EXHIBIT 10.31
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
MAGMA ELECTRIC COMPANY
TABLE OF CONTENTS
SECTION TITLE PAGE
- ------- ----- ----
1 PROJECT SUMMARY 1
2 DEFINITIONS 4
3 TERM 10
4 GENERATING FACILITY 10
5 OPERATING OPTIONS 19
6 INTERCONNECTION FACILITIES 20
7 METERING 20
8 POWER PURCHASE PROVISIONS 22
9 PAYMENT AND BILLING PROVISIONS 41
10 TAXES 44
11 TERMINATION 44
12 SALE OF GENERATING FACILITY 44
13 ABANDONMENT OF PROJECT 46
14 LIABILITY 46
15 INSURANCE 48
16 UNCONTROLLABLE FORCES 50
17 NONDEDICATION OF FACILITIES 52
18 PRIORITY OF DOCUMENTS 52
19 NOTICES AND CORRESPONDENCE 53
20 PREVIOUS COMMUNICATIONS 53
21 THIRD PARTY BENEFICIARIES 53
22 NONWAIVER 54
23 DISPUTES 54
24 SUCCESSORS AND ASSIGNS 55
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25 EFFECT OF SECTION HEADINGS 56
26 TRANSMISSION 56
27 AMENDMENT 57
28 GOVERNING LAW 57
29 CONFIDENTIALITY 57
30 MULTIPLE ORIGINALS 59
SIGNATURES 59
APPENDIX A A-l
APPENDIX B B-1
APPENDIX C C-1
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1. PROJECT SUMMARY
This Contract is entered into between Southern California Edison Company
("Edison") and Magma Electric Company, a Nevada Corporation ("Seller").
Seller is willing to construct, own, and operate a Qualifying Facility
and sell electric power to Edison and Edison is willing to purchase
electric power delivered by Seller to Edison at the Point of
Interconnection pursuant to the terms and conditions set forth as
follows:
1.1 All Notices shall be sent to Seller at the following
address: Magma Electric Company
P.O. Box 17760
Los Angeles, CA 90017
Attn: President
1.2 Seller's Generating Facility:
a. Nameplate Rating: 10,000 kW
b. Location: Niland, Imperial County, California
c. Type (Check One):
_____ Cogeneration Facility
X Small Power Production Facility
1.3 Contract Capacity: 8,000 kW
1.3.1 Estimated as-available capacity: 2,000 kW
1.4 Expected annual production: 56,064,000 kWh
1.5 Expected Date of Firm-Operation: July 1, 1986
1.6 Contract Term: 30 years
1.7 Operating Options pursuant to Section 5: (Check One)
X Operating Option I. Excess Generator output
dedicated to Edison. No electric service or
standby service required from Edison.
____ Operating Option II. Entire Generator output dedicated to
Edison with separate electric service required from
Edison.
1.8 The Capacity Payment Option selected by Seller pursuant to Section
8.1 shall be: (Check One)
_____ Option A - As-available capacity based upon:
_____ Standard Offer No. 1 Capacity Payment
Schedule, or
_____ Forecast of Annual As-Available Capacity
Payment Schedule
X Option B - Firm Capacity
X Standard Offer No. 2 Capacity Payment
Schedule in effect at time of Contract
execution
_____ Standard Offer No. 2 Capacity Payment
Schedule in effect at time of Firm
Operation
a. The Contract Capacity Price: $158
kW-yr. (Firm Capacity)
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1.9 The Energy Payment Option selected by Seller pursuant
to Section 8.2 shall be: (Check One)
X Option 1 - Forecast of Annual Marginal Cost of Energy in
effect at date of execution of this Contract. (Appendix B)
____ Option 2 - Levelized Forecast of Marginal Cost of Energy in
effect at date of execution of this Contract. (Appendix C) For
the energy payment refund pursuant to Section 8.5 under Option
2, Edison's Incremental Cost of Capital is 15%.
Seller may change once between Options 1 and 2, provided Seller
delivers written notice of such change at least 90 days prior to
the date of Firm Operation. For Option 1 or 2, Seller elects to
receive the following percentages in 20% increments, the total of
which shall equal 100%: 100 percent of Forecast of Annual Marginal
Cost of Energy, and 0 percent of Edison's published avoided cost of
energy as updated periodically and accepted by the Commission.
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GENERAL TERMS AND CONDITIONS
2. DEFINITIONS
When used with initial capitalizations, whether in the
singular or in the plural, the following terms shall have
the following meanings:
2.1 Adjusted Capacity Price: The $/kW-yr. capacity purchase
price based on the Capacity Payment Schedule in effect at the time
of Contract execution for the time period beginning on the date of
Firm Operation for the first generating unit and ending on the date
of termination or reduction of Contract Capacity under Capacity
Payment Option B.
2.2 Appendix A: Capacity Payment Schedule - Forecast of
Annual As-Available Capacity
2.3 Appendix B: Energy Payment Schedule - Forecast of
Annual Marginal Cost of Energy
2.4 Appendix C: Energy Payment Schedule - Levelized
Forecast of Marginal Cost of Energy
2.5 Capacity Payment Schedule(s): Published capacity
payment schedule(s) as authorized by the Commission and
in effect at the time of execution of this Contract for
as-available or firm capacity.
2.6 Commission: The Public Utilities Commission of the
State of California.
2.7 Contract: This document and Appendices, as amended from
time to time.
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2.8 Contract Capacity: The electric power producing
capability of the Generating Facility which is
committed to Edison.
2.9 Contract Capacity Price: The capacity purchase price from the
Capacity Payment Schedule approved by the Commission and in effect
on the date of execution of this Contract for Capacity Payment
Option B.
2.10 Contract Term: Period in years commencing with date of
Firm Operation during which Edison shall purchase
electric power from Seller.
2.11 Current Capacity Price: The $/kW-yr. capacity price
provided in the Capacity Payment Schedule determined by
the year of termination or reduction of Contract
Capacity and the number of years from such termination
or reduction to the expiration of the Contract Term for
Capacity Payment Option B.
2.12 Edison: The Southern California Edison Company.
2.13 Edison Electric System Integrity: The state of operation of
Edison's electric system in a manner which is deemed to minimize
the risk of injury to persons and/or property and enables Edison to
provide adequate and reliable electric service to its customers.
2.14 Emergency: A condition or situation which in Edison's sole judgment
affects Edison Electric System Integrity.
2.15 Energy: Kilowatt hours generated by the Generating
Facility which are purchased by Edison at the Point of
Interconnection.
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2.16 Firm Operation: The date agreed on by the Parties on which
each generating unit of the Generating Facility is determined to be
a reliable source of generation and on which such unit can be
reasonably expected to operate continuously at its effective rating
(expressed in kW).
2.17 First Period: The period of the Contract Term specified in
Section 3.1.
2.18 Forced Outage: Any outage other than a scheduled outage of the
Generating Facility that fully or partially curtails its electrical
output.
2.19 Generating Facility: All of Seller's generators, together with all
protective and other associated equipment and improvements, necessary
to produce electrical power at Seller's Facility excluding associated
land, land rights, and interests in land.
2.20 Generator: The generator(s) and associated prime mover(s), which are
a part of the Generating Facility.
2.21 Interconnection Facilities: The electrical interconnection
facilities furnished, at no cost to Edison, by Seller, or by the
Interconnecting Utility on the Seller's behalf, which are
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-
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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.
2.22 Interconnecting Utility: The electric utility, or any
other utility which takes delivery of electric energy
generated by the Generating Facility.
2.23 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 California utility standards and good engineering
practices.
2.24 Operating Representatives: Individual(s) appointed by each Party
for the purpose of securing effective cooperation and interchange
of information between the Parties in connection with
administration and technical matters related to this Contract.
2.25 Parties: Edison and Seller.
2.26 Party: Edison or Seller.
2.27 Peak Months: Those months which the Edison annual system peak
demand could occur. Currently, but subject to change with notice,
the peak months for the Edison system are June, July, August, and
September.
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2.28 Point of Interconnection: The point where the electrical
energy generated by the Seller, at the Project, is delivered to the
Edison electric system.
2.29 Project: The Generating Facility and Interconnection Facilities
required to permit the Generator to deliver electric energy and
make capacity available to Interconnecting Utility.
2.30 Qualifying Facility: Cogeneration or Small Power
Production Facility which meets the criteria as defined in Title
18, Code of Federal Regulations, Section
292.201 through 292.207.
