POWER PURCHASE CONTRACT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
IMPERIAL ENERGY CORPORATION
NILAND NO. 2
TABLE OF CONTENTS
SECTION TITLE PAGE
------- ----- ----
1 PROJECT SUMMARY 1
2 DEFINITIONS 4
3 TERM 9
4 GENERATING FACILITY 10
5 OPERATING OPTIONS 19
6 ELECTRIC LINES AND ASSOCIATED EASEMENTS 19
7 METERING 20
8 POWER PURCHASE PROVISIONS 22
9 PAYMENT AND BILLING PROVISIONS 42
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 51
17 NONDEDICATION OF FACILITIES 52
18 PRIORITY OF DOCUMENTS 53
19 NOTICES AND CORRESPONDENCE 53
20 PREVIOUS COMMUNICATIONS 53
21 THIRD PARTY BENEFICIARIES 54
22 NONWAIVER 54
23 DISPUTES 54
24 SUCCESSORS AND ASSIGNS 56
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TABLE OF CONTENTS
SECTION TITLE Page
------- ----- ----
25 EFFECT OF SECTION HEADINGS 56
26 TRANSMISSION AND INTERCONNECTION 56
27 EFFECT OF SECTION HEADINGS 59
28 GOVERNING LAW 59
29 CONFIDENTIALITY 59
30 MULTIPLE ORIGINALS 60
SIGNATURES 61
APPENDIX A A-1
APPENDIX B B-1
APPENDIX C C-1
ii
1. PROJECT SUMMARY
This Contract is entered into between Southern California Edison
Company ("Edison") and Imperial Energy Corporation, a California
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:
Imperial Energy Corporation
5743 Corsa Avenue, Suite 216
Westlake Village, CA 91362
Attn: President
1.2 Seller's Generating Facility:
a. Nameplate Rating: 49,000 kW.
b. Location: Niland, Imperial County, California
c. Generating Facility Designation: Imperial Energy
Corporation-Niland Plant No. 2
d. Type (Check One):
_____ Cogeneration Facility
x Small Power Production Facility
1.3 Contract Capacity: 49,000 kW
1.3.1 Estimated as-available capacity: 0 kW.
1.4 Expected annual production: 365,000,000 kWh.
1.5 Expected Date of Firm Operation: January 1, 1990
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.
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
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%.
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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.
1.10 Metering Location (Check one)
Seller elects metering location pursuant to Section 7 as
follows:
X Edison's side of the Point of Interconnection
-----
Seller's side of the Point of Interconnection.
----- Loss compensation factor is equal to ________,
pursuant to Section 7.2.
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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: Kilowatthours 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 metering, protective and other associated equipment
and improvements, necessary to produce electrical energy at
Seller's Facility and deliver such power to the
Interconnecting Utility's electric system, 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 Interconnecting Utility: The electric utility, or any other
utility which takes delivery of electrical energy generated
by the Generating Facility.
2.22 Operate: To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection,
operation, use, management, replacement, retirement,
reconstruction, and maintenance of and for
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the Generating Facility in accordance with applicable
California utility standards and good engineering practices.
2.23 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.
2.24 Parties: Edison and Seller.
2.25 Party: Edison or Seller.
2.26 Peak Months: Those months which the Edison annual system
peak demand could occur. Currently, but subject to chance
with notice, the peak months for the Edison system are June,
July, August, and September.
2.27 Point of Interconnection: The point where the electrical
energy generated by the Seller, at the Generating Facility,
is delivered to the Edison electric system.
2.28 Protective Apparatus: That equipment and apparatus installed
by Seller and/or Interconnecting Utility necessary for
proper and safe operation of the Generating Facility in
parallel with the Interconnecting Utility's electric system.
2.29 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.
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2.30 Renewable Resources: Wind parks, small hydroelectric, solar,
and geothermal resources which produce electric power.
2.31 Second Period: The period of the Contract Term specified in
Section 3.2.
2.32 Seller: The Party identified in Section 1.0.
2.33 Seller's Facility: The premises and equipment of Seller
located as specified in Section 1.2.
2.34 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.
2.35 Summer Period: Defined in Edison's Tariff Schedule
No. TOU-8 as now in effect or as may hereafter be authorized
by the Commission.
2.36 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.
2.37 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
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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 generated by the
Generating Facility to the Point of Interconnection shall
not be considered an Uncontrollable Force.
