5
hereof.
If the Units provide less than the full amount of the Contract Quantity for
any
reason other than a Non-Excusable Event, Seller is not obligated to provide
Buyer with replacement Designated RA Capacity or to indemnify Buyer for
penalties or fines pursuant to Section 5.5
hereof.
ARTICLE
4
DELIVERY
AND PAYMENT
4.1 Delivery
Period
The
Delivery Period shall be: [***] through [***], inclusive.
4.2 Delivery
Point
The
Delivery Point for each Unit shall be the CAISO Control Area and, if applicable,
the LAR region in which the Unit is electrically interconnected.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
6
4.3 Unit
Contract Quantity
The
Contract Quantity of each Unit for each Monthly Delivery Period shall
be:
Unit
Contract Quantity (MWs)
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Month
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2007
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2008
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2009
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2010
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2011
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2012
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2013
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2014
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January
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February
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March
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[***
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[***
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April
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[***
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May
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[***
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[***
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June
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[***
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[***
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[***
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[***
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[***
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[***
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July
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[***
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[***
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August
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[***
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[***
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[***
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[***
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[***
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September
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[***
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[***
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[***
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[***
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[***
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[***
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[***
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October
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[***
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[***
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[***
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[***
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[***
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[***
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[***
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November
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[***
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[***
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[***
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[***
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[***
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[***
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December
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[***
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[***
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[***
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[***
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[***
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[***
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[***
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[***
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If
any
portion of the Unit Contract Quantity of any Unit providing a Contingent Firm
RA
Product is not available after the Confirmation Effective Date for reasons
other
than a Non-Excusable Event, the Unit Contract Quantity shall be adjusted to
the
product of the Unit's (a) RA Capacity following adjustment, and (b) Prorated
Percentage of Unit Factor, provided that the resulting Unit Contract Quantity
shall not exceed the original Unit Contract Quantity on the Confirmation
Effective Date.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
7
4.4 Monthly
RA Capacity Payment
Buyer
shall make a Monthly RA Capacity Payment to Seller for each Unit, in arrears,
following each Monthly Delivery Period. Each Unit's Monthly RA Capacity Payment
shall be equal to [***]. Each Monthly RA Capacity Payment may be subject to
reduction in accordance with Section 4.5
hereof.
RA
CAPACITY FLAT PRICE TABLE
|
Contract
Year
|
RA
Capacity Flat Price
[***]
|
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2007
|
[***
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]
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2008
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[***
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2009
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[***
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2010
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[***
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2011
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[***
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2012
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[***
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2013
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[***
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2014
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[***
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]
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The
respective monthly Price Shape, set forth in the Monthly
Payment Price Shape Table
below,
shall apply throughout the entire Delivery Period.
MONTHLY
PAYMENT PRICE SHAPE TABLE
|
Contract
Month
|
Price
Shape
(%)
|
|||
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Jan
|
[***
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Feb
|
[***
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Mar
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[***
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Apr
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[***
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May
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[***
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Jun
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[***
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Jul
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[***
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Aug
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[***
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Sep
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[***
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Oct
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[***
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Nov
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[***
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]
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Dec
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[***
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]
|
||
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
8
4.5 Reduction
of Monthly RA Capacity Payment (Contingent Firm RA Product
only)
For
any
Contingent Firm RA Product, the Monthly RA Capacity Payment for each Unit shall
be reduced by its RA Availability Adjustment, which is calculated as follows:
[***]
4.6 Allocation
of Other Payments and Costs
Seller
may retain any revenues it may receive from the CAISO or any other third party
with respect to any Unit for (a) start-up, shut-down and minimum load
costs, (b) capacity revenue for ancillary services, (c) energy sales, and (d)
any revenues for black start or reactive power services. However, Buyer shall
be
entitled to receive and retain all revenues associated with the Designated
RA
Capacity of any Unit during the Delivery Period (including any capacity or
availability revenues from RMR Agreements for any Unit, and Reliability
Compensation Services Tariff capacity payments, but excluding payments described
in clauses (a) and (b) above). In accordance with Section 4.4
of this
Confirmation, all such revenues received by Seller, a Unit’s SC, owner, or
operator shall be remitted to Buyer, and Seller shall indemnify Buyer for any
such revenues that Buyer does not receive, and Seller shall pay such revenues
to
Buyer if the Unit’s SC, owner, or operator fails to remit those revenues to
Buyer. If Seller fails to pay such revenues to Buyer, Buyer may offset any
amounts owing to it for these revenues against any future amounts it may owe
to
Seller under this Confirmation. If a centralized capacity market develops within
the CAISO region, Buyer will have exclusive rights to offer, bid or otherwise
submit Designated RA Capacity provided to Buyer pursuant to this Confirmation
for re-sale in such market, and retain and receive any and all related revenues.
