Exhibit 10.3.4
POWER PURCHASE AND SALES AGREEMENT
BETWEEN
CHEVRON U.S.A. INC.
AND
SOUTHERN CALIFORNIA EDISON COMPANY
TABLE OF CONTENTS
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SECTION TITLE PAGE
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1 PARTIES 1
2 RECITALS 1
3 DEFINITIONS 1
4 TERM AND TERMINATION -- Modified by Amendment 1 7
5 CURTAILMENT 11
6 DESIGN AND CONSTRUCTION OF THE PROJECT 11
7 OPERATION OF THE PROJECT 13
8 SALE OF THE PROJECT 17
9 ABANDONMENT 19
10 DISCLAIMER 20
11 METERING 21
12 AVAILABILITY 23
13 POWER PURCHASE AND SALE 23
14 PAYMENTS FOR ENERGY - Replaced by Amendment 1 27
15 PAYMENTS FOR CAPACITY - Replaced by Amendment 1 33
16 TAXES 43
17 LIABILITY 44
18 INSURANCE 46
19 REGULATORY AUTHORITY 48
20 DISPUTES 48
21 NOTICES 49
22 NON-DEDICATION OF FACILITIES 50
23 PREVIOUS COMMUNICATIONS 50
24 NON-WAIVER 50
25 SUCCESSORS & ASSIGNS 51
26 ASSIGNMENT 51
27 NO THIRD PARTY BENEFICIARIES 53
28 EFFECT OF SECTION HEADINGS 53
29 GOVERNING LAW 53
30 CONFIDENTIALITY 53
31 UNCONTROLLABLE FORCES 54
32 PUBLICITY 56
33 WATER 56
34 TRANSMISSION COST - Replaced by Amendment 1 57
35 RECORDS AND AUDITS 59
36 CONDITIONS PRECEDENT 61
37 AGREEMENT AND SIGNATURES 62
1. PARTIES
The Parties to this Agreement are Chevron U.S.A., Inc. a Delaware
corporation, hereinafter referred to as "Seller", and Southern California Edison
Company, a California corporation, hereinafter referred to as "Edison;"
individually, "Party," and collectively, "Parties."
2. RECITALS
2.1 Seller is willing to construct and operate an electrical generating
facility with a nameplate capacity rating of 52,000 kW (47,000 kW Net) located
at Heber, California, and sell the capacity and associated net energy to Edison.
2.2 Edison is willing to purchase from the Seller, the Capacity made
available and all Net Energy delivered to Edison at the Point of Interconnection
on the terms and conditions set forth herein.
3. DEFINITIONS
When used with initial capitalizations, whether in the singular on in
the plural, the following terms shall have the following meanings:
3.1 Adjusted Capacity Price: The capacity purchase price, expressed in
$/kw/year, in the Capacity Payment Schedule for the period beginning on the Date
of Firm Operation and ending on the date of termination of this Agreement or
reduction in Capacity.
3.2 Agreement: This Power Purchase and Sales Agreement as it may be
amended from time to time.
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3.3 Avoided Operating Cost: Edison's incremental cost of electric
energy, that but for this Agreement, Edison would have generated from sources of
electric energy within the Edison electric system. In the event any federal or
state legislation, future Commission orders, rulings or guidelines are in
conflict with the definition contained in this Section 3.3, this definition
shall take precedence over such federal or state legislation, Commission orders,
rulings or guidelines.
3.4 Capacity Payment Schedule: Edison's published Capacity Payment
Schedule as authorized by the Commission and in effect at the time of execution
of this Agreement.
3.5 Commission: The Public Utilities Commission of the State of
California.
3.6 Capacity: That portion of the Project's electric power producing
capability (initially 47,000 KW) which is dedicated to Edison and made available
to Edison at the Point of Interconnection.
3.7 Capacity Price: The capacity purchase price, expressed in
$/kW/year, in the Capacity Payment Schedule for the Contract Term and Date of
Firm Operation.
3.8 Contract Term: The term of this Agreement shall be thirty (30)
years beginning on the Date of Firm Operation.
3.9 Control: To regulate the electrical output of the Project.
3.10 Current Capacity Price: The capacity price, expressed in
$/kW/year, in the Capacity Payment Schedule in effect at the time Edison
receives a termination of this Agreement or reduction in Capacity notice for a
term equal to the number of years from
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the date of termination of this Agreement or reduction in Capacity to the end of
the Contract Term.
3.11 Date of Firm Operation: The date established by the Operating
Representatives on which the Project is determined to be a reliable source of
generation as determined by a seventy-two (72) hour continuous demonstration
test at 80% of the capacity rating (47,000 KW).
3.12 Edison Electric System Integrity: Operation of the Edison electric
system in a manner which minimizes unreasonable risk of injury to persons and/or
damage to property and enables Edison to provide safe, adequate and reliable
electric service.
3.13 Emergency: A condition or situation which in Edison's sole
judgment affects Edison's ability to maintain Edison Electric System Integrity.
3.14 Forced Outage: Any unscheduled outage on either the Edison
electric system or the Project which results in a complete or partial
curtailment in either the generation of Net Energy or the acceptance of Net
Energy from the Project.
3.15 Generating Facilities: All of Seller's Generators and all
protective and other associated equipment and improvements necessary for the
Project to produce electrical energy, excluding associated land, land rights,
geothermal leases, or interests in land.
3.16 Generator: The generator(s) and associated prime mover(s), which
are a part of the Generating Facilities.
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3.17 Interconnecting Utility: The electric utility or any other utility
that is directly connected with the Project and which receives delivery of Net
Energy from the Project.
3.18 Interconnection Facilities: The electrical interconnection
facilities furnished, at no cost to Edison, by Seller, or by the Interconnecting
Utility on Seller's behalf, which is appurtenant to, and/or incidental to, the
Project. The Interconnection Facilities shall include, but are not limited to,
transmission lines and/or distribution lines between the Project and
transmission lines and/or distribution lines of the Interconnecting Utility,
relays, power circuit breakers, metering devices, telemetering devices, and
other control and protective devices specified by the Interconnecting Utility as
necessary for operation of the Project in parallel with the Interconnecting
Utility's electric system.
3.19 Net Energy: Kilowatthours generated by the Project which are
purchased by Edison at the Point of Interconnection pursuant to this Agreement.
3.20 Operate: To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection, operation, use,
management, replacement, retirement, reconstruction, and maintenance of, and for
the Generating Facility in accordance with applicable utility standards and good
engineering practices.
3.21 Operating Representatives: Individual(s) appointed by each Party
to secure effective cooperation and interchange of information between the
Parties in connection with this Agreement.
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3.22 Peak Months: Those months during which the annual system peak
demand of the Edison electric system may occur. Currently, those months are
June, July, August and September. Such designation is subject to change upon
written notice consistent with Commission guidelines.
3.23 Point of Interconnection: The point where the transfer of Net
Energy from Seller to Edison occurs.
3.24 Project: The Generating Facilities, Interconnection Facilities,
the site for the Generating Facilities, and metering equipment necessary to
permit the Generator to deliver Net Energy and make Capacity available to Edison
at the Point of Interconnection.
3.25 Qualifying Facility: A Small Power Production Facility as defined
in Title 18, Code of Federal Regulations Section 292.201 through 292.207 or a
geothermal power producer under California Public Utilities Code Section 2801
and following.
3.26 Renewable Resources: Wind parks, small hydroelectric, solar and
geothermal resources which produce electric power.
3.27 Summer Period: The Summer Period as defined in Tariff Schedule No.
TOU-8 now in effect or as may hereafter be authorized by the Commission to be
revised.
