HomeMy WebLinkAboutOrdinance No. 11-O1ORDINANCE NO. 11-01
AN ORDINANCE OF THE COUNCIL OF THE CITY OF AZUSA
APPROVING THE POWER SALES AGREEMENT BETWEEN THE
CITY AND THE SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY FOR THE LA PAZ SOLAR TOWER PROJECT
WHEREAS, pursuant to the provisions relating to the joint exercise of powers found in
Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, as amended
(the "Joint Powers Act"), the City of Azusa (the "City") and certain other public bodies
(collectively, the "Members") have entered into a Joint Powers Agreement, as amended (the
"Joint Powers Agreement"), which creates the Southern California Public Power Authority
("SCPPA"), a public entity separate and apart from the Members; and
WHEREAS, pursuant to the terns of the Joint Powers Act and the Joint Powers
Agreement, SCPPA has the power, for the purpose of promoting, maintaining and operating
electric generation and transmission on behalf of its Members, to plan, develop, contract for,
finance, acquire, design, undertake, own, construct, operate and administer projects involving
systems, methodologies and programs for the acquisition, supply, procurement and delivery of
secure, long-term reliable supplies of renewable electric energy and to cause such projects to be
planned, developed, contracted for, financed, acquired, designed, constructed, operated,
maintained, and administered and to provide by agreement for the performance and carrying out
of any such activities; and
WHEREAS, the City has need for.a long-term source of renewable energy to satisfy
City's renewable portfolio standard requirements and desires to ensure the reliable delivery of
solar energy to fulfill a portion of these requirements; and
WHEREAS, SCPPA and certain of its Members, to wit, currently the Cities of Anaheim,
Azusa, Burbank, Glendale, Pasadena and Riverside and the Imperial Irrigation District
(collectively, the "Project Participants") have investigated the feasibility of the purchase of solar
electric capacity and energy and the acquisition and development of solar energy and related
facilities in order to provide a long-term supply of renewable energy to meet a portion of the
electrical generation needs of the Project Participants while also helping them meet policy and
regulatory goals for increasing the amount of electricity obtained from renewable energy
resources; and
WHEREAS, SCPPA and the Project Participants have identified a solar energy facility
known as the La Paz Solar Tower Project (the "Project"), that will be owned by EnviroMission
(USA), Inc., a Delaware corporation ("EnviroMission") and an affiliate of EnviroMission
Limited. The Project is to have a nameplate capacity of 200 MW and is to be located in western
La Paz County, Arizona. The Project will include the siting, construction and installation of the
solar tower facility containing, among other things, thirty-two 6.25 MW pressure -staged turbine
generators. SCPPA desires to acquire a major portion of the electric capacity and energy of the
Project from EnviroMission, and each Project Participant desires to obtain electric capacity and
associated energy and environmental attributes of the Project from SCPPA pursuant to a La Paz
Solar Tower Project Power Sales Agreement between SCPPA and such Project Participant (the
"Power Sales Agreement"); and
WHEREAS, SCPPA proposes to enter into a Power Purchase Agreement with
EnviroMission (the "Power Purchase Agreement") to provide, among other things, for the
purchase by SCPPA of approximately 101 MW of capacity and associated energy and
environmental attributes from the Project. The form of the Power Purchase Agreement is
attached as an Appendix to the Power Sales Agreement; and
WHEREAS, the Power Purchase Agreement also provides for SCPPA and
EnviroMission to enter into an Option Agreement providing SCPPA with options to purchase a
percentage ownership interest in the Project equivalent to the percentage of the capacity of the
Project purchased by SCPPA under the Power Purchase Agreement. Exhibits to the Option
Agreement include the forms of a Participation Agreement (the "Participation Agreement") and a
Project Operation and Maintenance Agreement (the "Project O&M Agreement") which are to be
entered into by SCPPA with EnviroMission if SCPPA exercises its purchase option. The
Participation Agreement and the Project O&M Agreement provide for the management and
operation of the Project by SCPPA and EnviroMission as co-owners; and
WHEREAS, in the event that it exercises its option to purchase such ownership interest
in the Project, SCPPA would issue its bonds to finance the cost of acquisition of such ownership
interest; and
WHEREAS, the Power Sales Agreement provides for the purchase by a Project
Participant from SCPPA of a designated amount of Project capacity and the associated energy
and environmental attributes, whether such purchase be from the capacity and associated energy
and environmental attributes of the Project purchased by SCPPA under the Power Purchase
Agreement, or, if SCPPA exercises its option to purchase the ownership interest in the Project,
from the capacity and associated energy and environmental attributes supplied from SCPPA's
ownership interest in the Project. Under the terms of each Power Sales Agreement the
designated amount of a Project Participant's Capacity Amount, Output Entitlement Share or Cost
Share (as defined therein) may be increased or decreased by up to 50% but only subject to the
conditions set forth in the Power Sales Agreement, including the approval by the representative
of such Project Participant on the Project Coordinating Committee established pursuant to the
Power Sales Agreement (the "Project Coordinating Committee") and the approval of the SCPPA
Board of Directors; and
WHEREAS, for its purchase of Project capacity and associated energy and environmental
attributes, a Project Participant is to pay to SCPPA on a take or pay basis its share of SCPPA's
costs with respect to the Project (including debt service on SCPPA bonds if SCPPA should
acquire the ownership interest in the Project), all in accordance with the terms of the Power Sales
Agreement; and
WHEREAS, there has been submitted to this Council the form of the Power Sales
Agreement by and between SCPPA and the City of Azusa for the purchase of 2 MWs of Project
capacity and associated energy (subject to adjustment in accordance with the terms of the Power
Sales Agreement), including as an Appendix thereto, the form of the Power Purchase Agreement
2
with the form of Option Agreement attached as Appendix J to the Power Purchase Agreement
and the forms of the Participation Agreement and Project O&M Agreement attached as Exhibits
to the Option Agreement (the "Azusa Power Sales Agreement"); and
WHEREAS, the Council of the City of Azusa finds and determines that it is in the best
interests of the City and its residents to purchase Project capacity and the associated energy and
environmental attributes from SCPPA pursuant to the Azusa Power Sales Agreement.
NOW THEREFORE, the City Council of the City of Azusa does hereby ordain as
follows:
1. The Council hereby approves the Azusa Power Sales Agreement, including all
Appendices and attachments thereto, between the City and SCPPA with respect to the La Paz
Solar Tower Project, in substantially the form submitted to the Council.
2. The Director of Utilities of Azusa Light & Water is hereby authorized to execute
and deliver the Azusa Power Sales Agreement, with such changes, insertions and omissions as
shall be approved by the Director of Utilities (such approval to be conclusively evidenced by
such execution), and the City Clerk is hereby authorized to attest to such execution.
3. The Director of Utilities of Azusa Light & Water is further authorized to execute
and deliver any and all other documents and instruments and to do and cause to be done any and
all acts and things necessary or advisable for carrying out the responsibilities and transactions
under the Azusa Power Sales Agreement as contemplated by this Ordinance, which shall include,
without limitation, (i) authorization for the Director of Utilities to direct the representative of the
City appointed to the Project Coordinating Committee to approve adjustments of the Project
capacity to be purchased by the City as provided for under the Azusa Power Sales Agreement (or
to approve such adjustment himself or herself, should the Director of Utilities be the City's
appointed representative to the Project Coordinating Committee), and (ii) authorization to
execute and deliver any agreements, documents and instruments necessary to carry out the City's
participation and responsibilities under the Azusa Power Sales Agreement. In addition, the
Director of Utilities is further authorized to procure, on such terms and conditions as the Director
of Utilities deems advantageous to the City, energy, capacity, transmission services and ancillary
services necessary or useful for purposes of firming, shaping, regulating, transmitting and
delivering to the City's electric system the Project energy purchased by the City from SCPPA.
4. Should the Director of Utilities of Azusa Light & Water be absent or otherwise
not available to execute and deliver the agreements, documents or instruments or to carry out the
other responsibilities provided by or authorized in this Ordinance, then he or she may designate,
in writing, a representative act in his or her stead.
5. If any part of this Ordinance is held to be invalid for any reason, such decision
shall not affect the validity of the remaining portion of this Ordinance, and this City Council
hereby declares that it would have passed the remainder of this Ordinance, if such invalid portion
thereof has been deleted.
3
6. Pursuant to Section 54241 of the Government Code of the State of California, this
Ordinance is subject to the provisions for referendum applicable to the City.
7. This City Council shall certify to the enactment of this Ordinance and shall cause
this Ordinance to be published in accordance with Section 54242 of the Government Code of the
State of California.
8. Unless a petition shall be filed requiring that this Ordinance be submitted to
referendum, thirty (30) days from and after its enactment, this Ordinance shall take effect and be
in full force, in the manner provided by law.
PASSED AND ADOPTED this 4 day of January, 2011.
/JosephR. Rocha, Mayor
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I, Vera Mendoza, CMC, City Clerk of the City of Azusa, do hereby certify that the
foregoing Ordinance No. 11-01 was regularly introduced and placed upon its first reading at a
regular meeting of the City Council on the 6 day of December, 2010. That thereafter, said
Ordinance was duly adopted and passed at a regular meeting of the City Council on the 4 day of
January, 2011 by the following vote, to wit:
AYES: COUNCILMEMBERS: GONZALES, CARRILLO, HANKS, MACIAS, ROCHA
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: NONE
Vera Mendoza, CMC, City Clerk
11/20/2010 EXECUTION COPY
LA PAZ SOLAR TOWER PROJECT
POWER SALES AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
I ONFE
CITY OF AZUSA, CALIFORNIA
Dated as of November 1, 2010
90187821.2
TABLE OF CONTENTS
Page
1. PARTIES.............................................................................................
2. RECITALS, CONSTRUCTION AND PRELIMINARY MATTERS
3.
AGREEMENT...................................................................................................................9
4.
DEFINITIONS...................................................................................................................9
4.1
Agreement..............................................................................................................9
4.2
Effective Date........................................................................................................
9
4.3
[Intentionally Omitted]..........................................................................................
9
4.4
Cost of Acquisition................................................................................................
9
4.5
Delivery Point Output Cost Share........................................................................
13
4.6
Indenture Cost Share............................................................................................
13
4.7
Total Monthly Costs............................................................................................
13
4.8
Power Purchase Agreement Total Monthly Costs ...............................................
14
4.9
Ownership Total Monthly Costs..........................................................................
15
4.10
Project Cost Share................................................................................................
18
4.11
Transmission Services Cost Share.......................................................................
18
5.
PURCHASE AND SALE OF OUTPUT AND THE ROLES AND
OBLIGATIONS
OF SCPPA AND THE PROJECT PARTICIPANTS ..........................
18
5.1
Purchase and Sale of Output Entitlement Share ..................................................
18
5.2
Output and Deliverables......................................................................................
19
5.3
Project Manager...................................................................................................
20
5.4
Adoption of Annual Budget.................................................................................
20
5.5
Reports.................................................................................................................
21
5.6
Records and Accounts..........................................................................................
21
5.7
Provide Information.............................................................................................
21
5.8
Consultants and Advisors Available....................................................................
21
5.9
Deposit of Insurance Proceeds.............................................................................
21
5.10
Compliance with Federal Tax Law Requirements ...............................................
22
6.
COORDINATING COMMITTEE ......... ....................................................................
:.... 22
6.1
Establishment and Authorization of the Coordinating Committee ......................
22
6.2
Coordinating Committee Responsibilities...........................................................
24
6.3
Management Decisions and the Role of Board of Directors ...............................
29
6.4
Periodic Audits.....................................................................................................
31
6.5
Additional Committees........................................................................................
32
6.6
Written Record....................................................................................I.................
32
6.7
Change in Representative.................................................................. ...............
32
6.8
Costs of Consultants............................................................................................
32
6.9
Representative's Expenses...................................................................................
32
6.10
Inaction by Committee.........................................................................................
32
6.11
Compliance with Indenture..................................................................................
33
90187821.2
i
7
18
W
TABLE OF CONTENTS
(continued)
Page
6.12 Compliance with the Power Purchase Agreement and Transmission
UNCONDITIONAL PAYMENT OBLIGATIONS; RATE COVENANT;
AUTHORIZATIONS; CONFLICTS; LITIGATION...................................................... 38
8.1 Unconditional Payment Obligation...................................................................... 38
8.2 Source of Payments.............................................................................................. 39
8.3 Rate Covenant...................................................................................................... 39
8.4 Authorizations......................................................................................................39
8.5 Conflicts...............................................................................................................39
8.6 Litigation..............................................................................................................40
OTHER TERMS AND SERVICES................................................................................ 40
9.1 Delivery Procedures............................................................................................. 40
9.2 Other Services and Transmission From Points of Delivery ................................. 40
9.3 Energy Services................................................................................................... 40
9.4 Actions Respecting Facility Purchase.... ... 41
9.5 Balancing Agent and Dynamic Scheduling......................................................... 41
9.6 Transfer of Environmental Attributes to Project Participants .............................. 42
10. FEDERAL TAX LAW REQUIREMENTS.................................................................... 42
10.1 Purchaser to Provide Information Relevant to Compliance with Federal
Tax Law Requirements........................................................................................42
10.2 Compliance with Federal Tax Law Requirements ............................................... 42
10.3 SCPPA to Issue Rules, Procedures and Protocols ............................................... 42
11. PROJECT SPECIFIC MATTERS AND PROJECT PARTICIPANT RIGHTS
AND OBLIGATIONS UNDER PROJECT AGREEMENTS........................................43
11.1 Rights and Obligations under the Project Agreements ........................................ 43
11.2 Acquisition of the Facility by SCPPA................................................................. 43
90187821.2 ii
Arrangements.......................................................................................................
33
6.13
Delegation...........................................................................................................33
CHARGES AND BILLINGS..........................................................................................
33
7.1
Power Purchase Agreement Monthly Costs & Billing Statement .......................
33
7.2
Ownership Monthly Costs R Billing Statement ..................................................
34
7.3
Adoption of Alternative Billing Statement Procedures .......................................
36
7.4
Disputed Monthly Billing Statement...................................................................
36
7.5
Reconciliation of Monthly Costs.........................................................................
36
7.6
Other or Additional Cost Reconciliation Mechanisms ........................................
37
7.7
Interest on Late Payments....................................................................................
37
7.8
Prepayment of Monthly Costs.............................................................................
37
7.9
Costs or Expenses Incurred for Sole Benefit of Purchaser ..................................
38
7.10
Credit, or other Payment Attributable to a Specific Project Participant ..............
38
UNCONDITIONAL PAYMENT OBLIGATIONS; RATE COVENANT;
AUTHORIZATIONS; CONFLICTS; LITIGATION...................................................... 38
8.1 Unconditional Payment Obligation...................................................................... 38
8.2 Source of Payments.............................................................................................. 39
8.3 Rate Covenant...................................................................................................... 39
8.4 Authorizations......................................................................................................39
8.5 Conflicts...............................................................................................................39
8.6 Litigation..............................................................................................................40
OTHER TERMS AND SERVICES................................................................................ 40
9.1 Delivery Procedures............................................................................................. 40
9.2 Other Services and Transmission From Points of Delivery ................................. 40
9.3 Energy Services................................................................................................... 40
9.4 Actions Respecting Facility Purchase.... ... 41
9.5 Balancing Agent and Dynamic Scheduling......................................................... 41
9.6 Transfer of Environmental Attributes to Project Participants .............................. 42
10. FEDERAL TAX LAW REQUIREMENTS.................................................................... 42
10.1 Purchaser to Provide Information Relevant to Compliance with Federal
Tax Law Requirements........................................................................................42
10.2 Compliance with Federal Tax Law Requirements ............................................... 42
10.3 SCPPA to Issue Rules, Procedures and Protocols ............................................... 42
11. PROJECT SPECIFIC MATTERS AND PROJECT PARTICIPANT RIGHTS
AND OBLIGATIONS UNDER PROJECT AGREEMENTS........................................43
11.1 Rights and Obligations under the Project Agreements ........................................ 43
11.2 Acquisition of the Facility by SCPPA................................................................. 43
90187821.2 ii
TABLE OF CONTENTS
(continued)
Page
9018782E iii
11.3
Special Payment Obligations in Advance of the Issuance of Bonds ..................
44
12.
PLEDGE OF PAYMENTS..............................................................................................45
13.
ISSUANCE OF BONDS.................................................................................................
45
13.1
Issuance of Bonds................................................................................................
45
13.2
Additional Bonds.................................................................................................
45
13.3
Refunding"Bonds.................................................................................................
46
13.4
Opinions of Counsel............................................................................................
46
13.5
Redemption or Payment of Bonds.......................................................................
46
13.6
Bond -Related Documents....................................................................................46
14.
EXCESS
BOND PROCEEDS.........................................................................................46
15.
NONPERFORMANCE AND PAYMENT DEFAULT ..................................................
47
15.1
Nonperformance by Purchaser.............................................................................
47
15.2
Notice of Payment Default...................................................................................
47
15.3
Cured Payment Default........................................................................................
48
15.4
Failure to Cure Payment Default.........................................................................
48
15.5
Treatment of the Defaulting Project Participant's Project Rights and
Obligations upon Payment Default of Defaulting Project Participant .................
48
15.6
Elimination or Reduction of Payment Obligations ..............................................
50
15.7
Use of Operating Reserve Account......................................................................
51
15.8
Use and Replenishment of Debt Service Reserve Fund(s)..................................
51
15.9
Step -Up Invoices..................................................................................................
51
15.10
Application of Moneys Received from Step -Up Invoices Relating to the
Project..................................................................................................................
52
15.11
Application of Moneys Received from Default Invoices ....................................
53
15.12
Application of Moneys Received from Compliance Payments ...........................
53
15.13
Application of Moneys Received from Sale of SCPPA Facility Output .............
54
15.14
Limitation on Cure Period...................................................................................
54
16.
CHARACTER, CONTINUITY OF SERVICE...............................................................
54
16.1
Outages, Interruptions and Curtailment of Energy Deliveries .............................
54
16.2
Uncontrollable Forces..........................................................................................
56
17.
SEVERAL
OBLIGATION; LIABILITY ........................................................................56
17.1
Project Participants' Obligations Several............................................................
56
17.2
No Liability of SCPPA, Directors, Officers, Etc.; SCPPA Directors,
Officers, Employees, Project Manager Not Individually Liable .........................
56
17.3
Extent of Exculpation; Enforcement of Rights ....................................................
57
17.4
Determination or Enforcement of Rights.............................................................
57
17.5
No Relief From Insurer's Obligations.................................................................
57
17.6
No General Liability of SCPPA......................................... :.............. ...................
58
9018782E iii
TABLE OF CONTENTS
(continued)
Page
18.
RESTRICTIONS ON DISPOSITION.............................................................................
58
18.1 Limitations Concerning Private Use ......... :..........................................................
58
18.2 Restrictions on Elimination of Payment Obligations ...........................................
58
18.3 Restrictions on Disposition of Purchaser's Entire System ..................................
59
18.4 Successors and Assigns........................................................................................
59
19.
REIMBURSEMENT OF PROJECT DEVELOPMENT COSTS ...................................
59 .
20.
EFFECTIVE DATE, TERM AND EXPIRATION.........................................................
60
20.1 Effective Date; Execution in Counterparts..........................................................
60
20.2 Termination Conditions.......................................................................................
60
20.3 Expiration.............................................................................................................60
20.4 Transfer of SCPPA Interest.................................................................................
60
20.5 Termination of Agreement before Expiration Date .............................................
61
21.
REVISION OF APPENDICES B AND C..................:....................................................
61
21.1 Revision of Appendices B and C.. .......................................................................
61
21.2 Agreement Subject to the Indenture....................................................................
62
21.3 Comply With the Indenture.................................................................................
62
22.
SEVERABILITY.............................................................................................................63
23.
