EXHIBIT 10.38
89A.3
LTHRS
9-25-89
EXECUTION COPY
PLANT CONNECTION AGREEMENT
FOR THE
LEATHERS POWER PLANT
BETWEEN
IMPERIAL IRRIGATION DISTRICT
AND
LEATHERS, L.P.
EXECUTION COPY
9-25-89
TABLE OF CONTENTS
Page
1. PARTIES ............................................ 1
2. RECITALS ........................................... 1
3. AGREEMENT .......................................... 2
4. DEFINITIONS ........................................ 2
5. EFFECTIVE DATE AND TERM ............................ 3
6. CONNECTION OF PLANT ................................ 3
7. ELECTRIC SERVICE TO PRODUCER ....................... 4
8 METERING OF ENERGY DELIVERIES 4
9. PRODUCER'S DELIVERY AND IID ACCEPTANCE OF
ENERGY FROM PLANT .................................. 4
10. PRODUCER'S GENERAL OBLIGATIONS ..................... 5
11. IID'S GENERAL OBLIGATIONS .......................... 6
12. BILLING ............................................ 7
13. AUTHORIZED REPRESENTATIVES ......................... 8
14. METERS ............................................. 9
15. CONTINUITY OF SERVICE .............................. 10
16. LIABILITY .......................................... 11
17. UNCONTROLLABLE FORCES .............................. 13
18. INTEGRATION AND AMENDMENTS ......................... 14
19. NON-WAIVER ......................................... 14
20. NO DEDICATION OF FACILITIES ........................ 15
21. SUCCESSORS AND ASSIGNS ............................. 15
22. EFFECT OF SECTION HEADINGS ......................... 16
23. GOVERNING LAW ...................................... 16
24. ARBITRATION ........................................ 16
(1)
25. ENTIRE AGREEMENT ................................... 18
26. NOTICES ............................................ 19
27. SEVERAL OBLIGATIONS ................................ 19
28. SIGNATURE CLAUSE ................................... 20
(2)
1. PARTIES
The parties to this Agreement are IMPERIAL IRRIGATION DISTRICT ("IID"),
organized under the Water Code of the State of California and Leathers, L.P.
("Producer"), hereinafter referred to individually as "Party", and
collectively as "Parties".
2. RECITALS
2.1 Producer intends to construct and operate, as owner or lessee, a
megawatt generating facility with a maximum 38 megawatt net operating capacity
at the Salton Sea (KGRA), Imperial County, California, and to sell the Plant
electrical output to Southern California Edison Company ("SCE").
2.2 SCE has entered into the Power Purchase Agreement dated April 10,
1986 ("Purchase Agreement") with Producer, to purchase
all the electrical output from the Plant.
2.3 SCE and Producer agree that the terms and conditions regarding
transmission of the Plant's Energy to an IID/SCE point of interconnection
shall be pursuant to a Transmission Service Agreement to be entered into
between IID and Producer.
2.4 Since the Plant will be built in the IID service territory, it will
be convenient to connect the Plant to the IID electric system.
Producer hereby grants the IID the right to enter the Plant site
for any reasonable purposes connected with this Agreement, by previous
arrangements with the Plant manager. Those reasonable purposes include
maintenance and repairs to IID equipment in Producer's facilities, observing
tests of said facilities, reading of kilowatt-hour meters, and the like.
2.5 Producer desires to purchase and IID desires to sell the electrical
energy necessary to satisfy the operation and maintenance power consumption
requirements of the Plant for the life of the Plant that is not normally
generated by the Plant itself, or portable generating equipment.
2.6 The Parties desire, by means of this Agreement, to
interconnect the Plant to the IID electrical system and to establish
the terms, conditions and obligations of the Parties relating to
such interconnection.
3. AGREEMENT
The parties agree as follows:
4. DEFINITIONS
4.1 Agreement: This Plant Connection Agreement between IID and Producer,
and all Exhibits hereto, as may be amended from time to time.
4.2 Authorized Representative: The representative of a
Party designated in accordance with Section 13.
4.3 Energy: Electric energy in excess of Producer's electric energy
requirements, expresses in kilowatt-hours, generated by the Plant and measured
and delivered to the Point of Delivery.