2.38 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.
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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.
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:
a. Review the design of the Generating Facility's
electrical system. Such review shall be required
if necessary to maintain Edison Electric System
Integrity when in parallel with the Edison
electric system. Such review
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may include, but not be limited to, the
Generator, governor, excitation system,
synchronizing equipment, protective relays, and
neutral grounding. The Seller shall be notified
in writing of the-outcome of the Edison review
within 30 days of the receipt of all
specifications for the Generating Facility's
electrical system. Any flaws perceived by Edison
in the design shall be described in Edison's
written notice.
b. Edison shall have the right to request
modifications to the design of the Generating
Facility's electrical system. Such modifications
shall be required if necessary to maintain
Edison Electric System Integrity when in
parallel with the Edison electric system.
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
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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 Generating Facility to the Point of
Interconnection. Edison shall have the right to
have a representative present.
4.4.3 Edison shall have the right to require Seller to
curtail or reduce the delivery of electrical
energy from the Generating Facility to the Point
of Interconnection, whenever Edison determines,
in its sole judgment, that such curtailment or
reduction is necessary to facilitate maintenance
of Edison's facilities, or to maintain Edison
Electric System Integrity. Each Party shall
endeavor to correct, within a reasonable period,
the condition on its system which necessitates
the curtailment or the reduction
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of delivery of electrical energy from the
Generating Facility. 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:
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.
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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 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
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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 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 date of initial delivery of electrical
energy from the Generating Facility to the Point
of Interconnection and continuing through the
Contract Term.
4.4.11 The Seller warrants that the Generating Facility
shall, at all times, conform to all
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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
Generating Facility 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 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
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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 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
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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 Generating Facility 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
Generating Facility. Seller shall in no way represent to any
third party that any such review by Edison of the Generating
Facility, including, but not limited to, any review of the
design, construction, operation, or maintenance of the
Generating Facility by Edison, is a representation by Edison
as to the economic and 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
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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 Operate its Generating Facility pursuant to the
following option:
a. Operating Option I: Seller dedicates the excess Generator
output to Edison with no electrical service or standby
service required from Edison.
6. ELECTRIC LINES AND ASSOCIATED EASEMENTS
6.1 Edison shall, as it deems necessary or desirable, build
electric lines, facilities and other equipment, both
overhead and underground, on and off Seller's Facility, for
the purpose of effecting the agreements contained in this
Contract. The physical location of such electric lines,
facilities and other equipment on Seller's Facility shall be
determined by agreement of the Parties.
6.2 Seller shall reimburse Edison for the cost of acquiring
property rights off Seller's Facility required by Edison to
meet its obligations under this Contract.
6.3 Seller shall grant to Edison, without cost to Edison, and by
an instrument of conveyance, acceptable to Edison, rights of
way, easements and other property
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interests necessary to construct, reconstruct, use,
maintain, alter, add to, enlarge, repair, replace, inspect
and remove, at any time, the electric lines, facilities or
other equipment, both overhead and underground, which are
required by Edison to effect the agreements contained in the
Contract. The rights of ingress and egress at all reasonable
times necessary for Edison to perform the activities
contemplated in the Contract.
6.4 The electric lines, facilities, or other equipment referred
to in this Section 6 installed by Edison on or off Seller's
Facility shall be and remain the property of Edison.
6.5 Edison shall have no obligation to Seller for any delay or
cancellation due to inability to acquire satisfactory right
of way, easements, or other property interests.
7. METERING
7.1 All meters and equipment used for the measurement of
electrical power for determining Edison's payments to Seller
pursuant to this Contract shall be provided, owned, and
maintained by Edison and/or the Interconnecting Utility at
Seller's expense.
7.2 The meters and equipment used for measuring the Energy sold
to Edison shall be located on the side of the Point of
Interconnection as specified by Seller in Section 1.10. If
the metering equipment is located on
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Seller's side of the Point of Interconnection, then a loss
compensation factor agreed upon by the Parties shall be
applied. At the written request of the Seller, and at
Seller's sole expense, Edison shall measure actual
transformer losses. If the actual measured value differs
from the agreed-upon loss compensation factor, the actual
value shall be applied prospectively. If the meters are
placed on Edison's side of the Point of Interconnection,
service shall be provided at the available transformer
high-side voltage.