CONDITIONS TO TERMINATION OR AMENDMENT ............................................
63
23.1 _ No Adverse Effect.................................................................................................
63
23.2 Rights Among Project Participants......................................................................
63
23.3 Continuing Compliance with Federal Tax Law Requirements ............................
63
24.
REPRESENTATION AND GOVERNING LAW ..........................................................
63
25.
ARBITRATION AND ATTORNEYS' FEES................................................................
64
26.
PURCHASER'S CONTRACT ADMINISTRATOR......................................................
64
27.
NOTICES.........................................................................................................................64
28.
AMENDMENTS.............................................................................................................
64
APPENDICES
A— DEFINITIONS............................................................................................................... A-1
B — SCHEDULE OF PROJECT PARTICIPANTS CAPACITY AMOUNTS,
OUTPUT ENTITLEMENT SHARES, PROJECT COST SHARES, POINTS
OFDELIVERY............................................................................................................. B-1
90187921.2 iv
TABLE OF CONTENTS
Page
C — SCHEDULE OF PROJECT PARTICIPANTS DELIVERY POINT OUTPUT
COST SHARES, TRANSMISSION SERVICES COST SHARES, POINT OF
INTERCONNECTION ALLOCABLE SHARES, INDENTURE COST
SHARES........................................................................................................................ C-1
D — OPINION OF COUNSEL TO PROJECT PARTICIPANTS ........................................ D-1
E — OPINION OF COUNSEL TO SCPPA...........................................................................E-1
F — POWER PURCHASE AGREEMENT BETWEEN SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY AND ENVIROMISSION
(USA) INC. DATED AS OF NOVEMBER 1, 2010 ............... ....................................... F-1
90187821.1 v
LA PAZ SOLAR TOWER PROJECT
POWER SALES AGREEMENT
1. PARTIES. This La Paz Solar Tower Project Power Sales Agreement (this
"Agreement'), is dated for convenience as of the I" day of November, 2010, by and
between the SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint
powers agency and a public entity organized under the laws of the State of California,
hereinafter designated as "SCPPA." created under the provisions of the Act, and the
CITY OF AZUSA, CALIFORNIA, a municipal corporation organized and existing under
the laws of the State of California. The CITY OF AZUSA is also periodically designated
in this Agreement as "Azusa" or as "Purchaser," or, depending upon context, as "Project
Participant." Azusa and SCPPA are also sometimes herein referred to individually as a
"Party" and together as the "Parties." In addition, Azusa and the other members of
SCPPA participating in the Project may be referred to collectively, in this Agreement, as
"Project Participants."
2. RECITALS, CONSTRUCTION AND PRELIMINARY MATTERS. The' Recitals
set forth herein and the facts, which follow, are incorporated into this Agreement by
reference for all purposes. The facts and the circumstances of the Parties contained in the
Recitals, among others, represent the background and framework for this Agreement, the
aim and purpose of this Agreement and the intendments of the Parties with respect
thereto. This Agreement has been reviewed by attorneys for both Parties and shall not be
interpreted with reference to the rules of construction providing for construction against a
Party responsible for drafting or creating a particular provision or section, but should
instead be interpreted in a manner which broadly carries forth the goals and objectives of
the Parties as expressed herein. References to "Sections," "Annexes," "Appendices;"
"Schedules" and "Exhibits" shall be to Sections; Annexes, Appendices, Schedules and
Exhibits, as the case may be, of this Agreement unless otherwise specifically provided.
Section headings in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose nor given any
substantive effect. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference. The use herein
of the word "include" or "including", when following any general statement, term or
matter, shall not be construed to limit such statement, term or matter to the specific items
or matters set forth immediately following such word or to similar items or matters,
whether or not nonlimiting language (such as "without limitation' or "but not limited to"
or words of similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope of such
general statement, term or matter. This Agreement is made with reference to the
following facts among others:
2.1 SCPPA was created pursuant to provisions contained in the Joint Exercise
of Powers Act found in Chapter 5 of Division 7 of Title 1 of the
Government Code of California, as amended from time to time (the
"Act'); by its members, which are municipalities and an irrigation district
90187821 2
that supply, among other things, electrical energy, in the State of
California, for the purpose of jointly and cooperatively undertaking the
planning, financing, development, acquisition, construction, improvement,
betterment, operation, and maintenance, of projects for the generation or
transmission of electric energy, including the development and
implementation of systems and frameworks for the acquisition and
delivery of secure, long-term reliable supplies of renewable electric
energy.
2.2 Pursuant to the terms of the Act; SCPPA has the power, for the purpose of
promoting, maintaining and operating electric generation and
transmission, to plan, develop, contract for, finance, acquire, design,
undertake, own, construct, manage, operate, maintain and administer
projects involving systems, methodologies and programs for the
acquisition, supply procurement and delivery of secure, long-term reliable
supplies of renewable electric energy and to cause such projects to be
planned, developed, contracted for, financed, acquired, designed,
undertaken, constructed, managed, operated, maintained and administered
and to provide by agreement for the performance and carrying out of any
such activities.
2.3 Purchaser is a chartered California municipality which provides electric
energy to its citizens through its municipally owned electric system.
Purchaser is one of the parties to the SCPPA Joint Powers Agreement and
is one of the eleven founding member municipalities which formed
SCPPA. Since the initial creation of SCPPA pursuant to the Joint Powers
Agreement. Purchaser has acted, in part, through SCPPA's Board of
Directors to carry out generation, transmission and other projects through
SCPPA.
2.4 During the past decade Purchaser and other SCPPA members have
experienced the imposition of a substantial number of new environmental
laws, rules, regulations and policies and revised resource requirements
which have effectively required Purchaser and other SCPPA members to
shift generation assets and increasingly turn to and rely upon renewable
forms of energy generation, including solar energy technologies, systems
and facilities, as a significant part of the generation resource portfolio
necessary and appropriate to their electric systems. This shift to
renewable energy including solar generation has created an ever-
increasing need for the development of secure long-term arrangements for
the acquisition of solar energy resources and the delivery of energy from
solar generation facilities so that the Project Participants will be able to
carry out their objectives to reliably supply their customers with
renewable electric energy. The acquisition for the Project Participants of
the resources and output of the solar energy generation facility reflected
herein, including the procurement of the energy from this facility by way
of the Power Purchase Agreement and the accompanying facility purchase
901878212 2
option and the associated ancillary provisions for acquisition and delivery
of the resources and output of the facility and the benefits of its associated
lines, substations, interconnections, leases, licenses, contract rights,
clearances, permits, entitlements and other assets and infrastructure, has
been carried forth at the request of the Project Participants to assist the
Project Participants in their endeavors to meet their required renewable
electric energy resource goals.
2.5 Over the course of the past several years members of SCPPA have
investigated means and methods by which to acquire renewable energy
generation resources and secure necessary long-term reliable supplies of
renewable electric energy, including energy generated by facilities
employing solar energy based technologies, to carry forth their generation
responsibilities to their citizens.
2.6 To facilitate the appropriate review and due diligence studies necessary to
carry forth an effective program 'for the development of renewable
resources SCPPA created the "Renewable Electric Energy Resource
Project" to be carried forth between SCPPA and those SCPPA members
desiring to participate in this renewable energy oriented project under
SCPPA's Joint Powers Agreement.
2.7 To further the aims of the proposed Renewable Electric Energy Resource
Project, on January 19, 2006 the SCPPA Board of Directors approved
Resolution 2006-2 which declared its intention to reimburse certain
renewable resource expenditures from the proceeds of future financings,
as required by United States Department of Treasury Regulations section
1.150-2.
2.8 Thereafter on March 17, 2006 the SCPPA Board of Directors by way of
Resolution 2006-13 found and declared the proposed Renewable Electric
Energy Resource Project to be an official SCPPA Study Project pursuant
to the SCPPA Joint Powers Agreement and authorized the execution of a
development agreement for the Renewable Electric Energy Resource
Project among SCPPA and the SCPPA members participating in this
Study Project.
2.9 During the ensuing time frame following the creation of the Renewable
Electric Energy Resource Project the Board of Directors approved certain
additional resolutions declaring its intention to reimburse certain
renewable resource expenditures from the proceeds of further future
financings, as required by United States Department of Treasury
Regulations section 1.150-2.
2.10 In pursuit of the goals of the Renewable Electric Energy Resource Project
SCPPA has issued Requests for Proposals for potential renewable electric
resources to address SCPPA member renewable energy needs, and the
901878212 3
Purchaser and other participants in the Renewable Electric Energy
Resource Project have identified potential solar energy generation
resources which are being developed in La Paz County, Arizona. This
solar energy project has been denominated as the La Paz Solar Tower
Project. The La Paz Solar Tower Project is being developed by
EnviroMission (USA) Inc., a Delaware Corporation which in turn is a
wholly owned subsidiary of EnviroMission Limited, a corporation formed
in Australia. The La Paz Solar Tower Project entails a generating facility
to be situated on an approximately 5700 acre site consisting principally of
Arizona state lands
2.11 At the time of the formation of this Agreement, the Power Purchase
Provider as the developer and owner of the La Paz Solar Tower Project
has undertaken to develop, construct and operate, and pursuant to the
Power Purchase Agreement to sell to SCPPA a portion of the output from
the La Paz Solar Tower Project (the developed "Facility," as further
described herein). The Facility, when fully developed, is contemplated to
entail a solar power generating facility with an expected nameplate
capacity of 200MW. The Facility is to be situated in western La Paz
County along Arizona State Route 95 between the towns of Parker and
Quartzite. The Power Purchase Provider's project development
responsibilities will involve, among other things, the siting, construction,
and installation of this solar tower facility. The facility is anticipated to
contain thirty-two (32) 6.25 MW pressure -staged turbines. The turbines
are to be mounted in 2x2 banks of four at the base of the generation
facility. The interconnected grid from the facility is projected to include
either one 230kv or 500kv substation interconnected by a 230kv or 500kv
transmission line that will in turn provide access to the transmission
system of the Western Area Power Administration. This project, to be
developed by EnviroMission (USA) Inc., is contemplated to entail the
solar generation facility, designated portions of the infrastructure
facilities, transmission tie line, substation, SCADA system equipment,
related communication lines, access roads, operations, maintenance and
storage facilities, and other equipment, materials, and improvements
associated with such facilities. The Facility which is slated to provide
energy to the Project Participants includes all structures or improvements
erected on the portion of the state land lease dedicated thereto, all
alterations thereto or replacements thereof, all fixtures, attachments,
appliances, equipment, machinery, and other articles attached thereto or to
the extent used in connection therewith, and all spare parts which may
from time to time be incorporated or installed in or attached thereto, all
related contracts and agreements for services or for real or personal
property or goods related thereto, all real or personal property owned,
easement granted upon or related thereto, and all other real and tangible
and intangible personal property leased or owned by the developer to the
extent associated with the Project and placed upon or used in connection
with the generation of electricity from the Project.
90197821.2 4
2.12 The Project Participants desire to obtain the SCPPA Facility Output and
also to put into place certain acquisition alternatives under which SCPPA
would be provided the ability to exercise an option.to purchase or acquire
the Facility or a portion thereof or to otherwise succeed to the ownership
of the Facility or a portion thereof as well as related resources. It is the
intention of the Project Participants, as well, to provide a means by which
the Project Participants may secure such transmission and delivery
resources as may be necessary to transmit, move or exchange -the energy
from the Facility as directed by the respective Project Participants.
2.13 To carry forth the Project goals, Purchaser and the other participants in the
Renewable Electric Energy Resource Project have carried out extensive
investigations into the advisability of the methodology for the acquisition
of the long-term reliable supply of renewable electric energy from the
Facility provided for through the Power Purchase Agreement for the
purpose of carrying forth the goals of achieving a continuing systematic
source of renewable electric energy.
2.14 The Project Participants have examined numerous alternatives. Based
upon the investigations by Purchaser and the other participants in the
Renewable Electric Energy Resource Project, the Project Participants
have determined that, in the case of the La Paz Solar Tower Project, the
purchase of solar energy under and pursuant to the provisions of the
Power Purchase Agreement, together with the alternatives for acquisition
of the Facility which are provided for in the Power Purchase and Security
Agreements, provides the most desirable commercial structure by which
to best achieve the Project Participants' renewable energy needs and best
satisfy the continuing requirements of the Project Participants' respective
renewable portfolio standards.
2.15 The Project Participants have participated in the negotiation of a power
purchase agreement and related agreements, arrangements and
mechanisms for the procurement of the SCPPA Facility Output of this La
Paz County, Arizona solar generation facility by way of a transaction
through which SCPPA will purchase the SCPPA Facility Output of this
electric generation facility and will pay for SCPPA Facility Output,
Replacement Energy, Excess Energy, Capacity Rights, Environmental
Attributes and any other SCPPA Facility Output in connection with the
delivery of the same, and which also provide certain acquisition
alternatives under which SCPPA would be entitled to exercise an option
to, purchase or acquire the Facility or an ownership interest therein or to
otherwise succeed to the ownership in the Facility, its various
interconnections, its associated transmission arrangements, its resources,
its liabilities, its leases, contracts, permits, services and other related
facility assets, rights and entitlements. In addition the Project Participants
and SCPPA have further carried forth due diligence investigations and
90187821.2 5
plans and measures by which to provide appropriate project financing in
connection with such potential acquisitions.
2.16 Purchaser and the other Project Participants have also examined and
analyzed alternative methodologies and structures. for the potential
acquisition of solar generation to determine the most reliable framework
with the best pricing attributes to provide the best value to. each Project
Participant's respective renewable generation portfolio. Purchaser and the
other Project Participants have concluded that with respect to the La Paz
Solar Tower Project, the methodology posed by way of the Power
Purchase and Security Agreements set forth herein provides the Project
Participants with the most desirable means to achieve secure reliable long-
term supplies of solar generation.
2.17 The Project Participants have concluded that the purchase of solar
generation under the Power Purchase Agreement and the potential option
to purchase solar generation facilities contemplated through the Power
Purchase Agreement and related agreements and the structure, design and
planned methodologies contemplated herein, as part of the Project, will
materially assist the Project Participants in carrying out their critical
operating and business objectives to provide a long-term supply of solar
energy for the generation needs of the Project Participants. SCPPA,
Anaheim, Azusa, Burbank, Colton, Glendale, IID, Pasadena, Riverside
anticipate that the SCPPA Facility Output produced by the Project will be
utilized to serve the Project Participants' renewable energy needs within
their respective service areas and will materially assist each respective
utility in meeting its renewable portfolio standard.
2.18 To carry forth the objectives set forth herein, the Parties acknowledge,
authorize and agree that SCPPA (i) is entering into the Power Purchase
Agreement with EnviroMission (USA) Inc., an affiliate of EnviroMission
Limited, which will provide, in part, for the purchase of SCPPA Facility
Output from the Facility (ii) may enter into amendments of the Power
Purchase Agreement as approved by the Coordinating Committee and the
Board of Directors and (iii) in addition, will enter into other Power
Purchase and Security Agreements which, along with other applicable
provisions of the Power Purchase Agreement, will provide SCPPA with
certain purchase rights as well as a mortgage, liens and security interests
with respect to the Project and certain related facilities and property, all as
shall inure to SCPPA for and on behalf of the Project Participants in
accordance with each Project Participant's Output Entitlement Share and
Output Cost Share, including all of the rights, benefits and entitlements
and all of the duties, obligations, and liabilities under the Power Purchase
and Security Agreements accruing through SCPPA, including the receipt
of SCPPA Facility Output under and pursuant to the terms of the Power
Purchase Agreement and this Agreement and (iv) may enter into such
Project Agreements and such amendments to such Project Agreements as
90187821.2 6
the Coordinating Committee and the Board of Directors may from time to
time approve.
2.19 In order to secure the performance of the Power Purchase Provider in
connection with all of its obligations and requirements under the Power
Purchase and Security Agreements, SCPPA has endeavored to provide for
various legal mechanisms including Security Instruments and other
contractual provisions under which SCPPA is entitled to exercise certain
remedial rights and assurances, cure rights and foreclosure rights in order
to assure the provision of electric energy by the Facility to satisfy the
requirements of the Power Purchase Agreement. It is the intention of the
Parties that the Project Participants, under the Power Sales Agreements,
shall be reposed with the rights, benefits, liabilities, obligations and risks
accruing to SCPPA pursuant to the provisions of these instruments in
accordance with each Project Participant's Output Entitlement Share and
Output Cost Share.
2.20 Purchaser has need for a long-term source of renewable energy to satisfy
Purchaser's renewable portfolio standard requirements and desires to
ensure the reliable delivery of solar powered electric energy generation to
fulfill this requirement. Purchaser desires that SCPPA proceed with
arrangements providing for the economic design, structuring, financing,
Acquisition, development, implementation, operation and administration
of the Project to procure such a long-term supply of secure renewable
solar powered electric generation. To assist in meeting such future
renewable generation needs, Purchaser has determined that it is desirable
to enter into this Agreement to procure such renewable generation.
2.21 The Purchaser and the other Project Participants desire and intend through
the Power Sales Agreements to provide for certain potential acquisition
alternatives for SCPPA's purchase of the Facility or an ownership interest
therein, including certain options under the Power Purchase and Security
Agreements.
2.22 SCPPA will take or cause to be taken all reasonable steps necessary to
cause to be secured, such contracts, instruments, rights and entitlements
and all such governmental entitlements, permits, licenses and approvals as
are necessary for SCPPA to secure the benefits of the Project, and will
then proceed as appropriate with, all measures necessary for the economic
design, structuring, financing, Acquisition, development, implementation,
operation and administration of the Project, including, where applicable
and in accordance with this Agreement, the potential purchase of all or
any portion of the Project. To the extent provided through the Project
Agreements, SCPPA will carry forth those measures as directed by
Purchaser and the other Project Participants, associated with the operation
and maintenance of those interests and facilities designated as part of the
Project to provide a secure source of renewable energy for Purchaser and
901898212
the other Project Participants contracting with SCPPA therefor pursuant to
the terms and conditions of the Project Agreements.
2.23 The Purchaser and the other Project Participants may desire to finance
certain costs required for the Acquisition, financing, and development of
the Project by way of funds raised through the issuance by SCPPA of
Bonds. Except as otherwise provided herein, each Project Participant shall
be solely responsible for its respective associated debt obligations,
including but not limited to the repayment of its share of the Bonds, as
provided in each Project Participant's Power Sales Agreement.
2.24 In accordance with the directions of the Project Participants and the
determination of the Board of Directors SCPPA will finance the costs of
acquiring and developing the Project or an ownership interest therein,
including the acquisition of all or any portion of the Project, . either
pursuant to the Power Purchase Agreement or otherwise, through the
issuance of Bonds. In addition, in the event certain other conditions
should occur under which SCPPA shall determine to, and be provided
opportunity to, purchase the Facility or an ownership interest therein
pursuant to the Power Purchase and Security Agreements or otherwise
acquire ownership in the Facility, it is anticipated that SCPPA will issue
Bonds for the purpose of financing the costs thereof. To pay the costs of
acquiring, financing, and developing the Project, SCPPA will enter into
the Power Sales Agreements with the Project Participants which, among
other things, will provide for the payment of all debt service associated .
with the Bonds. In order to enable SCPPA to issue Bonds it is necessary
for SCPPA to have binding agreements with the Project Participants to
pay all of SCPPA's costs associated with the Project, and all payments
required to be made in accordance with the applicable provisions of the
Power Sales Agreements entered into by the Project Participants,
including payments required to be made under this Agreement, may be
pledged by SCPPA as security for the payment of the applicable Bonds,
and the interest thereon, subject to the application thereof to such purposes
and on such terms as provided in the Indenture and as required by the Act.
SCPPA shall further provide for the administration, operation and
maintenance of the Project if acquired by it through the application of the
payments required to be made by the Project Participants to SCPPA in
accordance with the provisions of the Power Sales Agreements.