2.31 Renewable Resources: Wind parks, small hydroelectric,
solar, and geothermal resources which produce electric
power.
2.32 Second Period: The period of the Contract Term
specified in Section 3.2.
2.33 Seller: The Party identified in Section 1.0.
2.34 Seller's Facility: The premises and equipment of Seller
located as specified in Section 1.2.
2.35 Small Power Production Facility: The facilities and equipment which
use biomass, waste, or Renewable Resources, including wind, solar,
geothermal, and water, to produce electrical energy as defined in
Title 18, Code of Federal Regulations, Section 292.201 through
292.207.
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2.36 Summer Period: Defined in Edison's Tariff Schedule No.
TOU-8 as now in effect or as may hereafter be
authorized by the Commission.
2.37 Tariff Schedule No. TOU-8: Edison's time-of-use energy
tariff for electric service exceeding 500 kW, as now in
effect or as may hereafter be authorized by the
Commission.
2.38 Uncontrollable Forces: Any occurrence beyond the control of a Party
which causes that Party to be unable to perform its obligations
hereunder and which a Party has been unable to overcome by the
exercise of due diligence, including but not limited to flood,
drought, earthquake, storm, fire, pestilence, lightning and other
natural catastrophes, epidemic, war, riot, civil disturbance or
disobedience, strike, labor dispute, action or inaction of
government or other proper authority, which may conflict with the
terms of this Contract, or failure, threat of failure or sabotage
of facilities which have been maintained in accordance with good
engineering and operating practices in California. The failure of
the Interconnecting Utility to deliver electrical energy to the
Point of Interconnection shall be an Uncontrollable Force only if
such failure is beyond the control of the Interconnecting Utility.
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2.39 Winter Period: Defined in Edison's Tariff Schedule No.
TOU-8 as now in effect or as may hereafter be
authorized by the Commission.
3. TERM
This Contract shall be effective upon execution by the Parties and shall
remain effective until either Party gives 90 days' prior written notice
of termination to the other Party, except that such notice of
termination shall not be effective to terminate this Contract prior to
expiration of the Contract Term specified in Section 1.6.
3.1 The First Period of the Contract Term shall commence upon date of Firm
Operation but not later than 5 years from the date of execution of
this Contract.
a. If the Contract Term specified in Section 1.6 is
15 years, the First Period of the Contract Term
shall be for 5 years.
b. If the Contract Term specified in Section 1.6 is 20, 25, or 30
years, the First Period of the Contract Term shall be for 10
years.
3.2 The Second Period of the Contract Term shall commence upon
expiration of the First Period and shall continue for the remainder
of the Contract Term.
4. GENERATING FACILITY
4.1 Ownership
The Generating Facility shall be owned by Seller.
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4.2 Design
4.2.1 Seller, at no cost to Edison, shall:
a. Design the Generating Facility.
b. Acquire all permits and other approvals
necessary for the construction,
operation, and maintenance of the
Generating Facility.
c. Complete all environmental impact
studies necessary for the construction,
operation, and maintenance of the
Generating Facility.
4.2.2 Edison shall have the right to review the
design of the Generating Facility's
electrical system and the Seller's
Interconnection Facilities. Edison shall
have the right to request modifications to
the design of the Generating Facility's
electrical system and the Seller's
Interconnection Facilities. Such
modifications shall be required if necessary
to maintain Edison Electric System Integrity.
If Seller does not agree to such
modifications, resolution of the difference
between the Parties shall be made pursuant to
Section 23.
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4.3 Construction
Edison shall have the right to review, consult with, and
make recommendations regarding Seller's construction
schedule and to monitor the construction and start-up of
the Project. Seller shall notify Edison, as far in
advance of Firm Operation as reasonably possible, of
changes in Seller's Construction Schedule which may
affect the date of Firm Operation.
4.4 Operation
4.4.1 Edison shall have the right to monitor operation of the
Project and may require changes in Seller's method of
operation if such changes are necessary, in Edison's sole
judgment, to maintain Edison Electric System
Integrity.
4.4.2 Seller shall notify, in writing, Edison's Operating
Representative at least 14 days prior to the initial
delivery of electrical energy from the Project to the
Point of Interconnection.
4.4.3 Edison shall have the right to require Seller to curtail
or reduce the delivery of electrical energy from the
Project to the Edison electric system whenever Edison
determines, in its sole judgment, that such curtailment
or reduction is necessary to
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facilitate maintenance of Edison's facilities, or to
maintain Edison Electric System Integrity. If Edison
requires Seller to curtail or reduce the delivery of
electrical energy from the Project to the Edison electric
system pursuant to this Section 4.4.3, Seller shall have
the right to continue to serve its total electrical
requirements. Each Party shall endeavor to correct,
within a reasonable period, the condition on its system
which necessitates the curtailment or the reduction of
delivery of electrical energy from the Project. The
duration of the curtailment or the reduction shall be
limited to the period of time such a condition exists.
4.4.4 Each Party shall keep the other Party's Operating
Representative informed as to the operating schedule of
their respective facilities affecting each other's
operation hereunder, including any reduction in
Contract Capacity availability. In addition, Seller shall
provide Edison with reasonable advance notice regarding
its scheduled outages including any reduction in Contract
Capacity availability. Reasonable advance notice is as
follows:
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SCHEDULED OUTAGE ADVANCE NOTICE
EXPECTED DURATION TO EDISON
Less than one day 24 Hours
one day or more
(except major overhauls) 1 Week
Major overhaul 6 Months
4.4.5 Notification by each Party's Operating Representative of
outage date and duration should be directed to the other
Party's Operating Representative by telephone.
4.4.6 Seller shall not schedule major overhauls
during Peak Months.
4.4.7 Seller shall maintain an operating log at
Seller's Facility with records of: real and
reactive power production; changes in
operating status, outages, Protective
Apparatus operations; and any unusual
conditions found during inspections. Changes
in setting shall also be logged for
Generators which are "block-loaded" to a
specific kW capacity. In addition, Seller
shall maintain records applicable to the
Generating Facility, including the electrical
characteristics of the Generator and
settings, adjustments of the Generator
control equipment, and well-field
information. Information maintained pursuant
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to this Section 4.4.7 shall be provided to Edison, within
30 days of Edison's request.
4.4.8 At Edison's request, Seller shall make all
reasonable effort to deliver power at an
average rate of delivery at least equal to
the Contract Capacity during periods of
Emergency. In the event that the Seller has
previously scheduled an outage coincident
with an Emergency, Seller shall make all
reasonable efforts to reschedule the outage.
The notification periods listed in Section
4.4.4 shall be waived by Edison if Seller
reschedules the outage.
4.4.9 Seller shall demonstrate the ability to
provide Edison the specified Contract
Capacity within 30 days of the date of Firm
operation. Thereafter, at least once per
year at Edison's request, Seller shall
demonstrate the ability to provide Contract
Capacity for a reasonable period of time as
required by Edison. Seller's demonstration
of Contract Capacity shall be at Seller's
expense and conducted at a time and pursuant
to procedures mutually agreed upon by the
Parties. If Seller fails to demonstrate the
ability to provide the Contract Capacity, the
Contract Capacity shall be reduced by
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agreement of the Parties pursuant to Section
8.1.2.5.
4.4.10 The Seller warrants that the Generating Facility meets
the requirements of a Qualifying Facility as of the
effective date of this Contract and continuing through
the Contract Term.
4.4.11 The Seller warrants that the Generating
Facility shall, at all times, conform to all
applicable laws and regulations. Seller
shall obtain and maintain any governmental
authorizations and permits for the continued
operation of the Generating Facility. If, at
any time, Seller does not hold such
authorizations and permits, Seller agrees to
reimburse Edison for any loss which Edison
incurs as a result of the Seller's failure to
maintain governmental authorization and
permits.
4.4.12 In the event electrical energy from the
Project is curtailed or reduced pursuant to
Sections 4.4.3, 16 or 8.4, the Seller, in its
sole discretion, may elect to (i) sell said
electrical energy to a third party or (ii)
deliver said electrical energy to a third
party for future delivery to Edison at times
and at amounts agreeable to Edison. The
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Seller shall be responsible for making all such
arrangements. The provisions in this Section 4.4.12 shall
only apply for the duration of the curtailment or
reduction.
