Exhibit 10.2
AMENDMENT TO THE
POWER PURCHASE AGREEMENT
BETWEEN
XXXXX POWER PARTNERS, L.P.
AND
PACIFIC GAS AND ELECTRIC COMPANY
(PG&E LOG NO. 16C047)
THIS AMENDMENT ("Amendment") is by and between PACIFIC GAS AND ELECTRIC
COMPANY ("PG&E"), a California corporation and Xxxxx Power Partners, L.P., a
California limited partnership ("Seller"). PG&E and Seller are sometimes
referred to herein individually as "Party" and collectively as the "Parties"
RECITALS
A. On April 15, 1985, Seller (or Seller's predecessor, as applicable) and
entered into a Power Purchase Agreement, (as amended, "the PPA") pursuant to
which PG&E purchases electric power from Seller and Seller sells electric power
to PG&E.
B. On April 6, 2001, PG&E filed voluntary petition under chapter 11 of the
United States Bankruptcy Code in the San Francisco Division of the United States
Bankruptcy Court for the Northern District of California (the "Bankruptcy
Court") (In re Pacific Gas and Electric Company, Banks. Case No. 01-03923).
C. On June 14, 2001, the Commission issued D.00-00-000, which approved as
reasonable certain non-standard PPA price modifications.
D. Seller and PG&E now desire to enter into the PPA price modification set
forth below. Seller has advised PG&E that Seller is unable to enter into the
PPA price modification unless the Bankruptcy Court has approved this Amendment
and Seller is provided a limited option to terminate this Amendment following
Bankruptcy Court approval if Seller is unable to
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Arrange for fuel purchases to accommodate the price modification contemplated
under this Amendment.
AMENDMENT
In consideration of the mutual promises and covenants contained herein,
PG&E and Seller agree to as follows:
1. INTERIM ENERGY PRICE
Unless otherwise set fourth in the PPA, for the period commencing with the
date on which this Amendment has been executed by the Parties and ending upon
the commencement of the Fixed Rate Period, as defined in Section 2 below, the
price for energy delivered, if any, to PG&E by Seller shall be determined
pursuant to the PPA, without reference to this Amendment.
2. FIXED ENERGY PRICE
Commencing with this date that is the earlier of, August 1, 2001, August
16, 2001 or September 1, 2001 following approval of the Bankruptcy Court as
specified in Section 4 below (hereafter, the "Bankruptcy Court Approval Date")
and ending on July 15, 2006 (this period referred to hereafter as the "Fixed
Rate Period"), Seller elects to replace the energy price term specified in the
PPA (PG&E's "full short-run avoided costs" or "full short-run avoided operating
costs" as the case may be) with the applicable energy prices as specified in
Attachment A. No provision of the PPA other than the energy price term is or
shall be deemed to be modified, amended, waived or otherwise affected by this
Amendment. The parties agree to reasonably cooperate and contest any challenge
in any Commission proceeding that seeks to alter or modify the energy pricing
terms set fourth in Attachment A, including, but not limited to any challenge to
the reasonableness of PG&E having entered into this Amendment.
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3. SELLER'S OPTION PERIOD
For a fifteen-day period following the Bankruptcy Court Approval Date,
Seller shall have the sole right to terminate this Amendment. Upon termination
of this Amendment pursuant to this section 3, this Amendment shall be deemed a
nullity.
4. EFFECTIVENESS
This Amendment shall not become effective unless and until it has been
approved by the Bankruptcy Court. If the Bankruptcy Court has not approved this
Amendment by August 31, 2001, this Amendment shall be deemed a nullity.
5. SIGNATURES
IN WITNESS WHEREOF, Seller and PG&E have caused this Amendment to be
executed by their authorized representatives.
PACIFIC GAS AND ELECTRIC COMPANY
a California corporation
By: [illegible]
-------------------------
Title: [illegible]
-------------------------
Date: 7/14/01
-------------------------
XXXXX POWER PARTNERS, L.P.
a California limited partnership
By: [illegible]
-------------------------
Title: Ex VP & COO
-------------------------
Date: 7/13/01
-------------------------
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Pacific Gas and Electric Company
June 1, 1993
[LOGO OMITTED] ALTAMONT COGENERATION CORPORATION
Attn: Xxx Xxxxxxx
c/o Wankesha-Xxxxxx
00000 Xxxxx Xxxx
XXXXXXX, XX 00000-0000
Dear Sir/Madam:
This is to notify you of a change of address for Article 9,
"Notices", of the Power Purchase Agreement (PPA) between PG&E
and Altamont Cogeneration Corporation. Please direct all
future written notices to:
Xx. Xxxxxxx X. Lavne
Director, Power Finance Department, B13D
Pacific Gas and Electric Company
00 Xxxxx Xxxxxx, Xxxx 0000
X.X. Xxx 000000 Xxx
Xxxxxxxxx, XX 00000
The address in the PPA relating to insurance matters has also
changed. All insurance certificates, endorsements.
cancellations, terminations, alterations, and material changes
of such insurance must be issued and submitted to the
following:
Pacific Gas and Electric Company
Power Contracts Department - B23C
Attn: Insurance Coordinator
X.X. Xxx 000000, Xxxx 0000
Xxx Xxxxxxxxx, XX 00000
CPUC Decision 00-00-000 dated April 7, 1993, adopted the
Division of Ratepayer Advocate's recommendation for modifying
the reporting requirements applicable to the quarterly report
of negative avoided cost or hydro spill. The above decision
ordered that: Decision (D) 00-00-000, Ordering Paragraph 17,
is modified to read in full as follows:
"Each utility shall promptly file a report for any
quarter in which a negative avoided cost or hydro
spill condition occurs."
Please inform all parties in your organization of the above
information. If you have any questions please call me at (415)
973-4966.
Sincerely,
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
Power System Analyst
(000)000-0000
PACIFIC GAS AND ELECTRIC COMPANY
STANDARD OFFER #4
POWER PURCHASE AGREEMENT
FOR
LONG-TERM ENERGY AND CAPACITY
Seller: Fayette Manufacturing Corporation
Location: Altamont Pass
Nameplate Rating: 6,500 kW
Firm Capacity: 5,700 kW
Energy Source: Natural Gas
MAY 1984
S.O #4
May 7, 1984
1
STANDARD OFFER #4:
LONG-TERM ENERGY AND CAPACITY
POWER PURCHASE AGREEMENT
CONTENTS
Article Page
------- ----
1 QUALIFYING STATUS 3
2 COMMITMENT OF PARTIES 4
3 PURCHASE OF POWER 5
4 ENERGY PRICE 6
5 CAPACITY ELECTION AND CAPACITY PRICE 10
6 LOSS ADJUSTMENT FACTORS 11
7 CURTAILMENT 11
8 RETROACTIVE APPLICATION OF CPUC ORDERS 12
9 NOTICES 12
10 DESIGNATED SWITCHING CENTER 13
11 TERMS AND CONDITIONS 13
12 TERM OF AGREEMENT 14
Appendix A: GENERAL TERMS AND CONDITIONS
Appendix B: ENERGY PAYMENT OPTIONS
Appendix C: CURTAILMENT OPTIONS
Appendix D: AS-DELIVERED CAPACITY
Appendix E: FIRM CAPACITY
Appendix F: INTERCONNECTION
2 S.O #4
May 7, 1984
LONG-TERM ENERGY AND CAPACITY
POWER PURCHASE AGREEMENT
BETWEEN
FAYETTE MANUFACTURING CORPORATION
AND
PACIFIC GAS AND ELECTRIC COMPANY
FAYETTE MANUFACTURING CORPORATION, a Pennsylvania corporation
("Seller"), and PACIFIC GAS AND ELECTRIC COMPANY ("PGandE"), referred to
collectively as "Parties" and individually as "Party", agree as follows:
ARTICLE 1 QUALIFYING STATUS
Seller warrants that, at the date of first power deliveries from
Seller's Facility' and during the term of agreement, its Facility shall
meet the qualifying facility requirements established as of the effective
date of this Agreement by the Federal Energy Regulatory Commission's rules
(18 Code of Federal Regulations 292) implementing the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C.A. 796, at seq.).
---------------
1 Underlining identifies those terms which are defined in Section S-1 of
Appendix A.
3 S.O #4
May 7, 1984
ARTICLE 2 COMMITMENT OF PARTIES
The prices to be paid Seller for energy and/or capacity delivered
pursuant to this Agreement have wholly or partly been fixed at the time of
execution. Actual avoided costs at, the time of energy and/or capacity
deliveries may be substantially above or below the prices fixed in this
Agreement. Therefore, the Parties expressly commit to the prices fixed in
this Agreement for the applicable period of performance and shall not seek
to or have a right to renegotiate such prices for any reason. As part of
its consideration for the benefit of fixing part or all of the energy
and/or capacity prices under this Agreement, Seller waives any and all
rights to judicial or other relief from its obligations and/or prices set
forth in Appendices B, D, and E, or modification of any other term or
provision for any reasons whatsoever.
This Agreement contains certain provisions which set forth methods of
calculating damages to be paid to PGandE in the event Seller fails to
fulfill certain performance obligations. The inclusion of such provisions
is not intended to create any express or implied right in Seller to
terminate this Agreement prior to the expiration of the term of agreement.
Termination of this Agreement by Seller prior to its expiration date shall
constitute a breach of this Agreement and the damages expressly set forth
in this
4 S.O #4
May 7, 1984
Agreement shall not constitute PGandE's sole remedy for such breach.
ARTICLE 3 PURCHASE OF POWER
(a) Seller shall sell and deliver and PGandE shall purchase and accept
delivery of capacity and energy at the voltage level of 115 kW.
(b) Seller shall provide capacity and energy from its 6,500 kW
Facility located in the Altamont Pass.
(c) The scheduled operation date of the Facility is February 1, 1987.
At the end of each calendar quarter Seller shall give written notice to
PGandE of any change in the scheduled operation date.
(d) To avoid exceeding the physical limitations of the interconnection
facilities, Seller shall limit the Facility's actual rate of delivery into
the PGandE system to 6,500 kW.
(e) The primary energy source for the Facility is natural gas.
5 S.O #4
May 7, 1984
(f) If Seller does not begin construction of its Facility by November
30, 1986, PGandE may reallocate the existing capacity on PGandE's
transmission and/or distribution system which would have been used to
accommodate Seller's power deliveries to other uses. In the event of such
reallocation, Seller shall pay PGandE for the cost of any upgrades or
additions to PGandE's system necessary to accommodate the output from the
Facility. Such additional facilities shall be installed, owned and
maintained in accordance with the applicable PGandE tariff.
(g) The transformer loss adjustment factor is ____________1
ARTICLE 4 ENERGY PRICE
PGandE shall pay Seller for its surplus energy output2 under the
energy payment option checked below3:
X Energy Payment Option 1 - Forecasted Energy Prices
-
-----------------
1 If Seller chooses to have meters placed on Seller's side of the
transformer, an estimated transformer loss adjustment factor of 2
percent, unless the Parties agree otherwise, will be applied. This
estimated transformer loss figure will be adjusted to a measurement of
actual transformer losses performed at Seller's request and expense.
In addition, a line loss percentage to the low side meter will be
determined by the Parties and added to the transformer loss adjustment
factor.
2 Insert either "net energy output" or "surplus energy output" to show
the energy sale option selected by Seller.
3 Energy Payment option 2 is not available to oil or gas-fired
cogenerators.
6 S.O #4
May 7, 1984
During the fixed price period, Seller shall be paid for energy
delivered at prices equal to 01 percent of the prices set forth in Table
B-1, Appendix B, plus 1002 percent of PGandE's full short-run avoided
operating costs.
For the remaining years of the term of agreement, Seller shall be paid
for energy delivered at prices equal to PCandE's full short-run avoided
operating costs.