2.25 In order to enable SCPPA to carry out the activities necessary to the
planning, economic design, structuring, financing, Acquisition,
development, implementation, operation and administration of the Project
on behalf of the Project Participants, it is necessary for SCPPA to have
binding agreements with both Purchaser and the other Project Participants
in the Project and to employ those payments made under the respective
Power Sales Agreements for the purpose of securing and paying for the
rights, services; entitlements and deliverables contemplated by each of the
90187821.2 8
Project Participants. SCPPA shall provide for the further investigation,
implementation, administration, operation and maintenance of the Project
if acquired by it through the application of the payments required to be
made pursuant to the Power Sales Agreements in accordance with their
provisions.
2.26 To the extent that SCPPA should finance any costs of acquisition of the
Project with Bonds that are subject to any Federal Tax Law Requirements,
it is necessary that both the Purchaser and the other Project Participants be
unconditionally obligated to comply with such Federal Tax Law
Requirements as determined and directed by SCPPA until such time as
any such Bonds have been fully paid or redeemed and discharged.
2.27 Each Project Participant shall pay from its electric revenue fund, including
any and all legally available electric system reserves, all amounts payable
to SCPPA under its Power Sales Agreement, including but not limited to
its Monthly Costs and all other costs, and such payments shall constitute
an operating expense of the Project Participant's electric utility.
3. AGREEMENT. For and in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, and in order to pay SCPPA for its costs of Purchaser's
share of the SCPPA Facility Output and in the event SCPPA acquires the Facility or an
ownership interest therein to pay SCPPA for Purchaser's share of SCPPA's costs of
administration, operation, maintenance and other related costs of the Facility or an
ownership interest therein and debt service on SCPPA's Bonds issued therefor, and the
maintenance of reserves under the Indenture securing such Bonds, the Parties agree as
herein set forth.
4. DEFINITIONS. Appendix A to this Agreement sets forth definitions of certain terms
used in this Agreement. The terms defined in Appendix A and this Section 4, whether in
the singular or plural, unless specifically provided otherwise, when used herein or in the
Appendices hereto and initially capitalized, shall have the meaning ascribed thereto in
said Appendix A or as set out below:
4.1 Agreement. This Agreement, as it may be amended, modified or
supplemented from time to time.
4.2 Effective Date. The date described in Section 20.1 hereof.
4.3 [Intentionally Omitted]
4.4 Cost of Acquisition. The Cost of Acquisition shall equal the sum of the
amounts described in Sections 4.4.1 through 4.4.18. SCPPA shall apply, as
a credit against the Cost of Acquisition, a proportionate share of all
receipts, revenues and other moneys received by it from the sale, if any, of
surplus equipment, materials, supplies or goods all if and to the extent held
in or paid into (without duplication) Funds, and as provided for in the
Indenture.
90187821.2 9
4.4.1 All costs associated with acquisition of the Facility or an
ownership interest therein and its resources pursuant to the Power
Purchase Agreement and for acquiring the Facility and its
associated resources pursuant to any purchase option or
requirement or pursuant to the purchase of rights,. interests or
options through any applicable Facility Credit Agreement or any
other agreement, including, if applicable, any other agreement
relating to any security in the Facility or an ownership interest
therein or any assignment or consent to assignment, including the
purchase of the Facility at any foreclosure sale or taking a deed
in -lieu -of foreclosure, or otherwise purchasing the Facility or an
ownership interest therein pursuant to any provisions in any of the
Power Purchase and Security Agreements, including without
limitation the following costs, as applicable: (i) the cost of
acquiring the Facility or an ownership interest therein pursuant to
the Power Purchase and Security Agreements, (ii) the cost of
purchasing the Facility, as applicable, through any foreclosure
sale or by way of any Security Instrument, (iii) the cost of
planning, designing, acquiring, constructing, mitigating impacts,
installing, and developing the Project or any Capital
Improvements or any portion thereof, (iv) the cost of the exercise
of cure rights or enforcement of rights with respect to any default
by the Power Purchase Provider or any other counterparty under
any agreements, mortgages, leases or other instruments relating to
or affecting the Project, (v) the cost of contracting for and
facilitating the delivery of the output of the Project at the
prescribed Point of Delivery or other prescribed location, (vi) the
cost, where applicable, of placing the Project into operation,
concluding, terminating and decommissioning (as applicable) the
Project, obtaining governmental approvals, certificates, permits,
assurances, entitlements and licenses relating to the Project,
including, where necessary, environmental entitlements,
clearances or credits, heretofore or hereafter paid or incurred by
SCPPA, (vii) all costs, expenses, obligations and liabilities
associated with exercising all performance rights, options,
benefits, entitlements, duties, liabilities and obligations under the
Project Agreements, (viii) to the extent deemed appropriate by the
Coordinating Committee, the cost of procurement of rights
associated with interconnection, transmission, and the
dispatching, scheduling and delivery of energy and for otherwise
facilitating the sale, disposition, movement, taking and
accounting for energy (including planning and design costs) and
(ix)the cost of those measures taken for the benefit of. and in
connection with, the Project that the Coordinating Committee
determines shall be included within this Section 4.4.1.
901578212 10
4.4.2 All costs and expenses for investigation and development of the
Project, for performance studies, for feasibility studies, economic
studies, diurnal, barometric and meteorological studies, for
modeling and planning, for examination of legal, environmental
and regulatory issues and for securing of legal, environmental or
regulatory approvals, for energy cost modeling, project modeling
or projections, economic analyses, diurnal, barometric and.
meteorological forecasts and weather analyses, as well as costs
for leases, lease options, lease related rights, land, land rights,
land options, resources, turbines, facilities, regulatory
developments, geographic, diurnal, barometric and
meteorological investigation and analysis, and, if applicable,
engineering; consultants, experts' fees, contractors' fees,
processing fees, labor, materials, equipment, utility services and
supplies, and legal fees and financing costs relating to and in
connection with the Project.
4.4.3 The costs and expenses incurred in the issuance and sale of
bonds, notes, certificates of participation, commercial paper or
other evidences of indebtedness (tax-exempt or taxable) from
time to time issued, the proceeds of which have been used or will
be required to be applied to one or more purposes for which
Bonds could be issued, including, without limitation, legal,
accounting, engineering, consulting, financing, technical, fiscal
agent and underwriting costs, fees and expenses, bond discount,
insurance, rating agency fees, and all other costs and expenses
incurred in connection with the authorization, sale and issuance of
the Bonds.
4.4.4 Interest accruing in whole or in part on Bonds for such period as
SCPPA may reasonably determine to be necessary in accordance
with the provisions of the Indenture.
4.4.5 To the extent not included in Total Monthly Costs, the cost of any
administrative, regulatory or judicial proceeding or any litigation
associated with the Power Purchase and Security Agreements or
other Project Agreement, or any aspect of the operation,
management or administration of the Project or in connection
therewith.
4.4.6 To the extent not included in Total Monthly Costs, all costs
incurred by SCPPA related to the acquisition of resources,
agreements, facilities and supplies for solar energy acquisition,
procurement, interconnection, transmission, sale, dispatching,
scheduling, movement and delivery and all other incidental costs
necessary for and in connection with the Project.
9018782 2 11
4.4.7 Training and testing costs, which are properly allocable to the
cost of acquisition and development of the Project.
4.4.8 All costs of insurance, if any, applicable to the development of
and in connection with the Project.
4.4.9 All costs relating to injury or damage claims or judgments paid by
SCPPA in connection with the acquisition, development or
implementation of the Project less proceeds of insurance, if any.
4.4.10 To the extent not included in Total Monthly Costs, legally
required or permitted federal, state and local taxes relating to the
Project.
4.4.11 All other costs incurred by SCPPA and properly allocable to the
planning, design, acquisition and development of the Project,
including, without limitation, all legal fees relating to the Project
(including, but not limited to, legal fees incurred by SCPPA in the
development or preparation of Project Agreements or in the
enforcement of any provision or provisions of the Project
Agreements).
4.4.12 The working capital requirements and reserves in such amounts
as shall be required during development of the Project and for
placing the Project in operation as deemed reasonably necessary
by the Board of Directors, and as may be provided or required in
the Indenture, and such additional amounts of working capital and
reserves, as may be established pursuant to the Indenture.
4.4.13 Interest accrued in whole or in part on Bonds prior to and during
development of the Project or during any time period as SCPPA
may reasonably determine necessary for placing the Project or
any component thereof in operation in accordance with the
provisions of the Indenture.
4.4.14 The deposit or deposits from the proceeds of Bonds issued to
finance such costs in any Fund established pursuant to the
Indenture to meet the Project Debt Service reserve requirements
for the Bonds.
4.4.15 Without duplication with respect to amounts otherwise provided
in this Section 4.4, the deposit or deposits from the proceeds of
Bonds issued to finance such costs in any other Funds established
pursuant to the Indenture which deposit or deposits are required
or permitted by the Indenture.
90187821.2 12
4.4.16 The payment of principal, premium, if any, and interest when due
(whether at the maturity of principal or at the due date of interest
or upon redemption) of any note or other evidence of
indebtedness, if any should exist, which is issued in anticipation
of Bonds for the purpose of financing the Cost of Acquisition.
4.4.17 All costs required to be paid to the Project Manager pursuant to
any applicable agreement for project management which are
applied or are to be applied thereunder to the payment of the Cost
of Acquisition.
4.4.18 Without duplication, all other costs (including incidental
financing costs and the costs of issuance of Bonds) financed by
the issuance of Bonds (i) pursuant to Section 13 of this
Agreement, (ii) for procurement of rights associated with the
acquisition, production, generation, transmission, interconnecting,
balancing, shaping, firming and delivery and for otherwise
facilitating the dispatching, scheduling, disposition, movement,
taking and accounting for SCPPA Facility Output (including
planning and design costs) relating to, or for the benefit of, the
Project that the Board of Directors determines shall be included
within this Section 4.4.18, (iii) the acquisition of the Facility or an
ownership interest therein or the rights and interests under any of
the Power Purchase and Security Agreements; and (iv) any
amounts required to be paid pursuant to section 148 of the
Internal Revenue Code.
4.5 Delivery Point Output Cost Share. As to any Project Participant for each
Power Supply Year during the term of the Power Purchase Agreement, the
applicable percentage share, as set forth for such Project Participant in
Appendix C hereof. of the Delivery Output Point cost component with
respect to such Project Participant's Designated Point of Delivery. The
Delivery Point Output Cost Share of such Project Participant may be
adjusted in connection with a revision of Appendix C as provided in
Section 21.1.
4.6 Indenture Cost Share. As to any Project Participant for each Power
Supply Year, the applicable percentage share, as set forth for such Project
Participant in Appendix C hereof, of the Indenture cost component. The
Indenture Cost Share of such Project Participant may be adjusted in
connection with a revision of Appendix C as provided in Section 21.1.
4.7 Total Monthlv Costs. All of SCPPA's costs to the extent not paid from
the proceeds of Bonds, certificates of participation, commercial paper,
notes or other evidences of indebtedness issued in anticipation of Bonds,
resulting from SCPPA's contracting for, providing for, accommodating;
acquiring, and facilitating the Project, and from its administration,
90187821.2 13
ownership, operation and maintenance of and renewal and replacement of
any facility, service or other element or component of the Project,
including costs arising under any of the Power Purchase and Security
Agreements or other Project Agreements. SCPPA shall apply, as a credit
against Total Monthly Costs, any receipts, revenues and other moneys
received by SCPPA from surplus equipment, materials, supplies or assets
relating to the Ptoject sold prior to the date of Commercial Operation for
the benefit of SCPPA (not otherwise applied as a credit against the Cost of
Acquisition as provided in Section 4.4) and any other amounts to be so
applied as provided in the Indenture. Total Monthly Costs shall, as
applicable, consist of (i) the Operating cost component (described in
Section 4.9.1), (ii) the Delivery Point Output cost component (described in
Section 4.8.1), (iii) the Transmission Services cost component (described
in Section 4.9?), (iv) the PPA General and Administrative cost
component (described in Section 4.8.2), (v) the Ownership General and
Administrative cost component (described in Section 4.9.3), (vi) a Reserve
Fund cost component (described in Sections 4.8.3 and 4.9.4, (vii) the
Indenture cost component (described in Section 4.9.5), and (viii) a
Supplementary Services cost component to the extent SCPPA incurs such
cost (described in Sections 4.8.4 and 4.9.6), and Total Monthly Costs shall
include, but not be limited to, the items of cost and expense referred to in
the Power Purchase and Security Agreements, the Ownership Participation
and Related Agreements and this Section 4.7 that are accrued or paid by
SCPPA during each Month of each Power Supply Year. In the event any
Power Supply Year shall consist of fewer than twelve Months, the fraction
set forth in Sections 4.8.2, 4.9.1, 4.9.3 and 4.9.5(6) shall be adjusted
accordingly and, in the event of any revision of the Annual Budget after
the commencement of any Power Supply Year, the amount determined
pursuant to said Sections shall be appropriately adjusted so that any
increase or decrease in the portion of the Annual Budget applicable to said
Sections shall be evenly apportioned over the remaining Months of such
Power Supply Year.
4.8 Power Purchase Agreement Total Monthly Costs. The cost components
of Total Monthly Costs during the term of the Power Purchase Agreement
shall consist of the following:
4.8.1 The Delivery Point Output cost component of the Total
Monthly Costs for each Month with respect to each of the
respective Points of Delivery shall consist of the costs of the
SCPPA Facility Output or Replacement Energy, as calculated
at the applicable Energy Prices therefor, as delivered at such
Point of Delivery during such Month.
4.8.2 The PPA General and Administrative cost component of the
Total Monthly Costs for each Month shall consist of one -
twelfth of the administrative and general costs with respect to
90187821.2 14
the Project, including (i) legal fees, costs relating to litigation
(including disbursements and other amounts paid as a result of
such litigation), insurance costs (including amounts to fund any
self-insurance program), overhead costs, any taxes required to
be paid by SCPPA with respect to SCPPA Facility Output or
the Project, (ii) all expenses incurred in enforcing the Power
Purchase Agreement and other Power Purchase and Security
Agreements, and (iii) all costs related to the conducting of the
business of SCPPA with respect to the Project, including the
applicable portion of salaries, fees for legal, engineering,
financial and other services, all other costs attributable to
miscellaneous and incidental expenses in connection with the
administration of the Project, and all other expenses properly
related to the conduct of such affairs of SCPPA.
4.8.3 The Reserve Fund cost component of the Total Monthly Costs
shall consist of the monthly costs associated with a Project
Participant's Project Cost Share that is necessary to establish
and maintain the Reserve Funds at the level deemed prudent
and appropriate by the Coordinating Committee and the
SCPPA Board of Directors.
4.8.4 The Supplementary Services cost component of the Total
Monthly Costs shall consist of all monthly costs incurred by
SCPPA, if any, in connection with the transmission,
dispatching, scheduling, firming, balancing, or delivery of and
otherwise facilitating the disposition, movement, crediting and
accounting for a Purchasers Output Entitlement Share from its
Designated Point of Delivery to one or more specified delivery
point(s) as determined by such Purchaser pursuant to Sections
9.2 and 9.5.
4.9 Ownership Total Monthly Costs. In the event that SCPPA acquires the
Facility or an ownership interest therein, commencing with such
Acquisition by SCPPA, the cost components of Total Monthly Costs shall
consist of the following:
4.9.1 The Operating cost component of the Total Monthly Costs for each
Month shall consist of one -twelfth of the costs of all Operating
Work, operating expenses, and all costs relating to, contracting for,
providing for, managing, administering, producing, procuring,
transporting and delivering of the SCPPA Facility Output during
such Power Supply Year, including, but not limited to, as applicable,
ordinary operation and maintenance costs or other operation and
maintenance costs payable by SCPPA and, where applicable, costs
of repairs, replacements, reconstitution and reconstruction of the
Project (that are not included in any Cost of Acquisition), any other
90187821.2 15
costs payable by SCPPA in connection with SCPPA Facility Output;
provided that the Operating cost component shall not include the
Transmission Services cost component as set forth in Section 4.9.2.
4.9.2 The Transmission Services cost component of Total Monthly
Costs for each Month and with respect to the Transmission
Services applicable to the delivery of SCPPA Facility Output
from the Point of Interconnection to each respective Point of
Delivery, the costs of such Transmission Services, together
with the associated Transmission Losses, for such Month.
4.9.3 The Ownership General and Administrative cost component of
Total Monthly Costs for each Month shall consist of one -
twelfth of the administrative and general costs (exclusive of
costs included in the Operating cost component set forth in
Section 4.9.1 above) with respect to the Project, including (i)
legal fees, costs relating to litigation (including disbursements
and other amounts paid as a result of such litigation), insurance
costs (including amounts to fund any self-insurance program),
overhead costs, taxes required to be paid by SCPPA with
respect to the Project and any other costs payable by SCPPA in
connection with SCPPA Facility Output, (ii) all expenses
incurred in enforcing the Ownership Participation and Related
Agreements and the expenses of enforcing the applicable
covenants and provisions of the ground leases, leasehold
interests, rights-of-way, estates and other interests and property
associated with the Facility or an ownership interest therein,
including all expenses of foreclosure or otherwise perfecting
any property interest or security interest in the Facility, and (iii)
all costs related to the conducting of the business of SCPPA
with respect to the Project, including the applicable portion of
salaries, fees for legal, engineering, financial and other
services, all other costs attributable to miscellaneous and
incidental expenses in connection with the administration of the
Project and all other expenses properly related to the conduct of
such affairs of SCPPA; provided that the Ownership General
and Administrative cost component shall not include the
Transmission Services cost component as set forth in Section
4.9.2.
4.9.4 The Reserve Fund cost component of Total Monthly Costs
shall consist of the monthly cost associated with a Project
Participant's Project Cost Share that is necessary to establish
and maintain the Reserve Funds at the level deemed prudent
and appropriate by the Coordinating Committee and the
SCPPA Board of Directors, provided, however, that to the
extent such a Reserve Fund cost component of Total Monthly
90187821.2 16
Costs are paid by the Project Participants pursuant to the
Indenture cost component of Total Monthly Costs, the Project
Participants shall be credited for that amount of the monthly
Reserve Fund cost component so paid by Project Participants
which is contained in such monthly Indenture cost component.
4.9.5 The Indenture cost component of Total Monthly Costs, as
applicable, shall consist of:
(a) The amount, without duplication, which SCPPA is
required under the Indenture to pay with respect to Debt
Service or to pay or deposit during such Month into
Funds established by the Indenture for Debt Service and
for any Debt Service reserve requirements for the Bonds
or for operating and other reserve requirements,
including replenishment (the timing of which shall be in
accordance with the provisions of this Agreement and
the Indenture) of any reserves drawn down as a result of
a failure of a Project Participant to pay all or any portion
of its share of Monthly Costs;
(b) One -twelfth of the amount (not otherwise included
under any item in this Section 4.9 hereof) which SCPPA
is required under the Indenture to pay or deposit during
such Power Supply Year into any other Fund
established by the Indenture, including, without
limitation, any amounts required to make up a
deficiency in any Fund required or permitted by the
Indenture;
(c) The amount of fees, expenses or other charges
incurred or payable by SCPPA under the Indenture; and
(d) Any rebate amount owed to the federal government.
4.9.6 The Supplementary Services cost component of the Total Monthly
Costs shall consist of all monthly costs incurred by SCPPA, if any,
and to the extent not included in Section 4.9.1 or Section 4.9.2, in
connection with services for transmission, dispatching, scheduling,
tagging, firming, balancing, swapping, exchanging or delivery and
for otherwise facilitating the disposition, movement, taking,
receiving, crediting and accounting for the SCPPA Facility Output
provided for under this Agreement. The Supplementary Services
cost component of the Total Monthly Costs shall also entail all
monthly costs incurred by SCPPA, if any, which are necessary to
move or otherwise handle Purchaser's Output Entitlement Share
from its Designated Point of Delivery to one or more specified
90187821.2 17
delivery point(s) as determined by Purchaser pursuant to
Sections 9.2 and 9.5.
