CALIFORNIA ISO
July 31, 1998
Dr. Ralph Masiello
General Manager
ABB Power T&D Company, Inc.
2550 Walsh Avenue
Santa Clara, CA 95051
RE: Independent System Operator Scheduling Applications, Scheduling
Infrastructure and business Systems Contract (the "Contract")
Dear Ralph,
This letter sets forth the agreements we have reached with respect to
performance of Stage 1 of the Contract. These agreements are contained in the
letter and in several Tabs that are attached hereto. Please indicate your
agreement to these terms and conditions by signing in the appropriate place on
the last page of this letter, and initialing each page of the letters and
attachments.
1. Claims in May 20,1998 Letter: The matters raised by the Alliance in your
letter of May 20, 1998 include claims for a number of alleged changes to the
Contract, totaling $7,861,334. The changes and their status are summarized at
Tab A. The ISO has offered and you have accepted $3.8 million in settlement of
these claims including settlement of ISO claims for liquidated damages which
accrued under Section 28.3.1 of the Contract and the other elements of
settlement contained in this letter.
2. Contract Variances: A number of variances remain unclosed at the date of this
letter. The Alliance has asserted by letter of June 12,1998 (and in subsequent
discussions) that a number of outstanding variances under the Contract were in
fact changes to the Contract. Descriptions of these variances have been agreed
to and their dispositions have been agreed to and are contained in the Schedule
at Tab B. A holdback of $500,000 from the Milestone payment due upon System
Acceptance will be retained by the ISO until the CVD and NCWV variances have
been fixed.
Except for six remaining Contract Supplier Performance milestone
payments, the forgoing constitute all of the Alliance claims that accrue to the
Alliance as of the above date. The Alliance agrees there are no further claims
relating to the Contract as of this date, that no further claims will be made to
the ISO based on facts occurring prior to the above date in connection with the
Contract, and that the above settlements are dispositive of any and all claims
of the Alliance, known or
151 Blue Ravine Road Folsom, California 95630 Telephone: 916 351-4400
unknown, directly or by way of set-off, which have arisen under the Contract to
date or the facts underlying which have occurred prior to this date.
3. Letter of Credit: The Letter of Credit required by Section 9.2.5 of the
Contract may be withdrawn by the ISO upon execution of this letter. The Alliance
will take the appropriate steps to assist the ISO in such withdrawal.
4. Contract Performance Issues: In addition to the forgoing, the ISO raised by
letter of June 10,1998 a number of Contract performance issues requiring
satisfactory resolution by the Alliance. These issues and the agreed
dispositions are as follows:
A. Completion of the Stage 2 DSOW: the provisions of the Contract
Modifications to implement Stage II relating to Stage 2 as executed
simultaneously with this letter govern the provision of the portions of the
Stage 2 DSOW provided for in the Contract.
B. The Successful Completion of the System Performance Tests: In paying
the Supplier Performance Milestone payment for this performance test (Milestone
70), the ISO agrees that the proxy test for the original System Performance test
was agreed to and was run and the data was submitted to ISO.
C. The Delivery of Final Documentation: Acceptable final Documentation
will be delivered prior to System Acceptance, as required by the Contract.
D. The Delivery of all Source Code for the Licensed Software required by
the Contract: The Source Code will be delivered to the ISO on July 31,1998
subject to Arrangements contained at Tab C.
E. Completion of System Availability Test: The System Availability Test
has been satisfactorily completed.
F. Resolution of Software Licensing Issue regarding License inclusion of
a site license: See Letter at Tab D.
G. Execution of Software Maintenance Agreement: Agreed text of the
Software Maintenance Agreement is attached at Tab E.
H. Resolution of Design Issues: Stage 1 design issues which were the
subject of changes or variances have been settled as described in Tab A.
2 of 3
I. Resolution of the Issues Relating to Change Orders: These resolutions
are contained in Paragraph 2 above and Tab A.
J. Confirmation that the SI/SA/BBS System will be Century Compliant for
the year 2000: This confirmation is accomplished by the Alliance Letter of
Compliance at Tab F.
Please affirm your agreement to this settlement by signing in the space
provided below, and on each page of the attachments.
Sincerely,
/s/
Terry Winter
Chief Operating Officer
California Independent System
Operator Corporation
/s/
Jeffrey Tranen
Chief Executive Officer
California Independent System
Operator Corporation
Agreed:
/s/
FOR THE ISO ALLIANCE
TABS:
A Disposition of Changes
B Disposition of Variances
C Arrangements for Receipt of Source Code
D ISO Letter to Alliance regarding PX Testing
E Software Maintenance Contract
F Alliance Letter to ISO regarding Century Compliance
3 of 3
Change Orders
C/O # Title
1032 Import of Ancillary Services at the Inter-tie
1035 Settlements of Ancillary Services and Supplemental Energy Imports at the
Inter-Tie
1036 Automated Interface for FERC Jurisdictional Data - Settlements
1037 Hour Ahead Interzonal Congestion Due TO
1038 Removal of Hour Ahead Ancillary Service due ISO Validation
1039 Removal of Hour Ahead Ancillary Service due SC Validation
1040 Changes to Ancillary Service (Addition of Regions)
1041 Existing Contracts
1042 Replacement Reserves
1043 Path 15
1044 Import Deviation Calculation and 5/10 minute Price Settlements
1045 Real Time Adjustments to Settlements
1046 Administrations Systems Training
1047 Billing & Credit Training
1048 Changes to the Per Unit Charge Facility
1049 Facility to Apply Neutrality Adjustments of Imbalance Energy Charges
1050 HA Interzonal Congestion - Reversal Flow
1051 Replacement Reserve
1052 Supplemental Reactive Power
1053 Error Window Correction
1054 Customer master File - UDC/Zone Maintenance
TAB-A
1055 Business Simulation Support - Settlements, Billing & Credit
1056 Market Simulation Support - Settlements, Billing & Credit
1057 Change Analysis Activities, BBS
1058 Other BBS System Related Activities
1059 Market Simulation Support - SA/SI
1060 Work done on Ziad's requirement in Nov/Dec on SA/SI
TAB-B
LEGEND
- -------------------------------------------------------------------------------
<Table>
<Caption>
VARIANCE
TYPE TYPE DESCRIPTION
- -------- ----------------
CVD Critical Variances Deferred - Stage 1 variances categorized as class 1
or 2, identified prior to system acceptance, and which will be
scheduled and resolved by the Alliance, at no cost to the ISO and
without impact on the maintenance agreement, after System Acceptance
as part of a Stage 2 work item.