ARTICLE
5
SELLER'S
FAILURE TO DELIVER CONTRACT QUANTITY
5.1 Notices
and Filings
If
the
Units will not be available to provide Designated RA Capacity in the full amount
of the Contract Quantity for any RAR and/or LAR Showings for the Delivery
Period, Seller shall, no later than the earlier of (a) [***] after the loss
of
any Designated RA Capacity, or (b) [***] before the relevant deadline for such
RAR or LAR Showing, notify Buyer of the Designated RA Capacity of each Unit
which can be included in such Showings. Seller shall, on a timely basis, submit,
or cause each Unit's Scheduling Coordinator to submit, Supply Plans to identify
and confirm the Designated RA Capacity of each Unit sold to Buyer. Seller shall
cause the Unit’s Scheduling Coordinator to certify to Buyer, no later than the
earlier of (a) [***] after the Confirmation Effective Date, or (b) [***] before
the relevant deadline for any applicable RAR or LAR Showing, that Buyer will
be
credited with the Designated RA Capacity for the Delivery Period in the Unit’s
Scheduling Coordinator’s Supply Plan. Seller shall indemnify and hold harmless
Buyer from any costs, monetary penalties or fines Buyer may incur in the event
any Unit’s Scheduling Coordinator fails to timely submit Supply Plans that
identify Buyer’s right to the Designated RA Capacity purchased hereunder. If
Seller fails to pay those costs, monetary penalties or fines, or fails to
reimburse Buyer for those costs, monetary penalties or fines, then Buyer may
offset any amounts owing to it under this Section 5.1
against
any future amounts it may owe to Seller under this Confirmation.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
9
5.2 RA
Capacity from Replacement Units
If
Seller
is required to provide Designated RA Capacity from one or more Replacement
Units
pursuant to Sections 3.2
or
3.3,
Seller
shall, at no cost to Buyer, provide Buyer with replacement RA Capacity from
one
or more Replacement Units, such that the total amount of Designated RA Capacity
provided to Buyer from all Units and Replacement Units equals the Contract
Quantity. The designation of any Replacement Unit by Seller shall be subject
to
Buyer’s prior written approval, which shall not be unreasonably withheld. For
clarity, in the aggregate all Units and Replacement Units must provide to Buyer
RAR Attributes and LAR Attributes equivalent to those that were provided by
the
original Units and that were sold under this Confirmation. Seller shall identify
Replacement Units meeting the above requirements no later than the earlier
of
[***] after the loss of any Designated RA Capacity, or [***] before the relevant
deadline for Buyer's RAR Showing and/or LAR Showing. Once Seller has identified
in writing any Replacement Units that meet the requirements of this Section
5.2,
any
such Replacement Unit shall be automatically deemed to be a Unit for purposes
of
this Confirmation until Seller notifies Buyer, in writing, of the availability
of the original Units.
For
purposes of this Confirmation, Seller shall be deemed to have failed to provide
Buyer with Designated RA Capacity in the full amount of the Contact Quantity
if
the Units and Replacement Units providing such Designated RA Capacity do not
in
the aggregate provide to Buyer the RAR Attributes and LAR Attributes contracted
for pursuant to this Confirmation.
5.3 Purchase
of Replacement Capacity
If
Seller
fails to provide any portion of Designated RA Capacity from Replacement Units
as
required by Section 5.2
hereof,
Buyer may, but shall not be required to, replace any Designated RA Capacity
not
provided by Seller with capacity (such replacement capacity being referred
to as
"Replacement Capacity") having equivalent RAR and LAR Attributes compared to
the
Designated RA Capacity not provided by Seller. Buyer may enter into purchase
transactions with one or more other parties to replace Designated RA Capacity
not provided by Seller. Additionally, Buyer may enter into one or more
arrangements to repurchase its obligation to sell and deliver the Product to
another party, and such arrangements shall be considered to be the procurement
of Replacement Capacity. Buyer shall act in a commercially reasonable manner
in
purchasing any Replacement Capacity.
5.4 Damages
for Failure to Deliver
If
Seller
is required to provide Designated RA Capacity from one or more Replacement
Units
pursuant to Sections 3.2
or
3.3,
and
fails to do so pursuant to Section 5.2
hereof,
then, for purposes of determining the damages due to Buyer, Seller shall pay
to
Buyer an amount equal to [***]. If Seller fails to pay those damages, then
Buyer
may offset those damages owed it against any future amounts it may owe to Seller
under this Confirmation.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
10
5.5 Indemnities
for Failure to Deliver Designated RA Capacity
Seller
agrees to indemnify Buyer for any monetary penalties or fines assessed against
Buyer by the CPUC or the CAISO, or an LRA having jurisdiction, resulting from:
[***]. With respect to the foregoing, the Parties shall use commercially
reasonable efforts to minimize such penalties and fines, [***].