If Seller's Facility is not an oil or gas-fired cogeneration facility,
Seller may convert from Energy Payment Option 1 to Energy Payment option 2
and be subject to the conditions therein, provided that Seller shall not
change the percentage of energy prices to be based on PGandE's full
short-run avoided operating costs. Such conversion must be made at least 90
days prior to the date of initial energy deliveries and must be made by
written notice in accordance with Section A-17, Appendix A.
_____ Energy Payment Option 2 - Levelized Energy Prices
-----------------
(1) Insert either 0, 20, 40, 60, 80, or 100, at Seller's option. If
Seller's Facility is an oil or gas-fired cogeneration facility, either
0 or 20 must be inserted.
(2) Insert the difference between 100 and the percentage selected under
footnote 1 above.
7 S.O #4
May 7, 1984
During the fixed price period, Seller shall be paid for energy
delivered at prices equal to ________ 1 percent of the levelized energy
prices set forth in Table B-2, Appendix B for the year in which energy
deliveries begin and term of agreement, plus ___________2 percent of
PGandE's full short-run avoided operating costs. During the fixed price
period, Seller shall be subject to the conditions and terms set forth in
Appendix B, Energy Payment Option 2.
For the remaining years of the term of agreement, Seller shall be paid
for energy delivered at prices equal to PGandE's full short-run avoided
operating costs.
Seller may convert from Energy Payment Option 2 to Energy Payment Option 1,
provided that Seller shall not change the percentage of energy prices to be
based on PGandE's full short-run avoided operating costs. Such conversion must
be made at least 90 days prior to the date of initial energy deliveries and must
be made by written notice in accordance with Section A-17, Appendix A.
-----------------
1 Insert either 20, 40, 60, 80, or 100, at Seller's option.
2 Insert the difference between 100 and the percentage selected under
footnote 1 above.
8 S.O #4
May 7, 1984
_____ Energy Payment Option 3 - Incremental Energy Rate
Beginning with the date of initial energy deliveries and continuing
until ______________1, seller shall be paid monthly for energy delivered at
prices equal to PGandE's full short-run avoided operating costs, provided
that adjustments shall be made annually to the extent set forth in Appendix
B, Energy Payment Option 3.
The incremental Energy Rate Band widths specified by Seller in Table I
below shall be used in determining the annual adjustment, if any.
Table I
-------
Year Incremental Energy Rate Band Widths
---- -----------------------------------
(must be multiples of 100 or zero)
1984 -------------
1985 -------------
1986 -------------
1987 -------------
1988 -------------
1989 -------------
1990 -------------
1991 -------------
1992 -------------
1993 -------------
1994 -------------
1995 -------------
1996 -------------
1997 -------------
1998 -------------
-----------------
1 Specified by Seller must be December 31, 1998 or prior.
9
S.O #4
May 7, 1984
After __________, Seller shall be paid to: energy delivered at prices
equal to PGandE's full short-run, avoided operating costs.
ARTICLE 5 CAPACITY ELECTION AND CAPACITY PRICE
Seller may elect to deliver either firm capacity or as-delivered
capacity, and Seller's election is indicated below. PGandE's prices fox
firm capacity and as-delivered capacity die derived from PGandE's full
avoided costs as approved by the CPUC.
X Firm capacity - 5,700 kW for 30 years from the firm capacity
availability date with payment determined in accordance with
Appendix E. Except for hydro- electric facilities, PGandE shall
pay Seller for capacity delivered in excess of firm capacity on
an as-delivered capacity basis in accordance with As-Delivered
Capacity Payment Option 1 set forth in Appendix D.
OR
__ As-delivered capacity with payment determined in accordance with
As-Delivered Capacity Payment Option set forth in Appendix D.
10 S.O #4
May 7, 1984
ARTICLE 6 LOSS ADJUSTMENT FACTORS
Capacity Loss Adjustment Factors shall be as shown in Appendix D and
Appendix E, dependent upon Seller's capacity election set forth in Article
5 of this Agreement.
Energy Loss Adjustment Factors shall be considered as unity for all
energy payments related to Energy Payment Options I and 2 set forth in
Appendix B for the entire fixed price period of this Agreement, except for
the percentage of' payments that Seller elected in Article 4 to have
calculated based on PGandE's full short-run avoided operating costs. Energy
Loss Adjustment Factors for all payments related to PGandE's full short-run
avoided operating costs are subject to CPUC rulings for the entire term of
agreement.
ARTICLE 7 CURTAILMENT
Seller has two options regarding possible curtailment by PGandE of
Seller's deliveries, and Seller's selection is indicated below:
X Curtailment Option A - Hydro Spill and Negative Avoided Cost
--
__ Curtailment Option B - Adjusted Price Period
The two options are described in Appendix C.
11 S.O #4
May 7, 1984
ARTICLE 8 RETROACTIVE APPLICATION OF CPUC ORDERS
Pursuant to Ordering Paragraph l (f) of CPUC Decision No. 00-00-000
(September 7, 1983), after the effective date of the CPUC's Application
B2-03-26 decision relating to line loss factors, Seller has the option to
retain the relevant terms of this Agreement or have the results of that
decision incorporated into this Agreement. To retain the terms herein,
Seller shall provide written notice to PGandE within 30 days after the
effective date of the relevant CPUC decision on Application 82-03-26.
Failure to provide such notice will result in the amendment of this
Agreement to comply with that decision.
As soon as practicable following the issuance of a decision in
Application 82-03-26, PGandE shall notify Seller of the effective date
thereof and its results.
ARTICLE 9 NOTICES
All written notices shall be directed as follows:
To PGandE: Pacific Gas and Electric Company
Attention: Vice President -
Electric Operations
00 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
12 S.O #4
May 7, 1984
To Seller: Fayette Manufacturing Corporation
Attention: Xxxxxx X. Xxxxx
X.X. Xxx 0000
Xxxxx, XX 00000
ARTICLE 10 DESIGNATED SWITCHING CENTER
The designated PGandE switching center shall be, unless changed by
PGandE:
Tesla Substation
Xxxxxxxxx Xxxx Xxxx
Xxxxx, XX 00000
(000)000-0000
ARTICLE 11 TERMS AND CONDITIONS
This Agreement includes the following appendices which are attached
and incorporated by reference:
Appendix A - GENERAL TERMS AND CONDITIONS
Appendix B - ENERGY PAYMENT OPTIONS
Appendix C - CURTAILMENT OPTIONS
Appendix D - AS-DELIVERED CAPACITY
Appendix E - FIRM CAPACITY
Appendix F - INTERCONNECTION
13 S.O #4
May 7, 1984
Article 12 TERM OF AGREEMENT
This Agreement shall be binding upon execution and remain in effect
thereafter for 30 years' from the firm capacity availability date2;
provided, however, that it shall terminate if energy deliveries do not
start within five years of the execution date.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized representatives- and it is effective
as of the last date set forth below.
FAYETTE MANUFACTURING CORPORATION PACIFIC GAS AND ELECTRIC COMPANY
BY:/s/ XXXX X. XXXXXXX BY: /s/ XXXXX X. XXXXXX
------------------- -------------------
XXXX X. XXXXXXX XXXXX H. DIANES
Vice President -
TITLE: General Counsel TITLE: Planning and Research
DATE SIGNED: April 12, 1985 DATE SIGNED: 4/15/85
-------------- -------
------------
1 The minimum contract term is 15 years and the maximum contract
term is 30 years.
2 Insert "firm capacity availability date" if Seller has elected to
deliver firm capacity or "date of initial energy deliveries" if
Seller has elected to deliver as-delivered capacity.
14 S.O #4
May 7, 1984
APPENDIX A
GENERAL TERMS AND CONDITIONS
CONTENTS
Section Page
------- -----
A-1 DEFINITIONS X-0
X-0 XXXXXXXXXXXX X-0
X-0 OPERATION X-00
X-0 XXXXXXX X-00
X-0 XXXXXXXXXXX OF PAYMENTS X-00
X-0 XXXXXX TO RECORDS AND PGandE DATA X-00
X-0 XXXXXXXXXXXX XX XXXXXXXXXX X-00
X-0 FORCE MAJEURE X-00
X-0 XXXXXXXXX X-00
X-00 XXXXXXXXX; DEDICATION X-00
X-00 XXXXXXX XXXXXXXXXXX X-00
X-00 XXX-XXXXXX A-19
A-13 ASSIGNMENT X-00
X-00 XXXXXXXX X-00
X-00 XXXXXX OF LAWS X-00
X-00 XXXXXXXXXXXX XXXXXXXXXXXX AND A-20
AUTHORIZATION
A-17 NOTICES X-00
X-00 XXXXXXXXX X-00
X-0
XXXXXXXX A
GENERAL TERMS AND CONDITIONS
A-1 DEFINITIONS
Whenever used in this Agreement, appendices, and attachments hereto,
the following terms shall have the following meanings:
Adjusted firm capacity price - The $/kW-year purchase price for firm
capacity from Table E-2, Appendix E for the period of Seller's actual
performance.
As-delivered capacity - Capacity delivered to PGandE in excess of firm
capacity or in lieu of a firm capacity commitment.
CPUC - The Public Utilities Commission of the State of California.
Current firm capacity price - The $/kW-year capacity price from
PGandE's firm capacity price schedule effective at the time PGandE Berates
the firm capacity pursuant to Section E-4(b), Appendix E or Seller
terminates performance under this Agreement, for a term equal to the period
from the date of deration or termination to the end of the term of
agreement.
A-2
Designated PGandE switching center - That switching center or other
PGandE installation identified in Article 10.
Facility - That generation apparatus described in Article 3 and all
associated equipment owned, maintained, and operated by Seller.
Firm capacity - That capacity, if any, identified as firm in Article 5
except as otherwise changed as provided herein.
Firm capacity availability date - The day following the day during
which all features and equipment of the Facility are demonstrated to
PGandE's satisfaction to be capable of operating simultaneously to deliver
firm capacity continuously into PGandE's system as provided in this
Agreement.
Firm capacity price - The price for firm capacity applicable for the
firm capacity availability date and the number of years of firm capacity
delivery from the firm capacity price schedule, Table E-2, Appendix E.
A-3
Firm capacity price schedule - The periodically published schedule of
the $/kW-year prices that PGandE offers to pay for firm capacity. See Table
E-2, Appendix E.
Fixed price Period - The period during which forecasted or levelized
energy prices, and/or forecasted as-delivered Capacity prices, are in
effect; defined as the first five years of the term of agreement if the
term of agreement is 15 or 16 years; the first six years of the term of
agreement if the term of agreement is 17, 18, or 19 years; or the first ten
years of the term of agreement if the term of agreement is anywhere from 20
through 30 years.
Forced outage - Any outage resulting from a design defect, inadequate
construction, operator error or a breakdown of the mechanical or electrical
equipment that fully or partially curtails the electrical output of the
Facility.
Full short-run avoided operating costs - CPUC-approved costs which are
the basis of PGandE's published energy prices. PGandE's current energy
price calculation is shown in Table B-5, Appendix B. PGandE's published
off-peak hours' prices shall be adjusted, as appropriate, if Seller has
selected Curtailment Option B.
A-4
Interconnection facilities - All means required and apparatus
installed to interconnect and deliver power from the Facility to the PGandE
system including, but not limited, to, connection, transformation,
switching, metering, communications, and safety equipment, such as
equipment required to protect (1) the PGandE system and its customers from
faults occurring at the Facility, and (2) the Facility from faults
occurring on the PGandE system or on the systems of others to which the
PGandE system is directly or indirectly connected. Interconnection
facilities also include any necessary additions and reinforcements by
PGandE to the PGandE system required as a result of the interconnection of
the Facility to the PGandE system.
Net energy output - The Facility's gross output in kilowatt-hours less
station use and transformation and transmission losses to the point of
delivery into the PGandE system. Where PGandE agrees that it is impractical
to connect the station use on the generator side of the power purchase
meter, PGandE may, at its option, apply a station load adjustment.