4.4.13 Seller shall maintain operating
communications with the Edison switching
center designated by the Edison Operating
Representative. The operating communications
shall include, but not be limited to, system
paralleling or separation, scheduled and
unscheduled shutdowns, equipment clearances,
levels of operating voltage or power factors,
and daily capacity and generation reports.
4.5 Maintenance
4.5.1 Seller shall maintain the Generating Facility
in accordance with applicable California
utility industry standards and good
engineering and operating practices. Edison
shall have the right to monitor such
maintenance of the Generating Facility.
Seller shall maintain and deliver a
maintenance record of the Generating Facility
to Edison's Operating Representatives upon
request.
4.5.2 Seller shall make a reasonable effort to
schedule routine maintenance during Off-Peak
Months and expected minimal generation
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periods for renewable resources. Outages for scheduled
maintenance shall not exceed a total of 30 peak hours for
the Peak Months.
4.5.3 The allowance for scheduled maintenance is as
follows:
a. Outage periods for scheduled maintenance
shall not exceed 840 hours (35 days) in any 12-month
period. This allowance may be used in increments of
an hour or longer on a consecutive or nonconsecutive
basis.
b. 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 used
consecutively and only for major overhauls.
4.6 Any review by Edison of the design, construction,
operation, or maintenance of the Project is solely for
the information of Edison. By making such review,
Edison makes no representation as to the economic and
technical feasibility, 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, construction, operation, or
maintenance of the Project by Edison, is a
representation by Edison as to the economic and
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technical feasibility, operational capability, or reliability of
said facilities. Seller is solely responsible for economic and
technical feasibility, operational capability, and reliability
thereof.
4.7 Edison shall have access to the Seller's geothermal
field and power-generating facilities for the purpose
of gathering technical information and records. The
technical information and records shall include, but
not be limited to, drilling data, well-testing data,
well-production data and design, power plant
performance data and design, environmental data, brine
handling design, and operation and maintenance data.
Edison agrees not to interfere with Seller's rules and
operating regulations.
5. OPERATING OPTIONS
5.1 Seller shall elect in Section 1.7 to Operate its
Generating Facility pursuant to one of the following
options:
a. Operating Option 1: Seller dedicates the excess
Generator output to Edison with no electrical service or
standby service required from Edison.
b. Operating Option II: Seller dedicates the entire
Generator output to Edison with electrical service
required from Edison.
5.2 After expiration of the First Period of the Contract Term, Seller
may change the Operating Option, but not more than once per year
upon at least 90 days' prior
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written notice to Edison. A reduction in Contract Capacity as a
result of a change in operating options shall be subject to Section
8.1.2.5. Edison shall not be required to remove or reserve capacity
of Interconnection Facilities made idle by a change in operating
options. Edison may dedicate any such idle Interconnection
Facilities at any time to serve other customers or to interconnect
with other electric power sources. Edison shall process requests
for changes of operating option in the chronological order
received.
6. INTERCONNECTION FACILITIES
6.1 Seller shall design, engineer, procure, construct, and test the
Interconnection Facilities in accordance with applicable California
utility standards and good engineering practices and the rules and
regulations of the Interconnecting Utility.
6.2 The design, installation, operation, maintenance, and modifications
of the Interconnection Facilities shall be at Seller's expense.
6.3 Seller, at no cost to Edison, shall acquire all permits and
approvals and complete all environmental impact studies necessary
for the design, installation, operation, and maintenance of the
Interconnection Facilities.
7. METERING
7.1 All meters and equipment used for the measurement of
electrical power for determining Edison's payments to
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Seller pursuant to this Contract shall be provided, owned, and
maintained by Edison and/or the Inter- connecting Utility at
Seller's expense.
7.2 If Seller's Generating Facility is rated at a Capacity of 500 kW or
greater, then Edison, at its option, may install at Seller's
expense, generation metering and/or telemetering equipment.
7.3 Edison's or the Interconnecting Utility's meters shall
be sealed and the seals shall be broken only when the
meters are to be inspected, tested, or adjusted by
Edison or Interconnecting Utility. Seller shall be
given reasonable notice of testing and have the right
to have its Operating Representative present on such
occasions.
7.4 Edison's or Interconnecting Utility's meters installed
pursuant to this Contract shall be tested by Edison or
Interconnecting Utility, at Edison's or Interconnecting
Utility's expense, at least once each year and at any
reasonable time upon request by either Party, at the
requesting Party's expense. If Seller makes such
request, Seller shall reimburse said expense to Edison
or Interconnecting Utility within thirty days after
presentation of a bill therefor.
7.5 Metering equipment found to be inaccurate shall be repaired,
adjusted, or replaced by Edison or Interconnecting Utility such
that the metering accuracy of said equipment shall be within plus
or minus two
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percent. If metering equipment inaccuracy exceeds plus or minus two
percent, the correct amount of Energy and capacity delivered during
the period of said inaccuracy shall be estimated by Edison and
agreed upon by the Parties.
8. POWER PURCHASE PROVISIONS
Prior to the date of Firm Operation, Seller shall be paid for Energy
only pursuant to Edison's published avoided cost of energy based on
Edison's full avoided operating cost as periodically updated and
accepted by the Commission. If at any time electrical energy can be
delivered to Edison and Seller is contesting the claimed jurisdiction of
any entity which has not issued a license or other approval for the
Project, Seller, in its sole discretion and risk, may deliver electrical
energy to Edison and for any electrical energy purchased by Edison
Seller shall receive payment from Edison for (i) Energy pursuant to this
Section, and (ii) as- available capacity based on a capacity price from
the Standard Offer No. 1 Capacity Payment Schedule as approved by the
Commission. Unless and until all required licenses and approvals have
been obtained, Seller may discontinue deliveries at any time.
8.1 Capacity Payments Seller shall sell to Edison and Edison shall
purchase from Seller capacity pursuant to the Capacity Payment Option
selected by Seller in Section 1.8. The Capacity Payment Schedules
will be based on Edison's full
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avoided operating costs as approved by the Commission
throughout the life of this Contract.
8.1.1 Capacity Payment Option A -- As-Available
Capacity.
If Seller selects Capacity Payment Option A, Seller shall be
paid a Monthly Capacity Payment calculated pursuant to the
following formula:
Monthly Capacity Payment = (A x D)+(B x D)+(C x D)
Where A = kWh purchased by Edison during on-peak
periods defined in Edison's Tariff
Schedule No. TOU-8.
B = kWh purchased by Edison during mid-peak
periods defined in Edison's Tariff Schedule No.
TOU-8.
C = kWh purchased by Edison during off-peak
periods defined in Edison's Tariff Schedule No.
TOU-8.
D = The appropriate time differentiated capacity
price from either the Standard Offer No. 1
Capacity Payment Schedule or Forecast of Annual
As- Available Capacity Payment Schedule as
specified by Seller in Section 1.8.
8.1.1.1 If Seller specifies the Standard
Offer No. 1 Capacity Payment
Schedule in Section 1.8, then the
formula set forth in Section 8.1.1
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shall be computed with D equal to
the appropriate time differentiated
capacity price from the Standard
Offer No. 1 Capacity Payment
Schedule for the Contract Term.
8.1.1.2 If Seller specifies the Forecast of
Annual As-Available Capacity
Payment Schedule in Section 1.8,
the formula set forth in Section
8.1.1 shall be computed as follows:
a. During the First Period of the
Contract Term, D shall equal the
appropriate time differentiated capacity
price from the Forecast of Annual
As-Available Capacity Payment Schedule.
b. During the Second Period of
the Contract Term, the formula
shall be computed with D equal
to the appropriate time
differentiated capacity price
from Standard Offer No. 1
Capacity Payment Schedule, but
not less than the greater of
(i) the appropriate time
differentiated capacity price
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from the Forecast of Annual As-Available
Capacity Payment Schedule for the last
year of the First Period, or (ii) the
appropriate time differentiated capacity
price from the Standard Offer No. 1
Capacity Payment Schedule for the first
year of the Second Period.
8.1.2 Capacity Payment Option B--Firm Capacity
Purchase
If Seller selects Capacity Payment Option B, Seller
shall provide to Edison for the Contract Term the
Contract Capacity specified in Section 1.3, or as
adjusted pursuant to Section 8.1.2.6, and Seller
shall be paid as follows:
8.1.2.1 If Seller meets the performance
requirements set forth in Section
8.1.2.2, Seller shall be paid a
monthly Capacity Payment, beginning
from the date of Firm Operation
equal to the sum of the on-peak,
mid-peak, and off-peak Capacity
Period Payments. Each capacity
period payment is calculated
pursuant to the following formula:
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Monthly Capacity Period = A x B x C x D
Payment
Where A = Contract Capacity Price specified in
Section 1.8 based on the Standard Offer No.