ARTICLE
6
CAISO
OFFER REQUIREMENTS
During
the Delivery Period, except to the extent any Unit is on an Outage, or is
affected by an event of Force Majeure that results in a partial or full Outage
of that Unit, Seller shall either schedule or cause the Unit’s Scheduling
Coordinator to schedule with, or make available to, the CAISO each Unit’s
Designated RA Capacity in compliance with the Tariff, and shall perform all,
or
cause the Unit’s Scheduling Coordinator, owner, or operator, as applicable, to
perform all obligations under the Tariff that are associated with the sale
of
Designated RA Capacity hereunder. Buyer shall have no liability for the failure
of Seller or the failure of any Unit’s Scheduling Coordinator, owner or operator
to comply with such Tariff provisions, including any penalties or fines imposed
on Seller or the Unit’s Scheduling Coordinator, owner, or operator for such
noncompliance.
ARTICLE
7
PLANNED
OUTAGES
For
Contingent Firm Products, no later than [***], Seller shall submit, or cause
the
Unit's Scheduling Coordinator to submit to Buyer each Unit's schedule of
proposed Planned Outages ("Outage Schedule") for the following twenty four
(24)
month period or to the end of the Delivery Period, whichever is shorter. Within
[***] after its receipt of an Outage Schedule, Buyer shall notify Seller in
writing of any reasonable request for changes to the Outage Schedule, and Seller
shall, consistent with Good Utility Practices, accommodate Buyer's requests
regarding the timing of any Planned Outage. Seller or the Unit's Scheduling
Coordinator shall notify Buyer within [***] of any change to the Outage
Schedule.
Planned
Outages cannot aggregate more than [***] (unless the Parties, prior to the
first
day of the Planned Outage, agree otherwise), and shall not be scheduled from
each [***] during the Delivery Period. In the event that Seller has a previously
Planned Outage that becomes coincident with a CAISO-declared system emergency,
Seller shall make all reasonable efforts to reschedule such Planned
Outage.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
11
ARTICLE
8
OTHER
BUYER AND SELLER COVENANTS
| 8.1 |
Buyer
and Seller shall, throughout the Delivery Period, take all commercially
reasonable actions and execute any and all documents or instruments
reasonably necessary to ensure Buyer's right to the use of the Contract
Quantity for the sole benefit of Buyer's RAR and LAR if applicable.
Such
commercially reasonable actions shall include, without
limitation:
|
| (a) |
Cooperating
with and providing, and in the case of Seller causing each Unit’s
Scheduling Coordinator, owner or operator to cooperate with and provide,
requested supporting documentation to the CAISO, the CPUC, or any
other
Governmental Body responsible for administering RAR and/or LAR under
Applicable Laws, to certify or qualify the Contract Quantity as RA
Capacity and Designated RA Capacity. Such actions shall include,
without
limitation, providing information requested by the CPUC, or by an
LRA
having jurisdiction, to demonstrate for each month of the Delivery
Period
the ability to deliver the Contract Quantity from each Unit to the
CAISO
Controlled Grid for the minimum hours required to qualify as RA Capacity,
and providing information requested by the CPUC, CAISO or other
Governmental Body having jurisdiction to administer RAR or LAR to
demonstrate that the Contract Quantity can be delivered to the CAISO
Controlled Grid, pursuant to "deliverability" standards established
by the
CAISO, or other Governmental Body having jurisdiction to administer
RAR
and/or LAR; and
|
| (b) |
Negotiating
in good faith to make necessary amendments, if any, to this Confirmation
to conform this Transaction to subsequent clarifications, revisions
or
decisions rendered by the CPUC, FERC, or other Governmental Body
having
jurisdiction to administer RAR or LAR, so as to maintain the benefits
of
the bargain struck by the Parties.
