EXHIBIT 10.37
EXECUTION COPY
TRANSMISSION SERVICE AGREEMENT
FOR THE
LEATHERS POWER PLANT
BETWEEN
IMPERIAL IRRIGATION DISTRICT
AND
LEATHERS, L.P.
TABLE OF CONTENTS
Section Title Page
------- ----- ----
1 PARTIES .................................................1
2 RECITALS ................................................1
3 AGREEMENT ...............................................1
4 DEFINITIONS .............................................1
5 TERM ....................................................3
6 TRANSMISSION SERVICE ....................................4
7 TRANSMISSION LOSSES .....................................8
8 CHARGES .................................................9
9 BILLING AND PAYMENT ....................................10
10 LIABILITY ..............................................12
11 AUDITING ...............................................14
12 AUTHORIZED REPRESENTATIVES .............................15
13 NO DEDICATION OF FACILITIES ............................15
14 NON-WAIVER .............................................15
15 NO THIRD PARTY RIGHTS ..................................15
16 UNCONTROLLABLE FORCES ..................................15
17 ASSIGNMENTS ............................................16
18 GOVERNING LAW ..........................................18
19 NOTICES ................................................18
20 SIGNATURE CLAUSE .......................................19
EXHIBIT I - DEVELOPMENTS AND METHODOLOGIES FOR TRANSMISSION SERVICE
CHARGES AND SCHEDULING FEE
EXHIBIT II - TRANSMISSION SERVICE FOR LEATHERS, L.P.
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1. PARTIES: The Parties to this Agreement are Imperial Irrigation District,
organized under the Water Code of the State of California ("IID"), and
Leathers, L.P. ("Producer"), hereinafter sometimes referred to individually as
"Party," and collectively as "Parties."
2. RECITALS: This Agreement is made with reference to the following facts,
among others:
2.1 Producer has caused to be constructed or intends to construct an
alternative energy resource facility located in IID's service area.
2.2 Producer and IID have entered into a Plant Connection Agreement.
2.3 Producer desires to purchase, and IID desires to sell firm transmission
service of power from the Plant to Edison's Mirage Substation subject to the
terms and conditions specified herein.
2.4 Producer and IID are parties to that certain Funding and Construction
Agreement dated June 29, 1987, providing for the funding and construction of
transmission lines within IID's service area.
3. AGREEMENT: The Parties agree as follows:
4. DEFINITIONS: The following terms, when used herein with initial
capitalization, whether in the singular or plural, shall have the meanings
specified:
4.1 Agreement: This IID - Producer Transmission Service Agreement for
Alternative Resources between Leathers, L.P. and IID, and all Exhibits
attached hereto, as such Agreement may
subsequently be amended for firm transmission service between each Plant and
Edison's Mirage Substation.
4.2 Authorized Representative: The representative of a
party designated in accordance with Section 12.
4.3 Date of Initial Service: The date when the output from
each Plant is first available for delivery to Edison, as notified
to IID pursuant to Section 5.2.
4.4 Edison: Southern California Edison Company.
4.5 Funding and Construction Agreement: An agreement entered into by IID
and others dated June 29, 1987, providing for the funding and construction of
the Heber-Mirage Transmission Project, to which a form of this agreement is
attached as Exhibit III.
4.6 Maximum Transmission Service Entitlement: The Maximum Transmission
Service Entitlement for each Plant, as specified in Exhibit[s] II,
Transmission Service, and in any subsequent Plant Amendments.
4.7 Normal Transmission Capacity: The maximum transfer capability,
expressed in megawatts (MW), from the Point of Receipt to the Point of
Delivery. Such transfer capability, as determined by IID, in its sole
judgment, shall be consistent with prudent operating procedures and with
generally-accepted engineering and operating practices in the electrical
utility industry.
4.8 Operating Transmission Capability: The maximum transfer capability,
expressed in megawatts (MW), available to IID at any given time to transmit
power from Point of Receipt to Point of
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Delivery. Such transfer capability shall be as determined by IID in its sole
judgment, may vary from time-to-time depending on system conditions, and shall
be consistent with prudent operating procedures and generally-accepted
engineering and operating practices in the electrical utility industry.
4.9 Plant: An electrical generating alternative energy resource facility
developed by Producer for which IID shall provide transmission service, as
specified in Exhibit(s) II, Transmission Service, and in any subsequent Plant
Amendments.
4.10 Plant Amendment: An agreement reached by the Parties, as an amendment
to this Agreement, for transmission service to be provided by IID for a Plant
added by Producer or for Producer's account subsequent to the execution of
this Agreement.
4.11 Plant Connection Agreement: An agreement between IID and Producer
providing for the connection of a Plant to IID's electrical system, as
specified in Exhibit[s] II, Transmission Service, and in any subsequent Plant
Amendments.
4.12 Point(s) of Delivery: The 230-kV switchrack at the Mirage Substation
site where Edison's 230-kV facilities are attached to IID's 230-kV
Coachella-Mirage Line or other points as may be mutually agreed upon by the
Authorized Representatives.
4.13 Point of Receipt: The point on the high voltage side of the Plant's
transformer where IID's metering equipment measures the delivery of energy to
the IID system.
4.14 Transmission Service Entitlement: The amount of transmission service,
expressed in megawatts (MW), provided by
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IID for each Plant, from the applicable Point of Receipt to the applicable
Point(s) of Delivery.