2 Capacity Payment Schedule as approved by
the Commission and in effect on the date of
the execution of this Agreement.
B = Conversion factors to convert annual
capacity prices to monthly payments by time
of delivery as specified in Standard Offer
No. 2 Capacity Payment Schedule and subject
to periodic modifications as approved by
the Commission.
C = Contract Capacity specified in
Section 1.3.
D = Period Performance Factor, not
to exceed 1.0, calculated as
follows:
Period Performance Factor [period kWh Purchased by Edison
(Limited by the Level of
Contract Capacity)]
-----------------
[0.8 x Contract Capacity x
(Period Hours minus Maintenance
Hours Allowed in Section 4.5.)]
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8.1.2.2 Performance Reguirements
To receive the Monthly Capacity Payment in
Section 8.1.2.1, Seller shall provide the
Contract Capacity in each Peak Month for all
on-peak hours as such peak hours are defined in
Edison's Tariff Schedule No. TOU-8 on file with
the Commission, except that Seller is entitled
to a 20% allowance for Forced Outages for each
Peak Month. Seller shall not be subject to such
performance requirements for the remaining
hours of the year.
a. If Seller fails to meet the requirements
specified in Section 8.1.2.2, Seller, in
Edison's sole discretion, may be placed on
probation for a period not to exceed 15 months.
If Seller fails to meet the requirements
specified in Section 8.1.2.2 during the
probationary period, Edison may derate the
Contract Capacity to the greater of the
capacity
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actually delivered during the probationary
period, or the capacity at which Seller
can reasonably meet such requirements. A
reduction in Contract Capacity as a result
of this Section 8.1.2.2 shall be subject
to Section 8.1.2.5.
b. If Seller fails to meet the
requirements set forth in this
Section 8.1.2.2 due to a
Forced Outage on the Edison
system, or a request to reduce
or curtail delivery under
Section 8.4, Edison shall
continue Monthly Capacity
Payments pursuant to Capacity
Payment Option B. The
Contract Capacity curtailed
shall be treated the same as
scheduled maintenance outages
in the calculation of the
Monthly Capacity Payment.
8.1.2.3 If Seller is unable to provide
Contract Capacity due to
Uncontrollable Forces, Edison shall
continue Monthly Capacity Payments
28
pursuant to Capacity Payment option B for 90
days from the occurrence of the Uncontrollable
Force. Monthly Capacity Payments payable during
a period of interruption or reduction by reason
of an Uncontrollable Force shall be treated the
same as scheduled maintenance outages.
8.1.2.4 Capacity Bonus Payment
For Capacity Payment Option B,
Seller may receive a Capacity Bonus
Payment as follows:
a. Bonus During Peak Months
------------------------
For a Peak Month, Seller shall
receive a Capacity Bonus
Payment if (i) the
requirements set forth in
Section 8.1.2.2 have been met,
and (ii) the on-peak capacity
factor exceeds 85%.
b. Bonus During Non-Peak Months
----------------------------
For a non-peak month, Seller
shall receive a Capacity Bonus
Payment if (i) the
requirements set forth in
Section 8.1.2.2 have been met,
29
(ii) the on-peak capacity factor for each
Peak Month during the year was at least
85%, and (iii) the on-peak capacity factor
for the non- peak month exceeds 85%.
c. For any eligible month, the
Capacity Bonus Payment shall
be calculated as follows:
Capacity Bonus Payment = A x B x C x D
Where A = (1.2 x On-Peak Capacity Factor)-
1.02
Where the On-Peak Capacity Factor, not to exceed 1.0,
is calculated as follows:
[Period kWh Purchased by
Edison (Limited by the Level
of Contract Capacity)]
On-Peak capacity Factor = ((Contract capacity) x (Period
Hours minus Maintenance Hours
Allowed in Section 4.5))
B = Contract Capacity Price specified
in Section 1.8 for Capacity
Payment Option B
C = 1/12
D = Contract Capacity specified in
Section 1.3
30
d. When Seller is entitled to receive a
Capacity Bonus Payment, the Monthly
Capacity Payment shall be the sum of the
Monthly Capacity Payment pursuant to
Section 8.1.2.1 and the Monthly Capacity
Bonus Payment pursuant to this Section
8.1.2.4.
8.1.2.5 Capacity Reduction
a. Seller may reduce the Contract
Capacity specified in Section 1.3,
provided that Seller gives Edison prior
written notice for a period determined by
the amount of Contract Capacity reduced as
follows:
Amount of Contract Length of
Capacity Reduced Notice Required
25,000 kW or under 12 months
25,001 - 50,000 kW 36 months
50,001 - 100,000 kW 48 months
over 100,000 kW 60 months
b. Seller shall refund to Edison
with interest at the current
published Federal Reserve
Board three months prime
commercial paper rate, an
amount equal to the difference
31
between (i) the accumulated Monthly
Capacity Payments paid by Edison pursuant
to Capacity Payment Option B up to the
time the reduction notice is received by
Edison, and (ii) the total capacity
payments which Edison would have paid if
based on the Adjusted Capacity Price.
c. From the date the reduction
notice is received to the date
of actual capacity reduction,
Edison shall make capacity
payments based on the Adjusted
Capacity Price for the amount
of Contract Capacity being
reduced.
d. Seller may reduce Contract
Capacity without the notice
prescribed in Section
8.1.2.5(a), provided that
Seller shall refund to Edison
the amount specified in
Section 8.1.2.5(b) and an
amount equal to: (i) the
amount of Contract Capacity
32
being reduced, times (ii) the difference
between the Current Capacity Price and the
Contract Capacity Price, times (iii) the
number of years and fractions thereof (not
less than one year) by which the Seller
has been deficient in giving the
prescribed notice. If the Current Capacity
Price is less than the Contract Capacity
Price, only payment under Section
8.1.2.5(b) shall be due to Edison.
8.1.2.6 The Parties may agree in writing at
any time to adjust the Contract
Capacity. Seller may reduce the
Contract Capacity pursuant to
Section 8.1.2.5. Seller may
increase the Contract Capacity with
Edison's approval and thereafter
receive payment for the increased
capacity in accordance with the
Contract Capacity Price for the
Capacity Payment Option selected by
Seller for the remaining Contract
Term.
33
8.1.2.7 For Capacity Payment Option B, Seller
shall be paid for capacity in excess of
Contract Capacity based on the as-available
capacity price in Standard Offer No. 1 Capacity
Payment Schedule, as updated and approved by
the commission.
8.2 Energy Payments - First Period
During the First Period of the Contract Term, Seller shall be paid
a Monthly Energy Payment for the electrical energy delivered by the
Seller and purchased by Edison at the Point of Interconnection
pursuant to the Energy Payment Option selected by the Seller in
Section 1.9, as follows.
8.2.1 Energy Payment Option 1 -- Forecast of Annual
Marginal Cost of Energy.
If Seller selects Energy Payment Option 1, then during the
First Period of the Contract Term, Seller shall be paid a
Monthly Energy Payment for electrical energy delivered by
Seller and purchased by Edison at the Point of Interconnection
during each month in the First Period of the Contract Term
pursuant to the following formula:
34
Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x E
Where A = kWh purchased by Edison during on-
peak periods defined in Edison's
Tariff Schedule No. TOU-8.
B = kWh purchased by Edison during mid- peak
periods defined in Edison's Tariff Schedule No.
TOU-8.
C = kWh purchased by Edison during off-peak
periods defined in Edison's Tariff Schedule No.
TOU-8.
D = The sum of:
(i) the appropriate time differentiated energy
price from the Forecast of Annual Marginal Cost
of Energy, multiplied by the decimal equivalent
of the percentage of the forecast specified in
Section 1.9, and (ii) the appropriate time
differentiated energy price from Edison's
published avoided cost of energy multiplied by
the decimal equivalent of the percentage of the
published energy price specified in Section 1.9.