3.28 Tariff Schedule No. TOU-8: Edison's time-of-use energy tariff for
electric loads of 500 kW or more as now in effect or as may hereafter be revised
as authorized by the Commission.
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3.29 Winter Period: The Winter Period as defined in Tariff Schedule No.
TOU-8 now in effect or as may hereafter be authorized by the Commission to be
revised.
4. TERM AND TERMINATION
4.1 This Agreement shall become effective upon execution and remain in
effect for the Contract Term (30 years from Date of Firm Operation) unless
sooner terminated as provided herein.
4.2 This Agreement shall terminate if the Date of Firm Operation does
not occur by December 31, 1987. In the event the Date of Firm Operation is
delayed due to an uncontrollable force, such date shall be extended for the
period of such delay, not to exceed one (1) year.
4.3 This Section 4.3 shall apply if this Agreement is terminated or
Capacity is reduced or terminated prior to the expiration of the Contract Term.
The Parties agree that the amount Edison pays Seller for Capacity is based on
the agreed value of Seller's performance of its obligations to provide Capacity
during the full Contract Term.
4.3.1 The Parties agree that the refund and payments provided in
Sections 4.4 and 4.5 represent a fair compensation for the reasonable
losses that would result from termination of this Agreement or reduction in
Capacity, and shall represent Edison's sole and exclusive remedy resulting
from such termination of this Agreement or reduction in Capacity.
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4.3.2 Edison shall provide Seller invoices for all amounts due Edison
pursuant to this Section. Such amounts shall be due on presentation and
paid within sixty (60) days of the invoice date.
4.3.3 If Seller does not make payments as specified in Section 4.3.2,
Edison shall have the right to offset any amounts Seller owes Edison
against any amounts Edison owes Seller or declare that all sums then due
Edison under this Agreement are immediately due and payable.
4.4 Seller may terminate this Agreement or reduce Capacity, provided that
Seller gives Edison (i) 12 months prior written notice for the reduction of all
or part of the first 25,000 KW of Capacity and (ii) 36 months prior written
notice for the termination of this Agreement or any reduction to Capacity which
results in a total aggregate reduction in Capacity in excess of 25,000 KW. [See
Amendment 1, Page 3 of Exhibit 10.3.5]
4.4.1 Upon termination of this Agreement or reduction in Capacity,
Seller shall pay Edison, for the amount of Capacity reduction, an amount
equal to the difference between (i) the total Capacity payments paid by
Edison up to and including the date of receipt of notice and (ii) Capacity
payments which Edison would have paid Seller for the period of Seller's
actual performance at the Adjusted Capacity Price with interest compounded
monthly at the current published Federal Reserve Board three (3) months
prime commercial paper rate up to the date of the termination of this
Agreement or reduction in Capacity.
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4.4.2 From the date of receipt of a termination or reduction notice to
the date of termination of the Agreement or reduction in Capacity, Edison
shall pay Seller until the effective date of such termination or reduction
at the Adjusted Capacity Price for the amount of Capacity reduced or
terminated by said notice.
4.4.3 Edison shall pay Seller for the amount of Capacity not
terminated, if any, at the Capacity Price.
4.5 If Seller terminates this Agreement or reduces the Capacity without
providing the notice specified in Section 4.4, the provisions of Section 4.4
shall apply, and additionally Seller shall pay Edison an amount equal to the
product of: (i) the amount of Capacity reduced or terminated times (ii) the
difference between the Current Capacity Price and the Capacity Price times (iii)
the period in years and fractions thereof (not less than one year) that the
Seller was deficient in providing notice pursuant to Section 4.4. If the Current
Capacity Price is less than the Capacity Price, no payment under this Section
4.5 shall be required.
4.6 In the event this Agreement is terminated and Capacity is
immediately made available to Edison under the terms of a new agreement, the
Seller's payments due Edison, pursuant to Sections 4.4 and 4.5 herein, may be
repaid over the first eight (8) years of the new agreement term at the Seller's
option. The unpaid balance of the Seller's payments shall draw interest monthly
at an annual rate equal to the current published Bank of America prime
commercial rate plus 1%.
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5. CURTAILMENT
Edison may interrupt or reduce the acceptance of Net Energy from the
Project if such an interruption or reduction is required (i) to allow Edison to
perform scheduled maintenance, tests, or repairs on the Edison electric system
as required, in Edison's sole judgement, to maintain Edison Electric System
Integrity or (ii) during an Emergency or Forced Outage on the Edison electric
system when acceptance of Net Energy from the Project in Edison's sole judgment,
would jeopardize Edison Electric System Integrity. Upon such Interruptions or
reductions of the acceptance of Net Energy from the Project, Edison shall
continue to make capacity payments pursuant to Sections 15.7.2 and 15.7.3. Each
Party shall use its best efforts to correct, within a reasonable period, the
conditions on its system or in its facilities necessitating such interruption or
reduction of the acceptance of Net Energy from the Project. Such interruption or
reduction shall be limited to the period of time such a condition exists.
6. DESIGN AND CONSTRUCTION OF THE PROJECT
6.1 Seller, at no cost to Edison, shall design, engineer, procure,
construct and test the Project in accordance with applicable utility standards
and good engineering practices
6.2 Seller, at no cost to Edison, shall design, engineer, procure,
construct and test the Interconnection Facilities in accordance with applicable
utility standards and good engineering practices and the rules and regulations
of the Interconnecting Utility.
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6.3 Except to the extent as previously obtained by Edison pursuant to
the agreement between Edison and Chevron in the Contract for the Engineering and
Construction of Heber Geothermal Generating Plant No. 1, executed on February 4,
1982 (E&C Contract), Seller, at no cost to Edison, shall acquire all permits and
approvals, and complete, or have completed, all environmental impact studies
necessary for the construction, operation, and maintenance of the Project.
6.4 Edison shall have the right to review the construction schedule and
to monitor the construction, start-up, operation and maintenance of the Project.
Seller shall notify Edison as far in advance of the Date of Firm Operation as
reasonably possible, of changes in the construction schedule which may affect
the Date of Firm Operation. Edison shall have the right to review technical data
and technical records of the operation of the Project. Edison agrees not to
interfere with the Seller's operations, and agrees to adhere to Seller's work
rules and operating regulations. All information or data received by Edison
under this Section 6 shall be treated in accordance with Section 30.
6.5 Seller, at no cost to Edison, shall make modifications to the
Interconnecting Facilities as required to maintain Edison Electric System
Integrity so that Edison can continue to accept Net Energy from the Project.
7. OPERATION OF THE PROJECT
7.1 Seller shall Operate, Control and maintain the Project in
accordance with applicable utility standards and good engineering practices and
shall produce the maximum electrical output from the Project consistent with
such standards and practices.
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7.2 Each Party shall keep the other Party's Operating Representative
informed regarding the operating schedule of their respective facilities which
affect the other Party's operations hereunder, including any reduction in
Capacity availability. Each Party shall use its best efforts to provide the
other Party with reasonable advance notice regarding scheduled outages of its
facilities, including any reduction in Capacity availability as follows, unless
otherwise agreed to by the Parties:
Scheduled Outage Advance Notice
Expected Duration Required
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Less than one day 24 Hours
One day or more (except major overhaul) 1 Week
Major overhaul 6 Months
7.3 The Operating Representatives shall notify each other by telephone
regarding outage dates and durations and shall use their best efforts to
coordinate the schedule of such outages as to facilitate the maximum output of
the Project.