5. TERM:
5.1 Unless otherwise agreed to by the Parties, this Agreement shall be
effective on the Completion Date for the transmission lines being constructed
pursuant to the Funding and Construction Agreement, as the term Completion
Date is defined in Article I thereof, and shall remain in effect until April
15, 2015. It is understood that if such Completion Date does not occur, this
Agreement shall be of no force or effect.
5.2 The Transmission Service Entitlement to be provided by IID for each
Plant shall be contingent on a Plant Connection Agreement being in effect.
Transmission service for each Plant shall commence on the Date of Initial
Service of such Plant. Producer's Authorized Representative shall give IID's
Authorized Representative written notice of the Date of Initial Service at
least thirty (30) days before the Date of Initial Service.
6. TRANSMISSION SERVICE:
6.1 Subject to the terms of this Agreement, IID shall provide to Producer
and Producer shall purchase from IID transmission service over IID's
transmission system for each Plant. IID shall make arrangements with Edison to
provide, at Producer's or Edison's expense, for the transfer of the electrical
power to be delivered to Edison hereunder from IID's transmission system to
Edison's transmission system at the Point(s) of Delivery.
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6.2 The Transmission Service Entitlement for each Plant shall be the
Maximum Transmission Service Entitlement for such Plant specified in
Exhibit[s] II, Transmission Service, or any subsequent Plant Amendments, or
such lesser amount as may be established as follows. Beginning on the Date of
Initial Service for each Plant, Producer shall be entitled to specify a
Transmission Service Entitlement by advance written notice given to IID's
Authorized Representative at least thirty (30) days prior to the Date of
Initial Service. The Transmission Service Entitlement to be provided by IID
subsequent to the Date of Initial Service may be adjusted at six (6) month
intervals thereafter until two (2) years after the Date of Initial Service for
such Plant (the "Trial Period"). Such adjustments shall be made by having
Producer's Authorized Representative give IID's Authorized Representative a
ninety (90) day advance written notice as to the adjustment required.
Beginning two (2) years after the Date of Initial Service for such Plant,
Producer shall be entitled to specify a Transmission Service Entitlement for
each successive two-year period during the remaining term of this Agreement by
written notice from Producer's Authorized Representative to IID's Authorized
Representative given at least ninety (90) days prior to the beginning of each
two-year period.
6.3 The Transmission Service Entitlement selected by Producer for each
Plant in accordance with Section 6.2 may be any amount which is less than or
equal to the Maximum Transmission Service Entitlement for such Plant specified
in Exhibit[s] II, Transmission Service and in any subsequent Plant Amendments,
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provided, however, that the following shall apply to each Plant after the
Trial Period for such Plant has elapsed.
6.3.1 If (i) the sum of the Transmission Service Entitlements for all
Plants which are no longer in their Trial Periods is less than the sum of the
Maximum Transmission Service Entitlements for such Plants, as shown in
Exhibit[s] II, Transmission Service and in any subsequent Plant Amendments,
(the "Aggregate Maximum Transmission Service Entitlement"), and (ii) provided
that IID requires additional capacity for transmitting electric power to
Edison's transmission system for another person (or, following the Credit
Installment Period as defined in the Funding and Construction Agreement, for
itself) and (iii) IID's use of such required capacity would be in conflict
with Producer's right as provided herein to increase the sum of the
Transmission Service Entitlements for such Plants to the Aggregate Maximum
Transmission Service Entitlement, then IID shall so notify Producer in
writing, specifying in such notice the portion, expressed in megawatts (MW),
of the excess of the Maximum Transmission Service Entitlement over the
Transmission Service Entitlement for each such Plant which it desires to use
as stated above. Producer shall have ninety (90) days after receipt of IID's
notice to notify IID in writing that it desires to increase the Transmission
Service Entitlements of such Plants. To the extent that Producer does not
elect to increase the Transmission Service Entitlement of each such Plant up
to the Maximum Transmission Service Entitlement for such Plant, IID shall be
entitled to use such unclaimed capacity to satisfy the
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transmission requirements specified in its notice to Producer, and to the
extent that IID does so, Producer shall thereafter be foreclosed from
increasing the Transmission Service Entitlement for such Plant in a manner
which would conflict with such usage by IID.
6.3.2 IID shall treat Producer and each other person who has entered
into a transmission service agreement similar in substance to this Agreement
in a fair and nondiscriminatory manner in requesting additional transmission
capacity as provided in this Section 6.3. Without limiting the generality of
the foregoing, IID shall request additional transmission capacity from
Producer and such other persons on a pro rata basis, in proportion to the
Aggregate Maximum Transmission Service Entitlement for each person less the
sum of the Transmission Service Entitlements for each of such persons'
generating plants which is no longer in a Trial Period.
6.4 In the event that the Original Capacity Nomination designated by
Producer (or the Participant associated with Producer) is adjusted pursuant to
Section 3.07 of the Funding and Construction Agreement, the Parties agree to
amend this Agreement in such a way that the sum of the Maximum Transmission
Service Entitlements for all Plants hereunder is equal to such Original
Capacity Nomination as so adjusted. As used in this Section 6.4, the terms
Original Capacity Nomination and Participant shall have the meanings assigned
to them in Article I of the Funding and Construction Agreement.