4.10 Project Cost Share. For any Power Supply Year and as to any particular
Project Participant, the share (expressed as a percentage), as set forth in
Appendix B. of this Agreement, attributable to such Project Participant
with respect to Monthly Costs as provided in Section 7.1 and Section 7.2
hereof, other than financing and refinancing related costs associated with
the Project. The Project Cost Share of such Project Participant may be
adjusted in connection with a revision of Appendix B as provided in
Section 21.1.
4.11 Transmission Services Cost Share. As to any particular Project
Participant, in the event that SCPPA shall acquire the Facility or an
ownership interest therein, for each Power Supply Year commencing upon
such acquisition, the applicable percentage share, as set forth for such
Project Participant in Appendix C hereof, of the Transmission Services
cost component with respect to the delivery of such Project Participant's
Point of Interconnection Allocable Share of SCPPA Facility Output, less
applicable Transmission Losses, from the Point of Interconnection to such
Project Participant's Designated Point of Delivery. The Transmission
Services Cost Share of such Project Participant may be adjusted in
connection with a revision of Appendix C as provided in Section 21.1.
5. PURCHASE AND SALE OF OUTPUT AND THE ROLES AND OBLIGATIONS
OF SCPPA AND THE PROJECT PARTICIPANTS.
5.1 Purchase and Sale of Output Entitlement Share. In accordance with the
terms and conditions of this Agreement, commencing on the earliest of
(i) the date SCPPA is obligated to pay any portion of the costs of the
Project, (ii) the date upon which SCPPA first incurs or accrues costs
associated with the issuance of any Bonds, (iii) the effective date of the
Power Purchase Agreement, or (iv) the date of the first delivery of energy
to Purchaser pursuant to this Agreement, and continuing through the term
of this Agreement, except as otherwise provided herein, SCPPA shall
provide Purchaser its Output Entitlement Share of any and all products,
rights, and benefits, whether tangible or intangible received or obtained by
SCPPA with respect to the Project, including without limitation SCPPA
Facility Output or, if applicable, Replacement Energy, at Purchaser's
Designated Point of Delivery, and Purchaser shall be responsible for and
pay its applicable Cost Share of any and all costs, liabilities and
obligations associated with the acquisition of such products, rights, and
benefits, which shall include without limitation all costs, liabilities and
obligations associated with SCPPA Facility Output or Replacement
Energy, as applicable, under the Power Purchase Agreement and any other
applicable Project Agreement, or associated with the purchase and
operation of the Facility upon any purchase or acquisition of the Facility
90187821.2 18
or an ownership interest therein by SCPPA, including purchase or
acquisition of any rights pursuant to the Power Purchase and Security
Agreements and any other applicable Project Agreement, and all costs,
credits, liabilities and obligations under the Indenture or Bonds issued by
SCPPA to finance the Project or any portion or component thereof, any
Cost of Acquisition, or any Capital Improvements.
5.2 Output and Deliverables. During the term of the Power Purchase
Agreement, SCPPA shall purchase and provide and Purchaser shall
purchase from SCPPA and receive its Output Entitlement Share of the
SCPPA Facility Output or Replacement Energy as delivered at
Purchasers Designated Point of Delivery in accordance with the Power
Purchase Agreement. In the event that SCPPA shall acquire the Facility
or an ownership interest therein, from and after such Acquisition SCPPA
shall allocate at the Point of Interconnection the Purchaser's Point of
Interconnection Allocable Share, as set forth in Appendix C of this
Agreement, of the SCPPA Facility Output as delivered to the Point of
Interconnection and shall deliver or cause the delivery of such allocated
share of SCPPA Facility Output, less applicable Transmission Losses, to
Purchaser at its Designated Point of Delivery, and Purchaser shall
purchase and receive such SCPPA Facility Output delivered to its
Designated Point of Delivery as its Output Entitlement Share of such
SCPPA Facility Output. To the extent permitted by the Power Purchase
and Security Agreements, the applicable Project Agreements, or otherwise
determined by the Coordinating Committee or the Board of Directors,
SCPPA will endeavor to take such actions or implement such measures as
may be necessary or desirable for the utilization, maintenance or
preservation of the rights and interests of the Project Participants in the
Project including, if appropriate, such enforcement actions or other
measures as the Coordinating Committee or the Board of Directors deems
to be in the Project Participants' best interests. To the extent not
inconsistent with the Power Purchase and Security Agreements or other
applicable Project Agreements, SCPPA may also be reposed with
responsibilities for planning, designing, financing, developing, acquiring,
insuring, contracting for, administering, operating and maintaining the
Project to effectuate the delivery and sale of such share of SCPPA Facility
Output or Replacement Energy, as applicable, to Purchaser. To the extent
such services are available and can be carried forth in accordance with the
Power Purchase and Security Agreements or other applicable Project
Agreements, SCPPA shall also provide such other services, as approved
by the Coordinating Committee or the Board of Directors, as may be
deemed necessary to secure the benefits and/or satisfy the obligations
associated with the Power Purchase and Security Agreements or other
applicable Project Agreements. SCPPA shall use its best efforts, on behalf
of Purchaser and the other Project Participants, to secure the benefits of
the transactions contemplated under the Power Purchase and Security
Agreements or other applicable Project Agreements including, if
90187821.2 19
appropriate, SCPPA's acquisition of the Facility or an ownership interest
therein and its associated resources, as well as the delivery of the SCPPA
Facility Output or Replacement Energy, as applicable, contemplated by
this Agreement, and shall endeavor to maintain and secure the rights and
benefits accruing to SCPPA through the Power Purchase and Security
Agreements and the other applicable Project Agreements in accordance
with Purchaser's Output Entitlement Share. SCPPA is authorized to
exercise the powers vested in SCPPA pursuant to the Act, its Joint Powers
Agreement and this Agreement, as agent for Purchaser to fully carry forth
Purchaser's objectives in the Project as set forth herein.
5.3 Project Manaaer. SCPPA or its designee or designees shall act as Project
Manager to develop, operate, maintain and administer the Project, or cause
the Project to be developed, operated, maintained and administered,
through any development, operating, project management or agency
agreement or, as applicable, through the Power Purchase Agreement.
5.4 Adoption of Annual Budget. The Annual Budget and any amendments to
the Annual Budget shall be prepared and approved in accordance with
Sections 5.4.1 or 5.4.2, respectively.
5.4.1 SCPPA will prepare and submit to Purchaser a proposed Annual
Budget at least 60 days prior to the beginning of each Power Supply
Year. In connection with the preparation of the Annual Budget,
SCPPA shall incorporate therein the Operating Budget (including an
energy production costs budget and where appropriate a provision
for the payment of costs of renewals, replacements or other costs of
acquisition and development which are not being financed by
proceeds of Bonds or other sources) for such Power Supply Year as
prepared by the Project Manager and approved by the Coordinating
Committee. Purchaser and the other Project Participants may then
submit to SCPPA, at any time until the Annual Budget is adopted,
any matters or suggestions relating to the Annual Budget. SCPPA
shall adopt the Annual Budget not less than 30 nor more than 60
days prior to the beginning of such Power Supply Year and shall
cause copies of such adopted Annual Budget to be delivered to each
Project Participant; provided, however, the Annual Budget for the
first Power Supply Year shall be prepared, considered, adopted and
delivered in the most practicable manner available prior to
Commercial Operation of the Facility. As required from time to
time during any Power Supply Year after seven days written notice
to each Project Participant, SCPPA may, pursuant to the foregoing
provisions for adopting the Annual Budget, adopt an amended
Annual Budget for and applicable to such Power Supply Year for the
remainder of such Power Supply Year.
5.4.2 Any adjustment, and any other or further mechanism for adjustment,
as may be required to address the variability of costs of operation of
90197821.2 20
the Project at any time during the Power Supply Year or the
variability of or addition to any other Annual Budget component,
may be incorporated into the Annual Budget as provided above, or
any amendment to an Annual Budget at any time during any Power
Supply Year upon the seven days written notice to each Project
Participant as set forth in Section 5.4.1.
5.5 Reports. SCPPA will prepare and issue to Purchaser and the other Project
Participants the following reports each quarter of a Power Supply Year:
5.5.1 Financial and operating statement relating to the Project.
5.5.2 Variance report comparing the costs in the Annual Budget versus
actual costs, and the status of other cost -related issues with respect to
the Project.
5.6 Records and Accounts. SCPPA will keep, or cause to be kept, accurate
records and accounts of each of the properties and facilities comprising the
Project as well as of the operations relating to the Project, all in a manner
similar to accepted accounting methodologies associated with similar
projects. All transactions of SCPPA relating to the Project with respect to
each Fiscal Year shall be subject to an annual audit. Purchaser shall have
the right at its own expense to examine and copy the records and accounts
referred to above on reasonable notice during regular business hours.
5.7 Provide Information. Purchaser agrees to supply SCPPA, upon request,
with such information, documentation and certifications as SCPPA shall
reasonably determine to be requisite to and necessary or desirable for the
design, financing, refinancing, development, operation, administration,
maintenance and ongoing activities of the Project, including information
reasonably available to allow SCPPA to respond to requests for such
information from any federal, state or local regulatory body or other
authority.
5.8 Consultants and Advisors Available. SCPPA shall make available to the
Coordinating Committee at the latter's request, all consultants and
advisors, including, but not limited to, financial advisors, Bond Counsel
and Tax Counsel, that are retained by SCPPA, and such consultants and
advisors shall be authorized to consult with and advise the Coordinating
Committee on Project matters.
5.9 Deposit of Insurance Proceeds. Except as otherwise may be required by
any of the Project Agreements and unless otherwise provided by the
Coordinating Committee, SCPPA promptly shall deposit with the Project
Trustee or Lender any insurance proceeds received by SCPPA as a result
of injury or damage to any insured interest attributable to any component
or all or any portion of the Project. All insurance proceeds collectible by
SCPPA as a result of an insured event affecting the Project shall be
90187821 2 21
applied as directed by SCPPA (which directions shall be in accordance
with any applicable provisions of the Indenture).
5.10 Compliance with Federal Tax Law Requirements. Notwithstanding
anything to the contrary in this Agreement, SCPPA and the Purchaser
shall each take all actions necessary to comply in all respects with the
Federal Tax Law Requirements applicable to any Bonds and shall refrain
from taking any action that would result in or cause non-compliance with
the Federal Tax Law Requirements applicable to any Bonds.
6. COORDINATING COMMITTEE.
6.1 Establishment and Authorization of the Coordinatine Committee. The
Coordinating Committee is hereby established and duly authorized to act
on behalf of the Project Participants as provided in this Section 6 for the
purpose of (i) providing coordination among, and information to, the
Project Participants and SCPPA, (ii) the administration of the Power
Purchase Agreement, (iii) the administration of the Project Agreements,
(iv) the administration of any operating agreement or any maintenance
agreement, (v) otherwise making any recommendations to the Board of
Directors regarding the administration of the Project and any acquisitions
related thereto, (vi) execution of the Coordinating Committee
responsibilities set forth in Section 6.2 hereof, including the various
financial, administrative, and technical matters which may arise from time
to time in connection with the Project or the administration and operation
thereof, and such further developments as may need to be addressed,
(vii) snaking recommendations to the Board of Directors in connection
with the exercise of any option, or other acquisition alternative, to
purchase the Facility or any ownership interest therein under and pursuant
to any of the Power Purchase and Security Agreements, including the
purchase of rights and interests under the Facility Credit Agreements or
under any arrangement or agreement with the Facility Lender or under any
consents or assignments or any agreements relating thereto, and taking
foreclosure action (or deed in -lieu -of foreclosure) under and pursuant to
any of the Security Instruments or purchasing the Facility at foreclosure
sale or otherwise; provided, however that any decision as to exercise of an
option.to purchase the Facility or an ownership interest therein or taking
any such foreclosure action or such purchase at a foreclosure sale shall be
subject to the approval of the Board of Directors, (viii) exercising any cure
rights with respect to any default by the Power Purchase Provider under
any agreements, deeds of trust, leases or other instruments and
(ix) execution of the Coordinating Committee responsibilities set forth in
Section 6.2 hereof, including the various financial, administrative, and
technical matters which may arise from time to time in connection with
the Project or the administration and operation thereof, and such further
developments as may need to be addressed. The Coordinating Committee
shall consist of one representative from each Project Participant. Each
90187821.2 22
Project Participant shall be entitled to cast a vote equal to its Project Cost
Share as set forth in Appendix B hereof. SCPPA shall be entitled to one
non-voting representative. SCPPA and Purchaser shall, within 30 days
after SCPPA has entered into the Power Sales Agreement between SCPPA
and Purchaser, give notice to SCPPA and any other Project Participant, of
its representative on the Coordinating Committee. Alternate
representatives may be appointed by similar written notice to act on the
Coordinating Committee, or on any subcommittee established by the
Coordinating Committee or by the Board of Directors, in the absence of
the regular representative or to act on specified occasions with respect to
specified matters. An alternate representative may attend all meetings of
the Coordinating Committee but may vote only if the representative for
whom she/he serves as alternate is absent. No Project Participant's
representative shall exercise any greater authority than permitted by the
Project Participant or Project Participants, which she/he represents. The
chairperson of the Coordinating Committee ("Chairperson") shall be a
representative of the Project Manager. The Chairperson shall be
responsible for calling and presiding over meetings of the Coordinating
Committee. The Chairperson or SCPPA shall promptly call a meeting of
the Coordinating Committee at the request of any representative in a
manner and to the extent permitted by law. For the purpose of conducting
meetings, a quorum shall exist so long as SCPPA's representative and the
representative of at least a majority of the Project Participants shall be
present. Except as may otherwise be provided in an agreement to which
all of the Project Participants agree, all actions taken by the Coordinating
Committee shall require an affirmative vote of Project Participants having
Project Cost Shares aggregating at least eighty percent (80%) of the total
Project Cost Shares. Notwithstanding the forgoing, however, if a
proposed action before the Coordinating Committee or the Board of
Directors relates solely to the interests of a single Project Participant and
such Project Participant determines, in good faith, that such proposed
action will not adversely affect, economically or otherwise, such Project
Participant, such Project Participant agrees that it shall.not unreasonably
withhold its affirmative vote with respect to such proposed action. Should
the Coordinating Committee address any determination to exercise the
Project Purchase Option all Project Participants shall be given notice of
any such proposed action, and the views of any Project Participant
desiring to so provide its views to the Coordinating Committee, shall be
considered prior to a vote on the proposed action. Unless the Board of
Directors shall otherwise determine to require a majority vote pursuant to
the terms of the Joint Powers Agreement, all actions with respect to the
Project taken by the SCPPA Board of Directors shall require an
affirmative vote of at least eighty percent (80%) of the Project Votes (as
defined in SCPPA's Joint Powers Agreement, dated as of November 1,
1980, as amended from time to time) cast thereon. Purchaser
acknowledges and agrees that SCPPA, through the Coordinating
90187821.2 23
Committee or the Board of Directors, as applicable, may from time to time
enter into applicable Project Agreements or amendments of and
supplements to the applicable Project Agreements (in accordance with
their respective terms) and that, except as provided herein or as otherwise
provided by resolution of the Board of Directors, SCPPA will not be
required to obtain the consent or approval of Purchaser in connection with
any such Project Agreement or supplement or amendment, provided that
any such amendment shall be approved by the Coordinating Committee or
the Board of Directors in the manner provided by this Agreement.
Conducting of Coordinating Committee meetings and actions taken by the
Coordinating Committee may be taken by vote given in an assembled
meeting or by telephone, video conferencing, telegraph, telex, letter, e-
mail or by any combination thereof, to the extent permitted by law.
6.2 Coordinating Committee Responsibilities. The Coordinating Committee
shall have the following responsibilities:
6.2.1 Provide liaison between SCPPA and the Project Participants at the
management or other levels with respect to Acquisition, further
developments, operation and ongoing administration of the Project,
and maintain a liaison between the Project Participants and all
other SCPPA members with respect to the Project, and where the
Coordinating Committee deems it appropriate, maintain a liaison
with the counterparties to any Project Agreements and with any
other entities or utilities engaged in or in connection with other
renewable energy projects.
6.2.2 If any desired Project design, feasibility or planning studies or
activities which are to be completed by SCPPA have not been
completed by the Effective Date of this Agreement, oversee, as
appropriate, the continuation and completion of such Project
design, feasibility or planning studies or activities.
6.2.3 Exercise general supervision over any subcommittee established
pursuant to Section 6.5.
6.2.4 Review, develop, discuss, and, if appropriate, recommend, modify
or approve all budgets and revisions thereof prepared and
submitted by SCPPA or the Project Manager pursuant to any
applicable agreement.
6.2.5 Review, develop, discuss, and, if appropriate, modify, approve or
otherwise act upon any systems or procedures for adjustment of the
Annual Budget or any alternative methodologies for budgeting or
billing as set forth in Section 5 and Section 7 of this Agreement.
9018782t.2 24
6.2.6 Carry out all other actions reposed in the Coordinating Committee
with respect to budgeting and billing as set forth in Section 5 and
Section 7 of this Agreement.
6.2.7 Review, discuss and attempt to resolve any disputes among the
Project Participants or the parties to any Project Agreements
including, without limitation, the Power Purchase Provider, the
counterparties under the Power Purchase and Security Agreements,
the Lease, the Security Instruments, any rights-of-way with respect
to the Project, any agreement providing for any interest in real
estate with respect to the Project, any common facilities
agreements, any transmission provider, any La Paz County
officials or representatives, any community organizations, or any
other counterparty with respect to any Project Agreement relating
to the Project.
6.2.8 Make recommendations to the Project Manager, the Board of
Directors or to the counterparties to any of the Project Agreements,
as appropriate, with respect to the development, operation and
ongoing administration of the Project.
6.2.9 Upon the request of the Project Participants affected thereby,
acting by and through their respective representatives on the
Coordinating Committee and in coordination with SCPPA's Board
of Directors, adopt a resolution approving the revisions of
Appendix B and Appendix C, as applicable, of this Agreement as
provided in Section 21.1.
6.2.10 Review, develop, and if appropriate, modify and approve rules,
procedures and protocols for the administration of the Project or
Project Agreements, including rules, procedures and protocols for
the management of the costs of the Facility or an ownership
interest therein and the scheduling, handling, tagging, dispatching
and crediting of SCPPA Facility Output and the handling and
crediting of Environmental Attributes associated with the Facility.
6.2.11 Review, develop, and if appropriate modify and approve rules,
procedures and protocols for the monitoring, inspection and the
exercise of due diligence activities in connection with the
Acquisitions relating to the Project and the operation of the
Facility.
6.2.12 Review, and, if appropriate, modify, approve or otherwise act
upon, the form or content of any written statistical, administrative,
or operational reports, solar energy related data, electric generation
information, solar energy production data, diumal, barometric and
meteorological information, solar tower and turbine mechanical
901878212 - 25
and technical information, facility reliability data, transmission
information, forecasting scheduling, dispatching, tagging, parking,
firming, shaping, exchanging, balancing, movement, or other
delivery information, climate and weather related matters, cloud
conditions, regulatory matters or requirements, and other
information and other similar records or matters pertaining to the
Project which are furnished to the Coordinating Committee by the
Project Manager, the counterparties to Project Agreements,
experts, consultants or others.
6.2.13 In coordination with the Board of Directors, review, and, if
appropriate, recommend, modify or approve rules, procedures, and
protocols as provided in Section 10.3.