|
| 8.2 |
Seller
represents, warrants and covenants to Buyer that, throughout the
Delivery
Period:
|
| (a) |
Seller
owns or has the exclusive right to the RA Capacity sold under this
Confirmation from each Unit, and shall furnish Buyer, CAISO, CPUC
or other
jurisdictional LRA, or other Governmental Body with such evidence
as may
reasonably be requested to demonstrate such ownership or exclusive
right;
|
| (b) |
No
portion of the Contract Quantity has been committed by Seller to
any third
party in order to satisfy RAR or LAR or analogous obligations in
CAISO
markets, other than pursuant to an RMR Agreement between the CAISO
and
either Seller or the Unit’s owner or
operator;
|
| (c) |
No
portion of the Contract Quantity has been committed by Seller in
order to
satisfy RAR or LAR, or analogous obligations in any non-CAISO
market;
|
| (d) |
Each
Unit is connected to the CAISO Controlled Grid, is within the CAISO
Control Area, and is under the control of CAISO;
|
| (e) |
In
the event Seller has rights to the energy output of any Unit, and
Seller
or the Unit’s Scheduling Coordinator schedules energy from the Unit for
export from the CAISO Control Area, or commits energy to another
entity in
a manner that could result in scheduling energy from the Unit for
export
from the CAISO Control Area, it shall do so only as allowed by, and
in
accordance with, Applicable Laws and such exports may, if allowed
by the
Tariff, be curtailed by the CAISO;
|
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
12
| (f) |
The
owner or operator of each Unit is obligated to maintain and operate
each
Unit using "Good Utility Practice," as defined in the Tariff, and,
if
applicable, General Order 167 as outlined by the CPUC in the Enforcement
of Maintenance and Operation Standards for Electric Generating Facilities
Adopted May 6, 2004, and is obligated to abide by all Applicable
Laws in
operating such Unit, provided
that the owner or operator of any Unit is not required to undertake
capital improvements, facility enhancements, or the construction
of new
facilities;
|
| (g) |
The
owner or operator of each Unit is obligated to comply with Applicable
Laws, including the Tariff, relating to RA Capacity, RAR and
LAR;
|
| (h) |
If
Seller is the owner of any Unit, the aggregation of all amounts of
LAR
Attributes and RAR Attributes that Seller has sold, assigned or
transferred for any Unit does not exceed that Unit’s RA
Capacity;
|
| (i) |
With
respect to the RA Capacity provided under this Confirmation, Seller
shall,
and each Unit’s SC is obligated to, comply with Applicable Laws, including
the Tariff, relating to RA Capacity, RAR and LAR;
|
| (j) |
Seller
has notified the SC of each Unit that Seller has transferred the
Designated RA Capacity to Buyer, and the SC is obligated to deliver
the
Supply Plans in accordance with the Tariff;
and
|
| (k) |
Seller
has notified each Unit’s SC that Buyer is entitled to the revenues set
forth in Section 4.6
of
this Confirmation, and such SC is obligated to promptly deliver those
revenues to Buyer, along with appropriate documentation supporting
the
amount of those revenues.
|
ARTICLE
9
CONFIDENTIALITY
The
Parties agree that Buyer may disclose the transfer of the Designated RA Capacity
under this Transaction to any Governmental Body, the CPUC, the CAISO or any
LRA
having jurisdiction in order to support its LAR or RAR Showings, if applicable,
and Seller may disclose the transfer of the Designated RA Capacity under this
Transaction to the SC of each Unit in order for such SC to timely submit
accurate Supply Plans; provided, that each disclosing Party shall, to the extent
reasonable, use reasonable efforts to limit the ability of any such applicable
Governmental Body, CAISO, LRA or SC to further disclose such information;
provided further, that the Parties agree and acknowledge that Buyer and Seller
are parties to a currently effective RA Marketing Services Agreement and,
pursuant to that RA Marketing Services Agreement, Buyer may make such
disclosures to effectuate the purposes of that RA Marketing Services Agreement
as Buyer may deem commercially necessary in the exercise of Buyer’s sole
discretion. Except as otherwise expressly provided herein, neither Party shall
disclose the terms or conditions of this Confirmation Agreement to a third
party
(other than the Party’s employees, lenders, counsel, accountants or advisors who
have a need to know such information and have agreed to keep such terms
confidential) except in order to comply with any applicable law, regulation,
or
any exchange, control area or independent system operator rule or in connection
with any court or regulatory proceeding; provided, however, each Party shall,
to
the extent practicable, use reasonable efforts to prevent or limit the
disclosure. The Parties shall be entitled to all remedies available at law
or in
equity to enforce, or seek relief in connection with, this confidentiality
obligation.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
13
ARTICLE
10
BUYER’S
RE-SALE OF PRODUCT
(a) Bu
Buyer
may
re-sell all or a portion of the Product delivered to Buyer hereunder without
Seller’s consent.
ARTICLE
11
CALIFORNIA
CLIMATE ACTION REGISTRY
In
accordance with CPUC Rulemaking 00-00-000, upon modification of the protocols
of
the California Climate Action Registry to allow generation facility-specific
registration, Seller or Seller’s supplier shall promptly (i) register with the
California Climate Action Registry and (ii) send Buyer notice of such
registration.
ARTICLE
12
CREDIT
REQUIREMENTS
| 12.1. |
Credit
Assurances to Buyer. As of the execution date of this agreement,
Buyer is
not requiring Performance Assurance of the Seller. If Buyer has reasonable
grounds for insecurity regarding the performance of any obligation
(whether or not then due) by Seller, Buyer will provide Seller with
written notice requesting Performance Assurance in an amount determined
by
Buyer in a commercially reasonable manner that may not exceed [***]
of the
remaining Monthly RA Capacity Payments during the Delivery Period.