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6.5 IID reserves the right to interrupt or curtail the transmission service
provided hereunder as follows:
6.5.1 If the Operating Transmission Capability is reduced to
less than Normal Transmission Capacity from a Point of Receipt to a Point of
Delivery, and when continuity of service within IID's service area is not
being jeopardized, IID may curtail the transmission service currently being
provided from such Point of Receipt to such Point of Delivery, to an amount
"A" determined by the following formula:
A = Operating Transmission Capability x Transmission Service
Normal Transmission Capacity Entitlement
The transmission service for each Plant affected shall be curtailed
by multiplying the Transmission Service Entitlement in accordance with
Exhibit[s] II, Transmission Service and in any subsequent Plant Amendments by
the same percentage (expressed as a decimal) as used in the determination of
"A." However, any such curtailment shall occur only after IID has made all
reasonable efforts to eliminate the cause of the reduction in Operating
Transmission Capability, and IID shall then employ reasonable efforts to
eliminate expeditiously the cause of said reduction.
6.5.2 If continuity of service within IID's control area is
being jeopardized, as determined by IID in its sole judgment, IID may
interrupt or curtail the transmission service provided hereunder to the extent
necessary to avoid or eliminate such jeopardy; provided that (i) such
interruptions or curtailments may be made so that IID may fully utilize all
generating resources owned by it or available to it under contract in order to
avoid damage to IID's electrical system
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caused by overloading, (ii) such interruption or curtailment shall occur only
after IID has made all reasonable efforts to avoid or eliminate such jeopardy
and (iii) to the extent feasible any curtailment of transmission service
provided hereunder from a Point of Receipt to a Point of Delivery shall be
made in accordance with the formula set forth in Section 6.5.1.
6.6 If IID's efforts do not avoid or eliminate such jeopardy, the Parties
shall endeavor to develop some other arrangement to avoid or eliminate such
jeopardy and minimize the effects of IID's interruption or curtailment on both
parties.
6.7 In the event of any curtailments or interruptions made pursuant to
Section 6.5.1 or Section 6.5.2, Producer shall, immediately after being orally
notified by IID, reduce the electrical output of the Plants by the amounts
requested by IID.
6.8 The transmission service to be provided by IID and purchased by
Producer for each Plant shall not exceed the Transmission Service Entitlement
for that Plant.
6.9 Subject to Section 6.5, IID shall, during the periods that IID has
agreed to provide the transmission service at the specified Transmission
Service Entitlements, accept hourly scheduled energy deliveries at each Point
of Receipt and simultaneously deliver the same amount of energy (less
transmission losses as provided herein) at the Point(s) of Delivery mutually
agreed upon by the Parties' dispatchers and/or schedulers.
6.10 Hourly scheduled energy deliveries at each Point of Receipt shall
conform with the practices and procedures developed
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by the Parties' dispatchers and schedulers and agreed to by the Authorized
Representatives.
7. TRANSMISSION LOSSES:
7.1 IID shall determine, by transmission power flow analysis, the
electrical losses (expressed as a percent amount of hourly scheduled energy
deliveries) associated with the electrical output from each Plant. Such
analysis shall be performed by IID at its sole expense. The initial percent
amount, for each Plant, representing the electrical losses as determined
herein shall be as specified in Exhibit[s] II, Transmission Service and in any
subsequent Plant Amendments.
7.2 Unless otherwise agreed to by Producer's and IID's schedulers and
dispatchers, IID shall reduce the amount of all hourly scheduled energy
deliveries for Producer or Producer's account by the percent amount of such
hourly deliveries for each Plant in accordance with Exhibit[s] II,
Transmission Service and in any subsequent Plant Amendments.
7.3 If either Party believes that there has been a significant change in
IID's electrical system and the electrical losses associated with any Plant
should be redetermined, either Party's Authorized Representative may submit a
written request to the other Party's Authorized Representative that the
electrical losses be redetermined. Following such request, a transmission flow
analysis shall be performed by IID as approved by the Authorized
Representatives and paid for by the requesting Party. Whenever the percent
amount for electrical losses is redetermined, such percent amount shall become
effective as of
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the first day of the month following the date of such redetermination;
provided, that such a redetermination may be no sooner than twelve (12) months
after the most recent redetermination. Any redetermination of electrical
losses made pursuant to this Section 7 shall be based on conditions in
existence at the time of such redetermination.
7.4 Along with the monthly billing pursuant to Section 9.1, for the
transmission service for each Plant, IID shall submit a monthly summary of
hourly scheduled energy deliveries and of electrical losses for each Plant.
8. CHARGES:
8.1 For transmission service provided by IID, Producer shall pay IID at a
rate to be determined by IID pursuant to the methodologies specified in
Exhibit I.A. The initial rate is specified in Exhibit[s] II, Transmission
Service and revisions thereto will be specified in any subsequent Plant
Amendments. Any specific facility charge to Producer for connecting the
Plant(s) to the IID transmission system shall be included only in the Plant
Connection Agreement(s) between IID and Producer.
8.2 The transmission rate shall be reviewed annually and may be revised.
Any revision of the rates shall be based on the methodologies in Exhibit I.A
and on the conditions in existence at the time of the revision. Producer shall
have the right to review any exhibits or work papers prepared by IID to revise
the rates.
8.3 An initial monthly scheduling fee, as specified in Exhibit[s] II,
Transmission Service and revisions thereto
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specified in any subsequent Plant Amendments, shall be paid by Producer to IID
for those months in which there were scheduled energy deliveries from the
Plant(s). The initial scheduling fee has been determined by IID pursuant to
the methodology specified in Exhibit I.B. The scheduling fee shall be reviewed
annually and may be revised. Any revision of the scheduling fee shall be based
on the methodology in Exhibit I.B and on the conditions in existence at the
time of the revision. Producer shall have the right to review any exhibits or
work papers prepared by IID to revise the scheduling fee.