6.2.14 Review, and, if appropriate, modify, approve or otherwise act
upon, practices and procedures as formulated by the Project
Manager or, if applicable, the counterparty to any Project
Agreement, to be followed by the Project Participants for, among
other things, the production, scheduling, tagging, transmission,
delivery, firming, balancing, exchanging, crediting, tracking,
monitoring, remarketing, sale or disposition of SCPPA Facility
Output.
6.2.15 Review, modify and approve, if necessary, the schedule of planned
activities formulated by the Project Manager or the counterparty
with respect to the performance of any Project Agreement,
including the policies for selection and utilization of contractors
and consultants included in the budgets with respect to the Project.
In formulating and approving such schedules, consideration may
be given, if possible, to each Project Participant's electric system
conditions, which may prevail during such planned activities
6.2.16 Review, and, if appropriate, recommend, modify, approve or
otherwise act with respect to the exercise of SCPPA's rights under
Section 11.6 or 11.8 of the Power Purchase Agreement or review,
recommend, approve or otherwise act with respect to the
procurement of resources in connection with any New Facility or
any Additional Facility under Section 11.6 or 11.8, respectively, of
the Power Purchase Agreement.
6.2.17 In connection with the Lease, review, exercise, or otherwise act
upon any cure rights under Section 11.5 or Section 13.7 of the
Power Purchase Agreement or take such other action under the
Power Purchase Agreement or the Power Purchase and Security
Agreements, or otherwise, in connection with the Lease as may be
deemed to be in SCPPA's interest or otherwise appropriate.
90187521.2 26
6.2.18 Review, modify, approve or otherwise act upon any proposed
change to the milestone schedule or to any Milestone under the
Power Purchase Agreement as the Coordinating Committee shall
deem to be desirable, appropriate or otherwise in SCPPA's
interest. The Coordinating Committee may impose such other
terms, conditions or qualifications upon any such action as the
Coordinating Committee shall deem appropriate.
6.2.19 Review, approve or otherwise act upon any proposed extension of
any date set forth in Appendix I of the Power Purchase Agreement
or of any Milestone Date under the Power Purchase Agreement
which, in the discretion of the Coordinating Committee, may be
appropriate, desirable or otherwise in SCPPA's interest. The
Coordinating Committee may impose other conditions or
qualifications upon the grant of any such extension as the
Coordinating Committee shall deem appropriate.
6.2.20 Review and act upon any present, potential or possible future
anticipated failure to deliver Guaranteed SCPPA Energy under the
Power Purchase Agreement in such manner as the Coordinating
Committee shall deem appropriate.
6.2.21 Act upon such recommended changes, as the Coordinating
Committee shall deem appropriate as set forth in Section 15.5 of
the Power Sales Agreements. Such changes as may occur in such
manner with respect to Appendix B and Appendix C herein shall
be considered an element of the administration of this Agreement
and shall be deemed an amendment of this Agreement and shall
not require the consent of the Parties hereto.
6.2.22 Review, and if appropriate, approve, recommend, modify or
otherwise act upon any matters or issues associated with Operating
Work and any other matters or issues which may arise in the
operation, maintenance or administration of the Project.
6.2.23 Review, and if appropriate, recommend, modify or approve
practices and procedures formulated by the Project Manager or by
any counterparty to any Project Agreements giving due recognition
to the needs of all Project Participants.
6.2.24 Review and act upon any matters involving any Security and
Assignment Agreement, including but not limited to the Milestone
Security, the Performance Security, the Mortgage and any
guarantee or letter of credit delivered to or for the benefit of
SCPPA by the Power Purchase Provider or any other counterparty
to any Project Agreement in connection with the Project, and take
90187821.2 27
such actions or make such recommendations as may be appropriate
or desirable in connection therewith.
6.2.25 Review, and, if appropriate, recommend, modify or approve
practices and procedures formulated by the Project Manager or any
counterparty with respect to any Project Agreement, and when
requested by a Project Participant review,. and, if appropriate,
recommend, modify or approve those matters associated with any
of the Points of Delivery or any other point or points designated for
delivery of energy, delivery arrangements, transmission contracts,
or other Project Agreements.
6.2.26 Review, and, if appropriate, recommend, modify or approve
policies or programs formulated by the Project Manager, any
counterparty under any Project Agreement or any other Person for
the exchange of energy from the Facility.
6.2.27 Review, and, if appropriate, recommend, modify, or approve
policies or programs formulated by the Project Manager or any
counterparty, under any Project Agreement for determining or
estimating the solar energy resources or the values, quantities,
volumes or costs of renewable energy from the Facility.
6.2.28 Review, modify or approve recommendations of the Project
Manager or counterparties made pursuant to the provisions of any
Project Agreement.
6.2.29 Review, modify and approve all Cost of Acquisition and costs of
Operating Work and submit to the Board of Directors any budget
revisions or other provisions for the payment or financing thereof.
6.2.30 Review, modify and approve SCPPA's insurance program with
respect to the Project (as applicable) including, without limitation,
the establishment of any self-insurance program and the maximum
amount or amounts of any uninsured claim that the Project
Manager may settle without prior approval of the Coordinating
Committee.
6.2.31 Review, modify and where appropriate, recommend or approve the
implementation of metering technologies and methodologies
appropriate for the delivery, accounting for, transferring and
crediting of SCPPA Facility Output to the respective Points of
Delivery or from any of the Points of Delivery to other points or
destinations, as applicable.
6.2.32 Review, modify and where appropriate, recommend or approve the
implementation of practices and procedures to carry forth the
90187821.2 28
provisions of Section 9 herein, as may be applicable with respect to
any of the Project Participants.
6.2.33 Identify, or develop criteria to identify, contracts or agreements
relating to work or Operating Work that shall be deemed to be
Major Contracts under any applicable project management or
operating agreement.
6.2.34 Review, and to the extent permitted by this Agreement or any other
relevant agreement relating to the Project, modify and approve or
disapprove the specifications; vendors' proposals, bid evaluations,
form of final agreement, or any other matters with respect to Major
Contracts.
6.2.35 Review, modify or approve recommendations, including
recommendations of the Project Manager with respect to actions,
disposition or use, if any, relating to Acquisition activities.
6.2.36 Perform such other functions and duties as may be provided for
under this Agreement, the Power Purchase Agreement, the Power
Purchase and Security Agreements, the Ancillary Documents, the
Interconnection Contracts, the Lease, the Security Instruments, any
real estate instruments relating to the Facility or any other
applicable Project Agreement, or as may otherwise be appropriate
or beneficial to the Project.
6.3 Management Decisions and the Role of Board of Directors. The rights
and obligations of SCPPA under the Project Agreements shall be subject
to the ultimate control at all times of the Board of Directors. Purchaser
and the other Project Participants shall be entitled to participate in the
decisions of the Board of Directors with respect to SCPPA's rights and
interests in the Facility and the Project as provided in Section 6.1 herein.
SCPPA through the Board of Directors shall have, in addition to the duties
and responsibilities set forth elsewhere in this Agreement, the following
duties and responsibilities, among others:
6.3.1 Future Developments. The Board of Directors shall provide
liaison among the Project Participants at the management level
with respect to the direction of the Project and future developments
arising out of the Power Purchase and Security Agreements,
including any purchase or acquisition of the Facility or any portion
thereof and shall carry out those measures necessary to address
such developments, including any purchase or acquisition of the
Facility or any portion thereof.
6.3.2 Dispute Resolution. The Board of Directors shall endeavor to
review, discuss and attempt to resolve any disputes among SCPPA,
90187821.2 29
the Project Participants and the counterparties under the Project
Agreements relating to the Project, the operation and management
of the Facility and SCPPA rights and interests in the Facility.
6.3.3 Scheduling procedures. When recommended by the Coordinating
Committee, or when otherwise appropriate, the Board of Directors
shall act upon and approve or modify the practices and procedures
to be followed by the Project Participants for the scheduling,
delivering, controlling and allocating SCPPA Facility Output
associated with the Project.
6.3.4 Proiect Agreements. The Board of Directors shall have the
authority to approve the Project Agreements and to review modify
and approve, as appropriate, all amendments, modifications and
supplements to the Project Agreements.
6.3.5 Capital Improvements. The Board of Directors shall review,
modify and approve if appropriate all Capital Improvements and
Acquisitions undertaken with respect to the Project and all
financing arrangements for such Capital Improvements or
Acquisitions. The Board of Directors shall approve those budgets
or other provisions for the payments associated with the Project
and the financing for any development or Acquisitions associated
with the Project.
6.3.6 Committees, The Board of Directors shall exercise such review,
direction or oversight as may be appropriate with respect to the
Coordinating Committee and any other committees established
pursuant to the Project Agreements.
6.3.7 Bond issuance. The Board of Directors shall have authority to
approve any and all of the following: (1) each issuance of SCPPA
indebtedness relating to the Project; (2) each supplement or
amendment to the Indenture relating to the Project, (3) the Bonds
issued to finance the purchase or acquisition of the Facility or any
portion thereof, any New Facility or Additional Facility or any
portion thereof, any Acquisition, any Capital Improvements, or any
costs related to the exercise or enforcement by SCPPA of its rights
with respect to any agreements, Mortgages, deeds of trust, leases or
other Power Purchase and Security Agreements relating to or
affecting the Project, or the purchase of rights and interests under
the Facility Credit Agreements, or other Acquisitions to carry out
the objectives of the Project, (4) the selection of underwriters for
each series of Bonds, (5) the manner and timing of marketing
(including of the manner of sale), amount, interest rates and other
terms and conditions of each series of SCPPA indebtedness
90187821.2 30
associated with the Project, and (6) any other action necessary or
appropriate to carry forth Section 13 of this Agreement.
6.3.8 Budgeting. The Board of Directors shall review, modify and
approve each Annual Budget and the revisions thereto in
accordance with Section 5.4 of this Agreement.
6.3.9 Federal Tax Law Requirements. With respect to any Bonds, the
Board of Directors, in consultation with Bond Counsel or Tax
Counsel, shall develop and promulgate rules, procedures, and
protocols, including the development and maintenance of relevant
information and reporting procedures, and shall provide direction
to the Purchaser and the other Project Participants with respect.to
the Federal Tax Law Requirements.
6.3.10 Revision of Appendices B and C. In coordination with the
Coordinating Committee adopt a resolution approving the
revisions of Appendix B and Appendix C, as applicable, of this
Agreement as provided in Section 21.1.
6.3.11 Other Matters. The Board of Directors is authorized to perform
such other functions and duties, including oversight of those
matters and responsibilities addressed by the Coordinating
Committee, as may be provided for under this Power Sales
Agreement and under the other Project Agreements, or as may
otherwise be appropriate.
6.4 Periodic Audits. The Board of Directors or the Coordinating Committee
may arrange for the annual audit under Section 5.6 of this Agreement by
certified accountants, selected by SCPPA and experienced in electric
generation or electric utility accounting, of the books and accounting
records of SCPPA, and where deemed appropriate the Project Manager (if
other than SCPPA), the Power Purchase Provider (to the extent provided
under any of the Power Purchase and Security Agreements) and any other
counterparty under any Project Agreement to the extent allowable, and
any cost reimbursable consultant or cost reimbursable contractor relevant
to the Acquisition, development, administration or operation of the
Project, and such audit shall be completed and submitted to SCPPA as
soon as reasonably practicable after the close of the Fiscal Year. SCPPA
shall promptly furnish to Purchaser and the other Project Participants
copies of all audits. No more frequently than once every calendar year, a
Project Participant may, at its sole cost and expense, audit or cause to be
audited the books and cost records of SCPPA, the Project Manager (if
other than SCPPA), the counterparty under any Project Agreement to the
extent so provided in the applicable Project Agreement, and any cost
reimbursable consultant or cost reimbursable contractor relevant to the
Acquisition, development, administration or operation of the Project.
90187821.2 31
6.5 Additional Committees. The Coordinating Committee, or the Board of
Directors, as appropriate, may establish as needed subcommittees
including, but not limited to, auditing, legal, financial, engineering,
mechanical, weather, geologic, diurnal, barometric, meteorologic,
operating, insurance, community relations, governmental relations,
environmental and public information subcommittees. The authority,
membership, and duties of any subcommittee shall be established by the
Coordinating Committee or Board of Directors; provided, however, such
authority, membership or duties shall not conflict with the provisions of
any of the Project Agreements. Each such subcommittee shall be initially
responsible to the Coordinating Committee.
6.6 Written Record. All actions, resolutions, determinations and reports made
by the Coordinating Committee as required by this Agreement shall be set
forth in a written record or its minutes.
6.7 Change in Representative. Each Project Participant shall promptly give
written notice to the other Project Participants and SCPPA of any changes
in the designation of its representative on the Coordinating Committee or
any subcommittee, and SCPPA shall promptly give written notice to the
other Project Participants of any changes in the designation of its
representative on the Coordinating Committee or any subcommittee.
6.8 Costs of Consultants. Costs (or the applicable portion thereof) of
consultants and others employed or appointed by the Coordinating
Committee to perform the duties required hereunder, to the extent the
Coordinating Committee is authorized to so employ or appoint, shall be
included in the Cost of Acquisition or Total Monthly Costs, as
appropriate, and shall be billed to SCPPA or the Project Manager (if other
than SCPPA).
6.9 Representative's Expenses. Any expenses incurred by any representative
of any Project Participant or group of. Project Participants serving on the
Coordinating Committee or any other committee in connection with
his/her duties on such committee shall be paid by the Project Participant or
Project Participants which he/she represents and shall not be an expense
payable under this Agreement.
6.10 Inaction by Committee. It is recognized by SCPPA and the Project
Participants that if the Coordinating Committee is unable or fails to agree
with respect to any matter or dispute which it is authorized to determine,
resolve, approve, disapprove or otherwise act upon after a reasonable
opportunity to do so, or within the time limits specified herein or in any
otherwise applicable Project Agreement, then the Project Manager may
take such action as in its discretion is necessary for its timely performance
under any applicable Project Agreement pending the resolution of any
such inability or failure to agree, but nothing herein shall be construed to
90187821.2 32
allow the Project Manager to act in violation of the express terms of any
applicable project management agreement or this Agreement.
6.11 Compliance with Indenture. It is recognized by SCPPA and the Project
Participants that the planning, financing, development, acquisition,
operation and maintenance of, and insurance programs relating to, the
Project must comply in all respects with requirements of the Indenture and
all licenses, permits and regulatory provisions necessary for such
planning, financing, development, acquisition, operation and maintenance
and it is therefore agreed that, notwithstanding Section 6.10 or any other
provision of this Agreement, no action by the Coordinating Committee or
the Project Manager (if a designee other than SCPPA) shall require
SCPPA to act in any manner inconsistent with any such requirements or to
refrain from acting as required by the Power Sales Agreements and if the
Coordinating Committee or the Project Manager (if a designee other than
SCPPA) shall fail to make recommendations or act with respect to any
matter in connection with an action that is required to be taken pursuant to
any of the foregoing, SCPPA shall take such action as is appropriate to
assure compliance with the foregoing
6.12 Compliance with the Power Purchase Agreement and Transmission
Arrangements. It is further recognized by SCPPA and the Project
Participants that the planning, development, acquisition, operation and
maintenance of the Project must comply with requirements of the Power
Purchase Agreement, those transmission arrangements entered into to
facilitate the delivery of SCPPA Facility Output and the licenses, permits
and regulatory provisions applicable to such planning, development,
acquisition, operation and maintenance and it is therefore agreed that,
notwithstanding Section 6.10 or any other provision of this Agreement, no
action by the Coordinating Committee, or the Project Manager (if a
designee other than SCPPA) shall require SCPPA to act in any manner
inconsistent with any such requirements or to refrain from acting in a
manner required by such requirements.
6.13 Delegation. To secure the effective cooperation and interchange of
information in a timely manner in connection with various administrative,
technical and other matters which may arise from time to time in
connection with Operating Work, in appropriate cases the authority, duties
and responsibilities of the Board of Directors or the Coordinating
Committee, as the case may be under this Section 6, may be delegated to
the Executive Director.
7. CHARGES AND BILLINGS.
7.1 Power Purchase Agreement Monthly Costs and Billing Statement. During
the term of the Power Purchase Agreement the amount of Monthly Costs
which shall be paid by Purchaser pursuant to a Billing Statement for a
90187921.2 33
particular Month shall be the sum of the following, as applicable, subject
to Sections 7.9 and 7.10 hereof and any applicable adjustments as
provided in Section 16 hereof:
7.1.1 Purchaser's Delivery Point Output Cost Share multiplied by the
Delivery Point Output cost component of Total Monthly Costs (as
provided in Section 4.8.1) with respect to Purchaser's Designated -
Point of Delivery for such Month.
7.1.2 Purchaser's Project Cost Share multiplied by the PPA General and
Administrative cost component of Total Monthly Costs (as
provided in Section 4.8.2 hereof) for such Month.
7.1.3 Purchaser's Project Cost Share multiplied by the Reserve Fund
cost component of Total Monthly Costs (as provided in Section
4.8.3 hereof) for such Month.
7.1.4 Purchaser's share of the Supplementary Services cost component
of Total Monthly Costs (as provided in Section 4.8.4 hereof) for
such Month based on Purchaser's allocated share of any such
services procured by SCPPA on behalf of the Purchaser.
7.1.5 By the fifth calendar day of each Month during each Power Supply
Year, SCPPA shall bill Purchaser for the amount of Monthly Costs
to be paid by Purchaser for the current Month by providing
Purchaser with a Billing Statement in accordance with the charges
established pursuant to the provisions of this Agreement. Such
Billing Statement shall detail the costs described in this Section 7.1
and shall sat forth, among other things, the amounts due for such
Month by Purchaser with respect to the items of Monthly Costs set
forth in this Section 7.1, as such Monthly Costs may be adjusted
from time to time in accordance with Section 5 and this Section 7.
Such Billing Statement shall be paid by Purchaser on or before 20
days after receipt of such Billing Statement.
7.2 Ownership Monthly Costs and Billing Statement. In the event that
SCPPA shall acquire the Facility or an ownership interest therein, the
amount of Monthly Costs which shall be paid by Purchaser pursuant to a
Billing Statement for a particular Month, commencing upon such
Acquisition, shall be the sum of the following, as applicable, subject to
Sections 7.9 and 7.10 hereof and any applicable adjustments as provided
in Section 16 hereof:
7.2.1 Purchaser's Project Cost Share multiplied by the Operating cost
component of Total Monthly Costs (as provided in Section 4.9.1
hereof) for such Month.
901878212 34
7.2.2 Purchaser's Transmission Services Cost Share multiplied by the
Transmission cost component of Total Monthly Costs (as provided
in Section 4.9.2) for such Month with respect to Transmission
Services applicable to the delivery of SCPPA Facility Output from
the Point of Interconnection to Purchaser's Designated Point of
Delivery.
7.2.3 Purchaser's Project Cost Share multiplied by the Ownership
General and Administrative cost component of Total Monthly
Costs (as provided in Section 4.9.3 hereof) for such Month.
7.2.4 Purchaser's Project Cost Share multiplied by the Reserve Fund
cost component of Total Monthly Costs (as provided in Section
4.9.4 hereof) for such Month.
7.2.5 Purchaser's Indenture Cost Share as set forth in the Indenture Cost
Shares column of Appendix C hereof multiplied by the Indenture
cost component of Total Monthly Costs (as provided in Section
4.9.5 hereof) for such Month as the Indenture cost component has
been reduced by interest earned on investments of amounts held
under the Indenture if' and to the extent not credited against the
Cost of Acquisition or has been off -set or reduced by other
amounts made available therefor as provided in the Indenture.
7.2.6 Purchaser's share of the Supplementary Services cost component
of Total Monthly Costs (as provided in Section 4.9.6 hereof) for
such Month based on Purchaser's allocated share of any such
services procured by SCPPA on behalf of Purchaser.
