NEVADA POWER EXHIBIT 10.87
10-K
RESTATED FIRST AMENDMENT TO POWER PURCHASE AGREEMENT
This Restated First Amendment to Power Purchase Agreement (this "Amendment") is
made and entered into this 30 day of April, 1998 by and between Nevada
Cogeneration Associates #1, a Utah general partnership ("Seller") and Nevada
Power Company, a Nevada corporation ("Nevada"). Seller and Nevada are sometimes
referred to herein collectively as the "Parties" and individually as a "Party".
RECITALS
A. Bonneville Nevada Corporation ("Bonneville") and Nevada executed that certain
Bonneville Nevada Contract A with Nevada Power Company for Long Term Power
Purchases from Qualifying Facilities (the "Contract") dated May 2, 1989 which
was assigned to Seller effective as of January 29, 1991.
B. Seller and Nevada executed that certain First Amendment to Power Purchase
Agreement dated October 3, 1997 (the "First Amendment") under the following
basis:
i. Seller and Nevada have had a continuing dispute concerning the second
paragraph of Section 4.6.3 of the Contract and the right thereunder of
Nevada to curtail potential purchases of capacity and energy from
Seller's Generating Facility.
ii. Seller and Nevada wish to resolve their dispute and to make other
changes to the Contract which will provide greater operating flexibility
for Nevada and create mutually beneficial opportunities for Seller,
Nevada, and Nevada's customers in connection with the purchase and sale
of energy and capacity from Seller's Generating Facility.
iii. To effect such resolution and changes, the Parties wish:
a. To amend Section 4.6.3 of the Contract.
b. To revise the payment provisions set forth in the Contract.
c. To provide a mechanism by which Nevada, upon mutual agreement of the
Parties (reached at each Party's sole discretion), may reduce its
take of the output from Seller's Generating Facility that would
otherwise be delivered by Seller to Nevada under the Contract.
d. To provide a mechanism by which Seller, upon mutual agreement of the
Parties (reached at each Party's sole discretion), may sell to other
parties the capacity or energy from Seller's Generating Facility that
would otherwise be dedicated by Seller to Nevada under the Contract.
e. To allow payment for Excess Energy and Excess Capacity by Nevada to
Seller on the basis of a negotiated market rate rather than Nevada's
Tariff Schedule QF-Short Term Energy and Capacity rates.
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C. Pursuant to Section 20 of the First Amendment, Nevada filed a Petition with
the Public Utilities Commission of Nevada ("Commission") seeking approval of
the First Amendment as executed and approval of a regulatory accounting
treatment with respect to the First Amendment, assigned Docket No. 97-11004.
D. The Parties to Docket No. 97-11004 have filed a stipulation to amend the
First Amendment and describe a regulatory accounting treatment acceptable to
Nevada. The Parties have asked the Commission to approve such stipulation.
E. The Parties entered into an Agreement to Extend Cancellation Date of First
Amendment to Power Purchase dated March 26, 1998, for 90 days to allow time
for approval of the stipulation.
F. The terms of the First Amendment must be revised pursuant to the terms of the
stipulation.
NOW, THEREFORE, in consideration of the mutual promises and obligations
stated herein and the mutual benefits to be derived therefrom, Seller and Nevada
hereby agree to this Restated First Amendment to the Contract as follows:
1. This Amendment shall amend and supersede the First Amendment and any
amendments thereto in their entirety.
2. Section 1.8.3 of the Contract is hereby amended to read as follows:
Nevada shall, in accordance with a Purchase Schedule, purchase and pay Seller
for Excess Capacity and Released Capacity made available to Nevada by Seller
only under rates, terms and conditions which are mutually agreed to by Nevada
and Seller.
3. Section 1.9.3 of the Contract is hereby amended to read as follows:
Nevada shall, in accordance with a Purchase Schedule, purchase and pay Seller
for Excess Energy and Released Energy delivered to Nevada by Seller only
under rates, terms and conditions which are mutually agreed to by Nevada and
Seller.
4. All capitalized terms shall have the meaning stated in Section 2 of the
Agreement, except as expressly amended by this Amendment.
5. The following definitions are hereby added to Section 2 of the Contract:
5.1. Derate Amount: The Contract Capacity and associated Energy less the
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amount of capacity and energy Seller is able to produce and deliver to
Nevada during any time that Seller experiences a Derating.