9. BILLING AND PAYMENT:
9.1 IID shall render bills to Producer, beginning in the month of the Date
of Initial Service, on or before the fifteenth (15th) day of each month for
the transmission service to be provided during the month. Producer shall pay
such bills within twenty (20) days after receipt thereof.
All payments by Producer shall be sent to:
Imperial Irrigation District
c/o Manager, Finance and Accounting
P.O. Box 937
Imperial, California 92251
All billings by IID shall be sent to:
Leathers, L.P.
480 West Sinclair Rd.
Calipatria, California 92233
9.2 Either Party's Authorized Representative may at any time, by advance
written notice to the other Party's Authorized Representative, change
the address to which payments or billings shall be sent.
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9.3 Bills which are not paid in full by said due date shall thereafter bear
an additional charge of one and one-half percent (1-1/2%) per month, or the
maximum legal rate of interest, whichever is less, compounded monthly on the
unpaid amount prorated by days from the due date until payment is received by
IID.
9.4 In the event any portion of any bill is disputed, the disputed amount
shall be paid when due under protest. If the protested portion of the payment
is found to be incorrect by the Authorized Representatives, the disputed
amount shall be paid by IID to Producer, including interest at the rate of
1-1/2% per month, or the maximum legal rate, whichever is less, compounded
monthly from the date of payment by Producer to the date the refund check or
adjusted bill is received by Producer.
9.5 For a fractional part of a calendar month at the beginning or end of
the period for which the transmission service is provided hereunder, the
charge pursuant to Section 8.1 shall be proportionately adjusted by the ratio
of days that service is furnished by IID to Producer during such month to the
total number of days in such month.
9.6 The charge for the transmission service pursuant to Section 8.1
shall be proportionately reduced to the extent the duration of the
interruptions or curtailments of the transmission service which may occur
pursuant to Section 6.5.1 or Section 6.5.2 exceed a cumulative total of
twenty-four (24) hours during any calendar month based on 730 hours per month
representing the full transmission service charge. The amount of such pro rata
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reduction in any month shall reflect the duration and amount of such
interruptions or curtailments which exceed said cumulative 24 hours. Such pro
rata reduction shall be reflected as a credit to Producer as soon as possible
in a subsequent monthly bill.
9.7 The charge for the transmission service shall not be reduced if IID can
deliver, but Edison's transmission system cannot receive, the hourly scheduled
energy deliveries independent of the duration of time this condition exists.
10. LIABILITY:
10.1 Except for any loss, damage, claim, costs, charge or expense resulting
from Willful Action, neither Party (the "released Party"), its directors or
other governing body, officers or employees shall be liable to the other Party
for any loss, damage, claim, cost, charge, or expense of any kind or nature
incurred by the other Party (including direct, indirect or consequential loss,
damage, claim, cost, charge or expense; and whether or not resulting from the
negligence of a Party, its directors or other governing body, officers,
employees or any person or entity whose negligence would be imputed to a
Party) from engineering, repair, supervision, inspection, testing, protection,
operation, maintenance, replacement, reconstruction, use or ownership of the
released Party's electrical system, Plant(s) or associated facilities in
connection with the implementation of this Agreement. Except for any loss,
damage, claim, cost, charge or expense resulting from Willful Action, each
Party releases the other Party, its directors or other governing body,
officers and employees from any such liability.
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10.2 For the purpose of this Section 10, Willful Action shall be defined as
action taken or not taken by a Party at the direction of its directors or
other governing body, officers or employees having management or
administrative responsibility affecting its performance under this Agreement,
as follows:
10.2.1 Action which is knowingly or intentionally taken or not taken
with conscious indifference to the consequences thereof or with intent that
injury or damage would result or would probably result therefrom.
10.2.2 Action which has been determined by final arbitration award or
final judgment or judicial decree to be a material default under this
Agreement and which occurs or continues beyond the time specified in such
arbitration award or judgment or judicial decree for curing such default or,
if no time to cure is specified therein, occurs or continues thereafter beyond
a reasonable time to cure such default.
10.2.3 Action which is knowingly or intentionally taken or not taken
with the knowledge that such action taken or not taken is a material default
under this Agreement.
10.3 Willful Action does not include any act or failure to act which is
merely involuntary, accidental or negligent.
10.4 The phrase "employees having management or administrative
responsibility," as used in Section 10.2, means the employees of a Party who
are responsible for one or more of the executive functions of planning,
organizing, coordinating, directing, controlling and supervising such Party's
performance under this Agreement with responsibility for results.
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10.5 Subject to the foregoing provisions of this Section 10, each Party
agrees to defend, indemnify and save harmless the other Party, its officers,
agents, or employees against all losses, claims, demands, costs or expenses
for loss of or damage to property, or injury or death of persons, which
directly or indirectly arise out of the indemnifying Party's performance
pursuant to this Agreement; provided, however, that a Party shall be solely
responsible for any such losses, claims, demands, costs or expenses which
result from its sole negligence or Willful Action.
11. AUDITING:
11.1 IID shall make its books, records, and other supporting information,
as requested, available to Producer or to Producer's designated contracted
representatives with a CPA firm, for the purpose of auditing any charges or
accounts to be kept by IID hereunder. All such audits shall be undertaken at
reasonable times and in conformance with generally-accepted auditing
standards.