4.4 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 C.
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4.5 Operation Date: The day on which the Plant Energy is first accepted
by IID for delivery to SCE.
4.6 Plant: A maximum of 40 MW net operating capacity Geothermal facility
operated by Producer, as owner or lessee, including all associated equipment
and improvements necessary for generating electric energy and transmitting it
to the high voltage side of the power transformer.
4.7 Point of Delivery: The point on the high voltage side of Producer's
switchyard where IID's metering equipment measures the delivery of Energy to
the IID system as shown on Exhibit "B".
4.8 System Emergency: A condition on IID's system which is likely to
result in imminent significant disruption of service to customers or is
imminently likely to endanger life or property.
5. EFFECTIVE DATE AND TERM
This Agreement shall become effective upon the Operation Date of the
Plant, and shall remain in effect until the earlier of (i) April 15, 2015, or
(ii) thirty six (36) months from the date the Plant has ceased to operate at
the option of IID. It is understood that (i) if the Completion Date, as the
term Completion Date is defined in Article I of Funding and Construction
Agreement does not occur, or (ii) if the Operation Date does not occur within
five (5) years after the date this Agreement was executed, this Agreement
shall be of no force or effect.
6. CONNECTION OF PLANT
6.1 Producer may electrically connect its Plant, in accordance with the
provisions of this Agreement, so that it can
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operate in parallel with the IID electric system. Parallel operation will
not commence until IID has inspected and approved the interconnection
facilities and operations procedures.
6.2 Notwithstanding the provision that Producer has
furnished the high voltage switchyard complete, including the high
voltage oil circuit breakers and disconnect switches, the control of the
high voltage oil circuit breakers and disconnect switches shall be
under the control of the IID dispatcher.
7. ELECTRIC SERVICE TO PRODUCER
IID shall provide electric service to Producer pursuant to Section 12.
8. METERING OF ENERGY DELIVERIES
Metering for electric service to Producer and for energy
deliveries by Producer to IID for delivery to SCE shall be at the
Point of Delivery as shown on Exhibit "B". Four meters shall be
installed which shall measure and record flows in each direction as
shown on Exhibit "B".
9. PRODUCER'S DELIVERY AND IID ACCEPTANCE OF ENERGY FROM PLANT
Whenever electric output from the Plant exceeds Producer's
power requirements, Producer shall deliver all such excess output
to IID for delivery to SCE and IID shall accept such output for
delivery to SCE and deliver such output to SCE pursuant to a
transmission service agreement to be entered into between Producer and
IID.
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10. PRODUCER'S GENERAL OBLIGATIONS
Producer shall:
10.1 Operate the Plant in a manner consistent with applicable electric
utility industry standards, good engineering practice, and without degradation
of quality or reliability of service to IID customers.
10.2 Deliver the Plant's net electrical output to IID for the account of
SCE at the Point of Delivery.
10.3 Each Party shall provide the reactive kilovolt-ampere (KVA)
requirements of its own system so that there will be no interchange of
reactive KVA between systems. The Parties shall cooperate to control the flow
of reactive KVA to prevent the introduction of objectionable operating
conditions on the system of either Party.
10.4 Coordinate, to the greatest extent practicable, major overhaul and
inspection outages of the Plant with IID.
10.5 Give IID a written schedule on or before June 1, and December 1,
each year of the estimated amounts and rates of delivery of energy to be
delivered to IID for the account of SCE at the Point of Delivery during each
month of the succeeding twelve-month (12) period commencing July 1, and
January 1.
10.6 Give IID a written schedule on or before the fifteenth (15th) day
of each month of the estimated amounts and rates of delivery of energy to be
delivered to IID for the account of SCE at the Point of Delivery during each
day of the succeeding calendar month.
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10.7 Give IID a schedule on or before 12:01 p.m. on Tuesday
of each seven-day (7) period of the estimated amounts and rates
of delivery of energy to be delivered to IID for the account of SCE
at the Point of Delivery during each hour of the succeeding seven-day (7)
period commencing at 12:01 a.m. on the following Monday; provided, however,
that if any changes in the hourly deliveries so scheduled become necessary,
Producer shall notify IID of such changes as far in advance as possible.