Prudent electrical practices - Those practices, methods, and
equipment, as changed from time to time, that are commonly used in prudent
electrical engineering and operations to design and operate electric
equipment lawfully and with safety, dependability, efficiency, and economy.
A-5
Scheduled operation date - The day specified in Article 3 (c) when the
Facility is, by Seller's estimate, expected to produce energy that will be
available for delivery to PGandE.
Special facilities - Those additions and reinforcements to the PGandE
system which are needed to accommodate the maximum delivery of energy and
capacity from the Facility as provided in this Agreement and those parts of
the interconnection facilities which are owned and maintained by PGandE at
Seller's request, including metering and data processing equipment. All
special facilities shall be owned, operated, and maintained pursuant to
PGandE's electric Rule No. 21, which is attached hereto.
Station use - Energy used to operate the Facility's auxiliary
equipment. The auxiliary equipment includes, but is not limited to, forced
and induced draft fans, cooling towers, boiler feed pumps, lubricating oil
systems, plant lighting, fuel handling systems, control systems, and sump
pumps.
Surplus energy output - The Facility's gross output, in
kilowatt-hours, less station use, and any other use by Seller, and
transformation and transmission losses to the point of delivery into the
PGandE system.
A-6
Term of agreement - The number of years this Agreement will remain in
effect as provided in Article 12.
Voltage level - The voltage at which the Facility interconnects with
the PGandE system, measured at the point of delivery.
A-2 CONSTRUCTION
A-2.1 Land Rights
Seller hereby grants to PGandE all necessary rights of way and
easements, including adequate and continuing access rights on property of
Seller, to install, operate, maintain, replace, and remove the special
facilities. Seller agrees to execute such other grants, deeds, or documents
as PGandE may require to enable it to record such rights :of way and
easements. If any part of PGandE's equipment is to be installed on property
owned by other than Seller, Seller shall, at its own cost and expense,
obtain from the owners thereof all necessary rights of way and easements,
in a form satisfactory to PGandE, for the construction, operation,
maintenance, and replacement of PGandE's equipment upon such property. If
Seller is unable to obtain such rights of way and easements, Seller shall
A-7
reimburse PGandE for all costs incurred by PGandE in obtaining them. PGandE
shall at all times have the right of ingress to and egress from the
Facility at all reasonable hours for any purposes reasonably connected with
this Agreement or the exercise of any and all rights secured to PGandE by
law or its tariff schedules.
A-2.2 Design, Construction, Ownership, and Maintenance
(a) Seller shall design, construct, install, own, operate, and
maintain all interconnection facilities, except special facilities, to the
point of interconnection with the PGandE system as required for PGandE to
receive capacity and energy from the Facility. The Facility and
interconnection facilities shall meet all requirements of applicable codes
and all standards of prudent electrical practices and shall be maintained
in a safe and prudent manner. A description of the interconnection
facilities for which Seller is solely responsible is set forth in Appendix
F, or if the interconnection requirements have not yet been determined at
the time of the execution of this Agreement, the description of such
facilities will be appended to this Agreement at the time such
determination is made.
(b) Seller shall submit to PGandE the design and all specifications
for the interconnection facilities (except special facilities) and, at
PGandE's option, the Facility, for review and written acceptance prior to
A-8
their release for construction purposes. PGandE shall notify Seller in
writing of the outcome of PGandE's review of the design and specifications
for Seller's interconnection facilities (and the Facility, if requested)
within 30 days of the receipt of the design and all of the specifications
for the interconnection facilities (and the Facility, if requested). Any
flaws perceived by PGandE in the design and specifications for the
interconnection facilities (and the Facility, if requested) will be
described in PGandE's written notification. PGandE's review and acceptance
of the design and specifications shall not be construed as confirming or
endorsing the design and specifications or as warranting their safety,
durability, or reliability. PGandE shall not, by reason of such review or
lack of review, be responsible for strength, details of design, adequacy,
or capacity of equipment built pursuant to such design and specifications,
nor shall PGandE's acceptance be deemed to be an endorsement of any of such
equipment. Seller shall change the interconnection facilities as may be
reasonably required by PGandE to meet changing requirements of the PGandE
system.
(c) In the event it is necessary for PGandE to install interconnection
facilities for the purposes of this Agreement, they shall be installed as
special facilities.
A-9
(d) Upon the request of Seller, PGandE shall provide a binding
estimate for the installation of interconnection facilities by PGandE.
A-2.3 Meter Installation
(a) PGandE shall specify, provide, install, own, operate, and maintain
as special facilities all metering and data processing equipment for the
registration and recording of energy and other related parameters which are
required for the reporting of data to PGandE and for computing the payment
due Seller from PGandE.
(b) Seller shall provide, construct, install, own, and maintain at
Seller's expense all that is required to accommodate the metering and data
processing equipment, such as, but not limited to, metal-clad switchgear,
switchboards, cubicles, metering panels, enclosures, conduits, rack
structures, and equipment mounting pads.
(c) PGandE shall permit meters to be fixed on PGandE's side of the
transformer. If meters are placed on PGandE's side of the transformer,
service will be provided at the available primary voltage and no
transformer loss adjustment will be made. If Seller chooses to have meters
placed on Seller's side of the transformer, an estimated transformer loss
adjustment factor of 2 percent, unless the Parties agree otherwise, will be
applied.
X-00
X-0 XXXXXXXXX
A-3.1 Inspection and Approval
Seller shall not operate the Facility in parallel with PGandE's system
until an authorized PGandE representative has inspected the interconnection
facilities, and PGandE has given written approval to begin parallel
operation. Seller shall notify PGandE of the Facility's start-up date at
least 45 days prior to such date. PGandE shall inspect the interconnection
facilities within 30 days of the receipt of such notice. If parallel
operation is not authorized by PGandE, PGandE shall notify Seller in
writing within five days after inspection of the reason authorization for
parallel operation was withheld.
A-3.2 Facility Operation and Maintenance
Seller shall operate and maintain its Facility according to prudent
electrical practices, applicable laws, orders, rules, and tariffs and
shall provide such reactive power support as may be reasonably required by
PGandE to maintain system voltage level and power factor. Seller shall
operate the Facility at the power factors or voltage levels prescribed by
PGandE's system dispatcher or designated- representative. If Seller fails
to provide reactive power support, PGandE may do so at Seller's expense.
A-11
A-3.3 Point of Delivery
Seller shall deliver the energy at the point where Seller's electrical
conductors (or those of Seller's agent) contact PGandE's system as it shall
exist whenever the deliveries are being made or at such other point or
points as the Parties may agree in writing. The initial point of delivery
of Seller's power to the PGandE system is set forth in Appendix F.
A-3.4 Operating Communications
(a) Seller shall maintain operating communications with the designated
PGandE switching center. 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.
(b) Seller shall keep a daily operations log for each generating unit
which shall include information on unit availability, maintenance outages,
circuit breaker trip operations requiring a manual reset, and any
significant events related to the operation of the Facility.
(c) if Seller makes deliveries greater than one megawatt, Seller shall
measure and register on a graphic recording device power in kW and voltage
in kV at a location within the Facility agreed to by both Parties.
A-12
(d) If Seller makes deliveries greater than one and up to and
including ten megawatts, Seller shall report to the designated PGandE
switching center, twice a day at agreed upon times for the current day's
operation, the hourly readings in kW of capacity delivered and the energy
in kWh delivered since the last report.
(e) If Seller makes deliveries of greater than ten megawatts, Seller
shall telemeter the delivered capacity and energy information, including
real power in kW, reactive power in kVAR, and energy in kWh to a switching
center selected by PGandE. PGandE may also require Seller to telemeter
transmission kW, kVAR, and kV data depending on the number of generators
and transmission configuration. Seller shall provide and maintain the data
circuits required for telemetering. When telemetering is inoperative,
Seller shall report daily the capacity delivered each hour and the energy
delivered each day to the designated PGandE switching center.
A-3.5 Meter Testing and Inspection
(a) All meters used to provide data for the computation of the
payments due Seller from PGandE shall be sealed, and the seals shall be
broken only by PGandE when the meters are to be inspected, tested, or
adjusted.
A-13
(b) PGandE shall inspect and test all meters upon their installation
and annually thereafter. At Seller's request and expense, PGandE shall
inspect or test a meter more frequently. PGandE shall give reasonable
notice to Seller of the time when any inspection or test shall take place,
and Seller may have representatives present at the test or inspection. If a
meter is found to be inaccurate or defective, PGandE shall adjust, repair,
or replace it at its expense in order to provide accurate metering.
A-3.6 Adjustments to Meter Measurements
If a meter fails to register, or if the measurement made by a meter
during a test varies by more than two percent from the measurement made by
the standard meter used in the test, an adjustment shall be made correcting
all measurements made by the inaccurate meter for --(1) the actual period
during which inaccurate measurements were made, if the period can be
determined, or if not, (2) the period immediately preceding the test of the
meter equal to one-half the time from the date of the last previous test of
the meter, provided that the period covered by the correction shall not
exceed six months.
A-4 PAYMENT
PGandE shall mail to Seller not later than 30 days after the end of
each monthly billing period (1) a statement showing the energy and capacity
A-14
delivered to PGandE during on-peak, partial-peak, and off-peak periods
during the monthly billing period, (2) PGandE's computation of the amount
due Seller, and (3) PGandE's check in payment of said amount. Except as
provided in Section A-5, if within 30 days of receipt of the statement
Seller does not make a report in writing to PGandE of an error, Seller
shall be deemed to have waived any error in PGandE's statement,
computation, and payment, and they shall be considered correct and
complete.
A-5 ADJUSTMENTS OF PAYMENTS
(a) In the event adjustments to payments are required as a result of
inaccurate meters, PGandE shall use the corrected measurements described
in. Section A-3.6 to recompute the amount due from PGandE to Seller for the
capacity and energy delivered under this Agreement during the period of
inaccuracy.
(b) The additional payment to Seller or refund to PGandE shall be made
within 30 days of notification of the owing Party of the amount due.
A-6 ACCESS TO RECORDS AND PGandE DATA
Each Party, after giving reasonable written notice to the other Party,
shall have the right of access to all metering and related records
A-15
including operations logs of the Facility. Data filed by PGandE with the
CPUC pursuant to CPUC orders governing the purchase of power from
qualifying facilities shall be provided to Seller upon request; provided
that Seller shall reimburse PGandE for the costs it incurs to respond to
such request.
A-7 INTERRUPTION OF DELIVERIES
PGandE shall not be obligated to accept or pay for and may require
Seller to interrupt or reduce deliveries of energy (1) when necessary in
order to construct, install, maintain, repair, replace, remove,
investigate, or inspect any of its equipment or any part of its system, or
(2) if it determines that interruption or reduction is necessary because of
PGandE system emergencies, forced outages, force majeure, or compliance
with prudent electrical practices; provided that PGandE shall not interrupt
deliveries pursuant to this section in order to take advantage, or make
purchases, of less expensive energy elsewhere. Whenever possible, PGandE
shall give Seller reasonable notice of the possibility that interruption or
reduction of deliveries may be required.
A-8 FORCE MAJEURE
(a) The term force majeure as used herein means unforeseeable causes,
other than forced outages, beyond the reasonable control of and without
A-15
the fault or negligence of the Party claiming force majeure including,
but not limited to, acts of God, labor disputes, sudden actions of the
elements, actions by federal, state, and municipal agencies, and actions of
legislative, judicial, or regulatory agencies which conflict with the terms
of this Agreement.