35
E = Energy Loss Adjustment Factor For Remote Generating
Sites*
8.2.2 Energy Payment Option 2 -- Levelized Forecast
of Marginal Cost of Energy. If Seller
selects Energy Payment Option 2, then during
the First Period of the Contract Term, Seller
shall be paid a Monthly Energy Payment for
electrical energy delivered by Seller and
purchased by Edison each month during the
First Period of the Contract Term pursuant to
the following formula:
Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x E
Where A = kWh purchased by Edison during on-peak periods defined
in Edison's Tariff Schedule No. TOU-8.
B = kWh purchased by Edison during mid- peak periods
defined in Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison during off-peak periods
defined in Edison's Tariff Schedule No. TOU-8.
D = The sum of:
(i) the appropriate time differentiated energy
price from
- --------
* The Energy Loss Adjustment Factor For Remote Generating
Sites shall be 1.0, subject to adjustment by Commission
orders and rulings.
36
the Levelized Forecast of Marginal Cost of
Energy, for the First Period of the Contract
Term multiplied by the decimal equivalent of
the percentage of the levelized forecast
specified in Section 1.9, and (ii) the
appropriate time differentiated energy price
from Edison's published avoided cost of energy
multiplied by the decimal equivalent of the
percentage of the published energy price
specified in Section 1.9.
E = Energy Loss Adjustment Factor For Remote
Generating Sites*
8.2.2.1 Performance Requirement for Energy
----------------------------------
Payment Option 2
----------------
During the First Period when the
annual forecast referred to in
Section 8.2.1 is greater than the
levelized forecast referred to in
Section 8.2.2, Seller shall deliver
to Edison at least 70 percent of
- --------
* The Energy Loss Adjustment Factor For Remote Generating
Sites shall be 1.0, subject to adjustment by Commission
orders and rulings.
37
the average annual kWh delivered to Edison
during those previous periods when the
levelized forecast referred to in Section 8.2.2
is greater than the annual forecast referred to
in Section 8.2.1. If Seller does not meet the
performance requirements of this Section
8.2.2.1, Seller shall be subject to Section
8.5.
8.3 Energy Payments - Second Period
During the Second Period of the Contract Term, Seller shall be paid
a Monthly Energy Payment for electrical energy delivered by Seller
and purchased by Edison at the Point of Interconnection at a rate
equal to 100% of Edison's published avoided cost of energy as
updated periodically and accepted by the Commission, pursuant to
the following formula:
Monthly Energy Payment = kWh purchased by Edison for each on-peak, mid-peak, and
off-peak time period defined in Edison's Tariff
Schedule No. TOU-8
x Edison's published avoided cost of energy by time of
delivery for each time period
38
x Energy Loss Adjustment Factor for
Remote Generating Sites*
8.4 Edison shall not be obligated to accept or pay for
electrical energy generated by the Generating Facility,
and may request Seller whose Generating Facility is one
(1) MW or greater to discontinue or reduce delivery of
electric energy, for not more than 300 hours annually
during off-peak hours when (i) purchases would result
in costs greater than those which Edison would incur if
it did not purchase electrical energy from Seller but
instead utilized an equivalent amount of electrical
energy generated from another Edison source, or (ii)
the Edison Electric System demand would require that
Edison hydro-energy be spilled to reduce generation.
8.5 Energy Payment Refund
If Seller elects Energy Payment Option 2, Seller shall
be subject to the following:
8.5.1 If Seller fails to perform the Contract
obligations for any reason during the First Period of the
Contract Term, or fails to meet the performance
requirements set forth in Section 8.2.2.1, and at the
time of such failure to perform, the net present value of
the cumulative Energy payments received by Seller
pursuant to Energy Payment Option 2
- --------
* The Energy Loss Adjustment Factor For Remote Generating
Sites shall be 1.0, subject to adjustment by Commission
orders and rulings.
39
exceeds the net present value of what Seller would have
been paid pursuant to Energy Payment Option 1, Seller
shall make an energy payment refund equal to the
difference in such net present values in the year in
which the refund is due. The present value calculation
shall be based upon the rate of Edison's incremental cost
of capital specified in Section 1.9.
8.5.2 Not less than 90 days prior to the date
Energy is first delivered to the Point of
Interconnection, Seller shall provide and
maintain a performance bond, surety bond,
performance insurance, corporate guarantee,
or bank letter of credit, satisfactory to
Edison, which shall insure payment to Edison
of the Energy Payment Refund at any time
during the First Period. Edison may, in its
sole discretion, accept another form of
security except that in such instance a 1-1/2
percent reduction shall then apply to the
levelized forecast referred to in Section
8.2.2 in computing payments for Energy.
Edison shall be provided with certificates
evidencing Seller's compliance with the
security requirements in this Section which
shall also include the requirement that
40
Edison be given 90 days' prior written notice of the
expiration of such security.
8.5.3 If Seller fails to provide replacement
security not less than 60 days prior to the
date of expiration of existing security, the
Energy Payment Refund provided in Section 8.5
shall be payable forthwith. Thereafter,
payments for Energy shall be 100 percent of
the Monthly Energy Payment provided in
Section 8.2.1.
8.5.4 If Edison at any time determines the security
to be otherwise inadequate, and so notifies
Seller, payments thereafter for Energy shall
be 100 percent of the Monthly Energy Payment
provided in Section 8.2.1. If within 30 days
of the date Edison gives notice of such
inadequacies, Seller satisfies Edison's
security requirements, Energy Payment Option
2 shall be reinstated. If Seller fails to
satisfy Edison's security requirements within
the 30-day period, the Energy Payment Refund
provided in Section 8.5 shall be payable
forthwith.
9. PAYMENT AND BILLING PROVISIONS
9.1 For Energy and capacity purchased by Edison:
9.1.1 Edison shall mail to Seller no later than
thirty days after the end of each monthly
41
billing period (1) a statement showing the Energy and
capacity delivered to Edison during the on-peak,
mid-peak, and off-peak periods, as those periods are
specified in Edison's Tariff Schedule No. TOU-8 for that
monthly billing period, (2) Edison's computation of the
amount due Seller, and (3) Edison's check in payment of
said amount.
9.1.2 If the monthly payment period involves portions of two
different published Energy payment schedule periods, the
monthly Energy payment shall be prorated on the basis of
the percentage of days at each price.
9.1.3 If the payment period is less than 27 days or greater
than 33 days, the capacity payment shall be prorated on
the basis of the average days per month per year.
9.1.4 If, within thirty days of receipt of the statement,
Seller does not make a report in writing to Edison of an
error, Seller shall be deemed to have waived any error
in Edison's statement, computation, and payment, and
they shall be considered correct and complete.
9.2 Edison shall bill the Seller, on a monthly basis, for
the costs Edison has incurred in the transmission of
42
the electrical energy from the Project to the Point of
Interconnection pursuant to the provisions of Section 26.
9.3 Payments Due to Contract Capacity Reduction
9.3.1 The Parties agree that the refund and
payments provided in Section 8.1.2.5 represent a fair
compensation for the reasonable losses that would result
from such reduction of Contract Capacity.
9.3.2 in the event of a reduction in Contract Capacity, the
quantity, in kW, by which the Contract Capacity is
reduced shall be used to calculate the refunds and
payments due Edison in accordance with Section 8.1.2.5,
as applicable.
9.3.3 Edison shall provide invoices to Seller for all refunds
and payments due Edison under this Section 9 which shall
be due within 60 days.
9.3.4 If Seller does not make payments as required in Section
9.2.3, Edison shall have the right to offset any amounts
due it against any present or future payments due Seller
and may pursue any other remedies available to Edison as
a result of Seller's failure to perform.
43
9.4 Energy Payment Refund
Energy Payment Refund is immediately due and payable upon Seller's
failure to perform the contract obligations as specified in Section
8.5.
10. TAXES
10.1 Seller shall pay ad valorem taxes and other taxes properly
attributable to the Project. If such taxes are assessed or levied
against Edison, Seller shall pay Edison for such assessment or
levy.
10.2 Seller shall pay ad valorem taxes and other taxes properly
attributed to land, land rights, or interest in land for the
Project. If such taxes are assessed or levied against Edison,
Seller shall pay Edison for such assessment or levy.
10.3 Seller or Edison shall provide information concerning the Project
to any requesting taxing authority.
11. TERMINATION
This Contract shall terminate if Firm Operation does not occur within 5
years of the date of Contract execution.
12. SALE OF GENERATING FACILITY
12.1 If Seller desires to sell the Generating Facility, Seller shall
promptly offer to Edison, or any entity designated by Edison in its
sole discretion, the right to purchase the Generating Facility.