10.8 Provide IID any reasonable rights-of-way and access required for
testing and reading of meters by previous arrangement with the Plant manager.
10.9 Carry out the directions of the Authorized Representatives with
respect to the matters set forth in this Agreement.
11. IID'S GENERAL OBLIGATIONS
IID shall:
11.1 Design, acquire, construct, operate and maintain, or cause to be
designed, acquired, constructed, operated and maintained, and shall own, a
connecting transmission line between IID's transmission system and the Plant.
Following the completion of such line, IID may bill and Producer shall pay
IID's costs of designing, acquiring and constructing such line. Producer shall
have the right to audit IID's records and accounts to verify the cost of such
line.
11.2 Accept the Plant's net electrical output for the account of SCE at
the Point of Delivery and simultaneously deliver an equal amount of electric
energy (less applicable
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transmission losses) to the SCE system at IID/SCE point(s) of interconnection.
11.3 Coordinate, to the greatest extent practicable, major overhaul and
inspection outages of IID transmission facilities with Producer and notify
Producer of any changes as far in advance as possible.
11.4 Carry out the directions of the Authorized Representative with
respect to the matters set forth in this Agreement.
11.5 Operate its system in a manner consistent with applicable utility
industry standards and good engineering practices.
12. BILLING
12.1 IID shall read the meters monthly according to its regular meter
reading schedule beginning no more than thirty (30) days after the date that
electric energy is first supplied to Producer. IID monthly shall send Producer
within ten (10) working days after the meter is read a bill for electric
service. Producer shall pay IID the total amount billed within thirty (30)
days of receipt of the bill.
12.2 IID shall bill Producer for Producer's consumption of energy from
IID's resources in accordance with Rate Schedule GL or Rate Schedule A-2, as
applicable, as it may be revised from time to time. Copies of current Rate
Schedule GL and current Rate Schedule A-2 are attached as Exhibit "A".
12.3 If Producer disputes a bill, payment shall be made as if no dispute
existed pending resolution of the dispute by the
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Authorized Representatives. If the bill is determined to be in
error, the disputed amount shall be refunded by IID including interest
at the rate of one and one-half percent (1 1/2%) per month, compounded monthly,
from the date of payment to the date the refund check
or adjusted bill is mailed.
13. AUTHORIZED REPRESENTATIVES
13.1 Within thirty (30) days after the date this Agreement is signed,
each Party shall designate, by written notice to the other Party, an
Authorized Representative who is authorized to act in its behalf in the
implementation of this Agreement and with respect to those matters contained
herein which are the functions and responsibilities for the Authorized
Representatives. Either Party may, at any time, change the designation of its
Authorized Representative by written notice to the other Party.
13.2 IID's Authorized Representative shall develop detailed written
procedures necessary and convenient to administer this Agreement within six
(6) months after the date signed. Such procedures shall be submitted to
Producer's Authorized Representative for review, comment, discussion and
concurrence before they are put into effect. Such procedures shall include,
without limitation: (i) communication between Producer and IID's electric
system dispatcher with regard to daily operating matters, (ii) billing and
payments, (iii) specified equipment tests, and (iv) operating matters which
affect or may affect quality and reliability of service to electric customers
and continuity of deliveries to SCE.
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13.3 The Authorized Representative shall have no authority to modify any
of the provisions of this Agreement.
14. METERS
14.1 All meters shall be sealed and the seal shall be broken only upon
occasions when the meters are to be inspected, tested or adjusted.
14.2 IID shall inspect and test all meters upon their installation and
at least once every year thereafter. If requested to do so by Producer, IID
shall inspect or test a meter more frequently than every year, but the expense
of such inspection or test shall be paid by Producer unless the meter is found
to register inaccurately by more than two percent (2%) from the measurement
made by a standard meter. Each Party shall give reasonable notice to the other
Party of the time when any inspection or test shall take place and that Party
may have representatives present at the test or inspection. If a meter is
found to be inaccurate or defective, it shall be adjusted, repaired or
replaced in order to provide accurate metering. All adjustments due to
inaccurate meters shall be limited to the preceding six (6) months.