(b) If either Party because of force majeure is rendered wholly or
partly unable to perform its obligations under this Agreement, that Party
shall be excused from whatever performance is affected by the force majeure
to the extent so affected provided that:
(1) the non-performing Party, within two weeks after the
occurrence of the force majeure, 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 force majeure,
(3) the non-performing 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
A-16
shall be at the sole discretion of the Party having the difficulty),
(4) when the non-performing Party is able to resume performance
of its obligations under this Agreement, that Party shall give the
other Party written notice to that effect, and
(5) capacity payments during such periods of force majeure on
Seller's part shall be governed by Section E-2(c), Appendix E.
(c) In the event a Party is unable to perform due to legislative,
judicial, or regulatory agency action, this Agreement shall be renegotiated
to comply with the legal change which caused the non-performance.
A-9 INDEMNITY
Each Party as indemnitor shall save harmless and indemnify the other
Party and the directors, officers, and employees of such other Party
against and from any and all loss and liability for injuries to persons
including employees of either Party, and property damages including
property of either Party resulting from or arising out of (1) the
engineering, design, construction, maintenance, or operation of, or (2) the
making of replacements, additions, or betterments to, the indemnitor's
facilities. This indemnity and save harmless provision shall apply
notwithstanding the active or passive negligence of the indemnitee. Neither
A-17
Party shall be indemnified hereunder for its liability or loss resulting
from its sole negligence or willful misconduct. The indemnitor shall, on
the other Party's request, defend any suit asserting a -claim covered by
this indemnity and shall pay all costs, including reasonable attorney fees,
that may be incurred by the other Party in enforcing this indemnity.
A-l0 LIABILITY; DEDICATION
(a) Nothing in this Agreement shall create any duty to, any standard
of care with reference to, or any liability to any person not a Party to
it. Neither Party shall be liable to the other Party for consequential
damages.
(b) Each Party shall be responsible for protecting its facilities from
possible damage by reason of electrical disturbances or faults caused by
the operation, faulty operation, or noncooperation of the other Party's
facilities, and' such other Party shall not be liable for any such damages,
so caused.
(c) No undertaking by one Party to the other under any provision of
this Agreement shall constitute the dedication of that Party's system or
any portion thereof to the other Party or to the public or affect the
status of PGandE as an independent public utility corporation or Seller as
an independent individual or entity and not a public utility.
X-00
X-00 XXXXXXX OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise,
the duties, obligations, and liabilities of the Parties are intended to be
several and not joint or collective. Nothing contained in this Agreement
shall ever be construed to create an association, trust, partnership, or
joint venture or impose a trust or partnership duty, obligation, or
liability on or with regard to either Party. Each Party shall be liable
individually and severally for its own obligations under this Agreement.
A-12 NON-WAIVER
Failure to enforce any right or obligation by either Party with
respect to any matter arising in connection with this Agreement shall not
constitute a waiver as to that matter or any other matter.
A-13 ASSIGNMENT
Neither Party shall voluntarily assign its rights nor delegate its
duties under this Agreement, 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. Any such assignment
A-19
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 Agreement.
A-14 CAPTIONS
All indexes, titles, subject headings, section titles, and similar
items are provided for the purpose of reference and convenience and are not
intended to affect the meaning of the contents or scope of this Agreement.
A-15 CHOICE OF LAWS
This Agreement shall be interpreted in accordance with the laws of the
State of California, excluding any choice of law rules which may direct the
application of the laws of another jurisdiction.
A-16 GOVERNMENTAL JURISDICTION AND AUTHORIZATION
Seller shall obtain any governmental authorizations and permits
required for the construction and operation of the Facility. Seller shall
reimburse PGandE for any and all losses, damages, claims, penalties, or
liability it incurs as a result of Seller's failure to obtain or maintain
such authorizations and permits.
X-00
X-00 NOTICES
Any notice, demand, or request required or permitted, to be given by
either Party to the other, and any instrument required or permitted to be
tendered or delivered by either Party to the other, shall be in writing
(except as provided in Section E-3) and so given, tendered, or delivered,
as the case may be, by depositing the same in any United States Post Office
with postage prepaid for transmission by certified mail, return receipt
requested, addressed to the Party, or personally delivered to the Party, at
the address in Article 9 of this Agreement. Changes in such designation may
be made by notice similarly given.
A-18 INSURANCE
A-18.1 General Liability Coverage
(a) Seller shall maintain during the performance hereof, General
Liability Insurance' of not less than $1,000,000 if the Facility is over
100 kW, $500,000 if the Facility is over 20 kW to 100 kW, and $100,000 if
the Facility is 20 kW or below of combined single limit or equivalent for
bodily injury, personal injury, and property damage as the result of any
one occurrence.
----------------
1. Governmental agencies which have an established record of
self-insurance may provide the required coverage through
self-insurance.
A-21
(b) General Liability Insurance shall include coverage for
Premises-operations, Owners and Contractors Protective, Products/Completed
Operations Hazard, Explosion, Collapse, Underground, Contractual Liability,
and Broad Form Property Damage including Completed Operations.
(c) such insurance, by endorsement to the policy(ies), shall include
PGandE as an additional insured if the Facility is over 100 kW insofar as
work performed by Seller for PGandE is concerned, shall contain a
severability of interest clause, shall provide that PGandE shall not by
reason of its inclusion as an additional insured incur liability to the
insurance carrier for payment of premium for such insurance, and shall
provide for 30-days' written notice to PGandE prior to cancellation,
termination, alteration, or material change of such insurance.
A-18.2 Additional Insurance Provisions
(a) Evidence of coverage described above in Section A-18.1 1 shall
state that coverage provided is primary and is not excess to or
contributing with any insurance or self-insurance maintained by PGandE.
(b) PGandE shall have the right to inspect or obtain a copy of the
original policy(ies) of insurance.
A-22
(c) Seller shall furnish the required certificates' and endorsements
to PGandE prior to commencing operation.
(d) All insurance certificates', endorsements, cancellations,
terminations, alterations, and material changes of such insurance shall be
issued and submitted to the following:
PACIFIC GAS AND ELECTRIC COMPANY
Attention: Manager - Insurance Department
00 Xxxxx Xxxxxx, Xxxx X000
Xxx Xxxxxxxxx, XX 00000
----------------
1 A governmental agency qualifying to maintain self-insurance should
provide a statement of self-insurance.
A-23
APPENDIX B
ENERGY PAYMENT OPTIONS
Energy Payment Option 1 - Forecasted Energy Prices
Pursuant to Article 4, the energy payment calculation for Seller's
energy deliveries during each year of the fixed price period shall include
the appropriate prices for such year in Table X-x, multiplied by the
percentage Seller has specified in Article 4. If Seller has selected
Curtailment Option B in Article 7, the forecasted off-peak hours' energy
prices listed in Table B-1 shall be adjusted upward by 7.7% for Period A
and 9.6% for Period B.
B-1
TABLE B-I
Forecasted Energy Price Schedule
Forecasted Energy Prices*, (cent)/kWh
Year of -------------------------------------
Energy Period A Period B Weighted
Deliv- ------------------------------ ------------------------------- Annual
eries On-Peak Partial-Peak Off-Peak On-Peak Partial-Peak Off-Peak Average
----- ------- ------------ -------- ------- ------------ -------- -------
1983 5.36 5.12 4.94 5.44 5.31 5.19 5.18
1984 5.66 5.40 5.22 5.74 5.61 5.48 5.47
1985 5.75 5.48 5.30 5.83 5.69 5.56 5.55
1986 5.99 5.72 5.52 6.08 5.94 5.80 5.79
1987 6.38 6.08 5.88 6.47 6.32 6.17 6.16
1988 6.94 6.62 6.39 7.03 6.87 6.71 6.70
1989 7.60 7.25 7.00 7.70 7.53 7.35 7.34
1990 8.12 7.74 7.48 8.23 8.04 7.85 7.84
1991 8.64 8.24 7.96 8.75 8.56 8.35 8.34
1992 9.33 8.90 8.60 9.46 9.24 9.02 9.01
1993 10.10 9.63 9.30 10.23 10.00 9.76 9.75
1994 10.91 10.41 10.06 11.06 10.81 10.55 10.54
1995 11.79 11.25 10.87 11.96 11.68 11.40 11.39
1996 12.67 12.09 11.68 12.85 12.56 12.25 12.24
1997 13.61 12.98 12.54 13.79 13.48 13.15 13.14
-------------------
* These prices are differentiated by the time periods as defined in
Table B-4.
B-2
Energy Payment option 2 - Levelized Energy Prices
Pursuant to Article 4, the energy payment calculation. for Seller's
energy deliveries during the fixed price period shall include the
appropriate prices set forth in Table B-2 for the year in which energy
deliveries begin and term of agreement, multiplied by the percentage Seller
has specified in Article 4. If Seller has selected Curtailment Option B in
Article 7, the levelized off-peak hours' energy prices listed in Table B-2
shall be adjusted upward by 7.7% for Period A and 9.6% for Period B. The
discount specified in (c)(vi) below, if applicable; will be applied to the
energy payments during the fixed price period.
During the fixed price period, Seller shall be subject to the
following conditions and terms:
(a) Minimum Damages
The Parties agree that the levelized energy prices which PGandE pays
Seller for the energy which Seller delivers to PGandE is based on the
agreed value to PGandE of Seller's energy deliveries during the entire
fixed price period. In the event PGandE does not receive such full
performance by reason of a termination, Seller shall pay PGandE an
amount based on the difference between the net present values, at the
B-3
time of termination, of the payments Seller would receive at the
forecasted energy prices in Table B-1 and the payments Seller would
receive at the levelized energy prices, for the remaining years of the
fixed price period. This amount shall be calculated by assuming that
Seller continued to generate for the remaining years of the fixed
price period at a level equal to the average annual energy generation
during the period of performance, and by applying the weighted annual
average levelized price applicable to Seller's Facility and the
weighted annual average forecasted energy prices in Table B-i for the
remaining years of the fixed E rice period. The following formula
shall be used to make this calculation:
Y (Fn)(A)(W) Y (L)(A)(W)
P = ---------- - ---------
(Sigma) (1.15)n (Sigma) (1.15)n
n=1 n=1
where:
P = amount due PGandE.
Y = number of years remaining in the fixed price period.
Fn = weighted annual average forecasted energy price in the
ninth year after the breach, failure to perform, or
expiration of security, as shown in Table B-1 for the
corresponding calendar year.
B-4
L = weighted annual average levelized energy price
applicable to Seller's Facility.
A = average annual energy generation by Seller during the
period of performance.
n = summation index; refers to the nth year following
termination.
W = percent of Seller's energy payments based on the
levelized energy prices, as specified in Article 4.
(b) Performance Requirements
Seller shall operate and maintain the Facility in accordance with
prudent electrical practices in order to maximize the likelihood that
the Facility's output as delivered to PGandE during the part of the
fixed price period when the levelized price is below the forecasted
price ("last part") shall equal or exceed 70% of the Facility's output
during the part of the fixed price period when the levelized price is
above the forecasted price ("first part"). In the event that the
Facility's output during any year or series of years in the last part
of the fixed price period is less than 70% of the average annual
production during the first part of the fixed price period, PGandE
may, at its discretion (taking into consideration events occurring
during such year or series of years such as curtailment by PGandE,
Seller's choice not to operate during adjusted price periods, or
B-5
scheduled maintenance including major overhauls, and the probability
that Seller's future performance will be adequate), either' request
payment from Seller or immediately draw on the security posted, up to
the amount equal to
P x A-B,
---- , where:
A
P and A are as defined in Section (a) above.
B = Seller's average annual energy generation during the year or
series of years in which the 70% performance requirement was not
met.
PGandE shall not request payment from Seller or draw on the security
posted if the Facility's output during the last part of the fixed
price period falls below 70% of the average annual energy generation
during the first part of the fixed Xxxxx period solely because of
force majeure as defined in Section A-8, Appendix A or a lack of or
limited availability of the primary energy resource of the Facility,
if such energy resource is wind, water, or sunlight.
