DEL RANCH
FUNDING AGREEMENT
1. PARTIES: The Parties to this Funding Agreement ("Agreement") are Del Ranch
Ltd., a California limited partnership ("Seller") and Southern California
Edison Company ("Edison"), a California corporation, 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 On February 22, 1984, Edison and Imperial Energy Corporation
("Imperial") executed a Power Purchase Contract to provide the terms and
conditions for the sale by Imperial and the purchase by Edison of electrical
power from an electrical generating facility to be located at Niland,
California.
2.2 On November 13, 1984, Edison and Imperial amended the Power
Purchase Contract (Amendment No. 1).
2.3 On January 22, 1986, Imperial assigned its rights, title, and
interest in the Power Purchase Contract to Magma Power Company ("Magma"), a
Nevada corporation, to which assignment Edison consented on March 12, 1986.
2.4 On April 10, 1986, Edison and Magma amended the Power Purchase
Contract (Amendment No. 2).
2.5 On March 14, 1988, Magma assigned its rights, title, and interest
in the Power Purchase Contract to Seller, to which assignment Edison consented
on March 14, 1988.
2.6 Seller is a signatory to the Funding and Construction Agreement
("Funding and Construction Agreement") among the Imperial Irrigation District
("IID") and independent power companies, listed as participants
("Participants") therein, which was executed on June 29, 1987. Seller's
capacity entitlement under the Funding and Construction Agreement is
sufficient to satisfy its capacity and energy deliveries under the Power
Purchase Contract.
2.7 Seller is, at the date of execution of this Agreement, in full
compliance with the terms and conditions of the Power Purchase Contract, the
Qualifying Facilities Milestone Procedure ("QFMP") and/or Edison's Tariff Rule
21, as applicable.
2.8 Seller and Edison jointly agree that a transmission capacity
limit of 400 MW exists on the existing transmission line between Edison's
Mirage Substation and its Devers Substation (the "Mirage/Devers Line") and
that construction of additional transmission facilities may, in Edison's sole
judgment, be required to allow delivery of Seller's electrical energy and
capacity over the portion of Edison's system between Edison's Mirage and
Devers Substations. Such facilities shall hereinafter be referred to as the
"Additional Transmission Facilities."
2.9 Six (6) Qualifying Facility projects identified in Appendix A,
Appendix B, and Appendix C, attached hereto, have previously executed Funding
Agreements to pay a pro rata share of the Additional Transmission Facilities.
2.10 Seller acknowledges that, because of the transmission priority
of its project under the QFMP and/or Edison's Tariff
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Rule No. 21, it may not be entitled thereunder to use the existing
Mirage/Devers Line to deliver its power to Edison. Therefore, Seller is willing
to pay a portion of the cost of the Additional Transmission Facilities which
may be required to accommodate transmission of its electrical energy and
capacity,
as further set forth therein.
3. AGREEMENT: The Parties agree as follows:
4. TERM: This Agreement shall be effective upon execution by the Parties and
shall remain in effect until the earliest of (a) termination by agreement of
the Parties, (b) completion of the Additional Transmission Facilities, or (c)
January 1, 1995.
5. FUNDING ACCOUNT:
5.1 Within 30 days after the date of execution of this funding
agreement, Seller shall, in the amount determined pursuant to the formula set
forth herein, either (a) provide Edison with an irrevocable letter of credit
issued by a commercial lender acceptable to Edison in its sole judgment
allowing Edison to draw the funds for use consistent with the terms and
conditions of this Agreement, or (b) establish and fund an escrow account
governed by an escrow agreement in a form acceptable to Edison, consistent
with the terms and conditions of this Agreement. The escrow account or letter
of credit so established shall hereinafter be referred to as the "Funding
Account." The dollar amount of Seller's Funding Account shall be
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the amount specified in Appendix D hereto as Seller's funding contribution,
which is established as follows:
X = A x (B / C)
Where: X = Seller's Funding Account in dollars
A = Seller's MW capacity as specified in
Appendix D
B = $3,150,000
C = 79 MW
Seller shall not be required to contribute any funds in excess of the amount
identified in Appendix D hereto as Seller's funding contribution.
5.2 Interest which may be paid to the Funding Account shall accrue to
the Funding Account and shall contribute to the principal when earned. Seller
shall not have any right to make withdrawals of accrued interest unless and
until the Funding Account is released to Seller pursuant to Section 5.6 of
this Agreement.