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5.2. Derating: The Seller's inability to deliver the full Contract
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Capacity and associated Energy due to a physical partial or complete
outage of either Seller's Generating Facility or the associated
transmission line.
5.3. First Amendment Effective Date: The date the Commission issues an
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order approving the First Amendment as amended by this Amendment.
5.4. Purchase Schedule: A document setting forth the mutual agreement of
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the Parties regarding the sale by Seller and the purchase by Nevada of
Excess Energy, Excess Capacity, Released Energy, and/or Released
Capacity. The Purchase Schedule shall be substantially in the form
attached hereto as Exhibit 2. The Purchase Schedule may be changed upon
the express consent of the Parties.
5.5. Recall Time: The period of time within which Seller must become
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capable of delivering Released Energy to Nevada following the
request of Nevada.
5.6. Release: Release, in accordance with the terms of a mutually agreed
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upon Release Schedule, of a Party's obligation to purchase, dedicate,
or sell capacity and energy in accordance with Section 4A hereunder,
that would otherwise be dedicated and/or delivered by Seller to Nevada
under the Contract.
5.7. Release Period: That period or those periods of time during which
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Release will occur.
5.8. Release Rate: The payment rate for the Release.
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5.9. Release Schedule: A document setting forth the mutual agreement of
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the Parties regarding the Release Period, the Released Energy and
Released Capacity, the Release Rate, Recall Time, an other terms and
conditions pertaining thereto. The Release Schedule shall be
substantially in the form attached hereto as Exhibit 1A or Exhibit 1B,
as applicable. The Release Schedule may be changed upon the express
consent of the Parties.
5.10. Released Capacity: The amount of capacity, associated with Released
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Energy, that is Released.
5.11. Released Energy: The amount of energy that is Released.
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6. The following sections of the Contract shall be amended to read as
follows:
6.1. Section 2.11 - Excess Capacity: Capacity in excess of Contract
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Capacity or as designated by the Parties during a Release Period in
accordance with a Purchase Schedule. The amount of Excess Capacity
shall be determined on a kWh basis hour by hour.
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6.2. Section 2.12 - Excess Energy: Energy associated with Capacity in
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excess of Contract Capacity or as designated by the Parties during a
Release Period in accordance with a Purchase Schedule. The amount of
Excess Energy shall be determined on a kWh basis hour by hour.
7. Section 4.6.3 of the Contract is hereby amended to read as follows:
The Parties agree that the provisions of 18 C.F.R. Sec. 292.304(f)
pertaining to curtailment and reduction of output from qualifying
facilities shall not apply to Seller's Generating Facility or the
obligations of Seller and Nevada under this Contract.
Nevada shall have the right to require Seller to reduce the output of
Seller's Generating Facility or to isolate any of Seller's Facilities from
Nevada's electric system if, in Nevada's reasonable judgment, such actions
are required to facilitate the maintenance of any of Nevada's facilities
or to maintain Nevada's Electric System Integrity. Nevada shall, within a
reasonable period of time and to the extent possible, endeavor to correct
the condition that necessitated the reduction or isolation. The duration
of such reduction or isolation shall be limited to the period of time that
the condition existed plus a reasonable period of time for the restoration
of Nevada's electric system to an operating condition that allows Nevada
to resume the discharge of its obligations in accordance with the
provisions of this Contract.
If Nevada has required Seller to reduce the output of Seller's Generating
Facility or to isolate any of Seller's Facilities from Nevada's electric
system, Seller shall neither increase the output nor reconnect the
isolated facilities without the prior approval of Nevada's Operating
Representative. Provisions for obtaining such approval have been set forth
in Exhibit C.
8. A new Section 4A, "Release", is hereby added to the Contract to read as
follows:
4A.1 Nevada may request of Seller, and Seller may permit Nevada, at
Seller's sole discretion, to be Released of its obligation to
purchase all of the Contract Capacity and associated Energy output
of Seller's Generating Facility for any reason pursuant to the terms
and conditions of a Release Schedule.
Seller may request of Nevada, and Nevada may permit Seller, at
Nevada's sole discretion, to be Released of its obligation to
dedicate all of the capacity and associated energy output of
Seller's Generating Facility to Nevada for any reason pursuant to
the terms and conditions of a Release Schedule.
Neither Seller nor Nevada is under an obligation to accept a Release
Schedule proposed by the other Party.