11.2 If as a result of such audits Producer believes its charges or
accounts should be adjusted, the findings shall be presented to the Authorized
Representatives. If the Authorized Representatives agree that any audit
finding should result in a revision of charges or accounts, such revisions
shall be retroactive to the first billing for such charges and accounts and
shall be made as soon as practical after determination.
11.3 The amount of any unresolved dispute shall accrue interest at the rate
of one and one-half percent (1-1/2%) per
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month, or the maximum legal rate, whichever is less, compounded monthly for
any amount of money ultimately refunded to Producer.
12. AUTHORIZED REPRESENTATIVES: Within thirty (30) calendar days after the
Completion Date, as defined in Article I of the Funding and Construction
Agreement, each Party shall designate by written notice to the other Party a
representative who is authorized to act on its behalf in the implementation of
this Agreement. Either Party may at any time change the designation of its
Authorized Representative by written notice to the other Party.
13. NO DEDICATION OF FACILITIES: Any undertaking by one Party to the other
Party under any provision of this Agreement shall not constitute the
dedication of the system or any portion thereof of the Party to the public or
to the other Party, and it is understood and agreed that any such undertaking
under any provision of this Agreement by a Party shall cease upon the
termination of its obligations hereunder.
14. NON-WAIVER: None of the provisions of this Agreement shall be considered
waived by either Party except when such waiver is given in writing. The
failure of either Party to insist in any one or more instances upon strict
performance of any of the provisions of this Agreement or to take advantage of
any of its rights hereunder shall not be construed as a waiver of any such
provisions or the relinquishment of any such rights for the future, but the
same shall continue and remain in full force and effect.
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15. NO THIRD PARTY RIGHTS: The Parties do not intend to create rights in order
to grant remedies to any Third Party or others as a beneficiary of this
Agreement or of any duty, covenant, obligation or undertaking established
hereunder.
16. UNCONTROLLABLE FORCES: Neither Party shall be considered to be in default
in the performance of any of its obligations under this Agreement when a
failure of performance shall be due to an uncontrollable force. The term
"uncontrollable force" shall mean any cause beyond the control of the Party
affected including, but not restricted to, failure of or threat of failure of
facilities which have been maintained in accordance with generally-accepted
engineering and operating practices in the electrical utility industry, flood,
drought, earthquake, tornado, storm, fire, pestilence, lightning and other
natural catastrophes, epidemic, war, riot, civil disturbance or disobedience,
strike, labor dispute, labor or material shortage, sabotage, government
priorities and restraint by court order or public authority (whether valid or
invalid) and actions or nonaction by or inability to obtain or keep the
necessary authorizations or approvals from any governmental agency or
authority, the failure or inablility of Edison to receive the electric power
to be transmitted hereunder at the Point(s) of Delivery, which by exercise of
due diligence such Party could not reasonably have been expected to avoid and
which by exercise of due diligence it has been unable to overcome. Nothing
contained herein shall be construed as to require a Party to settle any strike
or labor dispute in which it may be involved. Either Party rendered
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unable to fulfill any of its obligations under this Agreement by reason of an
uncontrollable force shall give prompt written notice of such fact to the
other Party and shall exercise due diligence to remove such inability with all
reasonable dispatch.
17. ASSIGNMENTS:
17.1 Any assignment by Producer of its interest in this Agreement which is
made without the written consent of IID (which shall not be unreasonably
withheld) shall not relieve Producer from its primary liability for any of its
duties and obligations hereunder, and in the event of any such assignment,
Producer shall continue to remain primarily liable for payment of any and all
money due IID hereunder and for the performance and observance of all other
covenants, duties and obligations to be performed and observed hereunder by it
to the same extent as though no assignment has been made.
17.2 Notwithstanding any provision of Section 17.1 to the contrary, prior
to the end of the Credit Installment Period, as defined in Article I of the
Funding and Construction Agreement, Producer's right to transmission service
under this Agreement with respect to one or more of the Plants may be assigned
only (i) to a purchaser or co-owner of such Plants or to a person who will
operate such Plants pursuant to a contract or other arrangement with such
purchaser and in either case only with the prior written consent of IID (which
shall not be unreasonably withheld) or (ii) for security purposes, to a bank
or other entity which provides financing for such Plants or any electrical
transmission facilities associated therewith. Producer and IID
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agree that nothing in this Section 17.2 may be amended, modified or waived
without the prior written consent of each and every party to the Funding and
Construction Agreement (except for any parties in default thereunder).
17.3 Whenever an assignment of Producer's interest in this Agreement is
made with the written consent of IID, Producer's assignee shall expressly
assume in writing the duties and obligations hereunder of Producer and, within
thirty (30) days after any such assignment and assumption of duties and
obligations, Producer shall furnish or cause to be furnished to IID a true and
correct copy of such assignment and assumption of duties and obligations.
17.4 Subject to the foregoing restrictions on assignments, all of the
terms of this Agreement shall be binding upon and inure to the benefit of both
of the Parties and their respective successors, permitted assigns and legal
representatives.
18. GOVERNING LAW: This Agreement shall be interpreted, governed by and
construed under the laws of the State of California or the laws of the United
States, as applicable.
19. NOTICES: Any notice, demand or request provided for in this Agreement, or
served, given or made in connection with it, shall be in writing and shall be
deemed properly served, given or made if delivered in person or sent by United
States mail, postage prepaid, to the persons specified below unless otherwise
provided for in this Agreement:
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Imperial Irrigation District
c/o General Manager
P.O. Box 937
Imperial, California 92251
Leathers, L.P.