(c) Security
(1) As security for amounts which Seller may be obligated to pay
PGandE pursuant- to Sections (a) and (b) above, Seller shall
provide and maintain one or more of the following in an amount as
described in Section (c)(2) below.
B-6
(i) An irrevocable bank letter of credit, delivered to and in favor
of PGandE with terms acceptable to PGandE.
(ii) A payment bond providing for payment to PGandE in the event of
any failure to meet the performance requirements set forth in
Section (b) above or breach of this Agreement by Seller. Such
bond shall be issued by a surety company acceptable to PGandE and
shall have terms acceptable to PGandE.
(iii) Fully paid up, noncancellable Project Failure Insurance made
payable to PGandE with terms of such policy(ies) acceptable to
PGandE.
(iv) A performance bond providing for payment to PGandE in the event
of any failure to meet the performance requirements set forth in
Section (b) above or breach of this Agreement by Seller. Such
bond shall be issued by a surety company acceptable to PGandE and
shall have terms acceptable to PGandE.
(v) A corporate guarantee of payment to PGandE which PGandE deems, in
its sole discretion, to provide at least the same quality of
B-7
security as subsections (i) through (iv) above.
(vi) Other forms of security which PGandE does not deem to be
equivalent security to those listed in subsections (i) through
(v) above, and which PGandE, in its sole discretion, deems
adequate. Such other forms of security may include, for example,
a corporate guarantee or a lien, mortgage or deed of trust on the
Facility or land upon which it is located. A 1.5% discount will
be applied against the levelized energy price portion of PGandE's
payments to Seller during the fixed price period if this type of
security is provided.
(2) (i) Commencing 90 days prior to the scheduled operation date and
continuing until December 1 of the following calendar year,
security as described in Section (c)(1) above shall be in place
in an amount calculated in accordance with the formula set forth
in Section (a) above, assuming Seller delivered energy through
the and of the following calendar year and then terminated this
Agreement. For purposes of determining the required amount of
B-8
security, it shall be assumed that Seller's deliveries through
the end of the following calendar year would. equal R x C x H,
where:
R = nameplate rating, in kW, of the Facility.
C = estimated capacity factor of the Facility, which
shall be established by mutual agreement of the
Parties at the time of execution of this Agreement.
H = number of hours from the scheduled operation date
through the end of the following calendar year.
(ii) In the second calendar year of operation and each year thereafter
until the end of the fixed price period, from December 1 through
December 1 of the following year, security I shall be in place in
an amount calculated by the formula set forth in Section (a)
above assuming Seller continued to deliver energy in each month
through the and of the following calendar year, at a level equal
to the average monthly energy deliveries to date, and then
terminated this Agreement.
B-9
(3) Security must be maintained throughout the fixed price period as
specified above. Any security with a fixed expiration date must
be renewed by, Seller prior to that date. If such security is not
renewed at least 30 days prior to its expiration, PGandE may, at
its discretion, either request payment from Seller or immediately
draw on the security posted, up to the amount calculated in
accordance with the formula set forth in Section (a) above.
(4) If, at any time during the fixed price period, PGandE believes
Seller is in material breach of this Agreement, PGandE shall so
notify Seller in writing and Seller must remedy such breach
within a reasonable period of time. If Seller does not so remedy,
PGandE may, at its discretion, either request payment from Seller
or immediately draw upon the security posted, up to the amount
calculated in accordance with the formula set forth in Section
(a) above, provided that if during Seller's period to remedy,
Seller disputes PGandE's conclusion that Seller is in material
breach, and PGandE elects to draw upon the security, the amount
drawn upon by PGandE shall be deposited in an interest earning
escrow account and held in such account until the dispute is
resolved in accordance with Section (c)(5) below.
B-10
(5) Upon the written request of either Party, any controversy or
dispute between the Parties concerning Section (c)(4) above shall
be subject to arbitration in accordance with the provisions of
the California Arbitration Act, Sections 1280-1294.2 of the
California Code of Civil Procedure except as provided otherwise
in this section. Either Party may demand arbitration by first
giving written notice of the existence of a dispute and then
within 30 days of such notice giving a second written notice of
the demand for arbitration.
Within ten days after receipt of the demand for arbitration, each
Party shall appoint one person, who shall not be an employee of
either Party, to hear and determine the dispute. After both
arbitrators have been appointed, they shall within five (5) days
select a third arbitrator.
The arbitration hearing shall take place in San Francisco,
California, within 30 days of the appointment of the arbitrators,
at such time and place as they select. The arbitrators shall give
written notice of the time of the bearing to both Parties at
least ten days prior to the hearing. The arbitrators shall not be
authorized to alter, extend, or modify the terms of this
Agreement. At the hearing, each Party shall submit a proposed
B-11
written decision, and any relevant evidence may be presented. The
decision of the arbitrators must' consist of selection of one of
the two proposed decisions, in its entirety.
The decision of any two arbitrators shall be binding and
conclusive as to disputes relating to Section (c)(4) only. Upon
determining the matter, the arbitrators shall promptly execute
and acknowledge their decision and deliver a copy to each Party.
A judgment confirming the award may be rendered by any superior
court having jurisdiction. Each Party shall bear its own
arbitration costs and expenses, including the cost of the
arbitrator it selected, and the costs and expenses of the third
arbitrator shall be divided equally between both Parties, except
as provided otherwise elsewhere in this Agreement.
Pending resolution of any controversy or dispute hereunder,
performance by each Party shall continue so as to maintain the
status quo prior to notice of such controversy or dispute.
Resolution of the controversy or dispute shall include payment of
any interest accrued in the escrow account.
B-12
TABLE B-2
Levelized Energy Price Schedule
For a term of agreement of 15-16 years:
Year in
Which Levelized Energy Prices*, (cent)/kWh
Energy ------------------------------------
Deliv- Period A Period B Weighted
eries ------------------------------- ------------------------------- Annual
Begin On-Peak Partial-Peak Off-Peak on-Peak Partial-Peak Off-Peak Average
----- ------- ------------ -------- ------- ------------ -------- -------
1983 5.76 5.50 5.31 5.85 5.71 5.58 5.57
1984 6.06 5.78 5.58 6.14 6.00 5.86 5.85
1985 6.41 6.11 5.91 6.50 6.35 6.20 6.19
1986 6.85 6.54 6.32 6.95 6.79 6.63 6.62
1987 7.37 7.03 6.79 7.47 7.30 7.13 7.12
1988 7.96 7.60 7.34 8.07 7.89 7.70 7.69
For a term of agreement of 17-19 years:
Year in
Which Levelized Energy Prices*, (cent)/kWh
Energy ------------------------------------
Deliv- Period A Period B Weighted
eries ------------------------------- ------------------------------- Annual
Begin On-Peak Partial-Peak Off-Peak on-Peak Partial-Peak Off-Peak Average
----- ------- ------------ -------- ------- ------------ -------- -------
1983 5.90 5.63 5.44 5.98 5.84 5.71 5.70
1984 6.23 5.95 5.74 6.32 6.18 6.03 6.02
1985 6.60 6.30 6.08 6.69 6.53 6.38 6.37
1986 7.06 6.73 6.51 7.16 7.00 6.83 6.82
1987 7.60 7.25 7.00 7.70 7.53 7.35 7.34
1988 8.21 7.83 7.57 8.32 8.13 7.94 7.93
For a term of agreement of 20-30 years:
Year in
Which Levelized Energy Prices*, (cent)/kWh
Energy ------------------------------------
Deliv- Period A Period B Weighted
eries ------------------------------- ------------------------------- Annual
Begin On-Peak Partial-Peak Off-Peak on-Peak Partial-Peak Off-Peak Average
----- ------- ------------ -------- ------- ------------ -------- -------
1983 6.49 6.20 5.98 6.58 6.43 6.28 6.27
1984 6.90 6.58 6.35 6.99 6.83 6.67 6.66
1985 7.34 7.00 6.76 7.44 7.27 7.10 7.09
1986 7.88 7.51 7.26 7.99 7.81 7.62 7.61
1987 8.49 8.10 7.82 8.61 8.41 8.21 8.20
1988 9.16 8.74 8.44 9.29 9.08 8.86 8.85
-----------------
* These prices are differentiated by the time periods as defined in
Table B-4.
B-13
Energy Payment Option 3 - Incremental Energy Rate
During the period specified in Article 4, annual adjustments to
Seller's energy payments shall be made as described below.
At the end of each calendar year, the Derived Incremental Energy Rate
(with units expressed in Btu/kWh) will be calculated as follows:
Derived Incremental Energy Rate (XXXX)= B
-----
A x C
where:
A = the total kWh delivered by Seller during the calendar
year, excluding any kWh delivered when Seller was asked to
curtail deliveries under Curtailment Option A or when Seller
was asked to take adjusted prices under Curtailment Option
B.
B = the total dollars paid for the energy described for A
above.
C = the weighted average price paid during the calendar year
by PGandE's Electric Department for oil and natural gas for
PGandE's fossil steam plants, expressed in $/Btu on a gas
Btu basis.
B-14
If the XXXX is between the upper and lower Incremental Energy Rate
Bounds specified for that year in Table B-3 for the curtailment option
selected by Seller, no additional payment is due either Party.
If the XXXX is below the lower Incremental Energy Rate Bound, PGandE
shall pay Seller an amount calculated as follows:
(Lower Incremental
PS = Energy Rate Bound - XXXX)(A)(C)
where:
PS = additional payment due Seller.
XXXX = Derived Incremental Energy Rate.
PGandE shall add this payment to the first payment made to Seller
following the calculation.
If the XXXX is above the upper Incremental Energy Rate Bound, Seller
shall pay PGandE an amount calculated as follows:
PB = (XXXX - Upper Incremental) (A)(C)
Energy Rate Bound
where:
PS = amount due PGandE.
XXXX = Derived Incremental Energy Rate.
B-15
This amount shall be deducted from the first payment made to Seller
following the calculation. If there is any remaining amount due
PGandE, PCandE may, at its option, invoice Seller' with such payment
due within 30 days or deduct this amount from future payments due
Seller.
B-16
TABLE B-3
Forecasted Incremental Energy Rates and
Incremental Energy Rate Bounds
Curtailment Option A:
Incremental
Forecasted Energy Upper Incremental Lower Incremental
Incremental Rate Band Energy Energy
Energy Width from Rate Bound, Rate Bound,
Rates Article 4 Btu/kWh Btu/kWh
Btu/kWh Btu/kWh (column (a) [column (a)]
Year (a) (b) plus column (b)] minus column (b)]
---- --- --- ---------------- -----------------
1984 9,000 ----------- ----------- -----------
1985 9,050 ----------- ----------- -----------
1986 8,840 ----------- ----------- -----------
1987 8,850 ----------- ----------- -----------
1988 8,960 ----------- ----------- -----------
1989 8,820 ----------- ----------- -----------
1990 8,540 ----------- ----------- -----------
1991 8,540 ----------- ----------- -----------
1992 8,540 ----------- ----------- -----------
1993 8,540 ----------- ----------- -----------
1994 8,540 ----------- ----------- -----------
1995 8,540 ----------- ----------- -----------
1996 8,540 ----------- ----------- -----------
1997 8,540 ----------- ----------- -----------
1998 8,540 ----------- ------------ -----------
B-17
TABLE B-3 (continued)
Curtailment Option B:
Incremental
Forecasted Energy Upper Incremental Lower Incremental
Incremental Rate Band Energy Energy
Energy Width from Rate Bound, Rate Bound,
Rates Article 4 Btu/kWh Btu/kWh
Btu/kWh Btu/kWh (column (a) [column (a)]
Year (a) (b) plus column (b)] minus column (b)]
---- --- --- ---------------- -----------------
1984 9,440 ----------- ----------- -----------
1985 9,500 ----------- ----------- -----------
1986 9,280 ----------- ----------- -----------
1987 9,290 ----------- ----------- -----------
1988 9,400 ----------- ----------- -----------
1989 9,270 ----------- ----------- -----------
1990 8,970 ----------- ----------- -----------
1991 8,970 ----------- ----------- -----------
1992 8,970 ----------- ----------- -----------
1993 8,970 ----------- ----------- -----------
1994 8,970 ----------- ----------- -----------
1995 8,970 ----------- ----------- -----------
1996 8,970 ----------- ----------- -----------
1997 8,970 ----------- ----------- -----------
1998 8,970 ----------- ------------ -----------
B-18
TABLE B-4
Time Periods
Monday Sundays
through and
Friday2 Saturdays2 Holidays
------- ---------- --------
Seasonal Period A
May 1 through September 30)
On-Peak 12:30 p.m.
to
6:30 p.m.
