POWER PURCHASE AND SALE AGREEMENT

175 Pages·2010·0.51 MB·English

ID #[Number], [Seller’s Name]

POWER PURCHASE AND SALE AGREEMENT
between
[BUYER’S NAME]
and
[SELLER’S NAME]
(ID #[Number])

Pro Forma Agreement for CHP Facilities Request for Offers Program
TERMS THAT ARE BOXED AND SHADED IN LIGHT YELLOW AND/OR BRACKETED
AND IN BLUE FONT ARE EITHER BUYER COMMENTS OR GENERATING FACILITY-
TYPE SPECIFIC COMMENTS THAT SHOULD BE REMOVED, ACCEPTED OR
COMPLETED, AS APPLICABLE.
THIS FORM OF AGREEMENT IS BUYER’S PRO FORMA FOR THIS CHP RFO.
SELLER MAY, AT ITS OPTION, REVISE THIS AGREEMENT, WHICH REVISIONS ARE
SUBJECT TO FURTHER NEGOTIATION AND BUYER’S ACCEPTANCE. BUYER
ENCOURAGES SELLER TO MAKE REVISIONS TO THE TERMS OF THIS AGREEMENT
TO THE EXTENT IT ADDS VALUE (INCLUDING ALTERNATIVE METHODS TO THOSE
IN SECTION 1.02(f) THAT PROVIDE GHG SAVINGS FOR BUYER) TO SELLER’S OFFER.
TABLE OF CONTENTS
LIST OF EXHIBITS.................................................................................................................iii
PREAMBLE...............................................................................................................................1
RECITALS.................................................................................................................................1
ARTICLE ONE: SPECIAL CONDITIONS..............................................................................3
1.01 Term............................................................................................................................3
1.02 Generating Facility......................................................................................................4
1.03 Delivery Point..............................................................................................................7
1.04 Capacity Performance Requirements..........................................................................7
1.05 Maintenance Outages; Major Overhaul......................................................................7
1.06 Power Product Prices; GHG Compliance Costs..........................................................8
1.07 Requirements Applicable Solely to New CHP Facilities, Repowered CHP Facilities,
and Certain Expanded CHP Facilities.........................................................................9
1.08 Scheduling Coordinator Election..............................................................................10
1.09 Economic Curtailment Option...................................................................................10
1.10 Power Rating.............................................................................................................10
ARTICLE TWO: SELLER'S SATISFACTION OF OBLIGATIONS BEFORE THE TERM
START DATE; TERMINATION; CPUC APPROVAL.........................................................11
2.01 Seller's Satisfaction of Obligations before the Term Start Date................................11
2.02 Termination Rights of the Parties..............................................................................12
2.03 Rights and Obligations Surviving Termination.........................................................12
2.04 CPUC Filing and Approval of this Agreement.........................................................13
ARTICLE THREE: SELLER'S OBLIGATIONS....................................................................15
3.01 Conveyance of the Product; Retained Benefits.........................................................15
3.02 Resource Adequacy Rulings.....................................................................................16
3.03 Site Control................................................................................................................17
3.04 Permits.......................................................................................................................17
3.05 Transmission.............................................................................................................17
3.06 CAISO Relationship..................................................................................................18
3.07 Generating Facility Modifications.............................................................................19
3.08 Metering....................................................................................................................20
3.09 Telemetry System......................................................................................................22
3.10 Provision of Information...........................................................................................22
3.11 Progress Reporting....................................................................................................24
3.12 Fuel Supply................................................................................................................24
3.13 Capacity Demonstration Tests; Resource Adequacy Demonstrations......................24
3.14 Operation and Record Keeping.................................................................................25
3.15 Power Product Curtailments at Transmission Provider’s, CAISO’s or Buyer’s
Request......................................................................................................................27
3.16 Report of Lost Output................................................................................................28
3.17 FERC Qualifying Cogeneration Facility Status........................................................29
3.18 Notice of Cessation or Termination of Service Agreements.....................................29
3.19 Buyer's Access Rights...............................................................................................30
3.20 Seller Financial Information......................................................................................30
3.21 NERC Electric System Reliability Standards...........................................................33
3.22 Allocation of Availability Incentive Payments and Non-Availability Charges........34
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ID #[Number], [Seller’s Name]