CVT Critical Variances Transformed - Stage 1 variances categorized as
class 1 or 2, identified prior to system acceptance, which will be
resolved by a change order to the Contract, authorized by the ISO
under the terms of the contract and scheduled and performed during
Stage 2.
CWV Critical Warranty Variances - Stage 1 variances categorized as class 1
or 2, identified prior to system acceptance, and which will be
resolved under the warranty provision of the Contract prior to system
acceptance.
PSA Repair Prior to System Acceptance-Stage 1 variances regardless of
class, identified prior to system acceptance that will be repaired
before the system is accepted.
NCWV Non-Critical Warranty Variances - Stage 1 variances categorized as
category 3 or above, identified prior to system acceptance, and which
will be scheduled and resolved by the Alliance, at no cost to the ISO
and without impact on the maintenance agreement, but no later than 90
days after System Acceptance, during Stage 2.
</Table>
data as of 7/29/98
<Table>
<Caption>
TYPE VARIANCE # SYSTEM CLASS DESCRIPTION COMMENTS/STATUS
- ---- ---------- ------ ----- ----------- ---------------
CVD 1493 BBS 2 Master file performance
CVD 2149 SA 2 BEEP miscalculating dispatchable energy per interval
CVD 2217 SA 2 Congestion does not support incremental load and export
CVT 2067 SA 2 Supplemental Energy bids should be checked against
final energy schedules
CVT 2170 SA 2 Procurement of dec/inc regulation in SA shall be
performed separately
CVT 2198 BBS 2 DA A/S calculation
CVT 2326 SA 2 ETC method in CONG Consider new Stage II Work
item with $0 cost and
payment tied to Work
Item 80?
CVT 2334 BBS 2 Editing capability in SI and BBS
</Table>
TAB-B
<Table>
<Caption>
COMMENTS/
TYPE VARIANCE # SYSTEM CLASS DESCRIPTION STATUS
- ---- -------- - ------ ----- ----------- ------
CVT 2339 SA 2 BEEP is dispatching units incrementally while ACE is negative (and vise-versa)
CVT 2341 SA 2 DVC calculation
CVT 2340 SI 2 Evaluating Phase II Validation
CWV 2314 BBS 2 Settlement RT Intrazonal Congestion screen should allow zero prices.
CWV 2333 BBS 2 Toggling batch procedure status from the Settlement Batch Control Screen causes
unexpected changes.
CWV 2337 SI 1 Alhambra SI server halts with a pci bus error. Second occurrence.
CWV 2344 BBS 1 UFE Not Recalculating
CWV 2345 BBS 2 Default Calendar
CWV 2347 BBS 2 Ability to define print area, margins, fit to page, font size
CWV 2349 BBS 2 "Filter By" Function
CWV 2352 BBS 2 Negative Qty = Blank Field
CWV 2353 BBS 1 Transmission Ownership
CWV 2354 BBS 1 Historical Archiving
CWV 2355 SI 2 Schedules not publishing to the ODB
CWV 2356 SA 2 DA savecase in STUDY MODE
CWV 2358 BBS 1 Batch Scheduler
CWV 2361 BBS 1 A parallel query in Settlement System failed.
NCWV 1256 SI 8 No color change to titles on PMI screen
NCWV 1845 BBS 8 Monagent sends out wrong error notifications.
NCWV 1976 SI 8 Error msg for RES_ENERGY_PRC is misleading or is unclear
NCWV 2078 SI 8 PMI info prints for hour other than what shows on the screen
NCWV 2127 SI 8 A/S should only be scheduled on take-out points
NCWV 2144 SI 8 Garbage appears at bottom of printout for Ex_Post schedule/price info_load
NCWV 2169 SA 8 Need a warning on ASM module (in the NACEXEB sequence)
NCWV 2191 SA 8 Cannot move directly to control screen from external import bid input display
NCWV 2196 SI 8 Inconsistent rounding between SI and settlements
NCWV 2211 SI 8 SI "pushing" data multiple times in a single day
NCWV 2213 SA 7 New Spider version to be configured at SA workstation
NCWV 2225 SI 8 Lights on SCWS do not work properly
NCWV 2280 SI 8 Submitting schedules using SCWS
NCWV 2297 SA 8 Displayed Summation of individual IOU loads is incorrect.