14.3 If a meter fails to register, or if measurement made by a meter
during a test varies by more than two percent (2%) from the measurement made
by the standard meter used in the test, adjustment shall be made correcting
all measurements made by the inaccurate meter for:
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(i) the actual period during which inaccurate measurements
were made, if the period can be determined, or if not,
(ii) the period immediately preceding the test of the meter equal
to one-half (1/2) the time from the date of the last previous
test of the meter; provided, however, that the period covered
by the correction shall not exceed six (6) months.
14.4 Producer shall telemeter information to IID's Dispatch Center
regarding the kilowatts, kilowatt-hours, kilovars and kilovar-hours delivered
to or received from IID at the Point of Delivery over phone line leased by
Producer.
IID shall purchase, own, and shall design, install, operate,
maintain, or cause to be designed, installed, operated, and maintained,
equipment to automatically transmit from the Plant to IID's Dispatch Center
continuous values of Plant output expressed as megawatts, megavars, and
megawatt-hours. IID may thereupon bill and Producer shall promptly pay IID's
cost of design, purchase and installation of said equipment. Producer shall
have the right to audit IID's records and accounts to verify the cost of said
equipment.
15. CONTINUITY OF SERVICE
IID shall not be obligated to accept and IID may require Producer to
temporarily curtail, interrupt or reduce deliveries of energy upon advance
notice to Producer, when such curtailment, interruption or reduction is
required in order for IID to construct, install, maintain, repair, replace,
remove,
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investigate or inspect any of its equipment or any part of its system
or if IID determines that such curtailment, interruption or reduction is
necessary because of a System Emergency, forced outages or abnormal operating
conditions on its system. IID shall use reasonable efforts to keep
interruptions and curtailment to a minimum time.
16. LIABILITY
16.1 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.
16.2 For the purpose of this Section 16, Willful Action shall be defined
as action taken or not taken by a Party at the
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direction of its directors or other governing body, officers or employees
having management or administrative responsibility affecting its performance
under this Agreement, as follows:
16.2.1 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.
16.2.2 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.
16.2.3 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.
16.3 Willful Action does not include any act or failure to act which is
merely involuntary, accidental or negligent.
16.4 The phrase "employees having management or administrative
responsibility," as used in Section 16.2, 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.
16.5 Subject to the foregoing provisions of this Section 16, each Party
agrees to defend, indemnify and save harmless the
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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 form its sole negligence or Willful Action.
17. 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, 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.
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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
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.
18. INTEGRATION AND AMENDMENTS
This Agreement constitutes the entire agreement between the Parties
relating to the interconnection of Producer's Plant to IID's electric system,
the acceptance of energy by IID from Producer and the providing of electric
service by IID. No oral agreement or prior written agreement between the
Parties shall be of any effect whatsoever; provided, however, that any
arrangements agreed upon by the Authorized Representatives within the limits
of their authority, and consistent with this Agreement shall be binding upon
the Parties. All changes to this Agreement shall be in writing and shall be
signed by an officer of each Party.
19. 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
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future; but the same shall continue and remain in full force and effect.
20. 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 by 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.
21. SUCCESSORS AND ASSIGNS
21.1 This Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the Parties.
21.2 This Agreement may be assigned by Producer only (i) to a purchaser
or co-owner of the Plant or to a person who will operate the Plant pursuant to
a contract or other arrangement with such purchaser and in either case 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 the Plant or any electrical transmission facilities associated therewith.
Producer and IID agree that nothing in this Section 21.2 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.)
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22. EFFECT OF SECTION HEADINGS
Section headings appearing in this Agreement are inserted for
convenience only, and shall not be construed as interpretation of text.
23. GOVERNING LAW
This Agreement shall be interpreted, governed and construed
under the laws of the State of California or the laws of the
United States, as applicable.
24. ARBITRATION
24.1 Any dispute arising out of or relating to this Agreement, or the
breach thereof, which is not resolved by the Parties acting through their
Authorized Representatives shall be settled by arbitration to the extent
permitted by the laws applicable to the Parties; provided, however, that no
Party to the dispute shall be bound to any greater extent than any other Party
to the dispute. Arbitration shall not apply to any dispute or matter that is
within the jurisdiction of any regulatory agency.