3.23 Seller’s Reporting Requirements...............................................................................34
ARTICLE FOUR: BUYER'S OBLIGATIONS.......................................................................35
4.01 Obligation to Pay.......................................................................................................35
4.02 Payment Adjustments................................................................................................35
4.03 Payment Statement and Payment..............................................................................36
4.04 GHG Compliance Costs............................................................................................38
4.05 No Representation by Buyer.....................................................................................39
4.06 Buyer’s Responsibility..............................................................................................39
4.07 Buyer’s Reporting Requirements..............................................................................39
ARTICLE FIVE: FORCE MAJEURE.....................................................................................40
5.01 No Default for Force Majeure...................................................................................40
5.02 Requirements Applicable to the Claiming Party.......................................................40
5.03 Termination...............................................................................................................40
ARTICLE SIX: EVENTS OF DEFAULT; REMEDIES.........................................................41
6.01 Events of Default.......................................................................................................41
6.02 Early Termination......................................................................................................46
6.03 Termination Payment................................................................................................46
ARTICLE SEVEN: LIMITATIONS OF LIABILITIES.........................................................48
ARTICLE EIGHT: GOVERNMENTAL CHARGES.............................................................50
8.01 Cooperation to Minimize Tax Liabilities..................................................................50
8.02 Governmental Charges..............................................................................................50
8.03 Providing Information to Taxing Governmental Authorities....................................50
ARTICLE NINE: MISCELLANEOUS...................................................................................51
9.01 Representations, Warranties and Covenants.............................................................51
9.02 Additional Covenants by Seller.................................................................................52
9.03 Indemnity...................................................................................................................53
9.04 Assignment................................................................................................................55
9.05 Consent to Collateral Assignment.............................................................................56
9.06 Governing Law and Jury Trial Waiver......................................................................59
9.07 Notices.......................................................................................................................59
9.08 General......................................................................................................................59
9.09 Confidentiality...........................................................................................................61
9.10 Insurance...................................................................................................................63
9.11 Nondedication...........................................................................................................65
9.12 Mobile Sierra.............................................................................................................65
9.13 Seller Ownership and Control of Generating Facility...............................................65
9.14 Simple Interest Payments..........................................................................................66
9.15 Payments...................................................................................................................66
9.16 Provisional Relief......................................................................................................66
ARTICLE TEN: DISPUTE RESOLUTION............................................................................67
10.01 Dispute Resolution....................................................................................................67
10.02 Mediation...................................................................................................................67
10.03 Arbitration.................................................................................................................67
SIGNATURES.........................................................................................................................70

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ID #[Number], [Seller’s Name]

LIST OF EXHIBITS
A. Definitions
B. Generating Facility and Site Description
C. Capacity Demonstration Test for Firm Contract Capacity
D. Monthly Contract Payment Calculation
D-1. Force Majeure Credit Value
D-2. Transmission Curtailment Credit Value
D-3. Economic Curtailment Credit Value
E. Scheduling and Calculation of Maintenance Outage and Major Overhaul Credits
F. Requirements Applicable Solely to New CHP Facilities, Repowered CHP Facilities and
Certain Expanded CHP Facilities
G. Scheduling Coordinator Services
H. Milestone Progress Reporting Form
I. Seller’s Forecasting Submittal and Accuracy Requirements
J. CAISO Charges
K. Scheduling and Delivery Deviation Adjustments
L. Physical Trade Settlement Amount
M. SC Trade Settlement Amount
N. Notice List
O. Form of Guaranty Agreement
P. Form of Letter of Credit
Q. Seller’s Milestone Schedule
R. Outage Schedule Submittal Requirements
S. Payment Adjustments if Buyer Assumes GHG Compliance Costs; GHG Reporting
Requirements
T. QF Efficiency Monitoring Program – Cogeneration Data Reporting Form
U. Economic Curtailment Option for Negative Pricing in the Day-Ahead Market

iii
ID #[Number], [Seller’s Name]