NCWV 2304 SI 8 Problem against the DEVELOPMENT SYSTEM: PMI Screen YR2K Data Format Violation
NCWV 2305 SI 8 Problem with the DEVELOPMENT SYSTEM: the dataNotReady program creates incorrect
Y2K dates
</Table>
TAB-B
<Table>
<Caption>
COMMENTS/
TYPE VARIANCE # SYSTEM CLASS DESCRIPTION STATUS
- ---- -------- - ------ ----- ----------- ------
NCWV 2306 SA 8 Problem with the DEVELOPMENT SYSTEM: 2-Digit Year Displays on SA Screens
NCWV 2311 SA 8 Problem against DEVELOPMENT SYSTEM: SDLF HR25 Data Entry Problem
NCWV 2312 SA 8 Problem against DEVELOPMENT SYSTEM: OS HR25 Input Problem
NCWV 2313 SA 8 Problem against DEVELOPMENT SYSTEM: NAC Manual Execution of HR25
NCWV 2316 SA 8 Against DEVELOPMENT SYSTEM: Incorrect System Date after Millenium Rollover (Y2K)
NCWV 2317 SI 8 Prices in Day Ahead Market Final Information file are not consistently rounded.
NCWV 2319 SI 8 An SC should not be permitted to enter an Inter-SC trade with oneself.
NCWV 2320 SA 8 Against DEVELOPMENT SYSTEM: Invalid Hour Input/Display for OS/PMI for
Short Day (20000402)
NCWV 2321 SI 8 Against DEVELOPMENT SYSTEM: Discrepancy in Filename and Contents for HA PMI
NCWV 2322 SA 8 Against DEVELOPMENT SYSTEM: Invalid Hour Input/display for SDLF/PMI for
Short Day (20000402)
NCWV 2357 SA 8 BEEP automatic run time
PSA 1868 SA 2 CONG had two target prices for two congestion zones with generation in only one
zone - DEV. MACHINE
PSA 1889 SI 2 SC load forecast errors when submitting via workspace
PSA 2082 SI 2 Missing hours after 2/24 fallback/fallforward
PSA 2105 SA 2 EMS/SDLF will not upload historical data and save
PSA 2153 SI 2 TruCluster ASE failed to start the Oracle database in OPS configuration
PSA 2161 SI 2 Scheduled transmission outage in PMI is not posting information
PSA 2219 SA 2 The DA scheduler screen is offset by one hour after April 5
PSA 2227 SA 2 SA does not support on demand obligations
PSA 2229 SI 2 Begin hour and end hour incorrect for scheduled line outages on PMI
PSA 2231 SA 2 Wrong price generated by BEEP for interval decremental price
PSA 2234 SA 2 BEEP displaying a price of $99,999.00 for decremental energy prices
PSA 2236 SI 2 HA schedule changes made in the HA market are not making it into ODB
PSA 2257 SA 2 In SDLF, if data is entered with a two digit YEAR, all data in SAVECASE is
deleted/non-recoverable
PSA 2258 SA 2 Inactive screens are not visible to read
PSA 2259 SA 2 Column headings are missing when in the "Matched Historical Load Curves"
PSA 2260 SA 2 The selection is not retained when scrolling in the "Matched Historical Load Curves"
PSA 2263 SA 2 In SDLF, the highlighted menu items are not visible (i.e. they are solid white)
</Table>
TAB-B
<Table>
<Caption>
COMMENTS/
TYPE VARIANCE # SYSTEM CLASS DESCRIPTION STATUS
- ---- -------- - ------ ----- ----------- ---------
PSA 2264 SA 2 Since DST, PGAE's load forecasts has been consistently shifted one hour
earlier than actual demands
PSA 2265 SA 2 Error message received when saving edits in OS
PSA 2266 SA 2 Entire data set becomes invalid if "validate' button is selected in edit
mode of OS
PSA 2267 SA 2 MW values shown incorrectly as zero in OS User Defined Report
PSA 2268 SA 2 In OS "sorting and report" all MW values are shown as blank
PSA 2269 SA 2 In OS, highlighted menu items are not visible
PSA 2276 SA 2 BEEP current interval screen does not always show the units to be
dispatched.
PSA 2283 SA 2 Save Case error in DA Market
PSA 2285 SA 2 BEEP Save Case Directory Display
PSA 2286 SI 2 Event Map Frame numbers are misinterpreted
PSA 2288 SI 2 Problem with templates we are pulling from OASIS
PSA 2298 SI 2 Problem against the DEVELOPMENT SYSTEM: drop down menu
PSA 2299 SI 2 Problem against the DEVELOPMENT SYSTEM: PMI_SHIFT
PSA 2300 SI 2 Problem against the DEVELOPMENT SYSTEM: html pages for HR01
PSA 2301 SI 2 Problem against the DEVELOPMENT SYSTEM: html pages for HR02
PSA 2302 SI 2 Problem against DEVELOPMENT SYSTEM: PMI pages
PSA 2303 SI 2 Problem against DEVELOPMENT SYSTEM: HA PMI Cannot be Downloaded
PSA 2307 SA 2 BEEP HE22 through HE24 on 5/24/98
PSA 2318 SA 2 Problem against the DEVELOPMENT SYSTEM: Error message received when no
replacement bid submitted.