Upon
receipt of such notice, Seller shall have [***] to remedy the situation
by
providing such Performance Assurance to Buyer. In the event that
Seller
fails to provide such Performance Assurance, or a guaranty or other
credit
assurance acceptable to Buyer within ten days of receipt of notice,
then
an Event of Default under Article Thirteen of this Confirmation Agreement
will be deemed to have occurred and Buyer will be entitled to the
remedies
set forth in Article Thirteen of this Confirmation
Agreement.
|
| 12.2. |
Downgrade
Events Affecting Seller. If at any time there shall occur a Downgrade
Event in respect of Seller, then Buyer may require Seller to provide
Performance Assurance in an amount determined by Buyer in a commercially
reasonable manner. In the event Seller shall fail to provide Buyer
with
such Performance Assurance or a guaranty or other credit assurance
acceptable to Buyer within three business days of receipt of notice,
then
an Event of Default shall be deemed to have occurred and Buyer will
be
entitled to the remedies set forth in Article Thirteen of this
Confirmation Agreement.
|
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
14
| 12.3. |
Credit
Assurances to Seller. As of the execution date of this agreement,
Seller
is not requiring Performance Assurance of the Buyer. If Seller has
reasonable grounds for insecurity regarding the performance of any
obligation (whether or not then due) by Buyer, Seller will provide
Buyer
with written notice requesting Performance Assurance in an amount
determined by Seller in a commercially reasonable manner that may
not
exceed [***] of the remaining Monthly RA Capacity Payments during
the
Delivery Period. Upon receipt of such notice, Buyer shall have [***]
to
remedy the situation by providing such Performance Assurance to Seller.
In
the event that Buyer fails to provide such Performance Assurance,
or a
guaranty or other credit assurance acceptable to Seller within ten
days of
receipt of notice, then an Event of Default under Article Thirteen
of this
Confirmation Agreement will be deemed to have occurred and Seller
will be
entitled to the remedies set forth in Article Thirteen of this
Confirmation Agreement.
|
| 12.4. |
Downgrade
Events Affecting Buyer. If at any time there shall occur a Downgrade
Event
in respect of Buyer, then Seller may require Buyer to provide Performance
Assurance in an amount determined by Seller in a commercially reasonable
manner. In the event Buyer shall fail to provide Seller with such
Performance Assurance or a guaranty or other credit assurance acceptable
to Seller within [***] of receipt of notice, then an Event of Default
shall be deemed to have occurred and Seller will be entitled to the
remedies set forth in Article Thirteen of this Confirmation
Agreement.
|
ARTICLE
13
EARLY
TERMINATION
| 13.1 |
Events
of Default.
|
An
“Event
of Default” shall mean, with respect to a Party (a “Defaulting Party”), the
occurrence of any of the following:
| (a) |
The
failure to make, when due, any payment required pursuant to this
Agreement
if such failure is not remedied within [***] after written
notice;
|
| (b) |
Any
representation or warranty made by such Party herein is false or
misleading in any material respect when made or when deemed made
or
repeated;
|
| (c) |
The
failure to perform any material covenant or obligation set forth
in this
Agreement (except to the extent constituting a separate Event of
Default
and except for such Party’s obligations to deliver or receive the Product,
the exclusive remedy for which is provided in Article 5) if such
failure
is not remedied within [***] after written
notice;
|
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
15
| (d) |
Such
Party becomes bankrupt;
|
| (e) |
The
failure of such Party to satisfy the creditworthiness requirements
of
Article 12 hereof; or
|
| (f) |
Such
Party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all of its assets to, another entity
and,
at the time of such consolidation, amalgamation, merger or transfer,
the
resulting, surviving or transferee entity fails to assume all the
obligations of such Party under this Agreement to which it or its
predecessor was a party by operation of law or pursuant to an agreement
reasonably satisfactory to the other
Party.
|
| 13.2 |
Declaration
of an Early Termination Date and Calculation of Settlement
Amounts.
|
If
an
Event of Default with respect to a Defaulting Party shall have occurred and
be
continuing, the other Party (the “Non-Defaulting Party”) shall have the right
(i) to designate a day, no earlier than the day such notice is effective and
no
later than [***]
after
such notice is effective, as an early termination date (“Early Termination
Date”) to accelerate all amounts owing between the Parties and to liquidate and
terminate all, but not less than all, Transactions due (each referred to as
a
“Terminated Transaction”) between the Parties; (ii) withhold any payments due to
the Defaulting Party under this Agreement and (iii) suspend performance. The
Non-Defaulting Party shall calculate, in a commercially reasonable manner,
a
Settlement Amount for each 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, as soon thereafter as is reasonably
practicable).