Edison, or any such entity designated by Edison, shall have up to
sixty days following the offer to accept Seller's offer or reach
agreement with Seller.
44
12.2 If the Parties are unable to reach a satisfactory agreement
within sixty days following the offer pursuant to Section 12.1, and
the Generating Facility is offered to any third party or parties,
Edison, or any such entity designated by Edison, has the right for
thirty days following each offer to agree to purchase the
Generating Facility under the same terms and conditions, if such
terms and conditions are better to Edison than those offered in
Section 12.1. Any offers to sell made more than two years after
Edison's failure to accept a previous offer to sell under Section
12.1, shall again be subject to the terms of Sections 12.1 and
12.2.
12.3 Notwithstanding the foregoing, Seller shall have the right at any
time to sell or transfer the Generating Facility to an affiliate of
Seller and an affiliate of Seller may sell, transfer, or lease to
Seller without giving rise to any right of first refusal of Edison.
An "affiliate" of Seller shall mean a Party's parent, a Party's
subsidiary, or any company of which a Party's parent is a parent.
An "affiliate" of Seller shall also mean a partnership or joint
venture from which the Seller leases and operates the Generating
Facility. A "parent" shall mean a company which owns directly or
indirectly not less than 51% of the shares entitled to vote in an
election of directors of another company.
45
13. ABANDONMENT OF PROJECT
13.1 The Generating Facility shall be deemed to be abandoned if Seller
discontinues operation of the Generating Facility with the intent
that such discontinuation be permanent. Such intent shall be
conclusively presumed by either (i) Seller's notice to Edison of
such intent, or (ii) Seller's operation of the Generating Facility
in such a manner that no Energy is generated therefrom for 200
consecutive days during any period after Firm Operation of the
first generating unit, 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 year.
13.2 If Seller abandons the Generating Facility during the term of this
Agreement, Edison, or any entity designated by Edison in its sole
discretion, shall have the right to purchase the Generating
Facility pursuant to the provisions of Section 12.
14. LIABILITY
14.1 Each Party (First Party) releases the other Party (Second Party),
its directors, officers, employees and agents from any loss,
damage, claim, cost, charge, or expense of any kind or nature
(including any direct, indirect or consequential loss, damage,
claim, cost, charge, or expense), including attorney's fees and
46
other costs of litigation incurred by the First Party, in
connection with damage to property of the First Party caused by or
arising out of the Second Party's construction, engineering,
repair, supervision, inspection, testing, protection, operation,
maintenance, replacement, reconstruction, use or ownership of its
facilities, to the extent that such loss, damage, claim, cost,
charge, or expense is caused by the negligence of Second Party, its
directors, officers, employees, agents, or any person or entity
whose negligence would be imputed to Second Party.
14.2 Each Party shall indemnify and hold harmless the other Party, its
directors, officers, and employees or agents from and against any
loss, damage, claim, cost, charge, or expense of any kind or nature
(including direct, indirect or consequential loss, damage, claim,
cost, charge, or expense), including attorney's fees and other
costs of litigation, incurred by the other Party in connection with
the injury to or death of any person or damage to property of a
third party arising out of the indemnifying Party's construction,
engineering, repair, supervision, inspection, testing, protection,
operation, maintenance, replacement, reconstruction, use, or
ownership of its facilities, to the extent that such loss, damage,
claim, cost, charge, or expense is caused by the negligence of the
indemnifying Party, its directors, officers, employees, agents, or
any person
47
or entity whose negligence would be imputed to the indemnifying
Party; provided, however, that each Party shall be solely
responsible for and shall bear all cost of claims brought by its
contractors or its own employees and shall indemnify and hold
harmless the other Party for any such costs including costs arising
out of any workers compensation law. Seller releases and shall
defend and indemnify Edison from any claim, cost, loss, damage, or
liability arising from any contrary representation concerning the
effect of Edison's review of the design, construction, operation,
or maintenance of the Project.
14.3 The provisions of this Section 14 shall not be construed so as to
relieve any insurer of its obligations to pay any insurance claims
in accordance with the provisions of any valid insurance policy.
14.4 Neither Party shall be indemnified by the other Party under Section
14.2 for its liability or loss resulting from its sole negligence
or willful misconduct.
15. INSURANCE
15.1 Until Contract is terminated, 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 $1,000,000 each occurrence.
The insurance carrier or carriers and form of policy shall be
subject to review and approval by Edison.
48
15.2 Prior to the date Seller's generating facility first delivers
electrical energy to the Point of Interconnection, Seller shall (i)
furnish certificate of insurance to Edison, which certificate shall
provide that such insurance shall not be terminated nor expire
except on thirty days prior written notice to Edison, (ii) maintain
such insurance in effect for so long as Seller's Generating
Facility is delivering electrical energy to the Point of
Interconnection, and (iii) furnish to Edison 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.
49
"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."
15.3 If Seller fails to comply with the provisions of this Section 15,
Seller shall, at its own cost, defend, indemnify, and hold harmless
Edison, its directors, officers, employees, agents, assigns, and
successors in interest from and against any and all loss, damage,
claim, cost, charge, or expense of any kind or nature (including
direct, indirect or consequential loss, damage, claim, cost,
charge, or expense, including attorney's fees and other costs of
litigation) resulting from the death 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 15.
16. UNCONTROLLABLE FORCES
16.1 Neither Party shall be considered to be in default in the
performance of any of the agreements contained in this Contract,
except for obligations to pay money, when and to the extent failure
of performance shall be caused by an Uncontrollable Force.
16.2 If either Party, because of an Uncontrollable Force, is
rendered wholly or partly unable to perform its
50
obligations under this Contract, the Party shall be executed from
whatever performance is affected by the Uncontrollable Force to the
extent so affected provided that:
(1) The non-performing Party, within two weeks after
the occurrence of the Uncontrollable Force, gives
the other Party written notice describing the
particulars of the occurrence;
(2) The suspension of performance is of no greater
scope and of no longer duration than is required
by the Uncontrollable Force;
(3) The non-performing Party uses its best efforts to
remedy its inability to perform (this subsection
shall not require the settlement of any strike,
walkout, lockout or other labor dispute on terms
which, in the sole judgment of the party involved
in the dispute, are contrary to its interest. It
is understood and agreed that the settlement of
strikes, walkouts, lockouts or other labor
disputes shall be at the sole discretion of the
Party having the difficulty);
(4) When the non-performing Party is able to resume performance of
its obligations under this Contract, that Party shall give the
other Party written notice to that effect; and
51
(5) Capacity payments during such periods of Uncontrollable
Force on Seller's part shall be governed by Section 8.1.2.3.
16.3 In the event that either Party's ability to perform cannot be
corrected when the Uncontrollable Force is caused by the actions or
inactions of legislative, judicial or regulatory agencies or other
proper authority, this Contract may be amended to comply with the
legal or regulatory change which caused the nonperformance.
If a loss of Qualifying Facility status occurs due to an
Uncontrollable Force and Seller fails to make the changes necessary
to maintain its Qualifying Facility status, the Seller shall
compensate Edison for any economic detriment incurred by Edison as a
result of such failure.
17. NONDEDICATION OF FACILITIES
Neither Party, by this Contract, dedicates any part of its facilities
involved in this Project to the public or to the service provided under
the Contract, and such service shall cease upon termination of the
Contract.
18. PRIORITY OF DOCUMENTS
If there is a conflict between this document and any Appendix, the
provisions of this document shall govern. Each Party shall notify the
other immediately upon the determination of the existence of any such
conflict.
52
19. NOTICES AND CORRESPONDENCE
All notices and correspondence pertaining to this Contract shall be in
writing and shall be sufficient if delivered in person or sent by
certified mail, postage prepaid, return receipt requested, to Seller as
specified in Section 1.1, or to Edison as follows:
Southern California Edison Company
Post Office Box 800
Rosemead, California 91770
Attention: Secretary
All notices sent pursuant to this Section 19 shall be effective when
received, and each Party shall be entitled to specify as its proper
address any other address in the United States upon written notice to
the other Party.
20. PREVIOUS COMMUNICATIONS
This Contract contains the entire agreement and understanding between
the Parties, their agents, and employees as to the subject matter of
this contract, 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 Contract.
21. THIRD PARTY BENEFICIARIES
This Contract is for the sole benefit of the Parties and shall not be
construed as granting any rights to any person or entity other than the
Parties or imposing obligations on either Party to any person or entity
other than the Parties.