5.3 Edison shall have sole drawing rights on the funds contained in
the Funding Account. Edison may use those funds for payment of the costs
actually incurred by Edison to construct the Additional Transmission Facilities
determined necessary by Edison in its sole discretion to accept the electric
capacity and energy of Seller pursuant to the Power Purchase Contract and to
pay any taxes levied on those funds as contributions in aid of construction.
5.4 Seller shall maintain the Funding Account in effect until the
termination of this Agreement pursuant to Section 4
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hereof. Failure to do so shall cause Seller to lose its rights to transmission
capacity under this Agreement and shall cause Edison's obligation to accept
Seller's power pursuant to Sections 6.1 and 6.2 of this Agreement to
terminate.
5.5 In the event of termination of this Agreement, Edison shall not
be obligated to reimburse Seller for any funds withdrawn from the Funding
Account in accordance with the terms and conditions of this Agreement.
5.6 In the event that this Agreement has terminated pursuant to
Section 4 hereof prior to the commencement of construction of the Additional
Transmission Facilities, Edison shall promptly release Seller's Funding
Account to Seller. Seller shall have no other right to terminate or withdraw
funds from the Funding Account.
6. OBLIGATIONS OF EDISON:
6.1 As long as Seller is in compliance with all of the terms and
conditions of this Agreement, Edison shall accept power from Seller pursuant
to Seller's Power Purchase Contract on the date of Firm operation (as that
term is defined in the Power Purchase Contract) in the amount specified in
Appendix D hereto, under the terms and conditions of Section 6.2 of this
Agreement. Purchases from Seller shall be made pursuant to the Power Purchase
Contract for energy and capacity delivered to Edison's Mirage Substation (a)
during the term of this Agreement and (b) following termination of this
Agreement only if terminated pursuant to Section 4.
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6.2 For that period of time between payment of funds pursuant to
Section 5.1 of this Agreement and completion and placing in service of the
Additional Transmission Facilities, Seller's access to transmission capacity
between Edison's Mirage and Devers substations, pursuant to this Agreement,
shall be on an as-available and interruptible basis. Upon completion and
placing in service of the Additional Transmission Facilities, Seller's access
to such transmission capacity shall be firm for the balance of the term of
Seller's Power Purchase Contract.
6.3 In the event that Edison enters into an agreement with a
developer other than those listed in Appendix A, Appendix B, Appendix C, or
Appendix D, which requires the use of capacity on the Additional Transmission
Facilities, Edison shall require such developer to pay a portion of the costs
of the Additional Transmission Facilities. Such payment shall be in accordance
with the formula specified in Section 5.1 of this Agreement. Such payment
shall not affect Seller's funding contribution as specified in Appendix D.
7. OWNERSHIP: Edison shall own and operate any Additional Transmission
Facilities which may be constructed or installed to fulfill Edison's
obligations pursuant to this Agreement.
8. TAXES:
8.1 Edison shall pay ad valorem taxes and other taxes properly
attributed to the Additional Transmission Facilities.
8.2 Edison may, at its sole discretion, use funds from the Funding
Account to pay taxes levied on contributions in aid of construction. However,
Seller shall not be required to pay any
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tax, or provide any funds for the payment of any tax, in excess of its funding
contribution as set forth in Appendix D of this Agreement.
8.3 If requested by any taxing authority, Seller or Edison, as the
case may be, shall provide information in its possession concerning the
Additional Transmission Facilities to such taxing authority.
9. NONDEDICATION OF FACILITIES: Neither Party, by this Agreement, dedicates
any part of its facilities to the public or to the service provided under the
Power Purchase Contract, and such service shall cease upon termination of the
Power Purchase Contract.
10. NOTICE: All notices pertaining to this Agreement shall be in writing and
shall be sufficient if delivered in person or sent by certified mail, postage
prepaid, return receipt requested, to Seller or to Edison at the following
address:
If to Seller: Del Ranch, Limited
c/o Red Hill Geothermal, Inc.
480 West Sinclair Road
Calipatria, CA 92233
Attention: Secretary
If to Edison: Southern California Edison Company
Post Office Box 800
Rosemead, CA 91770
Attention: Secretary
All notices sent pursuant to this Section 10 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.