7.4 Neither Seller nor Edison shall schedule major overhauls during
Peak Months and shall make reasonable efforts to avoid scheduling routine
maintenance during the Peak Months. Seller's and Edison's outages for scheduled
maintenance shall not exceed an aggregate of 30 peak hours during the entire
period encompassed by the Peak Months per year.
7.5 Seller shall maintain an operating log at Seller's Generating
Facility with records of real and reactive power production, changes in
operating status, outages,
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protective apparatus operations and any unusual conditions found during
inspections. Seller shall also maintain records applicable to the Generating
Facility, including records regarding the electrical characteristics of the
Generator and settings or adjustments of the Generator control equipment and
protective devices. Seller shall, under provisions of Section 30 herein, make
such information available to Edison upon request and provide copies of such
logs and records, if requested, to Edison within thirty (30) days of Edison's
request.
7.6 Seller shall use reasonable efforts to notify Edison at least 14
calendar days prior to initial energizing of the Point of Interconnection and
initial parallel operation of the Project with the Edison electric system.
Edison shall have the right to have a representative present at such times.
7.7 Seller shall use reasonable efforts to obtain Qualifying Facility
status for the Project prior to the Date of Firm Operation and maintain such
status during the term of this Agreement. If Seller fails to maintain Qualifying
Facility status, Seller, at its sole discretion, may elect to (i) suspend the
deliveries of Net Energy until such time the Qualified Facility status is
reestablished, subject to the provisions of Sections 9 and 15 or (ii) continue
the delivery of Net Energy and shall hold Edison harmless from any and all
liability, loss, damage, claim, action, cause of action, cost, charge or expense
resulting from such loss of Qualifying Facility status.
7.8 Seller and Edison, as applicable, shall obtain and maintain
necessary government authorization(s) and permit(s). The Seller or Edison shall
hold the other
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party harmless from any and all liability, loss, damage, claim, action, cause of
action cost, charge or expense resulting from the failure to obtain or maintain
the necessary government authorization(s) and permit(s). Seller may elect to
suspend the delivery of Net Energy until all necessary government
authorization(s) and permit(s) are obtained or maintained by the Seller subject
to Sections 9 and 15.
7.9 At Edison's request, Seller shall make all reasonable efforts to
deliver Net Energy at an average rate of delivery at least equal to the Capacity
during periods of Emergency. If the Seller has previously scheduled an outage
coincident with an Emergency, Seller shall make all reasonable efforts to
reschedule the outage. Edison shall waive the notification specified in Section
7.2 if Seller reschedules an outage.
8. SALE OF THE PROJECT
8.1 If Seller offers to sell its interest in the Project or relinquish
its interest under any lease of the Project, Seller shall promptly offer to
Edison, or any Edison subsidiary, the right to be substituted for Seller under
the lease of the Project or the right to purchase Seller's interest in the
Project. Edison shall have up to 60 days following any such offer to accept
Seller's offer or otherwise reach agreement with Seller.
8.2 If the Parties are unable to reach a satisfactory agreement as
specified in Section 8.1, and Seller offers to Sell its interest in the Project
to any third party, Edison, or any Edison subsidiary, shall have the right for
30 days following each offer to agree to purchase Seller's interest in the
Project under the same terms and conditions, if such terms and conditions are
better to Edison than those offered in Section 8.1 herein. Any
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offers to sell made more than two years after Edison's failure to accept a
previous offer to sell, under Section 8.1, shall again be subject to the terms
of Section 8.1 and 8.2.
8.3 Seller shall have the right to require Edison to purchase the
Project if the average cost of electric energy and capacity to Edison based on
the purchase price for the Project, and a projected price for geothermal heat
would result in a cost to Edison of electric energy and capacity delivered to
Edison's electric system in the aggregate below avoided costs for a consecutive
three hundred sixty-five day period which is reasonably representative of a
longer term. Such a purchase of the Project by Edison shall be subject to prior
regulatory approval (e.g. Commission Certificate of Public Convenience and
Necessity and rate base treatment of the investment) as required in Edison's
sole judgment, and subject to prior negotiation and execution of contracts
between Edison and Seller for the purchase of the Project and geothermal heat
for the Project consistent with such objective.
8.4 If the Project is sold to a third party and said third party does
not assume the obligations of this Agreement, as specified in Section 26, then
this Agreement shall be considered terminated and the provisions set forth in
Sections 4.4 and 4.5 shall apply.
8.5 If the Seller offers to sell the Project to Edison, or any Edison
subsidiary, under the provisions of Section 8, then Edison, or any Edison
subsidiary, shall establish a value of the Project to Edison. When determining
the value of the Project, Edison shall take into consideration any and all
monies due Edison under the terms of this Agreement in event of a termination.
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9. ABANDONMENT
9.1 The Project shall be deemed abandoned if Seller terminates
operation of the Project with the intent that such termination be permanent.
Such intent shall be presumed by either Seller's written notice to Edison of
such intent or operation of the Project so that no Energy is generated therefrom
for 730 consecutive days during any period after the Date of Firm Operation,
unless otherwise agreed to in writing by the Parties. If the Project is
prevented from generating energy due to an uncontrollable force, then such
period shall be extended for the duration of the uncontrollable force, not to
exceed one (1) year.
9.2 If Seller abandons the Project during the term of this Agreement,
Edison, or any Edison subsidiary shall have the right to substitute itself for
Seller under the Seller's lease arrangement with its lender or in the event the
Project is to be sold subsequent to such abandonment, Edison shall have the
right to purchase the Seller's interest in the Project under the terms of
Section 8.1 and 8.2.
9.3 If Seller abandons the Project, this Agreement may be terminated
and the provisions of Sections 4.4 and 4.5, as applicable, will control unless
otherwise provided herein.
10. DISCLAIMER
Any review by Edison of the design, engineering, construction,
operation, control, or maintenance of the Project is solely for the information
of Edison. By making such review, Edison makes no representation as to the
economic or technical feasibility,
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operational capability, or reliability of the Project. Seller shall in no way
represent to any third party that any such review by Edison of the Project ,
including but not limited to, any review of the design, engineering,
construction, operation, or maintenance of the Project by Edison is a
representation by Edison as to the economic or technical feasibility,
operational capability, or reliability of the Project. Seller is solely
responsible for economic feasibility, technical feasibility, operational
capability or reliability of the Project. Edison shall not be liable to Seller
for, and Seller shall, at its cost, defend, indemnify and hold harmless Edison,
its directors, officers, employees, agents, assigns and successors from and
against any loss, damage, claim, action, cause of action, cost, charge or
expense arising from any contrary representation concerning the effect of
Edison's review of the design, engineering, construction, operation or
maintenance of the Project.
11. METERING
11.1 Seller shall install or shall cause the Interconnecting Utility to
install and maintain metering equipment as specified and provided by the
Interconnecting Utility at the Point of Interconnection, pursuant to an
interconnection agreement to be entered into between Seller and the
Interconnecting Utility, to allow monitoring by the Parties and the
Interconnecting Utility and to record and measure kilowatthours and time. Edison
shall not be liable or responsible for any costs of acquisition, installation,
ownership or maintenance of such metering equipment, including costs incurred by
Seller for inspecting and calibrating such equipment. This metering equipment
shall be utilized for
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the measurement of Net Energy and Capacity in order to determine Edison's
payments to Seller pursuant to this Agreement.
11.2 Edison shall install, as required by Edison Electric System
Integrity, at Seller's cost, generation telemetering equipment to monitor the
Project's net generation. Seller shall install as required by Edison Electric
System Integrity in order that Edison can accept Net Energy from the Project,
additional meters at the Project to enable Seller to make daily telephone
reports in the event telemetering equipment is inoperative. Seller shall bear
all costs of additional meter equipment, installation, ownership and
administration and all costs for inspecting and testing such equipment.