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4A.2 If Nevada is Released, Nevada shall pay Seller for the Release at
the Release Rate set forth in the applicable Release Schedule. If
Nevada is Released, payment for the Release shall be due only to the
extent that the Seller's Generating Facility is able to produce the
Released Energy and such Released Energy could be delivered to
Nevada within the stated Recall Time. The ability of Seller's
Generating Facility to produce and the availability for delivery of
such Released Energy to Nevada shall be subject to reasonable review
and verification by Nevada. Seller shall not take a Scheduled Outage
during any Release Period.
If Seller is Released, Seller shall pay Nevada for the Release at
the Release Rate set forth in the applicable Release Schedule.
Payment shall be made on a per kWh basis, unless otherwise agreed by
the Parties, as if the Released Energy had been delivered.
4A.3 If, for any reason during any Release Period, Seller experiences a
Derating, then, for the duration of the Derating within the Release
Period, Seller shall not deliver to Nevada capacity and energy in
excess of Contract Capacity and associated Energy less Released
Capacity and Released Energy less the Derate Amount. Examples of
payments during a Derating, should it occur during a Release Period,
in accordance with the Contract and the appropriate Release
Schedule, are given in Exhibit 3.
4A.4. Except as specifically provided in this Section 4A, payment for
Release hereunder shall be made in the same manner and under the
same conditions set forth in Section 13 hereof.
9. Section 10.1.1 of the Contract is hereby amended to read as follows:
Summer Season: For the purposes of this section, a summer season shall
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include May, June, July, August, and September. During a summer season,
total Energy produced and delivered to Nevada during the On-peak hours of
that season must meet or exceed the product of (Contract Capacity
multiplied by the number of On-peak hours during that season less the
total Released Energy during that season's On-peak hours) and 90%.
10. Section 10.1.2 of the Contract is hereby amended to read as follows:
Winter Season: For the purposes of this section, a winter season shall
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include the months of December, January, and February. During a winter
season, total Energy produced and delivered to Nevada during the On-peak
hours of that season must meet or exceed the product of (Contract Capacity
multiplied by the number of On-peak hours during that season less the
total Released Energy during that season's On-peak hours) and 90%.
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11. Exhibit A of the Contract, entitled "Power Purchase Contract Payment
Provisions", shall be replaced in its entirety with the following:
Exhibit A
Power Purchase Contract
Payment Provisions
For the purposes of this exhibit, a summer season shall include the months
of May, June, July, August, and September. The associated On-Peak hours shall
be the twelve (12) hours from 10:00 am to 10:00 p.m. during each day of the
summer period; all other hours shall be Off-Peak hours.
For the purposes of this exhibit, a winter season shall include the months
of January, February, March, April, October, November, and December. The
associated On-Peak hours shall be the five (5) hours from 5:00 am to 10:00 am
and the eight (8) hours from 4:00 p.m. to midnight during each day of the winter
period; all other hours shall be Off-Peak hours.
Maintenance months shall include the months of March, April, October, and
November.
Except as otherwise provided, the rates ($/kWh) applicable to this
Contract shall be:
Summer Summer Winter Winter
On-Peak Off-Peak On-Peak Off-Peak
Capacity 0.05430 0.02084 0.03180 0.02084
Energy 0.02070 0.02070 0.02070 0.02070
------ ------- ------- ------- -------
Total 0.07500 0.04154 0.05250 0.04154
The above cited rates shall be effective from January 1, 1990 through April
30, 1991.
The above cited Capacity rates shall be adjusted annually, on May 1 of each
year beginning with the annual adjustment date of May 1, 1991 and ending with
the annual adjustment date of May 1, 2022, by two (2) percent per annum.
The above cited Energy rates shall be adjusted annually, on May 1 of each
year beginning with the annual adjustment date of May 1, 1991 and ending with
the annual adjustment date of May 1, 2022, by one hundred twenty percent (120%)
of the change in the Consumer Price Index for All Urban Consumers experienced
during the preceding year; the base index shall be the index for
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January of 1990. The Energy Rate shall then be reduced by the amounts set forth
in Table A below:
Table A
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$/kWh
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For the period beginning the November 1, 1997 until April 30,
1998
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For the annual Period beginning May 1 of the year:
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1998
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1999
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2000
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2001
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2002
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2003
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2004
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2005
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2006
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2007
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2008
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2009
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2010
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2011
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2012
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2013
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2014
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2015
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2016
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2017
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2018
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2019
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2020
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2021
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2022
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2023
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Except as expressly amended by this Amendment, the provisions of the Contract
shall remain unchanged.