POWER PURCHASE AND SALE AGREEMENT

between

[BUYER’S NAME]

and

[SELLER’S NAME]

(ID# [Number])

PREAMBLE

This Power Purchase and Sale Agreement by and between [Buyer’s name], a California
corporation (“Buyer”), and [Seller’s name], a [Seller’s form of business entity and state of
registration] (“Seller”), together with the exhibits, attachments, and any applicable referenced
collateral agreement or similar arrangement between the Parties that is expressly incorporated
into this Agreement by the Parties (collectively, this “Agreement”), is made, effective and
binding as of [Date of execution] (the “Effective Date”).
Buyer and Seller are sometimes referred to in this Agreement individually as a “Party” and
jointly as the “Parties.” Unless the context otherwise specifies or requires, initially capitalized
terms used in this Agreement have the meanings set forth in Exhibit A.

RECITALS

A. On or about September 20, 2007, the CPUC issued Decision (“D.”) 07-09-040 (the
“Decision”) which, among other things, directed Buyer to develop a form of a standard
contract and offer such contract to qualifying facilities meeting the eligibility criteria set
forth in the Decision.

B. Commencing in May 2009, Pacific Gas and Electric Company, San Diego Gas and
Electric Company, Southern California Edison Company, the California Cogeneration
Council, the Cogeneration Association of California, the Energy Producers and Users
Coalition, the Independent Energy Producers Association, the Division of Ratepayer
Advocates of the California Public Utilities Commission, and The Utility Reform
Network (collectively, the “Settling Parties”) entered into CPUC-facilitated settlement
negotiations in order to resolve certain outstanding issues among the Settling Parties,
including the implementation of the Decision.

C. Pursuant to the settlement negotiations, the Settling Parties entered into that certain
Settlement Agreement, dated October 8, 2010 (the “Settlement Agreement”), which

Preamble; Recitals
Page 1
ID #[Number], [Seller’s Name]

resolved certain issues pending in Rulemakings 99-11-022, 04-04-003, 04-04-025, and
06-02-013, and Application 08-11-001.

D. The Settlement Agreement became effective on [___] (the “Settlement Effective Date”).

E. The Settling Parties, pursuant to the Settlement Agreement, established a request for
offers program for eligible CHP Facilities and developed a pro forma agreement to be
made available to such CHP Facilities as part of such request for offers program (the
“CHP RFO Pro Forma”).

The Parties, intending to be legally bound, agree as follows:

Preamble; Recitals
Page 2
ID #[Number], [Seller’s Name]

ARTICLE ONE. SPECIAL CONDITIONS
{Buyer Comment: If the Term is greater than or equal to five years, before executing this Agreement,
Seller must provide to Buyer documentation evidencing its compliance with the Greenhouse Gas
Emissions Performance Standard set forth in D.07-01-039 and in subsequent CPUC rulings
implementing D.07-01-039, and with any subsequent CPUC-established precondition to the execution of
this Agreement, including any precondition set forth in the Settlement Agreement.
In accordance with Sections 7 and 8 of the Settlement Agreement, before executing this Agreement, Seller
must provide to Buyer anticipated Generating Facility operations estimates in order for Buyer to count
this Agreement towards Buyer’s GHG Emissions Reduction Target (as defined in the Settlement
Agreement), which include reasonable estimates of (i) the total expected Useful Thermal Energy Output
of the Generating Facility per Term Year, and (ii) the total expected electricity generation of the
Generating Facility per Term Year. Buyer shall use such information as specified in Section 7 of the
Settlement Agreement.}
1.01 Term.
(a) The term of this Agreement (the “Term”) commences on, or within 120 days
before [Date]; provided, however, that Seller may change the date set forth in this
Section 1.01(a) by providing Notice to Buyer at least one year before such date;
(b) Seller shall provide Buyer with 30 days advance Notice confirming the exact date
on which the Term commences, which date must be within the 120-day period set
forth in Section 1.01(a) (the “Term Start Date”);
(c) The Term Start Date must occur on the first day of a calendar month;
(d) The Term ends [Number of months] months after the Term Start Date (the “Term
End Date”); and
(e) Notwithstanding the proviso set forth in Section 1.01(a), the Term Start Date must
occur within 60 months of CPUC Approval, subject to any extension of the Term
Start Date as a result of a Force Majeure as to which Seller is the Claiming Party
(subject to Section 5.03) and Section 4(c)(ii) of Exhibit F.
{Buyer Comment: Select this Section 1.01 if the Generating Facility is a New CHP Facility or a
Repowered CHP Facility. Seller designates the Term Start Date and the Term End Date;
provided, however, that the Term must be no more than 12 years.}