Partial-Peak 8:30 a.m 8:30 a.m.
to to
12:30 p.m 10:30 p.m.
6:30 p.m
to
10:30 p.m
Off-Peak 10:30 p.m. 10:30 p.m. All Day
to to
8:30 a.m. 8:30 a.m.
Seasonal Period B
(October 1 through April 30)
On-Peak 4:30 p.m
to
8:30 p.m
Partial -Peak 8:30 p.m. 8:30 a.m.
to to
10:30 p.m. 10:30 p.m.
8:30 a.m.
to
4:30 p.m.
Off-Peak 10:30 p.m. 10:30 p.m. All Day
to to
4:30 p.m. 8:30 a.m.
-----------------
1 This table is subject to change to accord with the on-peak,
partial peak, and off-peak periods as defined in PGandE's own
rate schedules for the sale of electricity to its large
industrial customers.
2 Except the following holidays: New Year's Day, Washington's
birthday, Memorial Day, Independence Day, Labor Day, Veteran's
Day. Thanksgiving Day, and Christmas Day, as specified in Public
Law 90-363 (5 U.S.C.A. Section 6103(a)).
B-19
TABLE B-5
ENERGY PRICES
Energy Prices Effective February1I - April 30, 1905
The energy purchase price calculations which will apply to energy
deliveries determined from.. meter readings taken during February. March.
and April 1986, are as follows:
(a) (b) (c) (d)
Revenue Requirement Energy Purchase
Incremental for Cash Price4
Time Period Energy Rate1 cost of Energy2 Working,Cap1tal3 (d)= [(a) x (b)] + (c)
---------- ------------ --------------- -------- ---------------------
(Btu/kWh) ($/102 Btu) ($/kWh) ($/kWh)
February I - April 30
(Period B)
Time of
Delivery Basis:
On-Peak 16,320 5.2394 0.00053 0.08604
Partial-Peak 15,689 5.2394 0.0005l 0.06271
Off-Peak 11.625 5.2394 0.00038 0.06129
Seasonal Average 13,692 5.2394 0.00045 0.07219
(Period B)
--------------------
1 Incremental energy rates (Btu/kWh) for Seasonal Period A and
Seasonal Period B are derived from the marginal energy costs
(including variable operating and maintenance expense) adopted by
the CPUC in Decision No. 00-00-000 (page 339). They are based
upon natural gas as the incremental fuel and weighted average
hydroelectric power conditions.
2 Cost of natural gas under PGandE Gas Schedule No. G-5S effective
February 1, 1985 per Advice No. 1304-G.
3 Revenue Requirement for Cash Working Capital as prescribed by the
CPIIC in Decision No. 00-00-000.
3 Energy Purchase Price = (Incremental Energy Rate x Cost of
Energy) Revenue Requirement for Cash Working Capital. The energy
purchase price excludes the applicable energy line loss
adjustment factors. however, as ordered by Ordering Paragraph No.
12(j) of CPUC Decision No. 00-00-000, this figure is currently
1.0 for transmission and primary distribution loss adjustments
and is equal to marginal cost line loss adjustment factors for
the secondary distribution voltage level. These factors may be
changed by the CPUC in the future. The currently applicable
energy loss adjustment factors are shown in Table 11-6.
B-20
TABLE B-6
Energy Loss Adjustment Factorsl
Primary Secondary
Transmission Distribution Distribution
------------ ------------ ------------
Seasonal Period A
(May 1 through September 30)
On-Peak 1.0 1.0 1.0148
Partial-Peak 1.0 1.0 1.0131
Off-Peak 1.0 1.0 1.0093
Seasonal Period B
(October 1 through April 30)
On-Peak 1.0 1.0 1.0128
Partial-Peak 1.0 1.0 1.0119
Off-Peak 1.0 1.0 1.0087
-------------------
1 The applicable energy loss adjustment factors may be revised
pursuant to orders of the CPUC.
B-21
APPENDIX C
CURTAILMENT OPTIONS
Seller has two options regarding curtailment of energy deliveries and
Seller has made its selection in Article 7. The two options are as follows:
CURTAILMENT OPTION A - HYDRO SPILL AND
NEGATIVE AVOIDED COST
(a) In anticipation of a period of hydro spill conditions, as defined
by the CPUC, PGandE may notify Seller that any purchases of energy from
Seller during such period shall be at hydro savings prices quoted by
PGandE. if Seller delivers energy to PGandE during any such period, Seller
shall be paid hydro savings prices for those deliveries in lieu of prices
which would otherwise be applicable. The hydro savings prices shall be
calculated by PGandE using the following formula:
AQF - S
------- x PP (> or equal to 0)
AQF
where:
AQF = Energy, in kWh, projected to be available during hydro spill
conditions from all qualifying facilities under agreements
containing hydro savings price provisions.
C-1
S = Potential energy, in kWh, from PGandE hydro facilities which
will be spilled if all AQF is delivered to PGandE.
PP = Potential energy, in kWh, from PGandE hydro facilities which
will be spilled if all AQF is delivered to PGandE. Prices
published by PGandE for purchases during other than hydro
spill conditions.
PGandE shall give Seller notice of general periods when hydro spill
conditions are anticipated, and shall give Seller as much advance notice as
practical of any specific hydro spill period and the hydro savings price
which will be applicable during such period.
(b) PGandE shall not be obligated to accept or pay for and may require
Seller with a Facility with a nameplate rating of one megawatt or greater
to interrupt or reduce deliveries of energy during periods when PGandE
would incur negative avoided costs (as defined by the CPUC) due to
continued acceptance of energy deliveries under this Agreement. Whenever
possible, PGandE shall give Seller reasonable notice of the possibility
that interruption or reduction of deliveries may be required.
(c) Before interrupting or reducing deliveries under subsection (b),
above, and before invoking hydro savings prices under subsection (a),
above, PGandE shall take reasonable steps to make economy sales of the
surplus energy giving rise to the condition. If such economy sales are
made, while the surplus energy condition exists seller shall be paid at
C-2
the economy sales price obtained by PGandE in lieu of the otherwise
applicable prices.
(d) If Seller is selling net energy output to PGandE and
simultaneously purchasing its electrical needs from PGandE and Seller
elects not to sell energy to PGandE at the hydro savings price pursuant to
subsection (a) or when PGandE curtails deliveries of energy pursuant to
subsection (b), Seller shall not use such energy to meet its electrical
needs but shall continue to purchase all its electrical needs from PGandE.
If Seller is selling surplus energy output to PGandE, subsections (a) or
(b) shall only apply to the surplus energy output being delivered to
PGandE, and Seller can continue to internally use that generation it has
retained for its own use.
CURTAILMENT OPTION B - ADJUSTED PRICE PERIOD
(a) In each calendar year, the price which PGandE is obligated to pay
Seller for energy deliveries during 1,000 off-peak hours (as defined in
Table B-4, Appendix B) may be adjusted to a price equal to, but not in
excess of, PGandE's available alternative source. This adjusted price shall
be effective under any of the following conditions:
(i) when PGandE's energy source at the margin is not a PGandE oil- or
gas-fueled plant, and PGandE can replace Seller's energy with energy from
C-3
this source at a cost less than the price paid to Seller;
(ii) when PGandE would incur negative avoided costs (as defined by the
CPUC) due to continued acceptance of energy deliveries under this
Agreement; or
(iii) when PGandE is experiencing minimum system operations.
During any of the conditions described above the adjusted price may be
zero.
(b) Whenever possible, PGandE shall give Seller reasonable notice of
any price adjustment for energy deliveries and its probable duration.
(c) If Seller is selling net energy output to PGandE and
simultaneously purchasing its electrical needs from PGandE and Seller
elects not to sell energy to PGandE at the adjusted price, Seller shall not
use such energy to meet its electrical needs but shall continue to purchase
all its electrical needs from PGandE.
(d) After Seller receives notice of the probable duration of the
period during which the adjusted price will be paid, Seller may elect to
perform maintenance during such period and so inform the PGandE employee
C-4
in charge at the designated PGandE switching center prior to the time
when the adjusted price period is expected to begin. If Seller makes
such election, the number of off-peak hours of probable duration
quoted in PGandE's notice to Seller shall be applied to the 1,000-hour
calendar year limitation set forth in this section. After an election
to do maintenance, if Seller makes any deliveries of energy during the
quoted probable duration period, Seller shall be paid the adjusted
price quoted in its notice from PGandE without regard to any
subsequent changes on the PGandE system which may alter the adjusted
price or shorten the actual duration of the condition.
X-0
XXXXXXXX X
XX-XXXXXXXXX XXXXXXXX
X-0 AS-DELIVERED CAPACITY PAYMENT OPTIONS
Seller has two options for as-delivered capacity payments and Seller
has made its selection in Article 5. The two options are as follows:
AS-DELIVERED CAPACITY PAYMENT OPTION 1
PGandE shall pay Seller for as-delivered capacity at prices authorized
from time to time by the CPUC. The as-delivered capacity prices in effect
on the date of execution are calculated as shown in Exhibit D-l.
AS-DELIVERED CAPACITY PAYMENT OPTION 2
During the fixed price period, the as-delivered capacity prices will
be calculated in accordance with Exhibit D-1 and the forecasted shortage
costs in Table D-2.
For the remaining years of the term of agreement, PGandE shall pay
Seller for as-delivered capacity at the higher of:
D-1
(i) prices authorized from time to time by the, CPUC;
(ii) the as-delivered capacity prices that were paid Seller in the
last year of the fixed price period; or
(iii) the as-delivered capacity prices in effect in the first year
following the end of the fixed price period, provided that the
annualized shortage cost from which these prices are derived does
not exceed the annualized value of a gas turbine.
D-2 AS-DELIVERED CAPACITY IN EXCESS OF FIRM CAPACITY
The amount of capacity delivered in excess of firm capacity will be
considered as-delivered capacity. This as-delivered capacity is based on
the total kilowatt-hours delivered each month during all on-peak,
partial-peak and off-peak hours excluding any energy associated with
generation levels equal to or less than the firm capacity.
Seller has the two options listed in Section D-1 for payment for such
as-delivered cam. Seller has made its selection in Article 5.
D-2
EXHIBIT D-1
The as-delivered capacity price (in cents per kW-hr) for power
delivered by the Facility is the product of three factors:
(a) The shortage cost in each year the Facility is operating.
Currently, this shortage cost is $60 per kW-year.
(b) A capacity loss adjustment factor which provides for the
effect of the deliveries on PGandE's transmission and distribution
losses based on the Seller's interconnection voltage level. The
applicable capacity loss adjustment factors for non-remote' Facilities
are presented in Table D-1(a). Capacity loss adjustment factors for
remote Facilities shall be calculated individually.
(e) An allocation factor which accounts for the different values
of as-delivered capacity in different time periods and converts
dollars per kW-year to cents per kWh. The current allocation factors
are presented in Table D-1(b). The time periods to which they apply
are shown in Table B-4, Appendix B. The allocation factors are subject
to change from time to time.