13. The governing law for this Amendment shall be determined in accordance with
Section 25 of the Contract.
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14. Any amendment to this Amendment shall be in accordance with Section 19 of
the Contract.
15. The non-waiver provisions of Section 21 of the Contract shall also apply to
this Amendment.
16. If any paragraph, sentence, term or provision hereof shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not
affect the validity or enforceability of any other paragraph, sentence, term
or provision of this Amendment.
17. This Amendment is the result of negotiation and each Party and each Party's
respective counsel has reviewed this Amendment. Accordingly, the normal
rules of construction to the effect that any ambiguity shall be resolved
against the drafting Party shall not be employed in the interpretation of
this Amendment.
18. This Amendment constitutes the entire agreement of the Parties with respect
to this Amendment and supersedes any and all prior negotiations,
correspondence, understandings, and agreements between the Parties
concerning the subject matter of this Amendment.
19. The Parties agree to cooperate fully and to take all additional steps which
may be necessary or appropriate to give full force and effect to the terms
and intent of this Amendment. This Amendment shall become effective on the
First Amendment Effective Date.
In the event that the First Amendment Effective Date does not occur within
270 calendar days of the execution of the First Amendment, this Amendment
shall become null and void.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
their duly authorized representatives.
NEVADA COGENERATION NEVADA POWER COMPANY
ASSOCIATES #2
By: /s/ J.R. Gilmer By: /s/ Steven W. Rigazio
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J.R. Gilmer Steven W. Rigazio
Executive Director Vice President, Finance
& Planning, Treasurer
and Chief Financial Officer
Date: May 1, 1998 Date:
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EXHIBIT 1A
RELEASE SCHEDULE
Nevada hereby Releases Seller from the obligation to have the following capacity
and energy dedicated to Nevada:
Contract Excess
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Released Capacity (MW):
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Released Energy (kWh):
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Under the following terms:)
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Release Period (day, month,...):
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Release Period (hours of the day):
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Release Rate ($/kWh):
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Recall Time (10 min, 1 hour, or as specified):
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Other terms:
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NEVADA COGENERATION NEVADA POWER COMPANY
ASSOCIATES #1
By: By:
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Date: Date:
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EXHIBIT 1B
RELEASE SCHEDULE
Seller hereby Releases Nevada from the obligation to purchase the following:
Contract
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Released Capacity (MW):
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Released Energy (kWh):
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Under the following terms:
Release Period (day, month,...):
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Release Period (hours of the day):
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Release Rate ($/kWh):
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Recall Time (10 min, 1 hour, or as specified):
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Other terms:
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NEVADA COGENERATION NEVADA POWER COMPANY
ASSOCIATES #1
By: By:
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Date: Date:
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EXHIBIT 2
PURCHASE SCHEDULE
Nevada hereby agrees to purchase from Seller and Seller agrees to sell to Nevada
the following capacity and energy:
Released Excess
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Capacity (MW):
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Energy (kWh):
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Under the following terms:
Term of Purchase (day, month,...):
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Purchase Period (hours of the day):
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Purchase Rate ($/kWh):
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WSPP Schedule:
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Other terms:
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NEVADA COGENERATION NEVADA POWER COMPANY
ASSOCIATES #1
By: By:
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Date: Date:
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EXHIBIT 3
Table 1/1/
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Prior to Derating:
(1) Seller has the ability to deliver full 85MW Contract Capacity and
associated Energy; and
(2) 20MW released.
Result of Derating of 20MW:
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Prior to Derating Result of Derating
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Released Capacity and Released Energy paid for at 20MW 20MW
Release Rate/10/
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Capacity and Energy purchased at Exhibit A rates 65MW/2/ (20MW derating)
45MW/3/
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Excess Capacity and Excess Energy purchased at 0MW 0MW
negotiated rate/4/,/10/
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Released Capacity and Released Energy repurchased at 0MW 0MW
negotiated rate/6/,/10/
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Actual Output 65MW 45MW
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Table 2/1/
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Prior to Derating:
(1) Seller has the ability to deliver full 85MW Contract Capacity and associated
Energy; and
(2) Seller has the ability to deliver 5MW of Excess Energy and Excess Capacity;
and
(3) 20MW released.