PSA 2324 BBS 2 Real-time intrazonal congestion adjustments are processed too soon by
Settlement.
PSA 2325 SI 2 Data transfer from SI to Settlements
PSA 2327 SA 2 Decrease in performance of DA and HA sequences
PSA 2330 SI 2 Interchange schedule lost during the Fall back to Alhambra
PSA 2332 SA 2 Schedules Lost during Fall Back Process
PSA 2336 SI 2 Phase II Validation Report
PSA 2342 SI 2 Purging schedules in the Hour Ahead
PSA 2343 SI 2 System must validate the Trading SC when entering an Inter-SC schedule.
PSA 2346 BBS 2 Highlight Line Will Not Follow Scrollbar
PSA 2351 BBS 1 Settlements version SE304.4 software
</Table>
Contract Modification to Implement Stage II
to the
Independent System Operator
Scheduling Applications, Scheduling Infrastructure and Business Systems
Contract
This 3 day of July 1998 this contract modification (the "Contract
Modification") is being made between the ISO Alliance LLC (the "Alliance" or
"Supplier"} and the California Independent System Operator Corporation
("Purchaser") as successor in interest and assignee of the Independent System
Operator Restructuring Trust (the "Trust"), to the Independent System Operator
Scheduling Applications, Scheduling Infrastructure and Business Systems Contract
dated March 14, 1997 initially between the Alliance and the Trust (the
"Contract") (each a "Party" and collectively the "Parties"). Unless expressly
otherwise defined, defined terms used herein shall be as defined in the
Contract.
WHEREAS, Section 2.1 of the Contract provides for the completion of
the System in two stages with Stage II to be completed at a price not to exceed
$3,431,233 unless otherwise agreed to by the Parties;
WHEREAS, Section 5.1 of the Contract provides that the Stage II
DSOW shall be developed and agreed to by the Parties in conformance with the
Stage I DSOW;
WHEREAS, Section 9.2.2 provides that the Parties shall establish a
suitable payment schedule based on Stage II payment milestones developed and
agreed to in conjunction with the Stage II DSOW;
WHEREAS, the Parties wish that, except as hereinafter provided, the
requirements of Stage I DSOW shall remain in full force and effect, including
but not limited to Volume I of the Stage I DSOW, known as the "Common Section";
and
WHEREAS, the Parties wish to make certain other changes to the
Contract to facilitate the performance and completion of Stage II.
NOW, THEREFORE, the Parties agree as follows:
1. Reaffirmation of Contract and Disavowal of Course of Performance. The Parties
acknowledge that the priority efforts to complete the System to support the
legislatively mandated earliest possible operation date of the System (initially
set at January 1, 1998 and revised to March 31, 1998) may have resulted in
certain courses of performance between the Parties during Stage I that did not
always follow the formal requirements and procedures of the Contract. To
facilitate greater efficiency and discipline in administration and performance
of the Contract, the Parties hereby expressly reaffirm the provisions of Section
29 of the Contract and agree: (i) that
any Stage I course of performance by either party that may arguably have
constituted a waiver or modification to the Contract's written requirements
shall have no force and effect under Stage II of the Contract; (ii) that Stage
II performance shall not otherwise be influenced by any Stage I course of
performance and shall be conducted in accordance with the terms of the Contract
as written and as modified in writing in accordance with its terms; (iii) with
respect to changes and new Work, to not assert against each other any rights
that may accrue under the law for any course of performance that may develop
during Stage II that is inconsistent with the terms of the Contract; and (iv)
with respect to changes and new Work to promptly report to the designated
representative of the other party (the SR or PR) any conduct of its own
employee, agent or representative that it believes represents a course of
performance not in accordance with the terms of the Contract which if effective
as a waiver would constitute a material change to the Contract and the Parties'
obligations thereunder. Any party failing to make such a report when it knew or
reasonably should have known that a particular course of performance may
constitute a waiver shall not be eligible for any equitable adjustment in its
favor or other relief that may be associated with the course of performance
resulting in the changed obligations.
2. Alliance Manager. The Parties acknowledge that ABB Power T&D Company, Inc.
("ABB") is assuming the duties from Perot Systems Corporation as the Alliance
Manager. Perot Systems Corporation is not a subcontractor for Stage II. Supplier
and ABB hereby represents, warrants and covenants to Purchaser that: (i) ABB has
the power and authority to enter into this Contract Modification on behalf of
the Alliance and perform its obligations under the Contract as modified
hereunder; (ii) the Alliance has the power and authority to enter into this
Contract Modification and fully perform its obligations under the Contract as
modified hereunder; and (iii) all necessary organizational action to approve (a)
the execution and delivery of this Contract Modification, and (b) the
performance of the Contract as modified hereunder, has been duly taken by the
Alliance and that the Contract as modified by this Contract Modification
constitutes a valid and binding agreement enforceable against the Alliance in
accordance with its terms.
3. Alliance Project Manager. For an annual prorated fee of $3 50,000 to be
invoiced and paid as set forth in a Supplier Performance Milestone identified in
Schedule D, the Alliance agrees to assign on a full-time basis a fully qualified
project manager (the "Project Manager") who shall also be the Supplier's
Representative ("SR") and who shall be present on the Purchaser's Site for not
less than four days a week for the period of performance of the Stage II Work.