7.3 For purposes of monitoring the Generator operation, Edison
shall have the right to require, at Seller's expense, the
installation of generation metering. Edison may also require
the installation of telemetering equipment at Seller's
expense for Generating Facilities equal to or greater than
10 MW. Edison may require the installation of telemetering
equipment at Edison's expense for Generating Facilities less
than 10 MW.
7.4 Edison's meters shall be sealed and the seals shall be
broken only when the meters are to be inspected, tested, or
adjusted by Edison. Seller shall be given reasonable notice
of testing and have the right to have its Operating
Representative present on such occasions.
7.5 Edison's meters installed pursuant to this Contract shall be
tested by Edison, at Edison's expense, at
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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 within thirty days after presentation of a
bill therefor.
7.6 Edison's metering equipment found to be inaccurate shall be
repaired, adjusted, or replaced by Edison such that the
metering accuracy of said equipment shall be within plus or
minus two 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
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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. Seller shall receive
monthly payments for capacity equal to 100% of the payment
provisions specified in this Section 8.1.
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 at the Point of
Interconnection during
on-peak periods defined
in Edison's Tariff
Schedule No. TOU-8.
B = kWh purchased by Edison
at the Point of
Interconnection during
mid-peak periods defined
in Edison's Tariff
Schedule No. TOU-8.
C = kWh purchased by Edison
at the Point of
Interconnection during
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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 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
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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 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:
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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:
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.
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C = Contract Capacity specified in
Section 1.3.
D = Period Performance Factor, not to exceed
1.0, calculated as follows:
[Period kWh Purchased by Edison at the
Point of Interconnection (Limited
Period Performance Factor = by the Level of Contract Capacity)]
--------------------------
[0.8 x Contract Capacity x (Period Hours
minus Maintenance Hours Allowed
in Section 4.5.)]
8.1.2.2 Performance Requirements
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
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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 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
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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 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
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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, (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 at
the Point of
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Interconnection (Limited by the
Level of
On-Peak Capacity Factor = Contract Capacity)]
-----------------------------------
((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
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
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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
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
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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
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.
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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.
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, at a rate equal to 100% of the payment
provisions specified in
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Section 8.2, 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:
Monthly Energy Payment = [(A x D) + (B x D) + (C x D)] x E
Where A = kWh purchased by Edison at the
Point of Interconnection during
on-peak periods defined in Edison's
Tariff Schedule No. TOU-8.
B = kWh purchased by Edison at the
Point of Interconnection during
mid-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison at the
Point of Interconnection during
off-peak periods defined in
Edison's Tariff Schedule No. TOU-8.
D = The sum of:
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(i) the appropriate time differentiated
energy price from the Forecast
of Annual Marginal Cost of Energy,
multiplied by the decimal equivalent
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.
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 at the Point of Interconnection 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 at the Point of
Interconnection
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during on-peak periods defined in Edison's
Tariff Schedule No. TOU-8.
B = kWh purchased by Edison at the Point of
Interconnection during mid-peak periods defined
in Edison's Tariff Schedule No. TOU-8.
C = kWh purchased by Edison at the Point of
Interconnection 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 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
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multiplied by the decimal equivalent of the
percentage of the published energy price specified
in Section 1.9.
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 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
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periodically and accepted by the Commission, pursuant to the
following formula:
Monthly Energy Payment = kWh purchased by Edison at
the Point of Interconnection 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.
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:
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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 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
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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 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
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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 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
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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 Payments Due to Contract Capacity Reduction
9.2.1 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.
9.2.2 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.
9.2.3 Edison shall provide invoices to Seller for all
refunds and payments due Edison under this Section 9
which shall be due within 60 days.
9.2.4 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.
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9.3 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.
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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, any
company of which a Party's parent is a parent or a limited
partnership of which Seller is the controlling general
partner. 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
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51% of the shares entitled to vote in an election of
directors of another company.
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,
-46-
indirect or consequential loss, damage, claim, cost, charge,
or expense), including attorneys' fees and 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 attorneys' 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
-47-
caused by the negligence of the indemnifying Party, its
directors, officers, employees, agents, or any person 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
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carrier or carriers and form of policy shall be subject to
review and approval by Edison.
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
-49-
under this policy, incur liability to the insurance carrier
for payment of premium for this policy." "Any other
insurance carried by Edison which may be applicable shall be
deemed excess insurance and Seller's insurance primary for
all purposes despite any conflicting provisions in Seller's
policy to the contrary."