7.2.7 By the fifth calendar day of each Month during each Power Supply
Year, SCPPA shall bill Purchaser for the amount of Monthly Costs
to be paid by Purchaser for the current Month by providing
Purchaser with a Billing Statement in accordance with the charges
established pursuant to the provisions of this Agreement; provided,
however, that such Billing Statement, with respect to Debt Service
and other obligations payable from the Debt Service Fund under
the Indenture, shall instead include the amount, if any, to be paid
by Purchaser with respect to the applicable Bonds and the other
obligations payable from the Debt Service Fund that is due and
payable in the immediately succeeding Month or as otherwise
provided under the Indenture, and provided further, that such
Billing Statement, with respect to the cost of SCPPA Facility
Output provided by SCPPA to Purchaser under this Agreement,
shall also include with respect to the performance by SCPPA or the
counterparty under and pursuant to applicable Project Agreements,
a charge or credit to Purchaser with respect to the costs or revenues
attributable to Purchaser pursuant to and under any applicable
90197821.2 35
Project Agreement. Such Billing Statement shall detail the costs
described in this Section 7.2 hereof and shall set forth, among
other things, the amounts due for such Month by Purchaser with
respect to the items of Monthly Costs set forth in this Section 7.2,
as such Monthly Costs may be adjusted from time to time in
accordance with Section 5 and this Section 7. Such Billing
Statement shall be paid by -Purchaser on or before 20 days after
receipt of such Billing Statement.
7.3 Adoption of Alternative Billing Statement Procedures. The Coordinating
Committee may recommend the adoption of an alternative Billing
Statement billing methodology in connection with each Project
Participant's Billing Statement with respect to the Total Monthly Costs
and the costs associated with any Project Agreement. Such alternative
Billing Statement procedures may be placed into effect with the approval
of the same by resolution of the Board of Directors. Any such alternative
Billing Statement billing methodology shall satisfy all requirements of the
Indenture and shall be fiscally prudent, financially sound and shall assure
coverage of all potential and actual costs and obligations of SCPPA.
7.4 Disputed Monthly Billing Statement. In case any portion of any Billing
Statement received by Purchaser from SCPPA shall be in bona fide
dispute, Purchaser shall pay SCPPA the full amount of such Billing
Statement and, upon determination of the correct amount, the difference
between such correct amount and such full amount, if any, including
interest at the rate received by SCPPA on any overpayment, will be
credited to Purchaser by SCPPA after such determination; provided,
however, that such interest shall not accrue on any overpayment that is
acknowledged by SCPPA and returned to Purchaser by the fifth calendar
day following the receipt by SCPPA of the disputed overpayment. In the
event such Billing Statement is in dispute, SCPPA will give consideration
to such dispute and will advise Purchaser with regard to SCPPA's position
relative thereto within 30 days following receipt of written notification by
Purchaser of such dispute.
7.5 Reconciliation of Monthly Costs. As soon as practicable after the end of
each Power Supply Year, SCPPA will submit to Purchaser and the other
Project Participants a detailed statement of the actual aggregate Monthly
Costs and other amounts payable hereunder, including any credits thereto,
for all of the Months of such Power Supply Year, and the adjustments of
the aggregate Monthly Costs and other amounts payable hereunder, if any,
for any prior Power Supply Year, based on the annual audit of accounts
provided for in Section 6.4. If, on the basis of the statement submitted as
provided in this Section 7.5, the actual aggregate Monthly Costs and other
amounts payable by the Project Participants for any Power Supply Year
exceed the amount thereof which Purchaser and the other Project
Participants have been billed, Purchaser and the other Project Participants
901 87821.2 36
shall pay SCPPA, within 20 days of receipt of SCPPA's invoice, the
amount to which SCPPA is entitled. If, on the basis of the statement
submitted pursuant to this Section 7.5, the actual aggregate Monthly Costs
or other amounts payable by the Project Participants for any Power Supply
Year are less than the amount therefor which Purchaser and the other
Project Participants have been billed, SCPPA shall, unless otherwise
directed by Purchaser or the other Project Participants with respect to
moneys owed to each, credit such excess against Purchaser's and the other
Project Participants' next monthly Billing Statement. In the event that the
failure of Purchaser to make its payments in accordance with this
Agreement shall have resulted in the application of amounts in any reserve
or other Fund under the Indenture or this Agreement to the payment of
costs payable from such reserve or Fund and the other Project Participants
shall have made up the deficiency created by such application or paid
additional amounts as a result of a draw on such reserve or Fund, amounts
thereafter paid to SCPPA by Purchaser for application to such past due
payments including interest shall be credited on the Billing Statements of
such other Project Participants in the next Month or Months as provided in
the applicable provisions of Section 15.
7.6 Other or Additional Cost Reconciliation Mechanisms. The Board of
Directors may, by resolution, authorize or prescribe other billing,
payment, costing and cost reconciliation mechanisms to address such
billing, payment, costing and cost reconciliation issues as may from time
to time arise with respect to the Project.
7.7 Interest on Late Payments. If Purchaser fails to pay any Billing Statement
when due, interest shall accrue, to the extent permitted by law, at a rate
equal to the lesser of (i) one percent per Month (12% per annum) on the
unpaid amount of the bill or (ii) the monthly equivalent of the "prime" rate
of interest as noticed in the Federal Reserve's HR 15 weekly bulletin (or
the subsequent equivalent thereof) as of the date of nonpayment on the
unpaid amount of the bill, until such Billing Statement is paid.
7.8 Prepayment of Monthly Costs. Purchaser may, at any time, pay moneys to
SCPPA or utilize any credits due or amounts owed by SCPPA to
Purchaser with respect to the Project for the purpose of prepaying its
monthly Billing Statement. Such moneys and amounts owed by SCPPA
under any Project Agreement shall be deposited into an account
established by, or at the direction of, SCPPA. Consistent with SCPPA's
investment policy, moneys in such account shall be invested pursuant to
instructions provided to SCPPA by Purchaser and all investment income
shall be credited to such account. Payment of the amount of any monthly
Billing Statement or Default Invoice shall be made from moneys available
in such account to the extent set forth in written directions from Purchaser
to SCPPA received at least five business days prior to the due date of such
payment. Any credit or prepayment with respect to its monthly Billing
90187821.2 37
Statement shall not relieve or reduce Purchaser's other obligations under
this Agreement.
7.9 Costs or Expenses Incurred for Sole Benefit of Purchaser.
Notwithstanding anything to the contrary in this Agreement, if a particular
cost or expense is incurred by SCPPA for the sole benefit of Purchaser,
unless otherwise determined by the Coordinating Committee, then such
cost or expense shall be allocated only to Purchaser, in which event only
Purchaser (and no other Project Participant) shall be responsible for the
payment thereof under this Agreement. Any such cost or expense incurred
by SCPPA for the sole benefit of Purchaser shall be deemed to be paid last
from amounts paid by Purchaser for the payment of its Billing Statements.
7.10 Credit, or other Pavment Attributable to a Specific Project Participant.
Should any Project Participant make or provide, through any type of
payment mechanism, for a separate payment or prepayment for SCPPA
Facility Output or other Project purpose which results in a credit or
reduction in SCPPA's obligation being credited to the purchase of SCPPA
Facility Output, or a reduced cost of power or otherwise credited under the
Power Purchase Agreement or other Project Agreement, then, to the extent
that such credit is credited to an obligation of SCPPA under the Power
Purchase Agreement or such other Project Agreement, such credit shall be
passed through or credited to the applicable Project Participant under such
Project Participant's Power Sales Agreement. Such a credit may at the
request of the applicable Project Participant be credited on the Project
Participants subsequent Billing Statements or handled pursuant to a
Billing Statement methodology which bills for and places an amount
which is the equivalent of the credit into the Project Participants project
stabilization account or such a credit may be otherwise handled in such
manner as the applicable Project Participant may reasonably request. The
provisions of this Section 7.10 shall be in addition to the terms and
provisions of Section 16 and shall not be applicable to any circumstances,
conditions or matters that are within the scope of Section 16.
S. UNCONDITIONAL PAYMENT OBLIGATIONS; RATE COVENANT;
AUTHORIZATIONS; CONFLICTS; LITIGATION.
8.1 Unconditional Payment Obligation. Beginning with the earliest of (i) the
date SCPPA incurs or becomes obligated to pay any portion of the costs of
the Project , (ii) the date upon which SCPPA first incurs or accrues costs
associated with the issuance of the Bonds, (iii) the effective date of the
Power Purchase Agreement or (iv) the date of the first delivery of SCPPA
Facility Output to Purchaser and continuing through the term of this
Agreement, Purchaser shall pay SCPPA the amounts of Monthly Costs set
forth in the Billing Statements submitted by or on behalf of SCPPA to
Purchaser in accordance with the provisions of Section 7 hereof and,
without duplication, any amount set forth in any Step -Up Invoices or
90 18 7821.2 38
Default Invoices received by Purchaser as a result of the operation of
Section 15 hereof, whether or not the Project or any part thereof has been
completed, is functioning, producing, operating or operable or its output is
suspended, interrupted, interfered with, reduced or curtailed or terminated
in whole or in part, and such payments shall not be subject to reduction
whether by offset or otherwise and shall not be conditional upon the
performance or nonperformance by any party of any agreement for any
cause whatsoever.
8.2 Source of Pavments. The Purchaser hereby represents and warrants that
the obligations of Purchaser to make the payments to SCPPA under this
Agreement shall constitute a cost of purchased power and an operating
expense of Purchaser payable solely from its electric revenue fund,
including.any and all legally available electric system reserves. Purchaser
will annually in each and every fiscal year of Purchaser during the term of
this Agreement include in its power system budget, whether or not any
other items are included, an appropriation from the revenues of its electric
system (including moneys derived from sales to third parties) sufficient to
satisfy all the payments required to be made in such year under this
Agreement until all payments required under this Agreement have been
paid in full.
8.3 Rate Covenant. Purchaser will establish, maintain and collect rates and
charges for the electric service of its electric system each year so as to .
provide revenues sufficient, together with any legally available electric
system reserves, to enable Purchaser to pay to SCPPA all amounts payable
when due under this Agreement and to pay all other amounts payable
from, and all lawful charges against or liens on, the revenues of its electric
system.
8.4 Authorizations. The Purchaser hereby represents and warrants that no
order, approval, consent or authorization of any governmental or public
agency, authority or person, is required on the part of the Purchaser for the
execution and delivery by the Purchaser of this Agreement, or the
performance by the Purchaser of its obligations under this Agreement
except for such as have been obtained.
8.5 Conflicts. Purchaser represents and warrants to SCPPA-as of the Effective
Date and as of the date of the opinion of counsel referenced in
Section 13.4, that, to Purchaser's knowledge, the execution and delivery of
this Agreement by Purchaser, and Purchaser's performance thereunder
will not constitute a default under any agreement or instrument to which it
is a party, or any order, judgment, decree or ruling of any court that is
binding on Purchaser, or a violation of any applicable law of any
governmental authority, which default or violation would have a material
adverse effect on the financial condition of Purchaser's electric revenue
fund.
90187821.2 39
8.6 Litigation. Purchaser represents and warrants to SCPPA as of the
Effective Date and as of the date of the opinion of counsel referenced in
Section 13.4 that, to Purchaser's knowledge, except as disclosed, there are
no actions, suits or proceedings pending against Purchaser (service of
process on Purchaser having been made) in any court that questions the
validity of the authorization, execution or delivery by Purchaser of this
Agreement, or the enforceability on Purchaser of this Agreement.
9. OTHER TERMS AND SERVICES.
9.1 Delivery Procedures. Prior to the time at which any Energy will be
delivered to Purchaser from the Facility, Purchaser will schedule and shall
be obligated to take delivery of its Output Entitlement Share of the Energy
to be delivered. The SCPPA Facility Output generated and produced from
the Project shall be scheduled and delivered to Project Participants at their
respective Designated Points of Delivery under any development,
operating, project management or agency agreement and/or practices and
procedures approved by the Coordinating Committee pursuant to
Section 6.2, as applicable.
9.2 Other Services and Transmission From Points of Delivery. It is the
obligation of Purchaser to receive its share of SCPPA Facility Output and
to arrange for delivery of such SCPPA Facility Output to its ultimate
destination or destinations after having reached its Designated Point of
Delivery, as determined by Purchaser. However, to the extent specified by
the Purchaser, and to the extent practicable for SCPPA to do so, SCPPA
shall assist in arranging for Supplementary Services and for such
additional transmission, interconnection arrangements, energy
management, firming, shaping, swaps, exchanges or other services
associated with the transmission, use or disposition of SCPPA Facility
Output to be utilized by the Purchaser and to provide for delivery,
accounting for, transferring and crediting the ownership and transfer of
SCPPA Facility Output from such Purchaser's Designated Point of
Delivery to any other points or destinations, as determined by the
Purchaser.
9.3 Energy Services. Except as otherwise provided in this Agreement and
subject to Section 18.1, nothing herein shall prevent or restrict Purchaser
from providing for its own transmission, energy management services,
firming, balancing, or exchanging services or otherwise using or
dispatching its Energy under this Agreement; provided, however, that such
services, use or activities shall not affect any of the obligations of
Purchaser under this Agreement or, if applicable, result in or cause non-
compliance with the Federal Tax Law Requirements, and shall at all times
conform to the applicable requirements of Section 10 of this Agreement.
90187821.2 40
9.4 Actions Respecting Facilitv Purchase. SCPPA shall endeavor to take
those actions and carry forth those measures necessary to maintain and
preserve SCPPA's rights with respect to any purchase potential or
purchase or acquisition options contained in the Power Purchase and
Security Agreements and, if so determined pursuant to the terms of this
Agreement, to facilitate any such purchase or acquisition of the Facility or
an ownership interest therein pursuant to the terms of the Power Purchase
and Security Agreements or under or pursuant to any consents,
assignments or any agreements relating thereto, including any purchase of
rights or interests under or pursuant to the Facility Credit Agreements.
SCPPA's services in connection with any such purchase obligation or
purchase option may include but is not limited to determining the
advisability of such purchase, preparing such agreements, documents or
instruments as may be necessary to facilitate such purchase, and carrying
forth any diurnal, barometric or meteorological reporting, prepare any
facility efficiency reports, economic, modeling or appraisal studies as may
be desirable to facilitate any proposed transaction and to obtain any
necessary or appropriate information in connection with any such potential
purchase or acquisition of the Facility or an ownership interest therein.
9.5 Balancing Agent and Dynamic Scheduling. Upon the request of
Purchaser, SCPPA shall either (i) retain an agent to maintain and balance
Purchaser's hourly Energy schedules in accordance with WECC protocols
(`Balancing Agent"), including the provision or absorption of imbalance
energy to accommodate intra -hour fluctuations of SCPPA Facility Output
as compared to Purchaser's Energy schedule and maintaining a balancing
account of accumulated imbalance energy to be settled by adjusting future
Purchaser Energy schedules, (ii) arrange for Dynamic Scheduling from
Purchaser's Designated Point of Delivery to Purchaser's control area or
electric system, including the procurement and installation of scheduling
hardware, software, and communications equipment necessary to
effectuate Dynamic Scheduling (if such a scheduling methodology is
deemed appropriate, applicable and/ or otherwise feasible), (iii) procure,
contract for or otherwise arrange for any available energy balancing
finning, shaping or integration services to address any of the above
referenced imbalances, fluctuations, variability, intermittency, or like
conditions or (iv) address the costs, charges or consequences of such
imbalances, fluctuations, variability, intermittency, or like conditions
though other mechanisms or methodologies which are mutually agreeable
to the Purchaser and SCPPA. Any such arrangements (other than
arrangements with another Project Participant or other SCPPA members)
entered into by SCPPA at the request of Purchaser shall be with third
parties and negotiated in arms' length transactions, to the extent
applicable.
90187821.2 41
9.6 Transfer of Environmental Attributes to Project Participants. SCPPA shall
transfer all Environmental Attributes received by SCPPA either under the
Power Purchase Agreement or with respect to SCPPA Facility Output
following its purchase or acquisition of the Facility to Purchaser and the
other Project Participants in accordance with their respective Output
Entitlement Shares in the same manner by which SCPPA receives
Environmental Attributes.
10. FEDERAL TAX LAW REQUIREMENTS.
10.1 Purchaser to Provide Information Relevant to Compliance with Federal
Tax Law Requirements. At such times and through such means as
prescribed by the rules, procedures and protocols promulgated by SCPPA
to address compliance with the applicable Federal Tax Law Requirements
with respect to any Bonds, or pursuant to any request by SCPPA,
Purchaser shall provide SCPPA with a tax certificate relating to such
Bonds, and such additional information and representations as necessary
to establish Purchaser's compliance with the Federal Tax Law
Requirements, including, to the extent applicable, information and
representations concerning the disposition or use of electric energy
provided under this Agreement or the disposition or use of any assets
acquired with the proceeds of such Bonds.
10.2 Compliance with Federal Tax Law Requirements. With respect to any
Bonds, Purchaser agrees that it will promptly act in accordance with
written instructions which SCPPA may reasonably require from time to
time in connection with the Federal Tax Law Requirements, and in
addition Purchaser will not at any time take any action, or fail to take any
action, if such action or failure to take action would result in or cause non-
compliance with Federal Tax Law Requirements. The Purchaser agrees to
execute new or revised tax certificates or provide such information or
other assurance respecting past and future compliance with the Federal
Tax Law Requirements applicable to any Bonds as may be reasonably
requested by SCPPA. In connection therewith, Purchaser shall cooperate
with and provide to SCPPA such other information, representations and
certifications as necessary for Bond Counsel or Tax Counsel to render an
opinion or advise to the effect that any applicable Federal Tax Law
Requirements are met.
10.3 SCPPA to Issue Rules, Procedures and Protocols. SCPPA shall develop
and promulgate such rules, procedures and protocols, together with
amendments thereto, as necessary, in consultation with Bond Counsel or
Tax Counsel, to ensure compliance with any applicable Federal Tax Law
Requirements, including to establish expectations regarding future
compliance under applicable laws and regulations existing from time to
time with respect to any Bonds, and shall include, without limitation, the
90187821.2 42
appropriate reporting, documentation and certifications to establish and
maintain compliance with the provisions of this Section 10.
11. PROJECT SPECIFIC MATTERS AND PROJECT PARTICIPANT RIGHTS AND
OBLIGATIONS UNDER PROJECT AGREEMENTS.
11.1 Rights and Obligations under the Project Agreements. Notwithstanding
anything to the contrary contained herein: (i) the obligation of SCPPA to
deliver Purchaser's Output Entitlement Share of SCPPA Facility Output
hereunder during the Delivery Tenn of the Power Purchase Agreement is
limited to the SCPPA Facility Output which SCPPA receives from the
Facility (or the Power Purchase Provider, as applicable) at Purchaser's
Designated Point of Delivery for redelivery to Purchaser hereunder during
such time; (ii) the obligation of SCPPA (or the Power Purchaser Provider)
to deliver Purchasers Output Entitlement Share of Replacement Energy
hereunder during the Delivery Tenn of the Power Purchase Agreement is
limited to the Replacement Energy which SCPPA receives at Purchaser's
Designated Point of Delivery under the Power Purchase Agreement,
(iii) the obligation of SCPPA to pay any amount to Purchaser hereunder or
to give credits against amounts due from Purchaser hereunder is limited to
amounts SCPPA receives in connection with the transaction to which the
payment or credit relates (or is otherwise available to SCPPA in
connection with this Agreement for which such payment or credit relates);
(iv) any purchase costs, operating costs, energy costs, capacity costs,
environmental attribute costs, transmission costs, tax costs, insurance
costs, indemnifications, other costs or other charges for which SCPPA is
responsible under the Project Agreements shall be considered purchase
costs, operating costs, energy costs, capacity costs, environmental attribute
costs, transmission costs, tax costs, insurance costs, indemnifications,
other costs or other charges incurred by SCPPA and payable by Purchaser
and the other Project Participants as provided in this Agreement; and
(v) any Force Majeure under the Power Purchase Agreement or other
event of force majeure affecting the delivery of energy pursuant to
applicable provisions of the Project Agreements shall be considered an
event caused by Uncontrollable Forces affecting SCPPA with respect to
the delivery of energy and/or environmental attributes hereunder and
SCPPA forwarding to Purchaser notices and information from the Power
Purchase Provider concerning an event of Force Majeure upon receipt
thereof shall be sufficient to constitute a notice that Uncontrollable Forces
have occurred pursuant to Section 16.3 of this Agreement.