The selection of Project Manager will be subject to the approval of the
Purchaser as to his/her qualifications, and such approval will not be
unreasonably withheld. The Supplier will use its best efforts to ensure the
service of the same individual as Project Manager throughout the duration of
Work on Stage II. In no event shall the Supplier reassign the Project Manager
without (i) 30 days written notice to PR, and (ii) good cause. The Purchaser may
request in writing the removal of the Project Manager for cause. In such event,
a successor Project Manager shall be appointed by the Supplier within 20 days of
such request.
4. No Stage II Impact on Software Maintenance Agreement: The Parties hereby
agree that the Stage II Work shall have no impact on the Software Maintenance
Agreements entered into by
the Purchaser with the Supplier or its Major Subcontractors, or the hours
available to the Purchaser under such agreements.
5. Software Design Process and Standards. The Parties hereby agree that for the
Stage II Work Supplier shall follow the Software design process and standards to
be attached and incorporated by reference at Schedule A. The Parties hereby
agree to reach an agreement in good faith and finalize Schedule A by August
7,1998; final agreement by the Parties shall be indicated by the signatures of
the PR and SR on the last page of the final Schedule A.
6. ISO Corporation a Party. Pursuant to Section 30.4 of the Contract, the Trust
assigned all of its rights, obligations and duties under the Contract to the
California Independent Operator System Corporation on December 24, 1997.
Therefore, Section 1.1 is hereby revised by deleting the phrase "Independent
System Operator Restructuring Trust, established pursuant to the ISO Trust
Agreement (enabled by the Funding Decision, CPUC Decision 96-10-044 (October 25,
1996))" and replace it with the phrase "the California Independent System
Operator Corporation."
7. Stage II Contract Price. The Parties hereby agree that the third sentence of
Section 2.1 of the Contract is deleted and replaced with the following: "Stage
II Work is to be performed, subject to changes as provided for in the Contract,
for a total fixed price of $18,025,333 (the "Stage II Contract Price"}. The
Stage II Contract Price is an aggregate of the individual fixed prices for the
individual work items. The individual work item fixed prices and the Stage II
Contract Price are set forth in the attached Schedule B which is hereby
incorporated by reference."
8. Priority of Stage II DSOW Provisions. The Parties hereby agree to revise
Section 4.1 of the Contract by inserting the following sentence before the last
sentence to read as follows: "In the event of a conflict between the Stage II
DSOW provisions and Stage I DSOWs, the Stage II DSOW shall be controlling as to
the Stage II Work."
9. Stage II DSOW and Work Items. The Stage II Work shall be performed in
accordance with the Stage II DSOW. Pursuant to Section 5.1 of the Contract, the
Parties have agreed that the Stage II DSOW shall include individual work items,
each specifying the requirements for discrete elements of the Stage 11 Work.
Each individual work item shall be attached to Schedule F and shall be
incorporated by reference into the Contract pursuant to this Contract
Modification upon the acceptance of such work item by both the SR and PR as
evidenced by the signature of each affixed to the end of such work item. Except
for work item ID numbers 41 and 80, for work items identified on Schedule B but
not yet agreed upon by the Parties upon the execution of this Contract
Modification, the Parties shall finalize the requirements for such remaining
work items by August 7,1998. The requirements for item ID numbers 41 and 80
shall be agreed upon and finalized by the Parties by August 31, 1998.
10. Stage II Work Schedule Established Pursuant to a Resourced Work Plan.
Consistent with Section 6.1 of the Contract, the Stage 11 Work shall be
conducted pursuant to the Stage II Work
Schedule. The Stage II Work Schedule shall be established in accordance with a
resourced work plan that comports with current industry standards (the
"Resourced Work Plan"). The Resourced Work Plan for Stage II shall include a
schedule of project tasks and activities, indicating beginning, duration and end
of such tasks or activities. The Resourced Work Plan shall include the
associated resources by name and in man hours allocated to complete the task or
activity. Further, the Resourced Work Plan shall include payment milestones for
work item packages whose completion dates are spaced and whose resources are
levelized consistent with normal and accepted scheduling practices. The Stage II
Work Schedule shall be agreed to by the Parties by August 7, 1998 and attached
as Schedule C whereupon it shall become incorporated by reference herein; the
Parties acceptance of the Work Schedule shall be indicated by the signature of
the PR and the SR on the last page of the Work Schedule.
11. Stage II Supplier Performance Milestones. Pursuant to Section 9.2.2 of the
Contract, the Parties hereby agree that the schedule of work item payment
milestones attached at Schedule D is incorporated by reference into Section
9.2.2 as the Stage II Supplier Performance Milestones.
12. Stage II Purchaser Delivery Obligations. Pursuant to Section 9.2.3 of the
Contract, the Parties hereby agree that the following is incorporated by
reference into Section 9.2.3 as the Stage 11 Purchaser Delivery Obligation: "(I)
Connectivity of Supplier's Santa Clara facility with WEnet for as long as the
Purchaser's SA/SI development hardware is located at Supplier's Santa Clara
facility; such development hardware shall remain at the Santa Clara facility for
the duration of the Stage II performance provided such development hardware is
used by Supplier only to perform Work for the Purchaser."; and "(2) Access to
the BBS system development hardware and terminals at Alhambra for the
performance of Work by the Supplier for the Purchaser."