If the requirement of Section 15.2(iii) prevents Seller from
obtaining the insurance required in Section 15.1, then upon
written notification by Seller to Edison, Section 15.2(iii)
shall be waived.
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.
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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 obligations
under this Contract, the Party shall be excused 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
-51-
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
(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 non-performance.
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.
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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.
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 prior obligations, conditions, or
representations with respect to the subject matter of this Contract.
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21. THIRD PARTY BENEFICIARIES
This Contract is for the sale 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.
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
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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 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.
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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 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.
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 AND INTERCONNECTION
26.1 Seller shall be solely responsible for negotiating and
concluding 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.
26.2 It is contemplated that those agreements will include:
26.2.1 An agreement between Seller and/or a syndicate
(which includes the Seller) and the Interconnecting
Utility to develop those facilities, as determined
by the
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Interconnecting Utility, which are necessary
to transmit electrical energy generated by the
Generating Facility to the Point of Interconnection.
Such agreements shall be executed no later than 36
months prior to the expected date of Firm Operation
as specified in Section 1.5. Such agreement should
include the following terms:
a. Financial responsibilities of the Parties;
b. Default/Remedies;
c. Facilities and scope of work associated
thereto; and
d. Scheduling provisions reflecting the
development of the facilities.
26.2.2 An agreement between Seller and the Interconnecting
Utility for the transmission services necessary to
transmit the electrical energy generated by the
Generating Facility to the Point of Interconnection.
Such agreement shall be executed no later than three
months prior to the expected date of Firm Operation
specified in Section 1.5.
26.2.3 An agreement between Seller and the Interconnecting
Utility for the interconnection of the Generating
Facility and the Interconnecting Utility. Such
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agreement to permit the Generating Facility to
operate in parallel with the Interconnecting
Facility. Such agreement shall be executed no later
than three months prior to the expected date of Firm
Operation as specified in Section 1.5.
26.2.4 Edison shall review and determine, in its sole
judgment, if the Seller has compiled with the
provisions contained within Section 26.2.
26.3 Notwithstanding the provisions contained within Section
26.2, Seller may pursue and develop alternate means, routes
or agreements for the transmission of electrical energy
generated by the Generating Facility to the Point of
Interconnection. Should Seller develop such alternative
means, routes or agreements, Seller shall submit such
alternative method to Edison for review and approval at
least six months prior to the expected date of Firm
Operation as specified in Section 1.5. Edison shall, in its
sole judgment, determine if the proposed alternative method
complies with the terms and conditions of this Contract and
shall not impair or effect Edison's rights contained herein.
26.4 Should Seller be unable to comply with the provisions
contained within either Sections 26.2 or 26.3, Seller's
selection of a Contract Capacity Price pursuant to the
Seller's selection of Capacity Payment
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Option in Section 1.8 shall be abrogated, and Seller's
Contract Capacity Price shall be deemed to be $ 123/kW-year,
in its stead, for the duration of the Contract Term.
27. EFFECT OF SECTION HEADINGS
Section headings appearing in this Contract are inserted for
convenience only and shall not be construed as interpretations of
text.
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 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
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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.
30. MULTIPLE ORIGINALS
This Contract is executed in two counterparts, each of which shall be
deemed an original.
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SIGNATURES
IN WITNESS WHEREOF, the Parties hereto have executed this Contract
this 16th Day of August, 1985.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/ Edward A. Myers, Jr.
-------------------------------
Edward A. Myers, Jr.
Vice President
IMPERIAL ENERGY CORPORATION
By /s/ Michael B. Malvin
-------------------------------
Michael B. Malvin
President
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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 ($/kW-year)
1 1985 81
2 1986 87
3 1987 94
4 1988 101
5 1989 109
6 1990 117
7 1991 126
8 1992 148
9 1993 158
10 1994 169
11 1995 180
12 1996 194
13 1997 206
14 1998 221
15 1999 235
- ------------------
1This forecast to be used in conjunction with Capacity Payment Option A.
2The annual as-available capacity ($/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 1985 5.7
2 1986 6.0
3 1987 6.4
4 1988 6.9
5 1989 7.6
6 1990 8.1
7 1991 8.6
8 1992 9.3
9 1993 10.1
10 1994 10.9
11 1995 11.8
12 1996 12.6
13 1997 13.6
14 1998 14.6
15 1999 15.6
1This forecast to be used in conjunction with Energy Payment Option 1.