480 West Sinclair Rd.
Calipatria, California 92233
Either Party may at any time, by notice to the other Party,
change the designation or address of the person so specified as the one to
receive notices pursuant to this Agreement.
20. SIGNATURE CLAUSE: The signatories hereto represent that they have been
appropriately authorized to enter into this IID- Leathers Power Plant
Transmission Service Agreement for Alternative Resources (Standard Form) on
behalf of the Party for whom they signed. This Agreement is hereby executed as
of the 3rd day of October, 1989.
IMPERIAL IRRIGATION DISTRICT
By: /s/ Lester A. Burnt
------------------------------------
President, Board of Directors
LEATHERS, L.P., a California
Limited Partnership
By: /s/ Jon R. Peele
------------------------------------
Vice President, Red Hill Geothermal, Inc.
Managing General Partner for
Leathers, L.P.
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EXHIBIT I.A
DEVELOPMENT AND METHODOLOGY FOR THE
TRANSMISSION SERVICE CHARGE
IID's transmission service charge shall be recalculated during
the month of April of each year, using the methodology summarized
in this Exhibit. The recalculated transmission service charge
shall be effective on June 1 of the year of recalculation.
EI.A-1 Plant Investment
TAI = WP + PA - TR + GP + M&S
where
TAI = Total adjusted investment at the time of calculation.
WP = Estimate of weighted Transmission Plant Cost ($40,980,291) as
December 31, 1983 calculated using the following formula:
WP = (0.7 x OC) + (0.3 x RCN); where
OC = Cumulative original cost of Transmission Plant as shown
in IID's accounting records, obtained by summing the
actual cost of all yearly additions to Transmission Plant
from 1938 to the end of 1983, (i.e., $20,700,415).
RCN = Estimate of the cumulative reproduction cost to build
the Transmission Plant items identified in OC in 1983
dollars. Calculated by summing the escalated cost of each
yearly addition to Transmission Plant starting in 1938 up
to the end of calendar year 1983 using the Handy-Whitman
Index for Total Transmission Plant for the Pacific
Region, (i.e., $88,300,000).
PA = Cumulative sum of additions to Transmission Plant from
January 1, 1984 to the end of the year preceding the year of
calculation. Thus, if the calculation takes place in 1996, PA
is sum of Transmission Plant additions at actual cost from
January 1, 1984 to December 31, 1995.
PA = Sum of [TPA(I) + OA(i)]
where TPA(i) = Annual additions to Transmission Plant for each
year associated with the Transmission Project,
as defined in Section 7.05 of the Funding and
Construction Agreement. TPA(i) is calculated for
each year from Completion Date of Transmission
EIA-1
Project to end of year preceding year of
calculation.
OA(i) = Other annual additions to Transmission Plant
by IID each year. OA(i) is calculated for each
year from January 1, 1984 to end of year
preceding year of calculation.
TR = Sum of (i) and (ii) where:
(i) = For facilities placed in service prior to 1984, the
cumulative sum of the annual Weighted Retirement
Costs (WRC) for retirements from Transmission Plant
from January 1, 1984 to the end of the year
preceding the year of calculation. Thus, if the
calculation takes place in 1996, TR is comprised of
the sum of annual Transmission Plant retirements
from January 1, 1984 to December 31, 1995 with each
year's original cost adjusted to account for the
weighted cost of retirement.
where WRC = Weighted Retirement Cost for
transmission retired in a given year.
OCI = Original cost of transmission facilities
retired in a given year.
WRC = 70%*OCI + 30%*OCI*RCN/OC
(ii) = Cumulative sum of original cost of annual transmission
retirements for facilities placed in service after
January 1, 1984.
GP = General plant investment as shown in IID's
accounting records, as of the year preceding the
year of calculation, allocated to transmission use
by the ratio of total allocated transmission O&M
cost to the sum of production O&M cost excluding
fuel, distribution O&M cost, transmission O&M cost,
dispatching cost, and customer accounting and
services costs.
M&S = Materials and supplies inventory held by IID as of the
year preceding the year of calculation, allocated to
transmission use by the ratio of Transmission Plant
Original Cost to Total Electric Plant original cost as
reflected in IID's accounting records for the year
preceding the year of calculation.
EI.A-2 Annual Cost
TAC = (1.25 x CRF x TAI) + OM + A&G
where
TAC = Total Annual Cost.
CRF = Annual capital recovery factor calculated for a 33-
year amortization using the average interest rate for
the year preceding the year of calculation from the
"Merrill Lynch 500 Municipal Bond Index
Electric-Retail."
EIA-2
OM = Total allocated transmission O&M cost during the
year preceding the year of calculation, equal to the sum
of (i) dispatching costs and (ii) transmission O&M cost
allocated to transmission use by the ratio of
Transmission Plant original cost (OC) to Total
Transmission Plant original cost (including the cost of
subtransmission plant) as shown in IID's accounting
records.
A&G = Administrative and general cost during the year
preceding the year of calculation, allocated to
transmission use by the ratio of total allocated
transmission cost (OM) to the sum of production O&M cost
excluding fuel, distribution O&M cost, transmission O&M
cost, dispatching cost, and customer accounting and
services cost.