| 13.3 |
Net
Out of Settlement Amounts.
|
The
Non-Defaulting Party shall aggregate all Settlement Amounts into a single amount
by: netting out (a) all Settlement Amounts that are due to the Defaulting Party,
plus, at the option of the Non-Defaulting Party, any cash or other form of
security then available to the Non-Defaulting Party pursuant to Article 12,
plus
any or all other amounts due to the Non-Defaulting Party under this Agreement
against (b) all Settlement Amounts that are due to the Non-Defaulting Party,
plus any or all other amounts due to the Non-Defaulting Party under this
Agreement, so that all such amounts shall be netted out to a single liquidated
amount (the “Termination Payment”) payable by one Party to the other. The
Termination Payment shall be due to or due from the Non-Defaulting Party as
appropriate.
| 13.4 |
Notice
of Payment of Termination
Payment.
|
As
soon
as practicable after a liquidation, notice shall be given by the Non-Defaulting
Party to the Defaulting Party of the amount of the Termination Payment and
whether the Termination Payment is due to or due from the Non-Defaulting Party.
The notice shall include a written statement explaining in reasonable detail
the
calculation of such amount. The Termination Payment shall be made by the Party
that owes it within [***] after such notice is effective.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
16
| 13.5 |
Disputes
with Respect to Termination
Payment.
|
If
the
Defaulting Party disputes the Non-Defaulting Party’s calculation of the
Termination Payment, in whole or in part, the Defaulting Party shall, within
[***] of receipt of Non-Defaulting Party’s calculation of the Termination
Payment, provide to the Non-Defaulting Party a detailed written explanation
of
the basis for such dispute; provided, however, that if the Termination Payment
is due from the Defaulting Party, the Defaulting Party shall first transfer
Performance Assurance to the Non-Defaulting Party in an amount equal to the
Termination Payment.
ARTICLE
14
PAYMENT
AND NETTING
| 14.1 |
Billing
Period.
|
The
calendar month shall be the standard period for all payments under this
Agreement. As soon as practicable after the end of each month, each Party will
render to the other Party an invoice for the payment obligations, if any,
incurred hereunder during the preceding month.
| 14.2 |
Timeliness
of Payment.
|
All
invoices under this Confirmation Agreement shall be due and payable in
accordance with each Party’s invoice instructions on or before the later of the
[***]. Each Party will make payments by electronic funds transfer, or by other
mutually agreeable method(s), to the account designated by the other Party.
Any
amounts not paid by the due date will be deemed delinquent and will accrue
interest at the Interest Rate, such interest to be calculated from and including
the due date to but excluding the date the delinquent amount is paid in full.
“Interest Rate” means, for any date, the lesser of (a) the per annum rate of
interest equal to the prime lending rate as may from time to time be published
in The Wall Street Journal under “Money Rates” on such day (or if not published
on such day on the most recent preceding day on which published), plus two
percent (2%) and (b) the maximum rate permitted by applicable law.
| 14.3 |
Disputes
and Adjustments of Invoices.
|
A
Party
may, in good faith, dispute the correctness of any invoice or any adjustment
to
an invoice, rendered under this Confirmation Agreement (or otherwise) or adjust
any invoice for any arithmetic or computational error within twelve (12) months
of the date the invoice, or adjustment to an invoice, was rendered. In the
event
an invoice or portion thereof, or any other claim or adjustment arising
hereunder, is disputed, payment of the undisputed portion of the invoice shall
be required to be made when due, with notice of the objection given to the
other
Party. Any invoice dispute or invoice adjustment shall be in writing and shall
state the basis for the dispute or adjustment. Payment of the disputed amount
shall not be required until the dispute is resolved. Upon resolution of the
dispute, any required payment shall be made within [***] of such resolution
along with interest accrued at the Interest Rate from and including the due
date
to but excluding the date paid. Inadvertent overpayments shall be returned
upon
request or deducted by the Party receiving such overpayment from subsequent
payments, with interest accrued at the Interest Rate from and including the
date
of such overpayment to but excluding the date repaid or deducted by the Party
receiving such overpayment. Any dispute with respect to an invoice is waived
unless the other Party is notified in accordance with this Section 14(c) within
twelve (12) months after the invoice is rendered or any specific adjustment
to
the invoice is made. If an invoice is not rendered within twelve (12) months
after the close of the month during which performance of a transaction occurred,
the right to payment for such performance is waived.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
17
| 14.4 |
Netting
of Payments.
|
The
Parties hereby agree that they shall discharge mutual debts and payment
obligations due and owing to each other on the same date pursuant to all
transactions through netting, in which case all amounts owed by each Party
to
the other Party for the purchase and sale of Products during the monthly billing
period under this Confirmation Agreement, including but not limited to any
related damages calculated pursuant Article 5, interest, and payments or
credits, shall be netted so that only the excess amount remaining due shall
be
paid by the Party who owes it.
| 14.5 |
Payment
Obligation Absent Netting.
|
If
no
mutual debts or payment obligations exist and only one Party owes a debt or
obligation to the other during the monthly billing period, including, but not
limited to, any related damage amounts calculated pursuant to Article 5,
interest, and payments or credits, that Party shall pay such sum in full when
due.