Result of Derating of 10MW:
Prior to Derating Result of Derating
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Released Capacity and Released Energy paid for at 20MW 20MW
Release Rate/10/
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Capacity and Energy purchased at Exhibit A rates 65MW2 (5MW derating)
60MW
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Excess Capacity and Excess Energy purchased at 5MW (5MW derating)
negotiated rate/4/,/10/ 0MW/5/
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Released Capacity and Released Energy repurchased at 0MW 0MW
negotiated rate/6/,/10/
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Actual Output 70MW 60MW
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Table 3/1/
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Prior to Derating:
(1) Seller has the ability to deliver full 85MW Contract Capacity and associated
Energy; and
(2) Seller has the ability to deliver 5MW of Excess Energy and Excess Capacity;
and
(3) 20MW released; and
(4) Nevada agrees to repurchase 20MW of Released Capacity and Released Energy.
Result of Derating of 15MW:
Prior to Derating Result of Derating
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Released Capacity and Released Energy paid for at 20MW 20MW
Release Rate/10/
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Capacity and Energy purchased at Exhibit A rates 65MW2 (10MW derating)
55MW
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Excess Capacity and Excess Energy purchased at 5MW (5MW derating)
negotiated rate/4/,/10/ 0MW/5/
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Released Capacity and Released Energy repurchased at 20MW 20MW
negotiated rate/6/,/10/
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Actual Output 90MW 75MW
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Table 4/1/
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Prior to Derating:
(1) Seller has the ability to deliver full 85MW Contract Capacity and associated
Energy; and
(2) Seller has the ability to deliver 5MW of Excess Energy and Excess Capacity;
and
(3) 30MW released; and
(4) Nevada agrees to repurchase 30MW of Released Capacity and Released Energy.
Result of Derating of 70MW:
Prior to Derating Result of Derating
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Released Capacity and Released Energy paid for at 30MW (10MW derating)
Release Rate/10/ 20MW/8/
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Capacity and Energy purchased at Exhibit A rates 55MW/2/ (55MW derating)
0MW/6/
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Excess Capacity and Excess Energy purchased at 5MW (5MW derating)
negotiated rate/4/,/10/ 0MW/5/
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Released Capacity and Released Energy repurchased at 30MW 20MW/9/
negotiated rate/6/, /10/
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Actual Output 90MW 20MW
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Footnotes:
1) In order to simplify the example, amounts are shown in MW. Payments would be
in MWH for the MW's delivered over the duration of the conditions specified.
2) Amount of Capacity and Energy purchased at Exhibit A rates is reduced by the
amount of Released Capacity and Released Energy. Thus:
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Amount of Capacity and Energy = Contract Capacity and Energy - Released Capacity and Released
purchased at Exhibit A rates. Delivered Energy
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Table 1-3 65MW = 85MW - 20MW
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Table 4 55MW = 85MW - 30MW
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3) The amount of Capacity and Energy purchased at Exhibit A rates is reduced by
the amount of Released Capacity and Released Energy and the Derate Amount.
Thus:
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Amount of Capacity and = Contract Capacity and - Derate - Released Capacity and Released
Energy purchased at Energy Delivered Amount Energy
Exhibit A rates.
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45MW = 85MW - 20MW - 20MW
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4) Though the party purchasing the Excess Capacity and Excess Energy is not
material to the result shown, for simplicity, these examples assume that Nevada
is purchasing the specified amount of Excess Capacity and Excess Energy.
5) Excess is reduced to zero first because there is no output in excess of
Contract Capacity, in accordance with the definition of Excess (amount of output
in excess of Contract Capacity).
6) Though the party purchasing the Released Capacity and Released Energy is not
material to the result shown, for simplicity, these examples assume that Nevada
is purchasing the specified amount of Released Capacity and Released Energy.
7) The amount of Capacity and Energy purchased at Exhibit A rates is reduced to
zero because Seller is unable to deliver capacity and energy over the amount of
the Released Capacity and Released Energy. Any remaining Derate Amount is
deducted from the Released Amount and any Release repurchase.
8) The amount of Released Capacity and Released Energy to be paid for by Nevada
is reduced because of Seller's inability to deliver the full Released Amount in
accordance with Section 4A.2.
9) The amount of the repurchased Released Capacity and Released Energy is
limited by the Seller's ability to deliver.
10) If more than one schedule is in effect at the time of Derating then the
weighted average of the rates, for the applicable type of schedule, prior to
Derating shall be applied to the result of Derating. Weighted average shall be
determined as the [sum of (kWh amount multiplied by rate) divided by total kWh
amount] for the applicable type of schedule.
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