53
22. NONWAIVER
None of the provisions of the Contract shall be considered waived by
either Party except when such waiver is given in writing. The failure of
either Edison or Seller to insist in any one or more instances upon
strict performance of any of the provisions of the Contract 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 to remain in full force and
effect.
23. DISPUTES
23.1 Any dispute arising between the Parties relating to interpretation
of the provisions of this Contract 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 stating the complaint and proposed solution and submitted
to the appropriate Edison manager, whose interpretation and
decision thereon shall be incorporated into a written document
which shall specify Edison's position and that it is the final
decision of such manager. A copy of such document shall be
furnished to Seller within ten days following the receipt of
Seller's written complaint.
23.2 The decision of such manager pursuant to Section 23.1 shall be
final and conclusive from the date of receipt of such copy by the
complaining Party, unless within
54
thirty days Seller furnishes a written appeal to such manager.
Following receipt of such appeal, a joint hearing shall be held
within fifteen days of said appeal, at which time the Parties shall
each be afforded an opportunity to present evidence in support of
their respective positions. Such joint hearing shall be conducted
by one authorized representative of Seller and one authorized
representative of Edison and other necessary persons. Pending final
decision of a dispute hereunder, the Parties shall proceed
diligently with the performance of their obligations under this
Contract and in accordance with Edison's position pursuant to
Section 23.1.
23.3 The final decision by the Parties' authorized representatives shall
be made within fifteen days after presentation of all evidence
affecting the dispute, and shall be reduced to writing. The
decision shall be final and conclusive.
23.4 If the authorized representatives cannot reach a final decision
within the fifteen-day period, any remedies which are provided by
law may be pursued.
24. SUCCESSORS AND ASSIGNS
Neither Party shall voluntarily assign its rights nor delegate its
duties under this Contract, or any part of such rights or duties,
without the written consent of the other Party, except in connection
with the sale or merger of a substantial portion of its properties. Any
such assignment
55
or delegation made without such written consent shall be null and void.
Consent for assignment shall not be unreasonably withheld. Such
assignment shall include, unless otherwise specified therein, all of
Seller's rights to any refunds which might become due under the
Contract. Seller may assign all or any part of its interest under this
Contract to a financing institution to facilitate financing for the
Project by the Seller.
25. EFFECT OF SECTION HEADINGS
Section headings appearing in this Agreement are inserted for
convenience only, and shall not be construed as interpretations of text.
26. TRANSMISSION
26.1 Edison shall endeavor to make arrangements with third parties for
the necessary transmission of the electrical energy from the
Project to the Point of Interconnection. Seller shall be
responsible for all costs associated with such transmission of
electrical energy, including the cost of transmission losses from
the Project to the Point of Interconnection as determined by Edison
in its sole judgment.
26.2 If Edison is unable to secure firm transmission service or
equivalent arrangements from third parties which are required to
transmit the electrical energy from the Project to the Point of
Interconnection at terms and conditions satisfactory to Edison in
its sole judgment, then Edison shall not be liable to the Seller
for any
56
damages arising from Edison's failure to secure said transmission
service or arrangements nor will Edison be required to purchase
Energy which is not delivered or capacity which is not made
available at the Point of Interconnection.
27. AMENDMENT
If at any time during the term of this Agreement a change in
circumstances not anticipated at the time this Agreement was executed
significantly alters the rights or obligations of either Party, the
terms of the Agreement which are directly affected by the change shall
be amended by mutual agreement of Parties.
28. GOVERNING LAW
This Contract shall be interpreted, governed, and construed under the
laws of the State of California as if executed and to be performed
wholly within the State of California.
29. CONFIDENTIALITY
29.1 Except as provided herein, the Parties shall hold all information
in this Contract and all information related to or received
pursuant to this Contract as confidential.
29.2 Neither Party shall disclose any part nor the whole of this
Contract to any third party without the express prior written
consent of the other Party; such consent shall not be unreasonably
withheld.
29.3 From time to time governmental and/or regulatory
agencies may request disclosure of the Contract or
57
Contract-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.
58
30. MULTIPLE ORIGINALS
This Contract is executed in two counterparts, each of which shall be
deemed an original.
SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have executed this Contract this
15 of June, 1984.
SOUTHERN CALIFORNIA EDISON COMPANY
By: /s/ Edward A. Myers, Jr.
Vice President
MAGMA ELECTRIC CO.
By: /s/ Andrew W. Hoch
Vice President
59
APPENDIX A
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM STANDARD OFFER
CAPACITY PAYMENT SCHEDULE-
FORECAST OF ANNUAL AS-AVAILABLE CAPACITY1
Line As-Available Capacity2
No. Year ($/kW-year)
- --------------------------------------------------------------------------
1 1983 70
2 1984 76
3 1985 81
4 1986 87
5 1987 94
6 1988 101
7 1989 109
8 1990 117
9 1991 126
10 1992 148
11 1993 158
12 1994 169
13 1995 180
14 1996 194
15 1997 206
- -------------------------
1 This forecast to be used in conjunction with Capacity Payment
Option A.
2 The annual as-available capacity ($/kW-yr) will be converted to a
seasonal time-of-delivery ((cent)/kWh) value that is consistent with
as-available time-of-delivery rates current authorized by the Commission
for Avoided As-Available Capacity.
A-1
APPENDIX B
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM STANDARD OFFER
ENERGY PAYMENT SCHEDULE -
FORECAST OF ANNUAL MARGINAL COST OF ENERGY1
Line Annual Marginal Cost of
No. Year Energy ((cent)/kWh)
- -----------------------------------------------------------------------------
1 1983 5.3
2 1984 5.6
3 1985 5.7
4 1986 6.0
5 1987 6.4
6 1988 6.9
7 1989 7.6
8 1990 8.1
9 1991 8.6
10 1992 9.3
11 1993 10.1
12 1994 10.9
13 1995 11.8
14 1996 12.6
15 1997 13.6
1 This forecast to be used in conjunction with Energy Payment Option
1.
2 The annual energy payments in the table will be converted to seasonal
time-of-delivery energy-payment rates that are consistent with the
time-of-delivery rates currently authorized by the Commission for
Avoided Energy Cost Payments.
B-1
APPENDIX C
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM STANDARD OFFER ENERGY PAYMENT SCHEDULE -
LEVELIZED FORECAST OF MARGINAL COST OF ENERGY1
5-Year
Initial Levelized Levelized
Line Year of Forecast Forecast
No. Delivery ((cent)/kWh) ((cent)/KWh)
- ------------------------------------------------------------------------
1 1983 5.7 6.5
2 1984 6.0 6.9
3 1985 6.4 7.3
4 1986 6.8 7.9
5 1987 7.3 8.5
6 1988 7.9 9.1
- ------------------------
1 Levelized Forecast to be used in conjunction with Energy
Payment Option 2.
2 The annual energy payments in the table will be converted to seasonal
time-of-delivery energy payment rates that are consistent with the
time-of-delivery rates currently authorized by the Commission for
Avoided Energy Cost Payments.
C-1
AMENDMENT No. 1
TO
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
MAGMA ELECTRIC COMPANY
AMENDMENT NO. 1 TO
POWER PURCHASE CONTRACT BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY AND
MAGMA ELECTRIC COMPANY
1. Parties
The Parties to this Amendment No. 1 to the Power Purchase Contract
between Southern California Edison Company and Magma Electric Company,
executed on June 15, 1984, hereinafter referred to as "Amendment No. 1",
are Southern California Edison Company, a California corporation,
hereinafter referred to as "Edison", and Magma Electric Company, a
Nevada corporation, hereinafter referred to as "Seller", hereinafter
sometimes referred to individually as "Party" and collectively as
"Parties".
2. Recitals
This Amendment No. 1 is made with reference to the following
facts, among others:
2.1 On June 15, 1984, Edison and Seller executed the Power
Purchase Contract to provide the terms and conditions for the sale
by Seller and the purchase by Edison of electrical power delivered
by Seller to Edison at the Point of Interconnection from the 10,000
kW electrical generating facility, located at Niland, California.
2.2 The Parties desire to amend the Power Purchase Contract to modify
the rating of the Seller's generating facility and its expected
date of firm operation.
-1-
3. Agreement
The Parties agree to the following.
4. Effective Date
This Amendment No. 1 shall become effective upon execution
by the Parties.