11.3 The Parties shall seal all meters used to determine xxxxxxxx
hereunder. The seals shall be broken only when the meters are to be inspected,
calibrated or adjusted. Edison shall, at Seller's cost, inspect and calibrate,
or shall request that the Interconnecting Utility inspect and calibrate, all
meters upon their installation and annually thereafter. If requested to do so by
Seller, or if at any reading, the metering inaccuracy exceeds 2%, the meters
shall be calibrated promptly. Each Party shall give reasonable notice, both oral
and written, to the other Party, of at least five (5) working days of when any
inspection or calibration is to take place. The other Party may have
representatives present at the calibration or inspection. If metering equipment
inaccuracy exceeds 2%, the Operating Representatives shall estimate and agree
upon the correct amount of Net Energy delivered during the period of inaccuracy.
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11.4 Each Party shall within ten (10) days after written notice to the
other Party have the right of access during regular business hours to all
metering and billing records relevant to the purchase of Net Energy under this
Agreement.
12. AVAILABILITY
12.1 Seller shall make all reasonable efforts to limit Project outages.
12.2 If Seller fails to meet the performance requirements specified in
Section 15, Edison shall have the right to require the Seller to demonstrate the
ability of the Project to generate Capacity once a year and to observe said
demonstration. The Seller shall, at its expense, conduct said demonstration at a
time and under procedures mutually agreed upon by the Parties.
13. POWER PURCHASE AND SALE
13.1 Seller hereby agrees to sell to Edison, and Edison hereby agrees
to accept and purchase from Seller, all Net Energy delivered by Seller to Edison
hereunder at the Point of Interconnection regardless of economic dispatch or
hydro-spill consideration. Edison may interrupt or reduce such deliveries due to
scheduled or Forced Outages, Emergencies, and uncontrollable forces only. During
any such interruption or reduction, Edison shall continue to make capacity
payments to the Seller pursuant to Sections 15.7.2 and 15.7.3.
13.1.1 Seller shall begin delivery of Net Energy on or before the Date
of Firm Operation.
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13.1.2 If at any time, Seller can physically deliver Net Energy to
Edison while it is contesting the claimed jurisdiction of any entity which
has not issued a license or other approval for the Project, Seller, at its
sole discretion and risk, shall have the right to deliver Net Energy to
Edison. Edison shall pay Seller for Net Energy pursuant to Section 14.
However, unless and until all required licenses and approvals have been
obtained, Seller may discontinue deliveries at any time, at no cost or
liability to Seller.
13.1.3 In the event there has been an interruption or reduction in the
deliveries of Net Energy pursuant to Section 5 and during such period
Seller makes deliveries, with notice to Edison, of Net Energy to the
Interconnecting Utility which are subsequently delivered to Edison pursuant
to schedules agreed upon by Edison and the Interconnecting Utility, Edison
shall notify Seller of such scheduled deliveries within thirty (30)
business days of such scheduled deliveries, Edison shall pay Seller for
such Net Energy at the price applicable at the time of scheduled delivery
to Edison. In the event of an interruption or reduction in the deliveries
of Net Energy pursuant to Section 5 and the Interconnecting Utility is
either unable or unwilling to accept such Net Energy, the Seller may sell
such Net Energy to a third party. During any such sale of Net Energy to a
third party, Edison shall continue to make capacity payments to the Seller
pursuant to Sections 15.7.2 and 15.7.3.
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13.2 Seller shall sell to Edison, and Edison shall purchase from
Seller, Capacity as specified in Section 2.1 or Capacity as adjusted pursuant to
Section 13.3.
13.3 Seller may, with Edison's approval, which shall not be
unreasonably withheld, increase the amount of Capacity. Edison shall pay for
such additional Capacity at a rate equal to current Capacity Price for the
remaining Contract Term. Seller may reduce the amount of Capacity at any time by
giving written notice thereof to Edison pursuant to Section 4.4. Edison may
reduce the amount of Capacity as a result of demonstration tests or prior
performance. The amount by which Capacity is reduced shall be deemed a reduction
in Capacity pursuant to Section 4. Either Party may request the other Party to
agree in writing to a revised Capacity whenever it appears that Capacity has
changed.
13.4 Monthly Payment
13.4.1 Edison shall determine from monthly meter readings Net Energy
and Capacity purchased by Edison during the periods specified in Tariff
Schedule No. TOU-8 for the preceding monthly billing period, and calculate
the amount due Seller. Edison shall use its best efforts to read the meter
on a regular, monthly interval
13.4.2 If a monthly payment period involves portions of different
published Energy payment schedule periods, Edison shall prorate the monthly
Energy payment on the basis of the percentage of days at each price.
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13.4.3 Within 20 business days of each monthly meter reading, Edison
shall mail a statement to Seller indicating the amount of Net Energy and
Capacity purchased during the billing period and the amount to be paid.
Edison shall prepare and mail a check to Seller within ten (10) business
days of mailing of the statement.
14. PAYMENTS FOR ENERGY
14.1 Seller shall receive a monthly payment for Net Energy received and
accepted by Edison at the Point of Interconnection. Seller shall have the
option, to be exercised by the Seller prior to Date of Firm Operation, to elect
to sell Net Energy at a price based on the payment provisions described in
Section 14.2, 14.3 or 14.4.
14.2 Edison's Standard Offer No. 2 for Firm Power Purchases (effective
date February 14, 1983).
14.2.1 Seller shall receive monthly payments for Net Energy, based on
Edison's Avoided Operating Cost, received by Edison during the on-peak,
mid-peak and off-peak periods. These periods are defined and published in
Edison Tariff Schedule No. TOU-8.
14.2.2 Monthly payment for Net Energy shall be calculated as follows:
Monthly Payment for Net Energy = A + B + C
where:
A = on-peak energy payment
B = mid-peak energy payment
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C = off-peak energy payment
where, for each period:
Period Energy Payment = (Avoided Operating Cost/KwH) x (Period Net
Energy, KwH) x energy loss adjustment factor.*
14.3 Edison's Standard Offer No. 5 for Firm Power Purchases. This
option is valid only if Standard Offer No. 5 is approved and implemented by the
Commission prior to the Date of Firm Operation.
14.4 Net Energy Payment Option No. 3.
14.4.1 For the first 15 years of the Contract Term, Seller shall
receive monthly payments for Net Energy based on the pricing provisions
specified in Section 14.4.2. For the second 15 years of the contract term,
Seller shall receive monthly payments for Net Energy equal to 98% of
Edison's full Avoided Operating Costs as specified in Section 14.2.
14.4.2 For the first 15 years of the Contract Term, Seller shall
receive monthly payments for Net Energy based on the higher of (i) Edison's
full Avoided Operating Cost as specified in Section 14.2 or (ii) the floor
price. The floor price payments shall be calculated as follows:
--------
* The energy loss adjustment factor shall be one (1), subject to adjustment
by Commission orders or rulings.
22
Monthly Floor Payment (floor price/kwh) x (Net Energy, kwh) x energy
loss adjustment factor*
where, the floor price is:
Year Floor Price
---- -----------
1985 4.6(cent)/kwh
1986 5.1
1987 5.4
1988 5.4
1989 5.9
1990 5.9
1991 5.9
1992 7.0
1993 7.5
1994 7.5
1995 8.0
1996 8.0
1997 8.5
--------
* The energy loss adjustment factor shall be one (1), subject to adjustment
by Commission orders or rulings.