13. Withdrawal of Letter of Credit. The Parties hereby agree to revise Section
9.2.5 of the Contract to delete the remaining Stage I Letter of Credit
obligations and to delete the Stage II of the Letter of Credit renewal
obligations of the Purchaser in favor of the Supplier. Therefore, the text of
Section 9.2.5 of the Contract shall be deleted and the phrase "[reserved]"
inserted in its place.
14. Work Item Contingency Costs. The Parties hereby agree to insert a new
Section 9.2.6 to the Contract which shall read as follows:
"A contingency cost has been identified in Schedule B for certain Stage II DSOW
work items. The difference between a "Base" fixed price listed for a work item
and the price with contingency establishes a "Contingency" for that work item
from which the Purchaser may, upon the written request of the Supplier,
authorize additional expenditures for the completion of that work item. Each
contingency fund is particularized for, and may be used only for the completion
of, the identified work item. As an incentive to the Supplier, in the event the
full amount of an available contingency fond for a work item is not used.
Purchaser agrees to pay to Supplier upon completion of that work item 50% of the
value of the unused portion of such contingency fund (the "Contingency Incentive
Payment"). The Contingency Incentive Payment shall be made in
4
conjunction with the payment of the last Supplier Performance
Milestone specified in Schedule D for the work item in question.
15. Payment of Work Item Holdbacks. The Parties hereby agree to insert the
following as a new Section 9.2.7 to the Contract:
"An amount equal to 10% of the fixed price for each work item shall be held back
by the Purchaser pending acceptance of the associated Work in accordance with
the terms of the Contract. Holdback amounts are identified for each work item on
Schedule D. Purchaser shall pay aggregated work item holdback amounts in two
disbursements as follows: (i) holdback amounts for individual work items
scheduled to be delivered in 1998 shall be aggregated and paid by Purchaser only
following completion of all work items scheduled to be completed in 1998; and
(ii) holdback amounts for individual work items scheduled to be delivered in
1999 shall be aggregated and paid by Purchaser only following completion of all
work items scheduled to be completed in 1999."
16. System Performance Incentives. The Parties hereby agree to insert the
following as a new Section 9.2.8 to the Contract:
"9.2.8.1. Upon completion of the Stage II Work, the Purchaser agrees to consider
to pay, in its sole subjective discretion, to the Supplier an incentive payment
for SA Subsystem performance of up to $900,000. For purposes of example only,
the following guidelines may be considered by the Purchaser in assessing what
incentive payment, if any, is appropriate:
(i) the Purchaser has installed the computational equipment
upgrades identified in Schedule E;
(ii) no additional computational equipment upgrades beyond those
identified in Schedule E have been added;
(iii) the Purchaser has subjectively determined in its sole
discretion that current System performance has not been unacceptably degraded
upon the completion of Stage II; and
(iv) the Purchaser has subjectively determined, in its sole
subjective discretion, that the Supplier's performance of the Contract,
including but not limited timely performance in accordance with the Work
Schedule and underlying the Resourced Work Plan, merits the award of an
incentive payment.
9.8.2.2. In the event Stage II System performance is degraded below DSOW
performance requirements, the Supplier agrees, at no cost and without impact on
the maintenance hours available to Purchaser under its Software Maintenance
Agreement with ABB, to do the following:
(i) identify the new System required to restore performance; and
(ii) design the port to the new System,
Purchaser acknowledges that the costs associated with the actual software build
and of the hardware is Purchaser's responsibility."
17. Stage II Cumulative Liability Adjustment. The Parties acknowledge that (i)
the agreed to Stage II price is $18,025,333, and (ii) the Supplier's presently
specified maximum limit of liability for Stage II should be raised
commensurately. Therefore, the parties hereby agree to revise Section 25.3.2 of
the Contract to read as follows: "For Stage II, notwithstanding anything to the
contrary herein. Supplier's, its agents', employees', subcontractors',
suppliers', and licensors' cumulative liability hereunder, on any and all
claims, for any loss or damage arising out of, connected with or resulting from
this Contract, or from the performance or breach thereof, shall be limited to
the greater of(i) $5,000,000, or (ii) the portion of the Contract Price actually
paid solely for Stage II Work up to one-hundred percent (100%) of amount of the
Contract Price paid for Stage II Work."
18. Section 10 Editorial Errata. The Parties hereby agree to insert a ","
between the words "Documentation" "work hours" in Sections 10.2(iii) and
10.3(iii) of the Contract.
19. Executive Committee. The Parties hereby agree to resume meetings of the
Executive Committee required under Section 11.6 of the Contract at such time as
the Parties shall mutually agree.
20. Stage II Source Code. Pursuant to Section 16.1 of the Contract, the Parties
hereby agree that the Supplier shall deliver to the Purchaser all Source Code
for the Licensed Software developed under Stage II at a time(s) to be mutually
agreed upon by the Parties.
21. Technical Review Team: The Parties hereby agree to delete the text of
Section 8.14.2.1 of Volume I of the DSOW, the Common Section, and replace it
with the following:
"Control of changes to the scope, schedule or resources allocated to the Work
and shall be governed by a technical review team (the "Technical Review Team").
The Technical Review Team shall be chaired by the Purchaser's project manager
for the Contract, and shall include at a minimum the individuals, or their
delegatees, holding the following positions:
Purchaser
- Purchaser's Project Manager
- Manager of Market Operations
- Director of Operations and Engineering
- Director of Business Systems
- Director of Client Relations
- Director of Application Services
Manager of QA/QC
Alliance
- Project Manager (Alliance)
Each meeting of the Technical Review Team shall include the appropriate members,
or their delagees, and the appropriate technical personnel from each of the
Parties required to fully discuss and resolve the subjects on the agenda.