11.2 Acquisition of the Facility by SCPPA. The Parties mutually acknowledge
and agree that SCPPA may, under certain circumstances, acquire
ownership of the Facility or an ownership interest therein, and succeed to
the rights and obligations associated with such ownership with respect to
the Facility pursuant to the provisions of the Power Purchase and Security
Agreements, including the purchase of rights and interests under the
90187821.2 43
Facility Credit Agreements or pursuant to any security interest in the
Project held by any third party, or through foreclosure action (or a deed in -
lieu -of foreclosure) or under and pursuant to any of the Security
Instruments, or purchase at foreclosure sale, including, but not limited to,
the rights and obligations under operating agreements and the ownership
interests with respect to the leasehold estates, rights-of-way and other real
property interests upon which the Facility is situated, at such time and
under such terms as provided in the Power Purchase and Security
Agreements or on such other terms as may be agreed upon between
SCPPA and the Power Purchase Provider, or otherwise. The Parties also
anticipate that any such Acquisition of the Facility, or an ownership
interest therein may be carried out with SCPPA financing. If, pursuant to
the recommendation of the Coordinating Committee and approval of the
Board of Directors, SCPPA should enter into any arrangement to purchase
or acquire the Facility, or any ownership interest therein, pursuant to the
Power Purchase and Security Agreements or, subject to the
recommendation of the Coordinating Committee and approval of the
Board of Directors, SCPPA exercises any option to purchase or acquire
the Facility or any ownership interest therein as provided in the Power
Purchase and Security Agreements or to purchase rights and interests
under the Facility Credit Agreements, or otherwise acquires the Facility or
an ownership interest therein, pursuant to any of the Security Instruments
or any of the foregoing, SCPPA may finance the associated Cost of
Acquisition through the issuance of Bonds.
11.3 Special Payment Obligations in Advance of the Issuance of Bonds. In the
event the Board of Directors anticipates that SCPPA will be obligated to
make a substantial payment under a Project Agreement which may be
reimbursed from the proceeds of Bonds (a "Special Obligation") and it is
anticipated that there will not be time to issue Bonds, or that it is otherwise
impracticable to issue Bonds, to cover such Special Obligation, and the
amounts available through other cost payment mechanisms under this
Agreement are not sufficient to timely pay such Special Obligation at the
time it may come due, the Board of Directors may take action by
resolution in advance of the time anticipated for payment of such Special
Obligation to impose upon Purchaser the obligation to make such
payment. Purchaser shall pay its share of such costs within seven (7) days
of receiving an invoice therefor (a "Special Obligation Billing Statement')
from SCPPA which Special Obligation Billing Statement shall describe
the Special Obligation. In case any portion of any Special Obligation
Billing Statement received by Purchaser from SCPPA shall be in bona fide
dispute, Purchaser shall pay SCPPA the full amount of such Special
Obligation Billing Statement and, upon determination of. the correct
amount, the difference between such correct amount and such full amount,
if any, including interest at the rate received by SCPPA on any
overpayment, will be credited to Purchaser by SCPPA after such
determination; provided, however, that such interest shall not accrue on
90187821.2 44-
any overpayment that is acknowledged by SCPPA and returned to
Purchaser by the fifth (5th) Business Day following the receipt by SCPPA
of the disputed overpayment. In the event such Special Obligation Billing
Statement is in dispute, SCPPA will give consideration to such dispute and
will advise Purchaser with regard to SCPPA's position relative thereto
within thirty (30) days following receipt of written notification from
Purchaser- of such dispute. Should Purchaser satisfy such a Special
Obligation through its own resources, at the request of Purchaser SCPPA
will endeavor to reimburse such payments from the proceeds of future
financings to the extent, if applicable, permitted by the Federal Tax Law
Requirements.
12. PLEDGE OF PAYMENTS. All or any portion of the payments required to be made by
Purchaser in accordance with or pursuant to any provision of this Agreement may be
pledged by SCPPA to secure the payment of the Bonds, and interest thereon, subject to
the application thereof to such purposes and on such terms as provided in the Indenture,
and as required by the Act. SCPPA may assign, among other rights and security, to the
Project Trustee or Lender its rights to receive from Purchaser all or any portion of the
payments to be made by Purchaser pursuant to this Agreement. SCPPA may direct
Purchaser to make all or any portion of such payments directly to the Project Trustee or
Lender for application by the Project Trustee or Lender under the Indenture.
Notwithstanding the foregoing or any other provision of this Agreement, SCPPA shall
not acquire the Facility unless there shall be compliance with the applicable provisions of
Section 10 and with the provisions of the Indenture applicable to the acquisition of the
Facility.
13. ISSUANCE OF BONDS.
13.1 Issuance of Bonds. Bonds will be issued by SCPPA in accordance with
this Agreement, the provisions of the Indenture and the Act for the
purpose of financing the Cost of Acquisition, which may entail, among
other things, the acquisition resulting from the exercise of the purchase
option in the Power Purchase Agreement, and, if applicable, the purchase
or acquisition of the Facility or an ownership interest therein and all or any
portion of associated assets, rights and interests under or pursuant to the
Power Purchase and Security Agreements, and any other Acquisitions and
any Capital Improvements.
13.2 Additional Bonds. Additional Bonds may be issued by SCPPA in
accordance with this Agreement, the provisions of the Indenture and the
Act at any time and from time to time in the event funds are required for
further development or completion of the Project or for the purpose of
financing any further Cost of Acquisition or other Acquisitions or Capital
Improvements, including without limitation the cost of acquiring the
Facility or an ownership interest therein or the rights and interests
otherwise described in Section 11.2, and upon the recommendation of the
90187821.2 45
Coordinating Committee and approval of the Board of Directors, SCPPA
shall use its best efforts to issue such additional Bonds.
13.3 Refunding Bonds. In the event that Monthly Costs may be reduced by the
refunding of any of the Bonds or in the event it shall otherwise, for one or
more of the Project Participants, be advantageous, in the opinion of
SCPPA, to refund any Bonds, SCPPA may issue and sell refunding Bonds
in accordance with the Indenture and the Act.
13.4 Opinions of Counsel. In connection with the issuance of Bonds,
additional Bonds or refunding Bonds for the purposes described in this
Section 13, Purchaser shall provide an opinion of an attorney or firm of
attorneys, or the equivalent thereof, in substantially the form as attached
hereto as Appendix D as may be reasonably necessary to facilitate the
issuance of such Bonds.
13.5 Redemption or Payment of Bonds. SCPPA may issue such bonds, notes,
certificates of participation, commercial paper, other evidences of
indebtedness or other instruments, in accordance with the Indenture and
the Act, as it may deem appropriate to facilitate the redemption or
payment of Bonds.
13.6 Bond -Related Documents. Purchaser agrees to supply SCPPA, upon
written request, with such additional information and documentation as
SCPPA shall reasonably determine to be necessary or desirable to
facilitate the issuance of Bonds,. additional Bonds or refunding Bonds for
the purposes described in this Section 13 and to comply with Federal Tax
Law Requirements and continuing disclosure requirements including, but
not limited to, requirements under the United States Securities and
Exchange Commission Rule 15c2-12.
14. EXCESS BOND PROCEEDS. In the event the proceeds derived from the sale of any
Bonds exceed the aggregate amount required for the purposes for which such Bonds were
issued, the amount of such excess shall be used, after prior consultation with Bond
Counsel or Tax Counsel, to make up any deficiency existing in any Funds under the
Indenture in the manner therein provided, and any balance shall (i) be used to retire, by
purchase or redemption, Bonds in advance of maturity, (ii) be deposited in any applicable
account established in accordance with Section 7.8 hereof, (iii) reduce the payments by
the applicable Project Participants required pursuant to Section 7 hereof, and in such
event SCPPA will reduce the monthly Billing Statements of such Project Participants as
are necessary and appropriate, or (iv) be used for other lawful Project expenses or
purposes.
90187821.2 46
15. NONPERFORMANCE AND PAYMENT DEFAULT.
15.1 Nonperformance by Purchaser. If Purchaser shall fail to perform any
covenant, agreement or obligation under this Agreement or shall cause
SCPPA to be in default with respect to any undertaking entered into for
the Project or to be in default under the Power Purchase Agreement, or
any other Project Agreement, as applicable, or cause a default to occur
pursuant to such agreements, SCPPA may, in the event the performance of
any such obligation remains unsatisfied after 30 days' prior written notice
thereof to the Purchaser and a demand to so perform; take any action
permitted by law to enforce its rights under this Agreement, including but
not limited to termination of this Agreement, and/or (unless SCPPA has
already taken action pursuant to the immediately following sentence)
bring any suit, action or proceeding at law or in equity as may be
necessary or appropriate to recover damages and/or enforce any covenant,
agreement or obligation against the Purchaser with regard to its failure to
so perform. In addition to any other rights SCPPA may have under this
Agreement as a result of nonpayment by the Purchaser, if the Purchaser
fails to pay its share of Debt Service in accordance with this Agreement
and the result is that SCPPA defaults on the payment of principal of or
interest on any Bond or other obligations payable from the Debt Service
Fund under the Indenture, SCPPA may, immediately and without delay,
take any action permitted by law to enforce its rights under this Agreement
and/or bring any suit, action or proceeding at law or in equity as may be
necessary or appropriate to recover damages and/or enforce any covenant,
agreement or obligation against the Purchaser with regard to its failure to
so perform.
15.2 Notice of Payment Default. On or promptly following the Initial Payment
Default Date by Purchaser, SCPPA shall issue a Default Invoice and shall
provide written notice to Purchaser that as a result of a Payment Default it
is in default under this Agreement and has assumed the status of a
Defaulting Project Participant and that Purchasers Project Rights are
subject to discontinuance, termination and disposal in accordance with
Sections 15.4 and 15.5 of this Agreement. Notice of such Payment
Default shall be provided promptly by SCPPA to the other Project
Participants and to the Project Trustee or Lender. In addition to the
foregoing, the Notice of Payment Default shall specify that five days after
the issuance of the written notice of Payment Default by SCPPA,
deliveries of SCPPA Facility Output to the Purchaser pursuant to this
Agreement shall be thereafter suspended until such time as Purchaser is in
Compliance. SCPPA may take any action through or in conjunction with
the Power Purchase Provider or any other counterparty under a Project
Agreement or with the Project Manager, if applicable, to expeditiously
carry forth the provisions of this Section 15.
901578212 47
15.3 Cured Payment Default. Except for a Payment Default which causes
SCPPA to default on the payment of principal of or interest on Bonds or
other obligations payable from the Debt Service Fund under the Indenture,
which shall be subject to and addressed as provided in Section 15.4 and
the other applicable sections of this Agreement, and except as provided in
Section 15.14, if after a Payment Default, Purchaser cures such Payment
Default within 30 days (the Cure Period) its Project Rights shall not be
subject to discontinuance, termination or disposal as provided for in
Sections 15.4 and 15.5 of this Agreement as a result of any Payment
Default associated with such Cured Payment Default.
15.4 Failure to Cure Payment Default. If at any time 30 days after an uncured
Payment Default by Purchaser, Purchaser fails to be in Compliance, or if
at any time SCPPA defaults on the payment of principal of or interest on
any Bond, or other obligations payable from the Debt Service Fund under
the Indenture, due to the failure of the Defaulting Project Participant to
pay its share of Debt Service in a timely manner in accordance with this
Agreement, Purchaser's Project Rights shall immediately be discontinued
and terminated and its Project Rights and Obligations shall be disposed of
by SCPPA in accordance with Section 15.5 of the Defaulting Project
Participant's Power Sales Agreement; provided, however, the Defaulting
Project Participant's obligation to make payments under its Power Sales
Agreement shall not be eliminated or reduced except to the extent
provided in Section 15.6. SCPPA shall provide to the Defaulting Project
Participant a separate monthly invoice of any such payment obligations
under its Power Sales Agreement. SCPPA shall immediately notify the
Project Manager (if other than SCPPA), the other Project Participants and
the Project Trustee or Lender, and such others as SCPPA deems
appropriate, of such discontinuance and termination of a Defaulting
Project Participant's Project Rights.
15.5 Treatment of the Defaulting Proiect Particinant's Proiect Rights and
Obligations upon Payment Default of Defaulting Project Participant. In
the event Defaulting Project Participant's Project Rights are discontinued
and terminated pursuant to Section 15.4 of its Power Sales Agreement,
SCPPA shall undertake or cause to be undertaken the following actions in
the order indicated:
15.5.1 SCPPA shall offer to convey, transfer and assign to all non -
Defaulting Project Participants, on a temporary or permanent
basis as determined by SCPPA, the Project Rights and
Obligations of Defaulting Project Participant, and SCPPA shall
so convey, transfer and assign on such basis so determined by
SCPPA to (i) all requesting non -Defaulting Project Participants
the amount of Project Rights and Obligations requested if the
aggregate of such requests does not exceed the amount of the
Project Rights and Obligations of the Defaulting Project
901878212 48
Participant, or (ii) all requesting non -Defaulting Project
Participants on a pro -rata basis (based upon the amount
requested) if the aggregate of such requests exceeds the amount
of the Project Rights and Obligations of the Defaulting Project
Participant; provided, however, that SCPPA shall not offer or
permit the conveyance, transfer or assignment of Defaulting
Project Participant's Project Rights and Obligations in such a
manner or in such an amount as, in the opinion of Bond Counsel
or Tax Counsel, would violate any provision of the Indenture or
result in or cause non-compliance with the Federal Tax Law
Requirements relating to (if applicable) the Bonds. Each such
requesting non -Defaulting Project Participant shall assume all,
but not less than all, Project Rights and Obligations so conveyed,
transferred and assigned to it by SCPPA.
15.5.2 If all of Defaulting Project Participant's Project Rights and
Obligations are not conveyed, transferred and assigned to non -
Defaulting Project Participants as provided in Section 15.5.1 of
its Power Sales Agreement, SCPPA shall, to the extent SCPPA
in its discretion determines it appropriate, offer to convey,
transfer and assign, on a temporary or permanent basis as
determined by SCPPA, the remaining (or all, if applicable) of
Defaulting Project Participant's Project Rights and Obligations
to third parties, all in accordance with applicable law; provided,
however, that SCPPA shall not offer or permit the conveyance,
transfer or assignment of Defaulting Project Participant's Project
Rights and Obligations in such a manner or in such an amount as
would, in the opinion of Bond Counsel or Tax Counsel, violate
any provision of the Indenture or result in or cause non-
compliance with the Federal Tax Law Requirements relating to
(if applicable) the Bonds. Each such requesting third party shall
assume all, but not less than all, Project Rights and Obligations
so conveyed, transferred and assigned to it by SCPPA.
15.53 If, at any time or from time to time, any of the Project Rights
and Obligations of a Defaulting Project Participant are not
conveyed, transferred and assigned as provided in
Sections 15.5.1 or 15.5.2 of its Power Sales Agreement, SCPPA
shall use its best efforts, to the extent reasonably possible and
economically beneficial, to offer all non -Defaulting Project
Participants and third parties, for long-term or short-term sale as
determined by SCPPA, Facility Output associated with such
Project Rights and Obligations or to remarket or resell such
SCPPA Facility Output, or cause the same to be remarketed or
resold: provided, however, that SCPPA shall not offer or permit
the sale or remarketing of such SCPPA Facility Output
associated with Defaulting Project Participant's Project Rights in
90187821.2 49
such a manner or in such an amount as would, in the opinion of
Bond Counsel or Tax Counsel, violate any provision of the
Indenture or result in or cause non-compliance with the Federal
Tax Law Requirements relating to (if applicable) the Bonds; and
provided further, however, that without eliminating Defaulting
Project Participant's obligation to make payments under its
Power Sales Agreement (notwithstanding anything to the
contrary in this Agreement), including payment of SCPPA's
costs and expenses related to such default and sale, such
payment obligation shall be satisfied to the extent that payments
are received by SCPPA from the remarketing or sale of SCPPA
Facility Output associated with Defaulting Project Participant's
Project Rights. If at the time of any Coordinating Committee
meeting, any of Defaulting Project Participant's Project Rights
and Obligations are not conveyed, transferred and assigned as
provided in Sections 15.5.1 or 15.5.2, the associated voting
rights with respect to Defaulting Project Participant's Project
Rights and Obligations shall be redistributed pro rata among the
non -Defaulting Project Participants, based upon each non -
Defaulting Project Participant's Output Entitlement Share, so
that the total voting rights remain at 100%.
Except as provided in this Section 15.5 or otherwise in this Agreement,
SCPPA may not convey, transfer or assign any Project Participant's
Rights and Obligations without the prior written consent of the Project
Participant.
15.6 Elimination or Reduction of Payment Obligations. Upon termination of
Defaulting Project Participant's Project Rights pursuant to Section 15.5
and conveyance, transfer or assignment of Defaulting Project Participant's
Project Rights and Obligations pursuant to Sections 15.5.1 or 15.5.2,
Defaulting Project Participant's obligation to make payments under its
Power Sales Agreement (notwithstanding anything to the contrary in this
Agreement) shall not be eliminated or reduced except to the extent of
moneys received by SCPPA as a result of the conveyance, transfer and
assignment of Defaulting Project Participant's Project Rights and
Obligations, less SCPPA's related costs and expenses; provided, however,
such payment obligations for Defaulting Project Participant may be
eliminated or reduced to the extent permitted by law, if and to the extent
any costs incurred by SCPPA have been fully paid, and (a) no Bonds are
outstanding or adequate provision for the payment thereof has been made
in accordance with the applicable provisions of the Indenture and (b)the
Board of Directors, by resolution, determines to eliminate or reduce such
payment obligations, which determination shall not be unreasonably
withheld.
90197821.2 50
15.7 Use of Operating Reserve Account. With respect to a Payment Default by
Purchaser, funds in the operating reserve account, if any, under the
Indenture may be used, to the extent necessary and to the extent available
and consistent with the Indenture, to cover any deficiency with respect to
any payment due by SCPPA attributable to Purchaser's participation in the
Project under the Indenture during the period prior to the Operating
Reserve Depletion Date. Any replenishing of the operating reserve
account under the Indenture shall be in accordance with the Indenture.
15.8 Use and Replenishment of Debt Service Reserve Fund(s). SCPPA may
maintain Debt Service Reserve Fund(s) which shall be funded and
maintained in the amount(s) specified in the Indenture. With respect to a
Payment Default by Purchaser, funds (or any surety bond, credit facility or
similar instrument) in the Debt Service Reserve Fund(s) under the
Indenture shall be used, to the extent necessary and to the extent available,
to cover any shortfall in the Debt Service account(s) relating to the
Indenture to pay for Debt Service (but, unless otherwise provided in the
Indenture, not the payment of other obligations payable from amounts
deposited in the Debt Service Fund). The replenishment of the Debt
Service Reserve Fund(s) shall be in accordance with the Indenture.
15.9 Step -Up Invoices. Step -Up Invoices shall be issued in accordance with
the provisions set forth below.