-----------------
1 As defined by the CPUC.
D-3
TABLE D-1(a)
Capacity Loss Adjustment Factors
for Non-Remotes Facilities
Voltage Level Loss Adjustment Factor
------------- ----------------------
Transmission .989
Primary Distribution .991
Secondary Distribution .991
If the Facility is remote, the capacity loss adjustment factor is _______2.
TABLE D-1(b)
Allocation Factors
for As-Delivered Capacity3
On-Peak Partial-Peak Off-Peak
((cent)-yr/$-hr) ((cent)-yr/$-hr) ((cent)-yr/$-hr
---------------- ---------------- ---------------
Seasonal Period A .10835 .02055 .00002
Seasonal Period B .00896 .00109 .00001
-----------------
1 As defined by the CPUC. The capacity loss adjustment factors for
remote Facilities are determined individually.
2 Determined individually.
3 The units for the allocation factor, cent-yr/$-hr, are derived
from the conversion of $/kW-yr into 9/kWh as follows:
(cent)/kWh (cent)/kW-hr (cent)-yr
---------- = ------------ = -------------
$/kW-yr $/kW-yr $-hr
The allocation factors were prescribed by the CPUC in Decision No.
00-00-000 and are subject to change from time to time.
D-4
TABLE D-2
Forecasted Shortage Cost Schedule
Forecast Shortage
Year Cost,$/kW-Yr
---- ------------
1983 70.
1984 76
1985 81
1986 88
1987 95
1988 102
1989 110
1990 118
1991 126
1992 135
1993 144
1994 154
1995 164
1996 176
1997 188
D-5
APPENDIX E
FIRM CAPACITY
CONTENTS
Section Page
------- ----
E-1 GENERAL X-0
X-0 PERFORMANCE REQUIREMENTS E-2
E-3 SCHEDULED MAINTENANCEE E-4
E-4 ADJUSTMENTS TO FIRM CAPACITY E-5
E-5 FIRM CAPACITY PAYMENTS E-6
E-6 DETERMINATION OF NATURAL FLOW DATA E-12
E-7 THEORETICAL OPERATION STUDY E-13
E-8 DETERMINATION OF AVERAGE DRY E-15
YEAR CAPACITY RATINGS
E-9 INFORMATION REQUIREMENTS E-15
E-1O ILLUSTRATIVE EXAMPLE E-16
E-11 MINIMUM DAMAGES E-19
E-1
APPENDIX E
FIRM CAPACITY
E-l GENERAL
This Appendix E establishes conditions and prices under which
PGandE shall pay for firm capacity.
PGandE's obligation to pay for firm capacity shall begin on the
firm capacity availability date. The firm capacity price shall be
subject to adjustment as provided for in this Appendix E.
The firm capacity prices in Table E-2 are applicable for
deliveries of firm capacity beginning after December 30, 1982.
E-2 PERFORMANCE REQUIREMENTS
(a) To receive full capacity payments, the firm Capacity shall be
delivered for all of the on-peak hours1 in the peak months on the
PGandE system, which are presently the months of June, July, and
August, subject to a 20 percent allowance for forced outages in any
month. Compliance with this provision shall be based on the Facility's
total on-peak deliveries for each of the peak
--------------
1 On-peak, partial-peak, and off-peak hours are defined in Table
X-0, Xxxxxxxx X.
X-0
months and shall exclude any energy associated with generation levels
greater than the firm capacity.
(b) If Seller is prevented from meeting the performance requirements
because of a forced outage on the PGandE system, a PGandE curtailment of
Seller's deliveries, or a condition set forth in Section A-7, Appendix A,
PGandE shall continue capacity payments. Firm capacity payments will be
calculated in the same manner used for scheduled maintenance outages.
(c) If Seller is prevented from meeting the performance requirements
because of force majeure, PGandE shall continue capacity payments for
ninety days from the occurrence of the force majeure. Thereafter, Seller
shall be deemed to have failed to have met the performance requirements.
Firm capacity payments will be calculated in the same manner used for
scheduled maintenance outages.
(d) If Seller is prevented from meeting the performance requirements
because of exteme dry year conditions, PGandE shall continue capacity
payments. Extreme dry year conditions are drier than those used to
establish firm capacity pursuant to Section E-8. Seller shall warrant to
PGandE that the Facility is a hydroelectric facility and that such
conditions are the sole cause of Seller's inability to meet its firm
capacity obligations.
E-3
(e) If Seller is prevented from meeting the performance requirements
for reasons other than those described above in Sections E-2(b), (c), or
(d):
(1) Seller shall receive the reduced firm capacity payments as
provided in Section E-5 for a probationary period not to exceed 15
months, or as otherwise agreed to by the Parties.
(2) If, at the end of the probationary period Seller has not
demonstrated that the Facility can meet the performance requirements,
PGandE may derate the firm capacity pursuant to Section E-4(b).
E-3 SCHEDULED MAINTENANCE
Outage periods for scheduled maintenance shall not exceed 840
hours (35 days) in any 12-month period. This allowance may be used in
increments of an hour or longer on a consecutive or nonconsecutive
basis. Seller may accumulate unused maintenance hours from one
12-month period to another up to a maximum of 1,080 hours (45 days).
This accrued time must be used consecutively and only for major
overhaul's. Seller shall provide PGandE with the following advance
notices: 24 hours for scheduled outages less than one day, one week
for a scheduled outage of one day or more (except for major
overhauls), and six months for a major overhaul. Seller shall not
schedule major overhauls during the peak months (presently June, July
and August). Seller shall make reasonable efforts to schedule or
reschedule routine maintenance outside the peak months, and in no
E-4
event shall outages for scheduled maintenance exceed 30 peak hours
during the peak months. Seller shall confirm in writing to. PGandE
pursuant to Article 9, within 24 hours of the original notice, all
notices Seller gives personally or by telephone for scheduled
maintenance.
If Seller has selected Curtailment Option B, off-peak hours of
maintenance performed pursuant to Section (d) of Curtailment Option B,
Appendix C shall not be deducted from Seller's scheduled maintenance
allowances set forth above.
E-4 ADJUSTMENTS TO FIRM CAPACITY
(a) Seller may increase the firm capacity with the approval of
PGandE and receive payment for the additional capacity thereafter in
accordance with the applicable capacity purchase price published by
PGandE at the time the increase is first delivered to PGandE.
(b) Seller may reduce the firm capacity at any time prior to the
firm capacity availability date by giving written notice thereof to
PGandE. PGandE may derate the firm capacity in accordance with Section
E-2(e) as a result of appropriate data showing Seller has failed to
meet the performance requirements of Section E-2.
E-5
E-5 FIRM CAPACITY PAYMENTS
The method for calculation of firm capacity payments is. shown
below. As used below in this section, month refers to a calendar
month.
The monthly payment for firm capacity will be the product of the
Period Price Factor (PPF), the Monthly Delivered Capacity (MDC), the
appropriate capacity loss adjustment factor from Table E-1 based on
the Facility's interconnection voltage, and the appropriate
performance bonus factor, if any, from Table E-3, plus any allowable
payment for outages due to scheduled maintenance. The firm capacity
price shall be applied to meter readings taken during the separate
times and periods as illustrated in Table B-4, Appendix B.
The PPF is determined by multiplying the firm capacity price by
the following Allocation Factors1:
Firm
---- PPF
Allocation Factor X Capacity Price = ($/kW-month)
--------------
Seasonal .18540 -------------- -----------
Period A
Seasonal .01043 -------------- -----------
Period B
---------------
1 These allocation factors were prescribed by the CPUC in Decision
No. 00-00-000. All allocation factors are subject to change by
PGandE based on PGandE's marginal capacity cost allocation, as
determined in general rate case proceedings before the CPUC.
Seasonal Periods A end and B are defined in Table B-4, Appendix
B.
E-6
The MDC is determined in the following manner:
(1) Determine the Performance Factor (P), which is defined as the
lesser of 1.0 or the following quantity:
P = A
----------------- (< or = 1.0)
C x (B-S) x (0.8*)
Where:
A = Total kilowatt-hours delivered during all on-peak and
partial-peak hours excluding any energy associated with
generation levels greater than the firm capacity.
C = Firm capacity in kilowatts.
B = Total on-peak and partial-peak hours during the month.
S = Total on-peak and partial-peak hours during the month
Facility is out of service on scheduled maintenance.
(2) Determine the Monthly Capacity Factor (MCF), which is
computed using the following expression:
MCF = P x (1.0 - M)
---
D
Where:
M = The number of hours during the month Facility is out of
service on scheduled maintenance.
D = The number of hours in the month.
---------------
* 0.8 reflects a 20% allowance for forced outage.
E-7
(3) Determine the MDC by multiplying the MCF by C;
MDC (kilowatts) = MCF x C
The monthly payment for firm capacity is then determined by
multiplying the PPF by the MDC, by the appropriate capacity loss
adjustment factor presented from Table E-l, and by the appropriate
performance bonus factor, if any, from Table E-3.
monthly payment
for firm capacity = PPF x MDC x capacity loss x performance
adjustment factor bonus factor
Furthermore, the payment for a month in which there is an outage
for scheduled maintenance shall also include an amount equal to the
product of the average hourly firm capacity payment' for the most
recent month in the same type of Seasonal Period (i.e., Seasonal
Period A or Seasonal Period B) during which deliveries were made times
the number of hours of outage for scheduled maintenance in the current
month. Firm capacity payments will continue during the outage periods
for scheduled maintenance provided that the provisions of Section E-3
are met.
During a probationary period Seller's monthly payment for firm
capacity shall be determined by substituting for the firm capacity,
----------------
1 Total monthly payment divided by the total number of hours in the
monthly billing period.
E-8
the capacity at which Seller would have met the performance
requirements. In the event that during the probationary period Seller
does not meet the performance requirements at whatever firm capacity
was established for the previous month, Seller's monthly payment for
firm capacity shall be determined by substituting the firm capacity at
which Seller would have met the performance requirements. The
performance bonus factor shall not be applied during probationary
periods.
TABLE E-1
If the Facility is non-remote1 the firm capacity loss adjustment
factors are as follows:
Voltage Level Loss Adjustment Factor
------------- ----------------------
Transmission .989
Primary Distribution .991
Secondary Distribution .991
If the' Facility is remote the firm capacity loss adjustment factor is
_______________2
---------------
1 Is defined by the CPUC.
2 Determined individually.
E-9
TABLE E-2
Firm Capacity Price Schedule
----------------------------
(Levelized $/kW-year
Firm
Capacity
Avail-
ability
Date Number of Years of Firm Capacity Delivery
---- -----------------------------------------
------- -----------------------------------------------------------------------------------------
(Year) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 20 25 30
------- - - - - - - - - - -- -- -- -- -- -- -- -- --
1982 65 68 70 72 75 77 79 81 84 86 88 90 91 93 95 103 109 113
1983 70 73 75 78 80 83 85 88 90 92 94 96 98 100 102 110 117 122
1984 76 78 81 84 86 89 92 94 97 99 101 103 106 108 110 118 125 130
1985 81 84 87 90 93 96 99 101 104 106 109 111 113 115 118 127 134 140
1986 88 91 94 97 100 103 106 109 112 114 117 119 122 124 126 136 144 150
1987 95 98 101 105 108 111 114 117 120 123 125 128 130 133 135 146 154 160
E-10
TABLE E-3
Performance Bonus Factor
The following shall be the performance bonus factors applicable
to the calculation of the monthly payments for firm capacity delivered
by the Facility after it has demonstrated a firm capacity factor in
excess of 85%.
DEMONSTRATED
FIRM CAPACITY FACTOR PERFORMANCE
(%) BONUS FACTOR
--- ------------
85 1.000
90 1.059
95 1.118
100 1.176
After the Facility has delivered power during the span of all of
the peak months on the PGandE system (presently June, July, and
August) in any year (span),
(i) the firm capacity factor for each such month shall be
calculated in the following manner:
FIRM CAPACITY FACTOR (%) = F
--------- x 100
(N-W) x Q
Where:
F = Total kilowatt-hours delivered by Seller in any peak month
during all on-peak hours excluding any energy associated
with generation levels greater than the firm capacity.