23
1998 8.5
1999 8.5
14.4.3 If Seller elects the payment provision specified in Section
14.4, then Edison shall pay for the transmission service costs, as
specified in Section 34, which are incurred in delivering the Net Energy to
the Point of Interconnection, for the first 5 years of the Contract Term
and simultaneously enter an identical amount as a debit in the Payment
Tracking Account specified Section 14.4.4.
14.4.4 Payment Tracking Account
14.4.4.1 Edison shall establish a Payment Tracking Account (PTA) to
account for (i) transmission service costs described in Section 14.4.3 and
(ii) the amount by which Edison's monthly payment for Net Energy to Seller
exceeds the payment which would have been paid the Seller under Section
14.2. These entries shall be considered debits in the PTA. Sums in the PTA
will draw interest monthly at an annual rate equal to the current published
Bank of America prime commercial rate plus 1%.
14.4.4.2 The balance in the PTA, including accrued interest, shall not
exceed $5,000,000.
14.4.4.3 Whenever a balance exists in the PTA, the Seller shall
repay the balance using credits in the form of reductions to Edison's
monthly
24
payment for Net Energy to Seller. PTA credits shall include, but not be
limited to the following:
a. When Edison's full Avoided Operating Cost exceeds the floor
price, Edison shall make a monthly payment for Net Energy equal
to one-half (1/2) of the sum of monthly payments calculated using
Edison's full Avoided Operating Cost and the floor price. The
difference between the monthly payment made in accordance with
this Section 14.4.4.3 and the monthly payment pursuant to Section
14.2 shall be credited against the PTA balance.
b. Seller shall at any time have the option of paying to Edison part
or all of the existing balance in the PTA without incurring any
penalties. To implement this each month, Seller shall notify
Edison in writing within 20 business days after the monthly meter
reading of its election to receive a reduced monthly payment for
Net Energy and credit that reduction against the PTA balance.
c. If the PTA balance reaches the $5,000,000 limit, Edison's monthly
payment for Net Energy to Seller shall be reduced by an amount
which ensures the PTA balance does not exceed $5,000,000. At no
time shall the credits to the PTA exceed the current balance.
When the PTA balance is zero, the monthly
25
payment for Net Energy to the Seller shall be made pursuant to
Section 14.4.2.
14.4.4. If at the end of the first fifteen years the Contract Term a
PTA balance remains, the said PTA balance shall be due and payable and paid
within 60 days, including interest up to the date of payment.
15. PAYMENTS FOR CAPACITY
15.1 If the Seller selects the net energy payment provisions in Section
14.3, then the Seller shall be paid for Capacity delivered pursuant to he
provision of Edison's Standard Offer No. 5 for Firm Power Purchases. This option
is valid only if Standard Offer No. 5 is approved and implemented by the
Commission prior to the Date of Firm Operation.
15.2 If the Seller selects the net energy payment provisions in either
Section 14.2 or 14.4, then the Seller shall receive monthly payments for
Capacity pursuant to Section 15.3.
15.3 Seller shall receive monthly payments for Capacity made available
at the Point of Interconnection. Seller shall have the option, to be exercised
prior to the Date of Firm Operation, to elect to sell the Capacity pursuant to
the payment provisions specified in Section 15.4 or 15.5.
15.4 Payment Option 1 -- Performance Based on
Availability/Dispatchability
15.4.1 Minimum Performance Requirement in Option 1 to receive full
capacity payments.
26
15.4.1.1 The Generating Facility must be dispatchable to Edison upon
request, and meet the following conditions:
(i) The Generating Facility must be available during all on-peak
hours of each Peak Month except during hours of allowable Forced Outage
as specified in Section 15.4.1.3.
(ii) The Generating Facility must be available for all other
hours of the year except during hours of allowable maintenance as
specified in Section 15.6 and during hours of allowable maintenance as
specified in Section 15.4.1.3.
15.4.1.2 The measure of availability shall be the performance during
the hours that the Generating Facility is dispatched, ignoring energy
produced in any hour in excess of the Capacity of the Generating Facility.
Dispatching requests can only increase power production, and only up to
Capacity.
15.4.1.3 The Seller is allowed a 20% Forced Outage rate for the on-peak
hours of each Peak Month, a 20% Forced 20% Outage rate for the mid- and
off-peak hours of each Peak Month, and 20% Forced Outage rate for the hours
of each non-Peak Month. Except during the Peak Months, Seller may
accumulate and apply the 20% allowance for Forced Outage for any
consecutive three month period.
15.4.2 Payment Provision in Option 1
27
15.4.2.1 When the requirements of Section 15.4.1 are met, the monthly
payment is:
Monthly Capacity Payment =
(Capacity Price) x (1/12) x (Capacity)
15.4.2.2 When the requirements of Section 15.4.1 are not met, the
monthly payment is:
Monthly Capacity Payment*
(Capacity Price) x (1/12) x (Capacity) x (Availability/.8)*
15.4.3 Payments in excess of 100% of Capacity Price.
15.4.3.1. Bonus During Peak Months
For a Peak Month, the Seller will receive a bonus if
1) The performance requirements of Section 15.4.1 have
been met; and,
2) The on-peak availability exceeds 85%.
15.4.3.2 Bonus During Non-Peak Months
In a non-Peak Month, the Seller will receive a bonus if
--------
* (Availability/.8) cannot be greater than 1.0.
28
1) The performance requirements of Section 15.4.1 have been
met;
2) The on-peak availability for each of the year's Peak Month
was at least 85%; and
3) The on-peak availability exceeds 85%.
15.4.3.3 Bonus Payment
For any eligible month, the bonus payment will be calculated
according to the fol1owing formula.
Monthly Bonus Payment = [(1.2 x on-peak availability) - 1.02]
x (1/12) Capacity Price x Capacity
Where:
Availability =
kWh Purchased by Edison
--------------------------------------------------------------
(Capacity) x (Hours dispatched - Allowable Maintenance Hours)
15.4.3.4 Total monthly Capacity payment when a bonus is earned shall be
the sum of the monthly Capacity payments specified in Section 15.4.2.1 and
15.4.3.3.
15.4.4 Only by mutual agreement can the kilowatthours used in the
calculation of capacity payments specified in Section 15.4 be greater than
a delivery rate equal to Capacity.
15.5 Payment Option 2 -- Performance Based on Capacity Factor
29
15.5.1 Minimum performance Requirement in Option 2 to receive full
capacity payments.
15.5.1.1 The Capacity shall be available for all of the on-peak hours
as defined in Tariff Schedule No. TOU-8 in each of the Peak Months subject
to a 20% allowance for Forced Outages for each month.
15.5.1.2 There is no minimum performance requirement for the rest of
the year.
15.5.2 Payment Provision in Option 2.
The monthly capacity payment shall be calculated as the sum of
the on-peak, mid-peak, and off-peak capacity payments. Each capacity
period payment is calculated as follows:
Monthly Capacity Period Payment =
(Capacity Price) x (Conversion to Monthly Payment) x (Capacity)
x (Period Performance Factor)
Where:
Period Performance Factor =
kWh Purchased by Edison
-------------------------------------------------------------
0.8 x (Capacity) x (Period Hrs. - Allowable Maintenance Hrs.)
The Period Performance Factor cannot exceed
1. When the allowable maintenance hours equals the period hours,
the period performance factor shall equal 1.0.
30
Conversion to Monthly Payments: The following factors convert Capacity
Price to monthly payments by time period of delivery. These conversion factors
will be subject to periodic change as approved by the Commission.