(a) The term of this Agreement (the “Term”) commences on, or within 120 days
before [Date]; provided, however, that Seller may change the date set forth in this
Section 1.01(a) by providing Notice to Buyer at least one year before such date;

Article One Special Conditions
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ID #[Number], [Seller’s Name]

(b) Seller shall provide Buyer with 30 days advance Notice confirming the exact date
on which the Term commences, which date must be within the 120-day period set
forth in Section 1.01(a) (the “Term Start Date”);
(c) The Term Start Date must occur on the first day of a calendar month;
(d) The Term ends [Number of months] months after the Term Start Date (the “Term
End Date”); and
(e) Notwithstanding the proviso set forth in Section 1.01(a), the Term Start Date must
occur within 36 months of CPUC Approval, subject to any extension of the Term
Start Date as a result of a Force Majeure as to which Seller is the Claiming Party
(subject to Section 5.03) and Section 4(c)(ii) of Exhibit F.
{Buyer Comment: Select this Section 1.01 if the Generating Facility is an Expanded CHP
Facility. Seller designates the Term Start Date and the Term End Date; provided, however, (a)
the Term must be no more than seven years if Seller has elected in Section 1.02(a) not to comply
with the credit and collateral obligations set forth in this Agreement with respect to such
Expanded CHP Facility, and (b) no more than 12 years if the Generating Facility is an Expanded
CHP Facility, and Seller has elected in Section 1.02(a) to comply with the credit and collateral
requirements set forth in this Agreement with respect to such Expanded CHP Facility.}

(a) The term of this Agreement (the “Term”) commences on [Date] (the “Term Start
Date”);
(b) The Term ends [Number of months] months after the Term Start Date (the “Term
End Date”);
(c) Seller may change the Term Start Date set forth in this Section 1.01 by providing
Notice to Buyer at least one year before such Term Start Date; and
(d) Notwithstanding Section 1.01(c), the Term Start Date must occur within 24
months of the Effective Date, subject to any extension of the Term Start Date as a
result of a Force Majeure as to which Seller is the Claiming Party (subject to
Section 5.03).
{Buyer Comment: Select this Section 1.01 if the Generating Facility is an Existing CHP Facility.
Seller designates the Term Start Date and the Term End Date; provided, however, that the Term
must be no more than seven years.}
1.02 Generating Facility.
(a) Name; Designation. The name of the Generating Facility is [Generating Facility
name], which:
____ is a New CHP Facility;

Article One Special Conditions
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ID #[Number], [Seller’s Name]

____ is an Existing CHP Facility;
____ is or will be a Repowered CHP Facility on or before the Term Start Date;
____ is or will be an Expanded CHP Facility on or before the Term Start Date,
which elects to comply with the credit and collateral requirements set forth in this
Agreement; or
____ is or will be an Expanded CHP Facility on or before the Term Start Date,
which elects not to comply with the credit and collateral requirements set forth in
this Agreement.
(b) Location; Site. The Generating Facility is located at [Generating Facility address],
and is further described in Exhibit B.
(c) CHP Facility Type. As of the Effective Date, the Generating Facility is a
[“topping-cycle cogeneration facility”, as defined in 18 CFR Part 292, Section
292.202(d)] [“bottoming-cycle cogeneration facility”, as defined in 18 CFR Part
292, Section 292.202(e)].
(d) Contract Capacity. As set forth in the following table, Seller may elect (i) only
Firm Contract Capacity, (ii) only As-Available Contract Capacity, or (iii) both
Firm Contract Capacity and As-Available Contract Capacity:

Monthly Firm As-Available Net Contract
Month Contract Capacity Contract Capacity Capacity
(kW) (kW) (kW)
January [___] [___] [___]
February [___] [___] [___]
March [___] [___] [___]
April [___] [___] [___]
May [___] [___] [___]
June [___] [___] [___]
July [___] [___] [___]
August [___] [___] [___]
September [___] [___] [___]
October [___] [___] [___]
November [___] [___] [___]
December [___] [___] [___]
Firm Contract Capacity, As-Available Contract Capacity and Net Contract
Capacity are subject to adjustment in accordance with Section 3.07(c) and, if the
Generating Facility is (w) a New CHP Facility, (x) an Expanded CHP Facility, (y)
a Repowered CHP Facility, or (z) as set forth in Section 5.2.4.4 of the Settlement
Agreement, an Existing CHP Facility that is Operating in California but that has
never entered into an agreement for the purchase and sale of electric energy with
Buyer or any other California investor-owned utility, then, in each case, the Firm

Article One Special Conditions
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ID #[Number], [Seller’s Name]

Contract Capacity, As-Available Contract Capacity and Net Contract Capacity are
subject to adjustment in accordance with Section 3.13(b) and Exhibit C, as
applicable.
{Buyer Comment: The Net Contract Capacity must equal the sum of Firm Contract Capacity and
As-Available Contract Capacity, and cannot exceed PMax.}
(e) Expected Term Year Energy Production. The Expected Term Year Energy
Production for each Term Year equals [___] kWh. The Expected Term Year
Energy Production may be revised in accordance with Section 3.07(c), or based
on changes in the Site Host Load or the Site Host thermal requirements; provided,
however, that such revision must be supported by a certification from a
California-licensed professional engineer qualified to make a representation
affirming that such revision is reasonable and based on (i) actual modifications to
the Generating Facility performed or to be performed by Seller in accordance with
and subject to Section 3.07(c), or (ii) changes in the Site Host Load or the Site
Host thermal requirements. Such certification must include all data relied on to
support the revised Expected Term Year Energy Production.
{Buyer Comment: Expected Term Year Energy Production cannot exceed Net Contract Capacity
at 100% capacity factor applied over the Term Year.}
(f) Efficiency.
(i) The Generating Facility has an Efficiency Rating of [__]% (the “Expected
ER”).
(ii) If, at any time during the Term, the Efficiency Rating of the Generating
Facility falls below the Expected ER (an “Efficiency Rating Deficiency”),
Buyer shall send a Notice to Seller, which Notice shall require Seller,
within 90 days after Seller’s receipt of Buyer’s Notice, to provide a
written plan and schedule (the “Efficiency Rating Cure Plan”) for
correcting the Efficiency Rating Deficiency. Within 30 days after Buyer’s
timely receipt of the Efficiency Rating Cure Plan from Seller, Buyer shall
provide a Notice to Seller either accepting or rejecting such Efficiency
Rating Cure Plan. If Buyer rejects the Efficiency Rating Cure Plan, Buyer
and Seller shall negotiate in good faith to rectify any deficiency in the
Efficiency Rating Cure Plan. Upon Buyer’s acceptance of the Efficiency
Rating Cure Plan, Buyer shall send a Notice to Seller, which Notice shall
provide Seller with 180 days from the date of such Notice (the “Efficiency
Rating Cure Period”) to rectify the Efficiency Rating Deficiency. On or
before the last day of the Efficiency Rating Cure Period (the “Efficiency
Rating Cure Date”), Seller must demonstrate to Buyer’s reasonable
satisfaction that Seller has cured the Efficiency Rating Deficiency by
establishing that (1) Seller has satisfied its obligations under the Efficiency
Rating Cure Plan, and (2) the Efficiency Rating of the Generating Facility

Article One Special Conditions
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