Annual Cost
CRF = (33 years, 8%) = 8.6852
OM = 1,000,000 + 1,000,000 x 0.8272 = 827,200
A&G = 5,000,000 x 0.079 = 395,000
TAC = 1.25 x 0.086852 x $144,755,891 + 1,827,200 + 395,000
= $16,937,623
Monthly Transmission Service Charge
APL = 543,000 + 320,000 = 863,000
TSC = $16,937,623 = $1.64/kW
12 x 863,000
EIA-3
Examples (Continued)
Monthly Transmission Service Charge
APL= 369,000 + 63,000 = 432,000
TSC= 7,119,333 = 1.37 $/kW
------------
12 x 432,000
(2) Sample Calculation, 1996
Assumptions
- Weighted cost of Transmission Plant to 12-31-83;
$40,980,291.
- Transmission Additions to 12-31-95; $67,000,000.
- Transmission Credit to rate base through 12-31-94;
$30,000,000.
- Transmission credits used during 1995 were $6,000,000; IID's
Reserved Capacity is 40 MW, and the Deemed Capacity is 600
MW.
- No accumulated retirements.
- General plant investment as of 12-31-95, from IID
records, is $2,000,000.
- All allocation factors are assumed the same as in the
previous example but, in general, would not be
identically the same each year.
- Materials and supplies inventory as of 12-31-95; from
IID records, is $8,000,000.
- The 12-month average Merrill-Lynch Index interest rate
is 8% in 1995.
- Dispatching costs in 1995 were $1,000,000.
- IID's transmission O&M costs in 1995 were $1,000,000.
- IID's administrative and general costs in 1995 were
$5,000,000.
- IID's service peak load in 1995 was 543 MW.
- IID's total transmission commitments in 1995 were 320
MW.
EIA-4
Adjusted Investment 1996
WP = Weighted Plant to 12-31-83 ............$40,980,291
OA[1984-1995] = Transmission Plant Additions
Through 12-31-95
(excludes Transmission Project) ........67,000,000
TPA[1984-1994] = Transmission Credit to Rate Base
Through 12-31-94 .......................30,000,000
TPA[1995] = Transmission Credit to Rate Base
during 1995; 6,000,000 x 600 - 40
600 ..........5,600,000
GP = General Plant Allocated;
2,000,000 x 0.079 .........................158,000
M&S = M&S Allocated; 8,000,000 x 0.1272 .......1,017,600
-----------
TAI = $144,755,891
Administrative and general cost is comprised of Power
Department plus Joint Department A&G less Customer
Account Expense.
EI.A-3 Monthly Transmission Service Charge
TSC = TAC
--------
12 x APL
where
TSC = Monthly transmission service charge, in $/kW.
APL = Annual peak load during the year preceding the year
of calculation, expressed in kW, which is equal to the sum
of IID's service peak load plus all transmission wheeling
commitments (including all Transmission Service
Entitlements).
Examples
(1) Recalculation of 1985 Transmission Service Charge Plant Investment
OC = 20,700,415
RCN = 88,300,000
WP = (0.7 x OC) + (0.3 x RCN) = 40,980,291
PA = 0 + 4,111,000 = 4,111,000
GP =
1,526,849 x 574,528 + 189,450
----------------------------------------------------------
3,085,080 + 4,080,868 + 694,545 + 1,621,252 + 189,450
= 1,526,849 x 0.079 = 120,621
M&S = 6,151,304 x 20,700,415
-----------
162,700,978
= 6,151,304 x 0.1272 = 782,629
TAI = 40,980,291 + 4,111,000 + 120,621 + 782,629
= 45,994,541
EIA-5
Annual Cost
CRF = (33 years, 10.41%) = 10.8221%
OM = 694,545 x 20,700,415
----------
25,025,093
= 694,545 x 0.8272 = 574,528
A&G =
4,086,530 x 574,528 + 189,450
----------------------------------------------------------
3,085,080 + 4,080,868 + 694,545 + 189,450 + 1,621,252
= 4,086,530 x 0.079 = 322,836
TAC = (1.25 x 0.108221 x 45,994,541) + 574,528 + 322,836
= 7,119,333
EIA-6
EXHIBIT I.B
METHODOLOGY AND CALCULATION OF SCHEDULING FEE
ANNUAL DETERMINATION
OF
IID SCHEDULING FEES
IID, in April each year, will calculate monthly fees for scheduling
services related to Alternative Energy Resources and transactions with other
utilities as follows:
A. An appropriate number of scheduling units will be
assigned to every IID resource, Alternative Energy
Resource, and transaction with other utilities in
operation during the preceding year. The number of
scheduling units assigned to each resource and/or
transaction will depend upon the total daily number of
functions and therefore, estimated time required to
schedule the resource and/or transaction. This
estimate will be directly related to the complexity of
the scheduling service being provided. Table 1 shows
how the total scheduling units were determined for the
IID system.
B. The expenses related to dispatching and scheduling
services will be equal to the sum of the following:
1. IID FPC Account 556 for the year preceding the
year of calculation
2. A portion of the annual expenses related to the
SCADA and AG systems for the year preceding the
year of calculation, determined by multiplying one
half of the levelized debt service payments for
the systems by the percentage that FPC Account 55
is of the total of FPC Accounts 556, 561 and 581.
Table 2 shows calculations involved with this
step.
C. The annual scheduling fee per scheduling unit will be
determined by dividing the expenses related to
scheduling found in Step B by the total scheduling
units from Step A. The per unit fee will then be
multiplied by the number of scheduling units assigned
to each resource and/or transaction to develop an
appropriate annual scheduling fee for that resource
and/or transaction. The monthly scheduling fee will
then be calculated by dividing the annual fee by 12.