ARTICLE
15
LIMITATION
OF REMEDIES, LIABILITY AND DAMAGES
EXCEPT
AS SET FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A
PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE
PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED
IN
THIS CONFIRMATION AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH
OF
ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED,
SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE
REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION
AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY
OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY
SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES
SHALL
BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR
IN
EQUITY ARE WAIVED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY
PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS
HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO
THE
CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE
EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR
LOSS.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
18
ARTICLE
16
AUDIT
Each
Party has the right, at its sole expense and during normal working hours, to
examine the records of the other Party to the extent reasonably necessary to
verify the accuracy of any statement, charge or computation made pursuant to
this Confirmation Agreement. If requested, a Party shall provide to the other
Party statements evidencing the quantity delivered at the Delivery Point. If
any
such examination reveals any inaccuracy in any statement, the necessary
adjustments in such statement and the payments thereof will be made promptly
and
shall bear interest calculated at the Interest Rate from the date the
overpayment or underpayment was made until paid; provided, however, that no
adjustment for any statement or payment will be made unless objection to the
accuracy thereof was made prior to the lapse of twelve (12) months from the
rendition thereof, and thereafter any objection shall be deemed
waived.
ARTICLE
17
TITLE
AND RISK OF LOSS
Title
to
and risk of loss related to the Product shall transfer from Seller to Buyer
at
the Delivery Point. Seller warrants that it will deliver to Buyer the Contract
Quantity of the Product free and clear of all liens, security interests, claims
and encumbrances or any interest therein or thereto by any person arising prior
to the Delivery Point.
ARTICLE
18
ASSIGNMENT
Neither
Party shall assign this Agreement or its rights hereunder without the prior
written consent of the other Party, which consent may be withheld in the
exercise of its sole discretion; provided, however, either Party may, without
the consent of the other Party (and without relieving itself from liability
hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement or
the
accounts, revenues or proceeds hereof in connection with any financing or other
financial arrangements, (ii) transfer or assign this Agreement to an affiliate
of such Party which affiliate’s creditworthiness is equal to or higher than that
of such Party, or (iii) transfer or assign this Agreement to any person or
entity succeeding to all or substantially all of the assets whose
creditworthiness is equal to or higher than that of such Party; provided,
however, that in each such case, any such assignee shall agree in writing to
be
bound by the terms and conditions hereof and so long as the transferring Party
delivers such tax and enforceability assurance as the non-transferring Party
may
reasonably request.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
19
ARTICLE
19
GOVERNING
LAW
THIS
AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY
WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT.
ARTICLE
20
FORWARD
CONTRACT
The
Parties acknowledge and agree that this Confirmation Agreement constitutes
a
“forward contract” within the meaning of the United States Bankruptcy
Code.
ARTICLE
21
ADDITIONAL
COVENANTS OF THE SELLER
As
of the
Effective Date, Seller makes the warranties and representations set forth
below:
|
a.
|
Seller’s
Specified Resource(s) are duly licensed and certificated by all applicable
jurisdictional regulatory agencies and bodies. Seller has filed all
required notices and requests to the applicable agencies to transfer
ownership of all required licenses and permits to Seller from the
prior
owner of the Specific Resources, and as such will hold the necessary
authorities to participate in the CAISO markets prior to the commencement
of the Delivery Period.
|
|
b.
|
Seller
meets the credit requirements necessary to participate in the CAISO
markets.
|
|
c.
|
The
Contract Quantity is owned or controlled by Seller for each Specified
Resource specified above.
|
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
20
|
d.
|
The
Specified Resource(s) has(have) been registered with and/or certified
by
the CPUC and/or by the CAISO as deliverable to the Delivery Location(s);
provided, that if the Specified Resource(s) is(are) are not so registered
and/or certified, Seller will take all reasonable steps to assure
that the
Specified Resource(s) is(are) registered and/or certified prior to
the
commencement of the Delivery Period in the amount no less than the
Contract Quantity of Capacity sold under this Confirmation
Agreement.
|
|
e.
|
The
Contract Quantity of RA Capacity sold under this Confirmation Agreement
shall remain unencumbered by any other sale, any assignment, or any
rights
conferred to any party other than the
Buyer.