Summer Period Winter Period
------------- -------------
On-peak .13125 .02094
Mid-peak .00267 .01054
Off-peak .00000 .00127
15.5.3 Payments in Excess of 100% of Capacity Price
15.5.3.1 Bonus During Peak Months
For a Peak Month, the Seller will receive a bonus if
1) The Performance Requirements of Section 15.5.1 have
been met;
and
2) The on-peak capacity factor exceeds 85%.
15.5.3.2 Bonus During Non-Peak Months
1) The performance requirements of Section 15.5.1 have
been met;
2) The on-peak capacity factor for each of the year's
Peak Months was at least 85%;
and
3) The on-peak capacity factor exceeds 85%.
15.5.3.3 Bonus Payment
For any eligible month, the bonus payment is the following:
Bonus Payment =
31
[(1.2 x on-peak capacity factor) - 1.02]
x Capacity Price
x (1/12)
x Capacity
Where:
On-peak Capacity Factor =
kWh Purchased by Edison
-------------------------------------------------------
(Capacity) x (Period Hrs. - Allowable Maintenance Hrs.)
15.5.3.4 The monthly capacity payment when a bonus is
earned shall be the sum of the monthly capacity payment (Section
15.5.2) and the monthly bonus payment (Section 15.5.3.3).
15.5.4 Only by mutual agreement can the kilowatthours used in
the calculation of capacity payments specified in Section 15.5 be
greater than a delivery rate equal to Capacity.
15.6 Scheduled Maintenance Allowances
The a1lowance for scheduled maintenance is as follows:
15.6.1 Outage periods for scheduled maintenance shall not
exceed 840 hours (35 days) in any 12-month period. This allowance may
be used in increments of an hour or longer on a consecutive or
non-consecutive basis.
15.6.2 Seller may accumulate unused maintenance hours on a
year-to-year basis up to a maximum of 1,080 hours (45 days). This
accrued time must be
32
used only for major overhauls, as such major overhauls are reasonably
defined by the Seller.
15.7 Failure to Meet Minimum Performance Requirements
15.7.1 Except when caused by uncontrollable forces, if Seller
fails to meet the minimum performance requirements as set forth in
Sections 15.4.1 and 15.5.1. The following shall apply:
15.7.1.1 Seller may be placed on probation for a period
not to exceed 15 months or as otherwise agreed to by the Parties.
During this period, the monthly capacity payment will be based on
the level of Capacity actually made available as calculated in
Sections 15.4.2.2 and 15.5.2, as app1icable.
15.7.1.2 If Seller meets or demonstrates to Edison
pursuant to Section 12.2 that it can meet its minimum requirement
during the probationary period, Edison shall reinstate regular
capacity payments.
15.7.1.3 If Seller fails to meet its minimum
requirements during the probationary period, Edison may derate
the Capacity to the greater of the Capacity actually made
available when the minimum requirements stated in Sections 15.4.1
and 15.5.1 were not met, or the Capacity at which Seller is
reasonably likely to meet the minimum requirements. In either
case, the quantity by which the Capacity is reduced shall be
considered terminated without prescribed notice as provided in
Section 4.4.
33
15.7.2 If Seller is prevented from meeting the minimum
performance requirement because of a schedule outage, a Forced Outage
or an Emergency on the Edison electric system, Edison shall continue to
make capacity payments to Seller. Under Option 2, the calculations of
capacity payments will treat hours of Forced Outage and Emergency on
the Edison system the same as scheduled maintenance outages.
15.7.3 If deliveries are interrupted or reduced because of
uncontrollable forces, Edison shall continue to make capacity payments
to Seller for 90 days from the occurrence of the uncontrolled force
event. Under Option 2, the calculation of capacity payments will treat
hours of interruption or reduction by reason of an uncontrollable
force, the same as scheduled maintenance outages with reductions in
Capacity treated on a pro rata basis.
16. TAXES: Seller shall pay ad valorem taxes and other taxes properly attributed
to the Project. If such taxes are assessed or levied against Edison, Seller
shall pay Edison the amount of such assessment or levy within thirty (30) days
of presentation of documentation thereof. The Parties shall provide information
concerning the Project to any requesting taxing authority.
17. LIABILITY
17.1 As used in this Section 17, the word "liability"shall mean "all
liability, damages, costs, losses, claims, demands, actions, causes of action,
attorneys' fees and expenses, or any of them."
34
17.2 Seller shall defend at its own cost and indemnify and hold
harmless Edison, its officers, directors, employees, agents, contractors and
subcontractors from and against any and all liability resulting directly or
indirectly from or connected with the development and/or furnishing of Net
Energy by Seller as provided herein (including but not limited to such liability
arising from the death of or injury to an officer, director, agent or employee
of Seller or Edison or damage to property of Seller or Edison or of any officer,
director, agent or employee of Seller or Edison) to the extent caused by the
negligent acts of Seller.
17.3 Edison shall defend at its own cost and indemnify and hold
harmless Seller, its officers, directors, employees, agents, contractors and
subcontractors from and against any and all liability resulting directly or
indirectly from or connected with the utilization of Net Energy by Edison as
provided herein (including but not limited to such liability arising from the
death or injury to an officer, director, agent or employee of Seller or Edison
or damage to property of Seller or Edison or of any officer, director, agent or
employee of Seller or Edison) to the extent caused by the negligent acts of
Edison.
17.4 Seller shall defend at its own cost and indemnify and hold
harmless Edison, its officers, directors, employees, agents, contractors and
subcontractors from or connected with an infringement of a patent by Seller in
the performance or non-performance of this Agreement.
35
17.5 Edison shall defend at its own cost and indemnify and hold
harmless Seller, its officers, directors, employees, agents, contractors and
subcontractors from and against any and all liability resulting directly or
indirectly from or connnected with an infringement of a patent by Edison in the
performance or non-performance of this Agreement.
17.6 Notwithstanding anything in this Agreement to the contrary, under
no circumstances, whether arising in contract, equity, tort (including
negligence) or otherwise, shall either Party hereto be responsible or liable to
the other for loss of profit, loss of operating time or loss of use or reduction
in the use of any equipment or facilities or any portion thereof, increased
expense of operation or maintenance, cost of replacement power, claims of
customers, third parties or for any special, indirect, incidental or
consequential damages.
18. INSURANCE
18.1 During the term of this Agreement, Seller shall obtain and
maintain in force as hereinafter provided comprehensive general liability
insurance, including contractual liability coverage, with a combined single
limit of not less than $5,000,000 each occurrence. The insurance carrier or
carriers and form of policy shall be subject to review and approval by Edison.
18.2 Prior to the date the Project is first operated in parallel with
the Edison electric system, Seller shall furnish to Edison: (i) a certificate of
insurance providing that such insurance shall not be terminated nor expire
except on thirty (30) days prior written
36
notice to Edison, and (ii) an additional insured endorsement with respect to
such insurance in substantially the following form:
"In consideration of the premium charged, Southern California Edison
Company ("Edison") is named as additional insured with respect to all
liabilities arising out of Seller's use and ownership of Seller's
Generating Facility.
"The inclusion of more than one insured under this policy shall not
operate to impair the rights of one insured against another insured and
the coverages afforded by this policy will apply as though separate
policies had been issued to each insured. The inclusion of more than
one insured will not, however, operate to increase the limit of the
carrier's liability. Edison will not, by reason of its inclusion under
this policy, incur liability to the insurance carrier for payment of
premium for this policy.
"Any other insurance carried by Edison which may be applicable shall be
deemed excess insurance and Seller's insurance primary for all purposes
despite any conflicting provisions in Seller's policy to the contrary."