Table 3 shows the calculation.
The revised scheduling fee will be effective on June 1 of the year in which
they are calculated.
EIB-1
IID-Edison
Service Agreement
to Alternative
Energy Resources
TABLE 1
IMPERIAL IRRIGATION DISTRICT
SCHEDULING FEE METHODOLOGY
DETERMINATION OF TOTAL SCHEDULING UNITS
Hours Payback/ Pre- On AGC Off Loss
Energy Capacity Vaiable Banking Scheduling System System Accounting
(X=2) (X=2) (X=1) (X=2) (X=1) (X=1) (X=1) (X=1) Total
------ -------- ------- ------- ---------- ------ ------- ---------- -----
IID's Generating Units:
Pilot Knob x x x x 6
Drop No. 1 x x x x 6
Drop No. 2 x x x x 6
Drop No. 3 x x x x 6
Drop No. 4 x x x x 6
Drop No. 5 x x x x 6
Ea - Highline x x x x 6
Turnip and Double Weir x x x x 6
El Centro Unit No. 1 x x x x 6
El Centro Unit No. 2 x x x x 6
El Centro Unit No. 3 x x x x 6
El Centro Unit No. 4 x x x x 6
Coachella Units No. 1 and 2 x x x x 6
Coachella Units No. 3 and 4 x x x x 6
Railwood x x x x 6
El Reyx x x x x 6
--
Subtotal 96
Alternative Energy Resources:
Earth Energy x x x x x x x 10
Magma (East Mesa) x x x x x x x 10
Heber HGC x x x x x x x 10
Vulcan Power x x x x x x x 10
Ormesa I x x x x x x x 10
Ormesa II x x x x x x x 10
Western Blomas x x x x x x x 10
D.J. Ranch x x x x x x x 10
J.J. Elmore x x x x x x x 10
Desert Power x x x x x x x 10
---
Subtotal 100
Transactions with Other Utilities:
DOE x x x x x 7
EPE x x x x x 7
SCE x x x x x 7
SDG&E x x x x x x x 10
APS (Yucca) x x x x x 7
SCE GT's (Axis) x x x x x x 9
APS (Axis) x x x x x x 9
YCWUA x x x x x x 9
---
Subtotal 65
Total Scheduling Units 261
---
EIB-2
TABLE 2
IMPERIAL IRRIGATION DISTRICT
SCHEDULING FEE METHODOLOGY
EXPENSES RELATED TO SCHEDULING
IID 1986 Actual
FPC Account 556 (3) $413,810 (54.67%)
FPC Account 561 $234,475 (30.98%)
FPC Account 581 $108,627 (14.35%)
-------- --------
$756,912 (100.0%)
SCADA and AGC Systems
Investment (2) = $4,896,766
Annual Expense
$4,896,766 x 0.1170923 (1) = $ 573,374
Expenses Related to Scheduling
FPC Account 556 = $413,810
54.67% of SCADA and AGC Systems
Annualized Expense ($573,374 x 0.5467) = $313,463
--------
Total Expense Related to Scheduling = $727,273
(1) Capital Recovery Factor determined from levelized debt service
payments of $7,611,000 for $65,000,000 - May, 1983 COP issue.
(2) Fifty percent of total investment for SCADA and AGC,
$9,793,532, is assumed related to transmission service.
(3) Related to load dispatching for system control.
EIB-3
TABLE 3
IMPERIAL IRRIGATION DISTRICT
SCHEDULING FEE METHODOLOGY
CALCULATION OF SCHEDULING FEE
Annual Charge per Scheduling Unit
Total Expenses Related to Scheduling (from Table 2) = $727,273
Total Scheduling Units (from Table 1) = 261
--------
Annual Charge per Scheduling Unit ($727,273/261) = $ 2,786
Alternative Energy Resource Scheduling Fee
All Plants:
Annual Charge (10 Scheduling Units x $2,786) = $ 27,860/year
(1) Monthly Charge ($27,860/12) = $ 2,321/month
(1) Also applies to new plants to be on-line in 1989
EIB-4
EXHIBIT II
TRANSMISSION SERVICE
FOR THE LEATHERS POWER PLANT
EII-1. DESCRIPTION:
EII-2. APPLICABILITY: Applicable to the transmission service to be
provided by IID to Producer for transmitting the electrical
output from the Del Ranch Plant Point of Receipt to the Point(s)
of Delivery.
EII-3. PLANT CONNECTION AGREEMENT: The Del Ranch Plant Connection
Agreement to be executed between IID and Producer.
EII-4. MAXIMUM TRANSMISSION SERVICE ENTITLEMENT: 40 MW.
TRANSMISSION SERVICE ENTITLEMENT: 40 MW, as specified in
accordance with Sections 6.2 and 6.3.
EII-5. POINT OF RECEIPT: See Section 4.13.
EII-6. POINT(S) OF DELIVERY: The 230-kV switchrack at Edison's Mirage
Substation.
EII-7. TERM: The term of the Transmission Service Entitlement for the
Del Ranch Power Plant shall be effective from the Date of
Initial Service and shall terminate on April 15, 2015.
EII-8. TRANSMISSION SERVICE CHARGE: $1.29 per kilowatt-month, or as
revised in accordance with Section 8.2, times Transmission
Service Entitlement.
EII-9. SCHEDULING FEE: $2,321 per month or as revised in accordance
with Section 8.3.
EII-10. TRANSMISSION LOSSES: 2.8% or as revised in accordance with
Section 7.
EIB-5