|
|
f.
|
Seller
shall not commit any portion of the Contract Quantity, including
but not
limited to the sale or scheduling of firm energy to any party outside
the
CAISO control area, until all obligations to Buyer and/or CAISO under
the
contract and/or the CAISO tariffs have been met or are
extinguished.
|
ARTICLE
22
MUTUAL
COOPERATION TO PRESERVE THE BENEFITS OF THE BARGAIN
Where
necessary to modify this Confirmation Agreement to conform its terms and
conditions to changes in circumstances or regulations affecting the benefits
of
the bargain struck by the Parties, the Parties agree to negotiate in good faith
to modify this Confirmation Agreement so as to address such circumstances or
regulations while preserving the benefits of the bargain struck by the
Parties.
ARTICLE
23
MOBILE-SIERRA
Absent
the agreement of all Parties to the proposed change, the standard of review
for
changes to any portion of this Confirmation Agreement entered into hereunder
proposed by a Party, a non-party, or the Federal Energy Regulatory Commission
acting sua sponte, shall be the “public interest” standard of review set forth
in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 000 X.X. 000 (1956)
and
Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the
“Mobile-Sierra” doctrine).
The
Parties further agree that, if and to the extent that FERC should after the
Effective Date adopt any law, rule or regulation which requires that, in order
to exclude application of the “just and reasonable” standard under Sections 205
and 206 of the Federal Power Act, the Parties must agree to language which
varies from that set forth in clause (a) immediately above, then, without
further action of either Party, such Section shall be deemed amended to
incorporate the specific language adopted by FERC that requires the “public
interest” standard of review.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
21
ARTICLE
24
ARBITRATION
Any
claim, counterclaim, demand, cause of action, dispute, or controversy arising
out of or relating to this Agreement or the relationship established by this
Agreement, any provision hereof, the alleged breach thereof, or in any way
relating to the subject matter of this Agreement, involving the Parties and/or
their respective representatives (for purposes of this Section 22 only,
collectively the "Claims"), even though some or all of such Claims allegedly
are
extra-contractual in nature, whether such Claims sound in contract, tort, or
otherwise, at law or in equity, under state or federal law, whether provided
by
statute or the common law, for damages or any other relief, shall be resolved
by
binding arbitration. Arbitration shall be conducted in accordance with the
rules
of the Commercial Arbitration Rules of the American Arbitration Association.
The
validity, construction, and interpretation of this agreement to arbitrate,
and
all procedural aspects of the arbitration conducted pursuant hereto shall be
decided by the arbitrators. In deciding the substance of the Parties' Claims,
the arbitrators shall refer to the governing law identified in this Confirmation
Agreement. It is agreed that the arbitrators shall have no authority to award
treble, exemplary or punitive damages of any type under any circumstances
whether or not such damages may be available under state or federal law, or
under the Federal Arbitration Act, or under the Commercial Arbitration Rules
of
the American Arbitration Association, the Parties hereby waiving their right,
if
any, to recover any such damages. The arbitrators may award only direct
compensatory damages. The arbitration proceeding shall be conducted in New
York,
New York. Within twenty (20) days of the notice of initiation of the arbitration
procedure, the respondent shall file a response in writing. Within thirty (30)
days after the response, each party shall select one arbitrator. Within twenty
(20) days thereafter, the two (2) arbitrators shall select a third arbitrator.
All three arbitrators are required to be neutral and impartial and shall take
an
oath at the first session of the arbitration affirming same. None of the three
arbitrators shall have business, professional or social relationships with
any
of the Parties. However, upon full disclosure of such relationships, all parties
may agree that the arbitrator may serve as an arbitrator. The arbitration shall
proceed within sixty (60) days after the appointment of the last of the three
arbitrators. The arbitrators shall render their decision (by majority rule)
within twenty (20) days after the conclusion of the arbitration. New York law
shall apply to the subject matter of the arbitration. To the fullest extent
permitted by law, the arbitration and the award resulting from the arbitration
shall be maintained in confidence by the Parties and the
arbitrators.
This
Confirmation Agreement shall only be effective when executed by both
Parties.
[***]
Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
22
IN
WITNESS WHEREOF, the Parties have caused this Confirmation Agreement to be
fully
executed as of the date first written above.
| MMC Energy North America, LLC. | Occidental Power Services, Inc. | ||
| Per: /s /Xxxxx Xxxxxx | Per: /s/ Xxxxx Xxxxxxx, Xx. | ||
|
Name/Title: Xxxxx
Xxxxxx, Chief Financial Officer
|
|
||
| Date: January 26, 2007 | Date: January 26, 2007 |
[***]
Confidential information has been omitted and
filed separately with the Securities and Exchange Commission pursuant to a
confidential treatment request.
23