2The 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 1985 6.4 7.3
2 1986 6.8 7.9
3 1987 7.3 8.5
4 1988 7.9 9.1
5 1989 8.6 9.8
6 1990 9.2 10.6
- ----------------
1Levelized Forecast to be used in conjunction with Energy Payment Option 2.
2The 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 POWER COMPANY
-1-
AMENDMENT NO. 1 TO
POWER PURCHASE CONTRACT BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY AND
MAGMA POWER COMPANY
1. Parties
The Parties to this Amendment No. 1 to the Power Purchase Contract
between Southern California Edison Company and Imperial Energy
Corporation, executed on April 16, 1985 ("Power Purchase Contract"),
hereinafter referred to as "Amendment No. 1", are Southern California
Edison Company, a California corporation, hereinafter referred to as
"Edison", and Magma Power 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 Magma Electric Company, a
wholly owned subsidiary of Seller, executed a Power Purchase
Contract, which was amended on November 30, 1984 ("Magma
Electric Contract").
2.2 On April 16, 1985, Edison and Imperial Energy Corporation
("Imperial") executed the Power Purchase Contract to provide
the terms and conditions for the sale by Imperial and the
purchase by Edison of electrical power delivered by Imperial
to Edison at the Point of Interconnection from the 49,000 kW
electrical generating facility located at Niland,
California.
2.3 On September 9, 1985, Imperial assigned its rights, title,
and interest in the Power Purchase Contract to Niland Power,
Inc., and Edison consented to such assignment on September
11, 1985.
2.4 On January 22, 1986, Seller 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 Seller,
Imperial, Niland Power, Inc., and Salton Sea Associates.
2.5 On January 22, 1986, in conjunction with the Option, Niland
Power, Inc. assigned its rights, title, and interest in the
Power Purchase Contract to Seller. Edison consented to said
assignment on March 12, 1986.
-2-
2.6 On January 22, 1986, in conjunction with the Option,
Imperial assigned to Seller its rights, title, and interest
in the Power Purchase Contract between Edison and Imperial,
dated February 22, 1984 ("Imperial I Contract"), and amended
on November 13, 1984. Edison consented to said assignment on
March 12, 1986.
2.7 On February 10, 1986, Vulcan/BN Geothermal Power Company, of
which Seller's affiliate 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,
Seller has concluded that its succeeding projects should be
duplicates of that project.
2.8 On March 14, 1986, Imperial, Niland Power, Inc., and Salton
Sea Associates assigned to Seller their rights, title and
interest in those geothermal leaseholds described in and
pursuant to the terms and conditions 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. 1, Edison, Seller, and
Magma Electric Company have agreed to amend the Magma
Electric Contract and Imperial I Contract to effectively
transfer Capacity to be purchased by Edison from the Power
Purchase Contract and the Magma Electric Contract to the
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.
4. Effective Date
This Amendment No. 1 shall become effective upon execution by the
Parties.
5. Amendment to Section 1.1
Section 1.1 is deleted in its entirety and replaced with the
following:
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"1.1 All notices shall be sent to Seller at the following
address:
Magma Power Company
P.O. Box 17760
Los Angeles, CA 90017
Attention: President"
6. Amendment to Section 1.2
Subparagraphs a and c of Section 1.2 are deleted in their entirety
and replaced with the following:
"a. Nameplate Rating: 38,000 kW."
"c. Generating Facility Designation: Niland No. 4"
7. Amendment to Section 1.3
Section 1.3 is deleted in its entirety and replaced with the
following:
"Contract Capacity: 34,000 kW
1.3.1 Estimated as-available capacity: 4,000 kW."
8. Amendment to Section 1.4
Section 1.4 is deleted in its entirety and replaced with the
following:
"Expected annual production: 238,272,000 kWh."
9. 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.
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10. Signature Clause
The signatories hereto represent that they have been appropriately
authorized to enter into this Amendment No. 1 on the behalf of the
Party for whom they sign. This Amendment No. 1 is hereby executed
as of this 10th day of April , 1986.
SOUTHERN CALIFORNIA EDISON COMPANY
By: /s/ EDWARD A MYERS, JR.
-----------------------
EDWARD A MYERS, JR.
Vice President
MAGMA POWER COMPANY
By: /s/ ANDREW W. HOCH
--------------------
ANDREW W. HOCH
President