The Technical Review Team shall review the substance of any DSOW work item not
incorporated into the Stage II DSOW within two weeks of the signing of this
Contract Modification to Implement Stage II to the Contract.
The Technical Review Team shall participate in the business design and technical
design walkthroughs of the application development process.
The Technical Review Team shall review and recommend to the Purchaser's project
manager and the Purchaser executive management, changes in the scope, schedule
and resources allocated to the Work. Review of changes by the Technical Review
Team is a prerequisite to completing a formal Change Order to the Contract. This
Technical Review Team shall meet periodically as required by the volume of
pending changes to the Work."
22. Revised Change Process. Except as expressly revised herein, the Parties
hereby reaffirm and agree to follow the formal contract modification and change
process set out in Section 10 of the Contract. To help facilitate and expedite
the Work while the Section 10 formal contract modification process is
proceeding, the Parties hereby agree to amend Volume I of Stage I DSOW (the
"Common Section") by adding Sections 8.14.2.4 and 8.14.2.5 concerning expedited
change orders and change order accounting, respectively. The Sections to be
added shall read as follows:
"8.14.2.4 Expedited Pre-Change Order Process
(a) Introduction. Notwithstanding anything in the Contract to the
contrary, the Purchaser may authorize the initiation of work outside the
contract scope prior to the approval and execution of a formal change order
pursuant to Section 10 of the Contract, provided, that the Expedited Pre-Change
Order (EPO) procedures of this Section are followed. An EPO is not a change
order and is not a substitute for a formal Section 10 change order; a formal
change order must be processed as the work proceeds pursuant to the EPO. Both
Parties must agree to the EPO. Work actually completed under the EPO will be
paid pursuant thereto by Purchaser as
Field Technical Services pursuant to Section 9 of the Contract in the event the
work is discontinued or a final formal change order is not executed.
(b) Purchaser Initiated EPOs. (1) The PR must request an EPO in writing.
EPOs may be used to request the Supplier to undertake work outside the Contract
scope for changes including but not limited to the following:
(i) changes in the DSOW requirements (including but not limited to
drawings, documentation, testing and designs);
(ii) changes in the method or manner, time (e.g.. hours of the
day, days of the week, etc.) or place of performance of the Work;
(iii) changes in the Purchaser-furnished facilities, equipment,
materials, services, or site; or
(iv) changes in the Work Schedule. (2) The EPO must be in writing
and must contain the following:
(i) a commitment to reimburse costs up to a specified cost
incurrence ceiling for expenses associated with the work covered by the EPO to
be done prior to the execution of the relevant Section 10 Change Order,
provided, that no Costs above this ceiling shall be payable unless otherwise
agreed to by the Parties in the subsequent Section 10 formal Change Order;
(ii) a statement of the functionality to be achieved by the
change; and
(iii) the names of the Supplier personnel who will be responsible
for performing the work; and
(iv) signatures of PR and SR. Supplier shall have no obligation to
perform Work above the specified cost incurrence letter.
(c) Supplier Initiated EPOs. As used in this paragraph, "order" includes
directions, statements, conduct, or determinations of the PR, whether written or
oral. Any order from the PR or other employee or consultant of the Purchaser
that supplier believes to be outside the Contract scope shall be processed as an
Expedited Change Order under this Section, provided, that the following two
conditions are met:
(1) SR gives written notice to the Purchaser that states the Supplier regards
the order as requiring a Change Order and provides the following information:
(i) the date, nature (including technical scope, deliverables, and
testing) and circumstances of the order regarded as a change;
(ii) the name of each Purchaser and Supplier representative,
employee or agent involved in or knowledgeable about such order;
(iii) the identification of any documents and the substance of any
oral communications involved in such order including the identification of the
Supplier's basis for belief that the PR made or authorized such conduct;
(iv) in the instance of an order to change scheduled performance
or delivery, the basis upon which it arose;
(v) the particular elements of contract performance which will be
altered by the change including degradation of specified system functionality;
(vi) the Supplier's estimate of the time by which the Purchaser
must respond to the Purchaser's notice to minimize cost, delay or disruption of
performance; and
(vii) the form of an EPO acceptable to the Supplier.
(2) The PR acknowledges in writing to the Supplier that such directions,
statements or conduct constitute an EPO. Failure by the PR to make such an
acknowledgment within 3 business days of receipt of the Supplier's notice shall
be deemed a denial of acknowledgment by the Purchaser. In the event that the
Supplier's notice information provided pursuant to paragraph (c)(l) above is
inadequate for the PR to make a decision on acknowledgment, the PR shall within
3 business days of receipt of such notice advise the SR of the additional
information required, establish the date by which it is to be provided (in no
event to be greater than 20 business days from the date of the original notice
unless otherwise agreed to by the parties in writing), and the date thereafter
by which the Purchaser will respond (in no event to be greater than 20 business
days from the date of the original notice unless otherwise agreed to by the
parties in writing). Further, to be effective such acknowledgment must also set
a cost incurrence ceiling like that required by paragraph b(2)(i) above.
(d) Excluded Conduct. Except as provided in this Section, no order,
direction, statement, or conduct of the PR shall be treated as authorization for
additional work or entitle the Supplier to an equitable adjustment of the
Contract Price.