18.3 Seller shall maintain such insurance in effect for so long as
Seller's Generating Facility is operated in parallel with Edison's electric
system. If Seller fails to comply with the provisions of this Section 18, Seller
shall, at its own cost, defend, indemnify, and hold harmless Edison, its
directors, officers, employees, agents, assigns, and successors from and against
any and all liability, loss, damage, claim, action, cause of action, cost,
charge, or expense of any kind of nature including attorneys' fees and other
costs of litigation, resulting from death of, or injury to, any person or damage
to any property, including the personnel and property of Edison, to the extent
that Edison would have been protected had Seller complied with all of the
provisions of this Section 18.
37
19. REGULATORY AUTHORITY
Seller and Edison shall at all times conform to all applicable laws and
regulations.
20. DISPUTES
20.1 Any dispute arising between the Parties relating to interpretation
of the provisions of this Agreement or to performance of the Parties hereunder,
other than matters which may not be settled without the consent of an involved
insurance company, shall be reduced to writing by the complaining party stating
the complaint and proposed solution and submitted to the other party's manager
responsible for the administration of this Agreement. Such manager's
interpretation and decision shall be incorporated into a written document
outlining his interpretation and decision and specifying that it is the final
decision of such manager. A copy of such document shall be furnished to the
complaining party within ten (10) days following the receipt of the complaining
party's written complaint.
20.2 The decision of such manager pursuant to Section 20.1 shall be
final and conclusive from the date of receipt of such copy by the complaining
Party, unless, within a thirty (30) day period the complaining party furnishes a
written appeal to such manager delivered pursuant to Section 21. The Parties
shall hold a joint hearing within 15 days of receipt of such appeal. The Parties
shall each be afforded an opportunity to present evidence in support of their
respective positions at the hearing. One authorized representative of Seller and
one authorized representative of Edison and other necessary
38
persons shall conduct such hearing. Pending final decision of a dispute
hereunder, the Parties shall proceed diligently with the performance of their
obligations under this Agreement
20.3 The authorized representatives shall make their final decision
within 15 days of presentation of all evidence affecting the dispute and shall
reduce their decision to writing. The decision shall be final and conclusive.
20.4 If the authorized representatives cannot reach a final decision
within the 15 day period, any remedies which are provided by law may be pursued.
21. NOTICES
Except as otherwise specifically provided herein, any notice from one
Party to the other, shall be given in writing and shall be deemed to be given as
of the date the same is enclosed in a sealed envelope, addressed to the other by
certified first class mail, postage prepaid, and deposited in the United States
Mail. For the purposes of this Section 21, such notices shall be mailed to the
following respective addresses or to such others as may be hereafter designated
by either Party:
Southern California Edison Company
Xxxx Xxxxxx Xxx 000
Xxxxxxxx, Xxxxxxxxxx 0000X
Attention: Secretary
Seller: Chevron U.S.A. Inc.
c/o Chevron Geothermal Company
Address: X.X. Xxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Manager, Geothermal Operations
39
22. NON-DEDICATION OF FACILITIES
Neither Party by this Agreement dedicates any part of its facilities
involved in this Project to the public or to the service provided under this
Agreement, and such service shall cease upon termination of this Agreement.
23. PREVIOUS COMMUNICATIONS
This Agreement contains the entire agreement and understanding between
the Parties, their agents and employees as to the subject matter of this
Agreement, and merges and supersedes all prior agreements, commitments,
representations and discussions between the Parties. No Party shall be bound to
any other obligations, conditions, or representations with respect to the
subject matter of this Agreement.
24. NON-WAIVER
None of the provisions of this Agreement shall be considered waived by
either Party except when such waiver is given in writing. The failure of either
Party to insist in any one or more instances upon strict performance of any of
the provisions of this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights for the future, but the same shall continue
and remain in full force and effect.
25. SUCCESSORS & ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Parties subject to the limitations on
assignments set forth in Section 26.
40
26. ASSIGNMENT
26.1 A Party may assign all or part of its interests under this
Agreement to an affiliate. An "Affiliate" shall mean a Party's parent, a Party's
subsidiary, or any company of which a Party's parent is a parent. A "parent"
shall mean a company which owns directly or indirectly more than 50% of the
shares entitled to vote in an election of directors of another company.
26.2 Any assignment to a third party of all or any part of its interest
under this Agreement shall be subject to the prior written consent of the
non-assigning party. Consent shall not be unreasonably withheld. Any such
assignment shall be to an assignee that (a) is a financially responsible entity,
(b) is an experienced and prudent operating entity, and (c) has the rights,
title and interest necessary to perform the assigned obligations. In this regard
Seller intends to assign this Agreement to the Heber Geothermal Company (HGC)
and by execution of this Agreement, Edison hereby consents to this assignment
pursuant to this Section 26.2.
26.3 Any assignment by Chevron of its interest in this Agreement shall
not relieve Chevron as the assigning Party from liability for the duties and
obligations of Seller under this Agreement, except to the extent such duties and
obligations are expressly assumed by HGC, a general partnership of Centennial
Geothermal, a wholly owned subsidiary of Centennial Energy, Inc. and Dravo
Energy, Inc., a wholly owned subsidiary of Dravo Corporation under the
assignment agreement between Chevron and HGC.
41
26.4 Whenever an assignment of a Party's interest in this Agreement is
made, the assigning Party's assignee shall expressly assume in writing the
duties and obligations of the assigning Party pursuant to this Agreement and,
within 30 days after any such assignment and assumption of duties and
obligations, the assigning Party shall furnish, or cause to be furnished, to the
other Party a true and correct copy of such assignment and assumption of duties
and obligations. Seller, or its assignee, may assign all or any part of its
interest under this Agreement to a financing institution to facilitate financing
for the project by Seller or its assignee.
27. NO THIRD PARTY BENEFICIARIES
Except as otherwise specifically provided in this Agreement or under
separate agreements creating such rights, the Parties do not intend to create
rights in, or grant remedies to, any third party as a beneficiary of this
Agreement or of any duty, covenant, obligation or understanding established
under this Agreement.
28. EFFECT OF SECTION HEADINGS
Section headings appearing in this Agreement are inserted for
convenience only, and shall not be construed as interpretations of text.
29. GOVERNING LAW
This Agreement shall be interpreted, governed and construed under the
laws of the State of California or the United States as applicable as if
executed and to be performed wholly within the State of California.
42
30. CONFIDENTIALITY
30.1 Except as provided herein, the Parties shall hold all information
in this Agreement and all information related to or received pursuant to this
Agreement as proprietary and confidential.
30.2 Neither Party shall disclose any part nor the whole of this
Agreement to any third party without the express prior written consent of the
other Party, such consent shall not be unreasonably withheld.
30.3 From time to time governmental and/or regulatory agencies may
request disclosure of the Agreement or Agreement-related information from either
Party or both Parties and if such is the case either Party or both Parties may
consent to such disclosure provided, that (i) the requestor(s) be notified by
the disclosing Party that the information being released is confidential, and
that (ii) the disclosing Party inform the other Party, in writing, as to the
nature of the information disclosed and to whom disclosed.