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11. PREVIOUS COMMUNICATIONS: This Agreement contains the entire agreement
between the Parties, their agents, and employees as to the Additional
Transmission Facilities, and merges and supersedes all prior agreements,
commitments, representations, and discussions between the Parties relating
thereto. No Party shall be bound to any other obligations, conditions, or
representations with respect to the subject matter of this Agreement.
Notwithstanding the foregoing, nothing in this Agreement shall be construed to
terminate, supersede or amend the Power Purchase Contract, except if, and only
to the extent, specifically set forth herein.
12. SUCCESSORS AND ASSIGNS: This Agreement shall not be assigned by Edison
without Seller's consent, which consent shall not be unreasonably withheld.
Seller may assign this Agreement with the written consent of Edison only if
such assignment is in conjunction with assignment of the Power Purchase
Contract. Any such assignment or delegation made without said written consent
shall be null and void. Edison's consent to such assignment shall not be
unreasonably withheld. Any assignment of this Agreement in conjunction with
assignment of the Power Purchase Contract shall be in full compliance with the
applicable terms and conditions of the Power Purchase Contract. Any assignment
of this Agreement shall not relieve the Seller of its primary liability for
any of its duties and obligations hereunder unless the assignee expressly
assumes those duties and obligations in writing.
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13. UNCONTROLLABLE FORCE: Neither Party shall be considered to be in default
in the performance of any of its obligations under this Agreement, except for
obligations to pay money, when and to the extent failure of performance shall
be caused by an uncontrollable force. The term "uncontrollable force" shall
mean any cause beyond the control of the Party unable to perform such
obligations including, but not limited to, failure of or threat of failure of
facilities, flood, earthquake, storm, drought, fire, pestilence, lightning and
other natural catastrophes, epidemic, war, riot, civil disturbance or
disobedience, strike, labor dispute, labor or material shortage, sabotage,
government priorities, restraint by court order or public authority (whether
valid or invalid), and action or nonaction by or inability to obtain or keep
the necessary authorizations or approvals from any government 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. Nothing contained in this Section 13 shall be construed as
to require a Party to settle any strike or labor dispute in which it may be
involved.
14. EFFECT OF SECTION HEADINGS: Section headings appearing in this Agreement
are inserted for convenience only, and shall not be construed as
interpretations of text.
15. GOVERNING LAW: This Agreement 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.
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16. SIGNATURES: IN WITNESS WHEREOF, the Parties hereto have executed this
Funding Agreement this 18 day of May, 1990.
SOUTHERN CALIFORNIA EDISON COMPANY
By /s/Robert Dietch
Vice President
DEL RANCH, LIMITED
BY: RED HILL GEOTHERMAL, INC.
By /s/ Jon R. Peele
-----------------------------------
Name Jon R. Peele
---------------------------------
Title Vice President
--------------------------------
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EXHIBIT 10.44
APPENDIX A
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Western Power Group Imperial Resource 15 MW $ 598,101.27
Unit II, Inc. Recovery (QFID
No. 1043)
Earth Energy, Inc. Salton Sea II 20 MW $ 797,468.35
(QFID No. 3028)
Magma Power Company Leathers (QFID 38 MW $1,515,189.35
No. 3026)
Ormesa Geothermal Ormesa 1E (QFID 6 MW $ 239,240.51
No. 3010) ------ -------------
TOTAL APPENDIX A 79 MW $3,150,000.00
EXHIBIT 10.44
APPENDIX B
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Colmac Energy, Inc. Colmac Energy, Inc. 25.8 MW $1,028,734.20
APPENDIX C
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Ormesa Geothermal Ormesa Geothermal 6.5 MW $259,177.22
(QFID No. 3010)
APPENDIX D
DEVELOPER PROJECT CAPACITY FUNDING
--------- ------- -------- -------
Magma Power Company Vulcan/BN 6 MW $239,240.52
Geothermal (QFID
No. 3006)
Magma Power Company Del Ranch, Ltd.* 4 MW $159,493.67
(QFID No. 3004)
Magma Power Company Elmore, Ltd. (QFID 4 MW $159,493.67
No. 3009)
Magma Power Company Leathers, L.P. 4 MW $159,493.67
(QFID No. 3026) ---- -----------
TOTAL APPENDIX D 18 MW $717,721.56
*Seller