E-11
N = Total on-peak hours during the month.
W = Total on-peak hours during the peak month that the Facility
is out of service on scheduled, maintenance.
Q = Firm capacity in kilowatts.
(ii) the arithmetic average of the above firm capacity factors
shall be determined for that span,
(iii) the average of the above arithmetic average firm capacity
factors for the most recent span(s), not to exceed 5, shall be
calculated and shall become the Demonstrated Firm Capacity Factor.
To calculate the performance bonus factor for a Demonstrated Firm
Capacity Factor not shown in Table E-3 use the following formula:
Performance Bonus Factor = Demonstrated Firm Capacity- Factor %
-------------------------------------
85%
SECTIONS E-6 THROUGH E-10 SHALL APPLY ONLY TO HYDROELECTRIC PROJECTS
--------------------------------------------------------------------
E-6 DETERMINATION OF NATURAL FLOW DATA
Natural flow data shall be based on a period of record of at
least 50 years and which includes historic critically dry periods.
E-12
In the event Seller demonstrates that a natural flow data base of at
least50 years would be unreasonably burdensome, PGandE shall accept a
shorter, period of record with a corresponding reduction in the
averaging basis set forth in section E-8. Seller shall determine the
natural flow data by month by using one of the following methods:
Method 1
If stream flow records are available from a recognized gauging
station on the water course being developed in the general vicinity of
the project, Seller may use the data from them directly.
Method 2
If directly applicable flow records are not available, Seller may
develop theoretical natural flows based on correlation with available
flow data for the closest adjacent and similar area which has a
recognized gauging station' using generally accepted hydrologic
estimating methods.
E-7 THEORETICAL OPERATION STUDY
Based on the monthly natural flow data developed under Section
E-6 a theoretical operation study shall be prepared by seller. Such a
E-13
study shall identify the monthly capacity rating in kW and the monthly
energy production in kWh for each month of each year. The study shall
take into account. all relevant operating constraints, limitations,
and requirements including but not limited to --
(1) Release requirements for support of fish life and any other
operating constraints imposed on the project;
(2) Operating characteristics of the proposed equipment of the
Facility such as efficiencies, minimum and maximum operating levels,
project control procedures, etc.;
(3) The design characteristics of project facilities such as head
losses in penstocks, valves, tailwater elevation levels, etc.; and
(4) Release requirements for purposes other than power generation
such as irrigation, domestic water supply, etc.
The theoretical operation study for each month shall assume an
even distribution of generation throughout the month unless Seller can
demonstrate that the Facility has water storage characteristics. For
the study to show monthly capacity ratings, the Facility shall be
capable of operating during all on-peak hours in the peak months on
the PGandE system, which are presently the months of June, July, and
August. If the project does not have this capability throughout each
such month, the capacity rating in that month of that year shall be
set at zero for purposes of this theoretical operation study.
E-14
E-8 DETERMINATION OF AVERAGE DRY YEAR CAPACITY RATINGS
Based on the results of the theoretical operation study,
developed under Section E-7, the average dry year capacity rating
shall be established for each month. The average dry year shall be
based on the average of the five years of the lowest annual generation
as shown in the theoretical operation study. once such years of lowest
annual generation are identified, the monthly capacity rating is
determined for each month by averaging the capacity ratings from each
month of those years. The firm capacity shown in Article 5 shall not
exceed the lowest average dry year monthly capacity ratings for the
peak months on the PGandE system, which are presently the months of
June, July, and August.
E-9 INFORMATION REQUIREMENTS
Seller shall provide the following information to PGandE for its
review:
(1) A summary of the average dry year capacity ratings based on
the theoretical operation study as provided in Table E-4;
(2) A topographic project map which shows the location of all
aspects of the Facility and locations of stream gauging stations used
to determine natural flow data;
(3) A discussion of all major factors relevant to project
operation;
E-15
(4) A discussion of the methods and procedures used to establish
the natural flow data. This discussion shall be in sufficient detail
for PGandE to determine that the, methods are consistent with those
outlined in Section E-6 and are consistent with generally accepted
engineering practices; and
(5) Upon specific written request by PGandE, Seller's theoretical
operation study.
E-10 ILLUSTRATIVE EXAMPLE
(1) Determine natural flows - These flows are developed based on
historic stream gauging records and are compiled by month, for a
long-term period (normally at least 50 years or more) which covers dry
periods which historically occurred in the 1920's and 30's and more
recently in 1976 and 77. In all but unusual situations this will
require application of hydrological engineering methods to records
that are available, primarily from the USGS publication "Water
Resources Data for California".
(2) Perform theoretical operation study - Using the natural flow
data compiled under (1) above a theoretical operation study is
prepared which determines, for each month of each year, energy
generation (kWh) and capacity rating (KW). This study is performed
based on the Facility design, operating capabilities, constraints,
etc., and should take into account all factors relevant to project
E-16
operation. Generally such a study is done by computer which routes the
natural flows through project features, considering additions and
withdrawals from storage, spill, past the project, releases for
support of fish life, etc., to determine flow available for
generation. Then the generation and capacity amounts are computed
based on equipment performance, efficiencies, etc.
(3) Determine average dry year capacity ratings - After the
theoretical project operation study is complete the five years in
which the annual generation (kWh) would have been the lowest are
identified. Then for each month, the capacity rating (kW) is averaged
for the five years to arrive at a monthly average capacity rating. The
firm capacity is then set by the Seller based on the monthly average
dry year capacity ratings and the performance requirements of this
appendix. An example project is shown in the attached completed Table
E-4.
E-17
EXAMPLE
TABLE E-4
Summary of Theoretical Operation Study
Project: New Creek 1
Water Source: West Fork New Creek
Mode of Operation: Run of the river
Type of Turbine: Xxxxxxx Design Flow: 100 cfs Design Head: 150 feet
Operating Characteristics1:
Flow Head (feet) Output Efficiency %)
---- ------------ ------ --------------
(cfs) Gross Net (kW) Turbine Generator
----- ----- ---- ---- ------- ---------
Normal Operation 100 160 150 1,120 90 98
Maximum Operation 110 160 148 1,150 85 98
Minimum Operation 30 160 155 290 75 98
Average Dry Year Operation - Based on the average of the following
lowest generation years: 1930, 1932, 1934, 1949, 1977.
Energy Generation Capacity Output Percent of
Month (kWh) (kW) Total Hours Operated
----- ----- ---- --------------------
January 855,000 1,150 100
February 753,000 1,120 100
March 818,000 1,100 100
April 727,000 1,010 100
May 699,000 940 100
June 612,000 850 100
July 484,000 650 100
august 305,000 410 100
September 245,000 340 100
October 148,800 200 100
November 468,000 650 100
December 595,000 800 100
Maximum firm capacity: 410 kW
---------------
1 If Facility has a variable head, operating curves should be
provided.
E-18
E-11 MINIMUM DAMAGES
(a) In the event the firm Capacity is derated or Seller
terminates this Agreement, the quantity by which the firm capacity is
derated or the firm capacity shall be used to calculate the payments
due PGandE in accordance with Section (d).
(b) Seller shall be invoiced by PGandE for all amounts due under
this section. Payment shall be due within 30 days of the date of
invoice.
(c) If Seller does not make payments pursuant to Section (b),
PGandE shall have the right to offset any amounts due it against any
present or future payments due Seller.
(d) Seller shall pay to PGandE:
(i) an amount equal to the difference between (a) the firm
capacity payments already paid by PGandE, based on the original
term of agreement and (b) the total firm capacity payments which
PGandE would have paid based on the period of Seller's actual
performance using the adjusted firm capacity price. Additionally,
Seller shall pay interest, compounded monthly from the date the
excess capacity payment was made until the date Seller repays
E-19
PGandE, on all overpayments, at the published Federal Reserve
Board three months' Prime Commercial Paper rate; plus
(ii) a sum equal to the amount by which the firm capacity is
being terminated or derated times the difference between the
current firm capacity price on the date of termination or
deration for a term equal to the balance of the term of agreement
and the firm capacity price, multiplied by the appropriate factor
shown in Table E-5 below. In the event that the current firm
capacity price is less than the firm capacity price, no payment
under this subsection (ii) shall be due either Party.
TABLE E-5
Amount of Firm Capacity
Terminated or Derated Factor
---------------------- ------
1,000 kW or under 0.25
over 1,000 kW through 10,000 kW 0.75
over 10,000 kW through 25,000 kW 1.00
over 25,000 kW through 50,000 kW 3.00
over 50,000 kW through 100,000 kW 4.00
over 100,000 kW 5.00
E-20
APPENDIX F
INTERCONNECTION
CONTENTS
Section Page
------- ----
F-1 INTERCONNECTION TARIFFS X-0
X-0 XXXXX XX XXXXXXXX LOCATION SKETCH F-3
F-3 INTERCONNECTION FACILITIES FOR WHICH F-4
SELLER IS RESPONSIBLE
F-1
F-1 INTERCONNECTION TARIFFS
(The applicable tariffs in effect at the time of, execution of
this Agreement shall be attached.)
F-2
ASSIGNMENT
FOR GOOD AND VALUABLE CONSIDERATION, as set forth in the "Development
Option and Stock Purchase Agreement," effective June 1, 1989, the
undersigned FAYETTE ENERGY CORPORATION, a Delaware corporation ("FEC"),
hereby assigns, transfers and conveys to ALTAMONT COGENERATION CORPORATION,
a California corporation ("ACC"), all of FEC's right, title and interest in
and to that certain Standard Offer #4, option #1, Power Purchase Agreement
by and between Fayette Manufacturing Corporation and Pacific Gas and
Electric Company, date April 15, 1985, for the delivery of 6500 kilowatts
nameplate rating at 100% avoided costs for a cogeneration plant sited in
the Altamont Pass in California.
Fayette Energy Corporation
By /s/ Xxxxx Xxxxx
---------------
Xxxxx Xxxxx. Vice President April 10, 1990
ASSUMPTION
IN CONSIDERATION OF THE FOREGOING ASSIGNMENT, the undersigned ALTAMONT
COGENERATION CORPORATION hereby assumes all of the rights, duties and
obligations of the Seller under said Standard Offer 64, Option M1, Power
Purchase Agreement. In the event that ACC's rights under the Power Purchase
Agreement herein assigned are terminated or ACC has received notice of
default from POSE due to any act or failure to act by ACC, FEC may (subject
to the Power Purchase Agreement) cure such default within 90 days of
receipt by FEC of written notice from ACC that ACC's rights have been
terminated or that ACC has received notice of default from PG&E, and FEC
may (subject to the Power Purchase Agreement) reassume directly all rights
and obligations of ACC to and under the Power Purchase Agreement. ACC shall
take all reasonable action necessary to ensure that FEC is promptly
notified of any notice of default given to Seller under the Power Purchase
Agreement so as to maximize the time available to FEC to ensure that the
assigned Power Purchase Agreement is not terminated by PG&E, provided,
however, that FEC shall not be entitled to effect any cure of such default
on behalf of ACC if ACC is diligently proceeding to cure such default
within the time allowed for such cure under the Power Purchase Agreement.
ACC shall indemnify, hold harmless and defend FEC for any claim made by
PG&E of liability of FEC for the duties and obligations of the Seller under
the assigned Power Purchase Agreement arising during such time as ACC is
the Seller thereunder. The rights of any subsequent assignee to the
assigned Power Purchase Agreement shall be subject to the conditions set
forth in this paragraph.
Altamont Cogeneration Corporation
By /s/ Xxxxx Xxxxx April 10, 1990
---------------
Xxxxx Xxxxx, President