24.2 Any demand for arbitration shall be made by written notice to the
other Party setting forth in adequate detail the nature of the dispute, the
issues to be arbitrated, the amount or amounts, if any, involved in the
dispute, and the remedy sought. Within twenty (20) days from the receipt of
such notice, the other Party may submit its own written statement of the
dispute and may set forth in adequate detail any additional related matters or
issues to be arbitrated.
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24.3 Within thirty (30) days after delivery of the written notice
demanding arbitration, the Parties acting through their Authorized
Representatives shall meet for the purpose of selecting an arbitrator. The
Parties may agree upon a single arbitrator, but in the event that they cannot
agree, three arbitrators shall be used. Each Party shall designate one
arbitrator, and the two arbitrators shall then select a third arbitrator. All
arbitrators shall be persons skilled and experienced in the field in which the
dispute has arisen and no person shall be eligible for appointment as an
arbitrator who is or has been an officer or employee of either of the Parties
or otherwise interested in the matter to be arbitrated. Should either party
refuse or neglect to appoint an arbitrator or to furnish the arbitrators with
any papers or information demanded, the arbitrators are empowered, by both
Parties, to proceed without the participation or assistance of that Party.
24.4 Except as otherwise provided in this Section, the arbitration shall
be governed by the rules and practices of the American Arbitration
Association, or a similar organization if the American Arbitration Association
should not at the time exist.
24.5 Arbitration proceedings shall be held in Imperial, California, at a
time and place to be selected by the arbitrators. The arbitrators shall hear
evidence submitted by the Parties and may call for additional information
which shall be furnished by the Party having such information. The arbitrators
shall have no authority to call for information not
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related to the issues included in the dispute or to determine other issues not
in dispute.
24.6 If there is only one arbitrator, his decision shall be binding and
conclusive on the Parties. If there are three arbitrators, the decision of any
two shall be binding and conclusive. The decision of the arbitrators shall
contain findings regarding the issues involved in the dispute, including the
merits of the positions of the Parties, the materiality of any default, and
the remedy or relief to which a Party shall be entitled. The arbitrators may
not grant any remedy or relief which is inconsistent with this Agreement, nor
shall the arbitrators make findings or decide issues not in dispute.
24.7 The fees and expenses of the arbitrators shall be shared equally by
the Parties, unless the decision of the arbitrators specifies some other
apportionment. All other expenses and costs of the arbitration shall be borne
by the Party incurring such expenses and costs.
24.8 Any decision or award granted by the arbitrators shall be final and
judgment may be entered on it in any court of competent jurisdiction. This
agreement to arbitrate shall be specifically enforceable.
25. ENTIRE AGREEMENT
25.1 The complete agreement of the Parties is set forth in this Agreement
and all communications regarding subject interconnected operations whether oral
or written, are hereby abrogated and withdrawn.
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26. NOTICES
Any formal communication or notice in connection with this Agreement
shall be in writing and shall be deemed properly given if delivered in person
or sent first class mail, postage prepaid to the person specified below:
LEATHERS, L.P.
480 West Sinclair Rd.
Calipatria, California 92233
IMPERIAL IRRIGATION DISTRICT
c/o General Manager
P. O. Box 937
Imperial, California 92251
27. SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise, the
duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. Nothing contained in this Agreement shall ever be
construed to create an association, trust, partnership, or joint venture, or
impose a trust or partnership duty, obligation or liability on or with regard
to either Party. Each Party shall be individually and severally liable for its
own obligations under this Agreement.
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28. SIGNATURE CLAUSE
The Parties have caused this Agreement to be executed in their
respective names, in duplicate, by their respective officers hereunto this 3rd
day of October, 1989.
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.
ATTEST:
By /s/ Thomas C. Hinrich
---------------------------
Asst. Secretary
IMPERIAL IRRIGATION DISTRICT
By /s/ Lester A. Burnt
--------------------------
President, Board of Directors
ATTEST:
By /s/ Larry E. Beck
---------------------------
Secretary
[SEAL]
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