5. Amendment to Section 1.2
Subparagraph a. in Section 1.2 is deleted in its entirety
and replaced with the following:
"a. Nameplate Rating: 49,000 kW."
6. Amendment to Section 1.3
Section 1.3 is deleted in its entirety and replaced with the following:
"1.3 Contract Capacity: 45,000 kW
1.3.1 Estimated as-available capacity: 0 kW."
7. Amendment to Section 1.4
Section 1.4 is deleted in its entirety and replaced with the following:
"1.4 Expected Annual Production: 315,360,000 kWh."
8. Amendment to Section 1.5
Section 1.5 is deleted in its entirety and replaced with following:
"1.5 Expected Date of Firm Operation:
1.5.1 Phase No. 1 (Nameplate Rating: 12,500 kW):
December 1, 1986
1.5.2 Phase No. 2 (Nameplate Rating: 12,500 kW):
December 1, 1987
1.5.3 Phase No. 3 (Nameplate Rating: 12,500 kW):
April 1, 1988
-2-
1.5.4 Phase No. 4 (Nameplate Rating: 12,500 kW):
December 1, 1988"
9. Amendment to Section 1.8
Subparagraph a. to Option B in Section 1.8 is deleted in its
entirety and replaced with the following:
"a. The estimated Contract Capacity Price based on the
estimated dates of Firm Operation (Firm Capacity) is:
a.1 Phase No. 1: $158 per kW-yr.
a.2 Phase No. 2: $170 per kW-yr.
a.3 Phase No. 3: $184 per kW-yr.
a.4 Phase No. 4: $184 per kW-yr.
10. Amendment to Section 3.1
The first sentence in Section 3.1 is deleted in its entirety and
replaced with the following: "The First Period of the Contract Term for
the project phases, as specified in Section 1.5, shall commence upon
date of Firm Operation of Phase No. 1 but not later than 5 years from
the date of execution of this Contract."
11. Effect of this Amendment No. 1
Except as amended herein, all terms, covenants and
conditions contained in the Power Purchase Contract shall
remain in full force and effect.
-3-
12. Signature Clause
The signatories hereto represent that they have been
appropriately authorized to enter into this Amendment No. 1
on behalf of the Party for whom they sign. This Amendment
No. 1 is hereby executed as of this 30 day of November,
1984.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/ Edward A. Myers, Jr.
Vice President
MAGMA ELECTRIC COMPANY
By /s/ Andrew W. Hoch
Vice President
-4-
AMENDMENT NO. 2
TO
POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
MAGMA ELECTRIC COMPANY
AMENDMENT NO. 2 TO
POWER PURCHASE CONTRACT BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY AND
MAGMA ELECTRIC COMPANY
1. Parties
The Parties to this Amendment No. 2 to the Power Purchase Contract
between Southern California Edison Company and Magma Electric Company,
executed on June 15, 1984 ("Power Purchase Contract"), hereinafter
referred to as "Amendment No. 2", are Southern California Edison
Company, a California corporation, hereinafter referred to as "Edison",
and Magma Electric Company, a Nevada corporation, hereinafter referred
to as "Seller", hereinafter sometimes referred to individually as
"Party" and collectively as "Parties".
2. Recitals
This Amendment No. 2 is made with reference to the following
facts, among others:
2.1 On June 15, 1984, Edison and Seller executed the Power
Purchase Contract to provide the terms and conditions for the sale
by Seller and the purchase by Edison of electrical power delivered
by Seller to Edison at the Point of Interconnection from the 10,000
kW electrical generating facility located at Niland, California.
2.2 On November 30, 1984, Edison and Seller amended the Power Purchase
Contract to modify the (i) Nameplate rating, (ii) Contract Capacity
and Estimated as- available capacity, (iii) Expected Annual
Production,
-1-
(iv) Expected Date of Firm Operation, (v) Estimated Contract
Capacity Price, and (vi) definition of the First Period of the
Contract Term as it applies in Section 3.1.
2.3 Seller is a wholly owned subsidiary of Magma Power
Company ("Magma").
2.4 On January 22, 1986, Magma acquired an option to purchase the
geothermal leaseholds described in and pursuant to the terms and
conditions contained in the Option to Acquire Adjacent Geothermal
Leasehold ("Option") among Magma, Imperial Energy Corporation,
Niland Power, Inc., and Salton Sea Associates.
2.5 On January 22, 1986, in conjunction with the Option,
Imperial Energy Corporation assigned to Magma its
rights, title and interest in the Power Purchase
Contract between Edison and Imperial Energy
Corporation, dated February 22, 1984, and amended on
November 13, 1984 ("Imperial I Contract"). Edison
consented to such assignment on March 12, 1986.
2.6 On January 22, 1986, in conjunction with the option,
Niland Power, Inc., assigned to Magma its rights,
title, and interest in the Power Purchase Contract
between Edison and Imperial Energy Corporation, dated
April 16, 1985, which it acquired from Imperial Energy
Corporation on September 9, 1985 ("Imperial II
Contract"). Edison consented to said assignment on
March 12, 1986.
-2-
2.7 On February 10, 1986, Vulcan/BN Geothermal Power Company, of
which Vulcan Power Company, a wholly owned subsidiary of Magma and
an affiliate of Seller, is a partner, declared its 29,500 kW
geothermal project at Niland in firm operation. Based on the
successful development of its first project at Niland, Magma has
concluded that its succeeding projects should be duplicates of that
project.
2.8 On March 14, 1986, Imperial Energy Corporation, Niland Power, Inc.,
and Salton Sea Associates assigned to Magma their rights, title and
interest in those geothermal leaseholds described in and pursuant
to the terms and conditions contained in the Option.
2.9 The aforementioned Power Purchase Contracts provide for projects
which will all be constructed and operated on contiguous sites.
2.10 Concurrent with this Amendment No. 2, Edison and Magma have agreed
to amend the Imperial I Contract and Imperial II Contract to
effectively transfer Capacity to be purchased by Edison from the
Power Purchase Contract and from Imperial II Contract to Imperial I
Contract to account for the decrease in Capacity to be produced
under the Power Purchase Contract.
2.11 Seller, based on the aforementioned facts, desires to amend the
Power Purchase Contract to reflect a change in the rating of the
Seller's Generating Facility.
3. Agreement
The Parties agree to the following.
-3-
4. Effective Date
This Amendment No. 2 shall become effective upon execution
by the Parties.
5. Amendment to Section 1.2
5.1 Subparagraph a. in Section 1.2 is deleted in its
entirety and replaced with the following:
"a. Nameplate Rating: 38,000 kW."
5.2 Add the following subparagraph "d."
"d. Generating Facility Designation: Niland No. 3."
6. Amendment to Section 1.3
Section 1.3 is deleted in its entirety and replaced with the following:
"1.3 Contract Capacity: 34,000 kW.
1.3.1 Estimated as-available capacity: 4,000 kW."
7. Amendment to Section 1.4
Section 1.4 is deleted in its entirety and replaced with the following:
"1.4 Expected Annual Production: 238,272,000 kWh."
8. Amendment to Section 1.5
Section 1.5 is deleted in its entirety and replaced with the following:
"l.5 Expected Date of Firm Operation: June 1, 1989."
9. Amendment to Section 1.8
Subparagraph a. to Option B in Section 1.8 is deleted in its
entirety.
-4-
10. Amendment to Section 3.1
The first sentence in Section 3.1 is deleted in its entirety and
replaced with the following:
"The First Period of the Contract Term shall commence upon date of
Firm Operation but not later than 5 years from the date of
execution of this Contract."
11. Amendment to Section 26
Section 26 is deleted in its entirety and replaced with the following:
"Seller shall be solely responsible, using all reasonable efforts,
to negotiate and conclude all required transmission and
interconnection agreements with the Interconnecting Utility. Such
agreements shall provide for the transmission of electrical energy
generated by the Generating Facility to the Point of
Interconnection."
12. Effect of this Amendment No. 2
Except as amended herein, all terms, covenants and
conditions contained in the Power Purchase Contract shall
remain in full force and effect.
-5-
13. Signature Clause
The signatories hereto represent that they have been
appropriately authorized to enter into this Amendment No. 2
on the behalf of the Party for whom they sign. This
Amendment No. 2 is hereby executed as of this 10 day of
April, 1985.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/ EDWARD A. MYERS, JR.
Vice President
MAGMA ELECTRIC COMPANY
By /s/ ANDREW W. HOCH
Vice President
-6-