31. UNCONTROLLABLE FORCES
31.1 Neither Party shall be considered to be in default in the
performance of any of its obligations under this Agreement, other than an
existing obligation to pay money, when, and to the extent, failure of
performance shall be due to an uncontrollable force. The term "uncontrollable
force" means any cause beyond the control of the Party failing to perform,
including, but not limited to, flood, earthquake, storm, lightning, fire,
epidemic, war, riot, civil disturbance or disobedience, labor dispute, labor or
material shortage, sabotage, restraint by court order or public authority, and
action or nonaction
43
by, or inability to obtain and maintain the necessary authorizations or
approvals from, any governmental agency or authority, which by the exercise of
due diligence such Party could not reasonably have been expected to avoid and
which, by exercise of due diligence it has not overcome. Either Party rendered
unable to fulfill any of its obligations under this Agreement by reason of an
uncontrollable force shall give prompt written notice of such facts to the other
Party and shall exercise due diligence to remove such inability. Nothing
contained herein shall be construed so as to require a Party to settle any
strike or labor dispute in which it may be involved.
31.2 The failure of the Commission to approve the pass through to
Edison's ratepayers of monies paid to Seller for Net Energy and Capacity under
this Agreement, subject to the limitations of Sections 7.7 and 7.8, shall not be
deemed to be an uncontrollable force.
31.3 In the event the applicable provisions of this Section 31 are
invoked by Seller, Seller shall not be obligated to deliver Net Energy and Net
Capacity and may interrupt or reduce deliveries to Edison, and Edison shall not
be obligated to make any payments hereunder. In the event the applicable
provisions of this Section 31 are invoked by Edison, except as provided in
Section 15.7.3, Edison shall not be obligated to accept or pay for, and may
require Seller to interrupt or reduce, deliveries of Net Energy.
32. PUBLICITY
Except as required for compliance with Commission rules and
regulations, Edison shall not make any press releases, statements or other
disclosures to the public
44
regarding the construction, construction schedule, start-up, operation and
maintenance of the Project without the prior written consent of Seller.
33. WATER
Edison has entered into a Water Supply Agreement with Imperial
Irrigation District (IID) dated December 22, 1981 which provides that IID will
permit Edison to take from the Daffodil Canal, Delivery No. 1, water sufficient
to satisfy the reasonable requirements of the Project. Pursuant to the E&C
Contract referred to in Section 6.3 herein, Edison is required to assign the
Water Supply Agreement to Seller. If for any reason whatsoever, Edison is unable
to assign such Water Supply Agreement to Seller, then Edison shall maintain such
Water Supply Agreement in effect and provide water to the Project in accordance
with its terms. In such event, the cost of water for the Project paid by Edison
shall be a credit against payments due Seller as calculated in accordance with
Section 13.4
34. TRANSMISSION COST
34.1 Seller shall select the method for determining transmission
service costs specified in Sections 34.2 or 34.3. Seller shall make this
selection prior to the Date of Firm Operation.
34.2 Edison, with Seller's assistance, shall seek to contract with
third parties in order to secure the most economic transmission path and service
costs for the delivery of Net Energy from the Project to the Point of
Interconnection at terms and conditions
45
acceptable to Seller. Seller shall be responsible for all costs incurred in the
delivery of the Net Energy from the Project to the Point of Interconnection.
34.3 For the first 5 years of the Contract Term, the Seller shall pay
for the transmission of the Net Energy from the Project to the Path of
Interconnection at a transmission service cost based on a method comparable to
the method which is in effect or will be negotiated for Edison's geothermal
facilities at Xxxxxxx and Salton Sea. The exact, mutually agreed upon
transmission service cost shall be established prior to the Date of Firm
Operation and may be adjusted periodically as necessary. The transmission
service cost shall consist of (i) a flat monthly service cost expressed in $ per
kilowatt per month and (ii) transmission losses expressed in % of Net Energy or
delivery to the Point of Interconnection. The Seller may elect this Section 34.3
subject to the following conditions:
34.3.1 The date of initial delivery of Net Energy shall occur on or
before August 1, 1985.
34.3.2 Seller shall upgrade Edison's 115/92 kV interconnnection
substation with the Interconnecting Utility by increasing its capacity by
25,000 kW. Seller shall pay the capital cost of the upgrade and pay the
monthly charges related to the upgrade facilities under the terms and
conditions of Edison's Rule No. 2 H for added facilities. If the Seller is
unable to use the upgraded facilities, at any time, then Edison shall have
the option to use such facilities and reduce the Seller's monthly charges
accordingly. The upgrade must be complete prior
46
to Date of Firm Operation. At the end of 5 years, the transmission service
costs shall be handled under the provisions of Section 34.2, unless the
Seller elects to continue to use the provisions specified in is Section
34.3 after the first 5 years of the Contract Term absent the transmission
service cost methodology contained in this Section 34.3. In the event of
such election Section 34.4 shall not apply.
34.4 If the Seller exercises the provisions specified in Section 34.3
then for said five (5) year period, the applicable portion of the
Interconnecting Utility electric system shall be considered part of the Edison
electric system but only to the extent that the capacity payment provisions
specified in Sections 15.7.2 and 15.7.3 apply.
35. RECORDS AND AUDITS
35.1 Edison and Seller shall maintain true and correct records in
connection with this Agreement and all transactions related thereto and shall
retain all such records for at least 24 months after termination of this
Agreement.
35.2 No director, employee or agent of either Party shall give or
receive any commission, fee, rebate, gift or entertainment of significant cost
or value in connection with this Agreement, on enter into any business
arrangement with any director, employee or agent of the other Party, except as a
representative of one of the Parties, without prior written notification thereof
to both Parties. Any representative(s) authorized by either Party may audit any
and all records of the other Party pertaining to the administration of this
Agreement for the sole purpose of determining whether there has been compliance
with this Section 35.2
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35.3 Any representative(s) authorized by either party may from time to
time and at any time after the date of this Agreement until 24 months after its
termination make an audit of all records of the other Party in connection with
payments made on a cost reimbursement basis under this Agreement. Audit may also
cover procedures and controls with respect to such reimbursable costs. Upon
completion of the audit, the Parties shall pay each other any amounts shown due
by the audit. If the audited Party disagrees with the results of the audit, it
may have an independent audit conducted, at its expense, by a third party
acceptable to both Parties and pursuant to auditing instructions acceptable to
both Parties. The findings of the audit shall be binding upon both Parties.
36. CONDITIONS PRECEDENT
This Agreement shall be effective upon execution of all the following
documents:
36.1 1983 Geothermal Energy Contract between Chevron Geothermal Company of
California and Southern California Edison.
36.2 Corporate Guarantee from Dravo Constructors, Inc. to Southern
California Edison for the repayment of the Payment Tracking Account pursuant to
Section 14.4.4.
36.3 Geothermal Sales Agreement between Chevron Geothermal Company of
California and Heber Geothermal Company.
36.4 Geothermal Energy Agreement between Chevron Geothermal Company of
California and Dravo Energy, Inc.
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36.5 Assignment and Assumption Agreement between Chevron U.S.A., Inc. and
Heber Geothermal Company.
36.6 The acceptance and execution of the final commitment letter from
General Electric Credit Corporation to Heber Geothermal Company.
36.7 The approval of this Agreement by the Board of Directors or Management
Committee, as appropriate, of the following entities:
36.7.1 Centennial Energy, Inc.
36.7.2 Dravo Corporation
36.7.3 General Electric Credit Corporation
37. AGREEMENT AND SIGNATURE
This Agreement is executed in multiple counterparts, each of which shall be
deemed an original. The signatories hereto represent that they have been
appropriately authorized to enter into this Agreement on behalf of the Party for
whom they sign. This Agreement is hereby executed as of this 26th day of August,
1983.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/ Indecipherable
---------------------------------------
Vice President
CHEVRON U.S.A., INC., represented by
its agent, Chevron Resources Company
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By /s/ Indecipherable
---------------------------------------
Title Vice President
------------------------------------
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