(e) Formal Change Order. Within 14 days of execution of an EPO made in
accordance with paragraphs (a) or (c). Supplier shall submit a proposed Change
Order in writing to be otherwise executed by parties in accordance with Section
10 of the Contract. Purchaser shall approve, disapprove or propose modifications
to Supplier's proposal within 7 days. For Stage II of the Contract all Supplier
proposed Change Orders made under Section 10 of the Contract shall include:
(i) the effect, if any, on the existing Work Schedule;
(ii) the requisite mitigating actions, if required, to ensure
continued reliable System operation pending completion and implementation of the
change;
(iii) the requisite mitigating actions, if required, to ensure
completion and implementation of System functionality by the previously agreed
to dates;
(iv) an assessment of the change on the spare parts, training,
testing. Documentation, work hours by type of labor, rates, material and
Subcontract costs, and Work Schedule requirements; and
(v) the proposed equitable adjustment to the Contract Price with
supporting documentation, including but not limited to the EPO accounting
information (or summaries thereof) required to be kept pursuant to this Section.
(f) Exclusions to Equitable Adjustment. No equitable adjustment for any
EPO initiated under paragraph (c) of this Section shall be made for any costs
incurred more than 20 days before the Supplier gives the written notice as
required. Further, no equitable adjustment for any EPO shall include:
(i) increased costs or time extensions for delay resulting from
the Supplier's failure to provide notice or to continue performance pending
resolution of disputes as required by Section 26.1 of the Contract; or
(ii) unless otherwise agreed to by the Parties, costs above the
cost incurrence ceiling price set by the PR.
(g) Maximum Supplier Rates. In no event shall Supplier propose or charge
labor rates in excess of the Supplier Rates listed in Annex C to the Contract.
8.14.2.5 Change Order Accounting
Notwithstanding anything in the Contract to the contrary, the PR may require an
accounting whenever the estimated cost exceeds $50,000 for any Change Order or
series of related Change Orders. The Supplier, for each Change Order or series
of related Change Orders, shall maintain separate accounts, by job order or
other suitable accounting procedure, of all incurred segregable, direct costs of
work and material (less credits for work or material that does not need to be
performed or procured because of the Change Order), associated with the Change
Order. The Supplier shall maintain such accounts until (i) the parties agree to
an equitable adjustment and execute a formal Change Order, or (ii) if the matter
is in dispute, the matter is conclusively disposed of in accordance with Section
26 of the Contract. Supplier shall upon reasonable notice provide access to the
PR to the records documenting the separate accounts being maintained pursuant to
this Section."
10
IN WITNESS WHEREOF the Parties have caused this Change Modification to
Implement Stage II to the Contract to be signed by their authorized officers or
representatives as of the date specified above.
CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION
/s/
Jeffrey Tranen
President and Chief Executive Officer
/s/
Terry Winter
Chief Operating Officer
ISO ALLIANCE LLC
/s/
By: Ralph Masiello, General Manager, ABB T&D Company, Inc.
Its: Manager
11
TAB-C
July 31, 1998
ISO Alliance
c/o Dr. Ralph Masiello
General Manager
ABB Power T & D Company, Inc.
2550 Walsh Avenue
Santa Clara, CA 95051
Dear Ralph,
This will set forth the procedures pursuant to which the Source Code for Stage 1
will be delivered initially to the ISO and the necessary updates and additions
will be furnished.
All deliveries of Source Code will be carried out pursuant to a third-party
escrow arrangement to assure that the versions as delivered can later be
verified. In the case of the initial Source Code delivery, the third party
mechanism will not be available. Accordingly, the packaging containing the code
delivered on July 31,1998 must be packaged by the Alliance so that at a later
date when the third party escrow mechanism is available, the Alliance can
acknowledge that the package has remained unopened and the Source Code is in its
original condition.
There following, the Source Code or updates or additions will be delivered to
the third-part escrow agent as provided in the permanent procedure to be agreed
upon when the agent has been selected and retained.
Please indicate your agreement with the forgoing by signing in the place
provided below.
Sincerely,
/s/
Terry Winter
Chief Operating Officer
Accepted for the Alliance
/s/
TAB-D
July 29, 1998
ISO Alliance
c/o Dr. Ralph Masiello
General Manager
ABB Power T & D Company, Inc.
2550 Walsh Avenue
Santa Clara, CA 95051
Dear Ralph,
As we have discussed, the PX has approached us to secure certain testing and
simulation services. This letter outlines how we have agreed those services
will be performed. All previous settlement offers and proposals by the Alliance
are withdrawn with prejudice to their renewal.
For the sum of $1.00, the ISO authorizes you to use the so-called "SC test
system" located at Alhambra in performing administrative and other related
services in conjunction with the PX testing. In addition, the ISO authorizes
the use of the network model and the ISO master file containing PX Market
Information for purposes of this testing only. The Alliance acknowledges that
the master file and its contents are proprietary to the ISO and require
safeguarding against disclosure as required by Section 14 of the SA/SI/BBS
Contract.
Please indicate your agreement to the above by signing in the appropriate place
below.
Sincerely Yours,
/s/
Terry Winter
Chief Operating Officer
California Independent System
Operator Corporation
ACCEPTED AND AGREED:
/s/
FOR THE ISO ALLIANCE