15.9.1 In the event of a Payment Default by one or more Project
Participants, SCPPA shall provide by the fifth day of the month
following such Payment Default(s) a separate Step -Up Invoice
to each non -Defaulting Project Participant that specifies the non -
Defaulting Project Participant's pro rata share, based upon the
Indenture Cost Shares of all non -Defaulting Project Participants,
of the amount of the Payment Defaults with respect to the
Indenture cost component (described in Section 4.9.5 hereof) set
forth in the Billing Statement(s) for the Defaulting Project
Participant(s). Notwithstanding the previous sentence, (i) the
amount of a Step -Up Invoice provided to a non -Defaulting
Project Participant under this Section 15.9.1 shall not exceed
100% of the amount that such non -Defaulting Project Participant
was billed for the Indenture cost component (described in
Section 4.9.5 hereof) in its Billing Statement for the Month
preceding such monthly Step -Up Invoice and (ii) following the
Operating Reserve Depletion Date, the provisions of
Section 15.9.2 hereof shall apply and no additional Step -Up
Invoices shall be issued pursuant to this. Section 15.9.1 with
respect to such Payment Default.
90 87821.2 51
15.9.2 In the event of a Payment Default by one or more Defaulting
Project Participants, which is in existence following the
Operating Reserve Depletion Date, SCPPA shall provide by the
fifth day of the Month following such Operating Reserve
Depletion Date, a separate Step -Up Invoice to each
non -Defaulting Project Participant that includes a charge equal
to the non -Defaulting Project Participant's pro rata share, based
upon the Project Cost Shares of all non -Defaulting Project
Participants, of the amount of Total Monthly Costs reflected in
the unpaid Billing Statements for the previous Month for such
Defaulting Project Participant(s). Notwithstanding the
foregoing, the amount of each monthly Step -Up Invoice
provided to a non -Defaulting Project Participant shall not exceed
100% of the aggregate amount that such non -Defaulting Project
Participant was billed with respect to Total Monthly Costs in its
Billing Statement for the Month preceding such monthly Step -
Up Invoice.
15.9.3 Step Up Invoices shall be due and payable within 20 days of the
receipt thereof, and payments to SCPPA with respect to Step -Up
Invoices shall be separate from any other payments due under
each Project Participant's Power Sales Agreement, including but
not limited to monthly Billing Statement payments.
15.10 Application of Moneys Received from Step -Up Invoices Relating to the
Project. Moneys received by or on behalf of SCPPA from the payment of
Step -Up Invoices relating to a Payment Default of a Project Participant
shall be applied in the following manner:
15.10.1 Moneys received from Project Participants with respect to the
Indenture cost component (described in Section 4.9.5 hereof), as
set forth in the Step -Up Invoices, to the extent such moneys
relate to Debt Service, shall be forwarded to the Project Trustee
or Lender for deposit directly into the Debt Service Fund under
the Indenture, and to the extent such moneys relate to any other
portion of the Indenture cost component, shall be forwarded to
the Project Trustee or Lender for deposit into such other Funds
as are appropriate under the Indenture.
15.10.2 Moneys received from the Project Participants with respect to
the amount of Total Monthly Costs (described in Section 4.8 or
Section 4.9 hereof, other than Section 4.9.5) as set forth in the
Step -Up Invoices, shall be forwarded to the Project Trustee or
Lender for deposit into the Revenue Fund under the Indenture,
as appropriate, or into such other Funds as are appropriate under
the Indenture.
90187821.2 52
15.10.3 In the event a Project Participant pays less than the total amount
of its Step -Up Invoice, such Project Participant shall be a
Defaulting Project Participant and its partial payment shall be
allocated in the following order: (i) all Total Monthly Costs
(described in Section 4.8 or Section 4.9 hereof) except the
Indenture cost component described in Section 4.9.5 hereof, and
(ii) the Indenture cost component (described in Section 4.9.5
hereof).
15.11 Application of Moneys Received from Default Invoices. Moneys received
by or on behalf of SCPPA from the payment of Default Invoices shall be
forwarded by SCPPA to the Project Trustee or Lender for deposit into the
Revenue Fund of the Indenture, as appropriate, or into such other Funds as
are appropriate under the Indenture. SCPPA shall credit on each non -
Defaulting Project Participant's next monthly Billing Statement or Billing
Statements an amount equal to the aggregate amount such non -Defaulting
Project Participant paid as a result of Step -Up Invoices with respect to
such Default Invoice, plus a pro rata share, based upon the Project Cost
Shares of the non -Defaulting Project Participants, of the amount SCPPA
received regarding late payment interest charges. In the event a Defaulting
Project Participant pays less than the full amount of its Default Invoice,
the credit to each non -Defaulting Project Participant shall be adjusted
proportionately.
15.12 Application of Moneys Received from Compliance Payments. Moneys
received by or on behalf of SCPPA from a Defaulting Project Participant
that makes payments to remain in Compliance with respect to a Payment
Default shall be applied in the following manner:
15.12.1 With respect to a Defaulting Project Participant's first payment
to remain in Compliance, SCPPA shall forward or cause to be
forwarded the moneys received to the Project Trustee or Lender
to be deposited into the Revenue Fund of the Indenture, as
appropriate, or into such other Funds as are appropriate under
the Indenture. SCPPA shall provide a credit on each non -
Defaulting Project Participant's next monthly Billing
Statement(s) an amount equal to the aggregate amount such non -
Defaulting Project Participant paid as a result of Step -Up
Invoices with respect to such Compliance payment, plus a pro
rata share, based upon the Project Cost Shares of the non -
Defaulting Project Participants, of the amount SCPPA received
regarding late payment interest charges.
15.12.2 With respect to a Defaulting Project Participant's payments to
remain in Compliance other than the first payment (as provided
in Section 15.12.1 hereof), SCPPA shall forward or cause to be
forwarded the moneys received to the Project Trustee or Lender
90187821-2 53
16.
for deposit into the Revenue Fund of the Indenture, as
appropriate, or into such other Funds as are appropriate under
the Indenture.
15.13 Application of Moneys Received from Sale of SCPPA Facility Output.
Moneys, received by or on behalf of SCPPA from the sale of SCPPA
Facility Output related to a Defaulting Project Participant's Project Rights
and Obligations, as provided in Section 15.5.3 hereof, shall be applied in
the following manner in order:
15.13.1 SCPPA shall credit on each non -Defaulting Project Participant's
next monthly Billing Statement(s) an amount up to, but not in
excess of, the aggregate amount paid to SCPPA by such non -
Defaulting Project Participant with respect to each such non -
Defaulting Project Participants Step -Up Invoices.
15.13.2 SCPPA shall forward or caused to be forwarded to the
applicable Project Trustee or Lender for deposit into the
Revenue Fund of the Indenture, as appropriate, or into such
other Funds as are appropriate under the Indenture, the
applicable portion of such moneys.
15.13.3 Following consultation with the non -Defaulting Project
Participants, SCPPA shall determine the disposition of any
moneys received that are in excess of the aggregate amount of
related Step -Up Invoices paid by non -Defaulting Project
Participants. Unless the Coordinating Committee determines
otherwise, or except as otherwise required by law, the
Defaulting Project Participant shall have no claim or right to any
such monies.
15.14 Limitation on Cure Period. Notwithstanding anything to the contrary in
this Agreement, there shall be no Cure Period with respect to Purchaser's
failure to pay those costs constituting its share of Debt Service in a timely
manner in accordance with this Agreement, and any such Debt Service not
paid by the Purchaser when due shall be immediately due and payable to
SCPPA.
CHARACTER, CONTINUITY OF SERVICE.
16.1 Outaaes. Interruntions and Curtailment of Enerev Deliveries. Under
certain conditions set forth in Project Agreements or in the case of
emergencies or abnormal conditions with respect to the Facility or in order
to take the Facility out of service for repairs, maintenance work,
replacements; equipment installation or inspections, or in the event of a
failure by a Project Participant to receive or accept SCPPA Facility Output
or Replacement Energy delivered to SCPPA at a Point of Delivery, the
90187821.2 54
Power Purchase Provider or, if SCPPA shall acquire the Facility or an
ownership interest therein, SCPPA, its agent or the Project Manager, as
the case may be, may temporarily interrupt or curtail deliveries of SCPPA
Facility Output (or in the case of the Power Purchase Provider, the
Replacement Energy) to Project Participants. In the event of the
occurrence of any such interruption or curtailment, including any
associated Facility outage, which shall cause a reduction in deliveries of
SCPPA Facility Output, any incurrence by SCPPA of additional costs, or a
receipt by SCPPA of payments or credits under any Project Agreement,
certain of the rights, entitlements and obligations of the affected Project
Participants under their respective Power Sales Agreements shall be
subject to adjustment as follows:
16.1.1 In the case of such an interruption, curtailment or outage affecting
the deliveries of SCPPA Facility Output at or to the Point of
Interconnection, (i) the resulting reduction in SCPPA Facility -
Output at the Point of Interconnection shall be shared by the
Project Participants pro rata in accordance with their respective
Point of Interconnection Allocable Shares, and (ii) any resulting
costs incurred by SCPPA or payments or credits received by
SCPPA shall be allocated among the Project Participants in
accordance with their respective Project Cost Shares.
16.1.2 In the case of such an interruption or curtailment that affects
deliveries of SCPPA Facility Output from the Point of
Interconnection to any Point of Delivery, and as a result thereof
SCPPA shall receive any payment or credit, each affected Project
Participant shall in turn receive a credit on its monthly Billing
Statement (i) during the term of the Power Purchase Agreement,
in the amount of its Delivery Point Output Cost Share of such
payment or credit received by SCPPA, and (ii) commencing upon
an Acquisition by SCPPA of the Facility or an ownership interest
therein, the amount of its Transmission Services Cost Share of
such payment or credit received by SCPPA.
16.1.3 In the case where a Project Participant fails to accept or receive at its
Designated Point of Delivery all or any portion of its Output
Entitlement Share of SCPPA Facility Output or Replacement Energy
delivered to such Point of Delivery, such Project Participant shall be
responsible for any cost incurred by SCPPA which is attributable to
such failure and the amount of such cost shall be added to such
Project Participant's monthly Billing Statement.
16.1.4 No such interruption or curtailment of deliveries of SCPPA Facility
Output, including any interruption or curtailment due to a Facility
outage, shall relieve any of the Project Participants of their
90187921.2 55
obligations to make payments under their respective Power Sales
Agreements.
16.1.5 SCPPA or the Project Manager (if other than SCPPA) or SCPPA's
agent will use its best efforts to apprise the affected Project
Participants of potential outages, interruptions or curtailments, the
reason therefor and the probable duration thereof, when such
outages, interruptions or curtailments can be deemed likely to occur.
16.1.6 After informing the affected Project Participants regarding any such
planned interruption or curtailment, giving the reason therefor, and
stating the probable duration thereof, SCPPA, its agent or the Project
Manager, as applicable, will to the best of its ability schedule such
interruption or curtailment at a time which will cause the least
interference with the system operations of the Project Participants.
16.2 Uncontrollable Forces. SCPPA shall not be required to provide, and
SCPPA shall not be liable for failure to provide, SCPPA Facility Output or
other service under this Agreement when such failure or the cessation or
curtailment of or interference with the service is caused by Uncontrollable
Forces or by the inability of SCPPA, the Power Purchase Provider or other
applicable counterparty to obtain any required governmental permits,
licenses or approvals to enable SCPPA or the Power Purchase Provider, as
applicable, to acquire, administer or operate the Project; provided,
however, that Purchaser and the other Project Participants shall not
thereby be relieved of their obligations to make payments under their
respective Power Sales Agreements except to the extent SCPPA is so
relieved pursuant to the Indenture and/or other applicable Project
Agreements.
17. SEVERAL OBLIGATION; LIABILITY.
17.1 Proiect Participants' Obligations Several. Purchaser and the other Project
Participants shall be severally responsible and liable for performance
under their respective Power Sales Agreements, and for any respective
arrangements which are not part of the Project. The obligation of
Purchaser to make payments under this Agreement is a several obligation
and not a joint obligation with those of the other Project Participants under
the other Power Sales Agreement to which such Project Participants are
parties.
17.2 No Liability of SCPPA. Directors, Officers, Etc.; SCPPA Directors,
Officers, Employees, Project Manager Not Individually Liable. Purchaser
agrees that neither SCPPA, the Project Manager, nor any of their directors,
officers, or employees shall be liable to Purchaser for any and all claims,
including loss of profits, direct or consequential loss, or damage suffered
by Purchaser as a result of (i) the performance or non-performance by the
Power Purchase Provider or the Project Manager or any of its directors,
90187821.2 56
officers, and employees under this Agreement or any Project Agreement
(including negligent or grossly negligent acts or omissions and excluding
willful misconduct) or (ii) the performance or non-performance of
SCPPA, the Project Manager, or any of their directors, officers, or
employees under this Agreement or any Project Agreement (including
negligent or grossly negligent acts or omissions and excluding willful
misconduct). Purchaser releases SCPPA and its directors, officers, and
employees and the Project Manager from any claim or liability that
Purchaser may have cause to assert as a result of any actions or inactions
of SCPPA under this Agreement or the performance or non-performance
by the Project Manager under this Agreement or any Project Agreement
(including negligent or grossly negligent acts or omissions and excluding
willful misconduct). No such performance or non-performance by the
Project Manager, the Power Purchase Provider, or SCPPA shall relieve
Purchaser from its obligations under this Agreement, including its
obligation to make payments required under this Agreement. The
provisions of this Section 17.2 shall not be construed so as to relieve the
Project Manager or the Power Purchase Provider from any obligation (or
liability in the case of the Power Purchase Provider) under this Agreement,
the Power Purchase and Security Agreements or any other applicable
Project Agreement. It is also hereby recognized and agreed that no
member of the Board of Directors, the Project Manager, nor their officers
or employees or member of SCPPA in its capacity as a member of
SCPPA, shall be individually liable in respect of any undertakings by
SCPPA under this Agreement or any Project Agreement.
17.3 Extent of Exculpation: Enforcement of Rights. The exculpation provision
set forth in Section 17.2 hereof shall apply to all types of claims or actions
including, but not limited to, claims or actions based on contract or tort.
Notwithstanding the foregoing, Purchaser may protect and enforce its
rights under this Agreement by a suit or suits in equity for specific
performance of any obligations or duty of SCPPA, and Purchaser shall at
all times retain the right to recover, by appropriate legal proceedings, any
amount determined to have been an overpayment by Purchaser in
accordance with Section 7.4 hereof.
17.4 Determination or Enforcement of Rights. Notwithstanding Section 17.2
and 17.3 hereof. Purchaser or SCPPA may determine, protect and enforce
its rights under this Agreement or any Project Agreement by a suit(s) in
equity for specific performance of, or declaratory action with respect to,
any obligation or duty hereunder or thereunder.
17.5 No Relief From Insurer's Obligations. Notwithstanding any provision in
this Agreement to the contrary, including but not limited to the provisions
in this Section 17, the provisions of this Section 17 shall not be construed
or applied so as to relieve any insurer of its obligation to pay any
insurance claims in accordance with any applicable insurance policy.
90197821.2 57
17.6 No General Liability of SCPPA. The undertakings under this Agreement
by SCPPA, or the Project Manager in its capacity as such, shall never
constitute a debt or indebtedness of SCPPA or the Project Manager within
the meaning of any provision or limitation of the Constitution or statutes
of the State of California and shall not constitute or give rise to a charge
against its general credit.
18. RESTRICTIONS ON DISPOSITION.
18.1 Limitations Concerning Private Use. Purchaser recognizes that certain
Federal Tax Law Requirements, if applicable, limit the arrangements
permitted with respect to the purchase, sale, assignment or other
disposition of Purchaser's Project Rights and Obligations. Purchaser shall
comply with the rules, procedures and protocols promulgated by SCPPA
pursuant to Section 10.3 with respect to compliance with the Federal Tax
Law Requirements, applicable, to any Bonds. Except as provided in
Section 6.2.9 or Section 15 hereof, no sale, assignment or other disposition
of all or any portion of Purchaser's Project Rights and Obligations,
including the Purchaser's Output Entitlement Share with respect to the
Project, shall be effective until (i) Purchaser shall have given prior written
notice thereof to SCPPA, and (ii) unless waived by the Board of Directors
after consultation with Bond Counsel or Tax Counsel, Bond Counsel or
Tax Counsel shall have rendered an opinion that such sale, assignment or
other disposition will not result in or cause non-compliance with any
applicable Federal Tax Law Requirements and will not be inconsistent
with the Power Sales Agreements. Notwithstanding the immediately
preceding sentence, Purchaser may (without giving such notice or
obtaining such opinion) contract to provide or otherwise sell or dispose of
the SCPPA Facility Output to which it is entitled hereunder in a
transaction which complies with guidelines established by SCPPA and
approved by SCPPA's Bond Counsel or Tax Counsel from time to time.
In addition to the forgoing, no such sale, assignment or disposition shall
cause SCPPA to be in default of any term or condition of the Power
Purchase Agreement.
18.2 Restrictions on Elimination of Payment Obligations. No sale, assignment
or other disposition of Purchaser's Project Rights and Obligations to any
Person ("Assignee") that occurs when any Bonds are outstanding shall
release Purchaser from its payment obligations under this Agreement;
provided, however, such payment obligations may be eliminated or
reduced if no Bonds are outstanding or adequate provisions for the
payment thereof have been made in accordance with the provisions of the
Indenture if (i) such Assignee shall assume and agree to fully perform and
discharge the Project Rights and Obligations under this Agreement,
(ii) unless otherwise provided by resolution of the Board of Directors,
such Assignee shall have a corporate or lona term senior unsecured credit
rating not less than Standard & Poors A- or Moody's A3, and (iii) the
90187821.2 58
Board of Directors, by resolution, determines in its sole discretion to
eliminate or reduce such payment obligations. For avoidance of doubt,
notwithstanding the forgoing, no such sale, assignment or disposition shall
cause SCPPA to be in default of any term or condition of the Power
Purchase Agreement or of any Project Agreement.
18.3 Restrictions on Disposition of Purchaser's Entire System. Purchaser shall
not sell, lease or otherwise dispose of all or substantially all of its electric
system to any Person ("Acquiring Entity") unless the following conditions
shall be met: (A) in the event that Bonds are outstanding then
(i) Purchaser shall assign its Project Rights and Obligations hereunder to
such Acquiring Entity and such Acquiring Entity shall assume and agree
to fully perform and discharge the Project Rights and Obligations under
this Agreement, (ii) such sale, lease or other disposition shall not, in and of
itself, cause the rating of any Bonds to be downgraded, suspended or
withdrawn (which fact shall be evidenced by letters of the rating agencies
then rating the Bonds), and (iii) such sale, lease or other disposition will
not adversely affect the value of this Agreement as security for the
payment of the Indenture cost component; (B) in the event that no Bonds
are outstanding or adequate provisions for the payment thereof have been
made in accordance with the provisions of the Indenture then (i) such
Acquiring Entity shall assume and agree to fully perform and discharge
the Project Rights and Obligations under this Agreement, and (ii) such
Acquiring Entity shall have a corporate or long -tern senior unsecured
credit rating not less than investment grade; and (C) in all cases, unless
waived by SCPPA after consultation with Bond Counsel or Tax Counsel,
Bond Counsel or Tax Counsel shall have rendered an opinion that such
sale, lease or other disposition will not result in or cause non-compliance
with any applicable Federal Tax Law Requirements with respect to any
Bonds.
18.4 Successors and Assigns. Subject in all respects to Sections 15 and 18
hereof, the Project Rights and Obligations under this Agreement shall
inure to the benefit of and shall be binding upon the respective successors
and assigns of the parties to this Agreement.
19. REIMBURSEMENT OF PROJECT DEVELOPMENT COSTS. Within 90 days
after the issuance of the first Bonds all of the following project development costs and
expenses and other applicable costs for Development Work, paid by Purchaser prior to
the date of such issuance, to the extent reimbursable under applicable tax law and
regulations, shall be reimbursed to Purchaser by SCPPA from the proceeds of the Bonds
(in an amount determined by the Coordinating Committee or Board of Directors, as
appropriate): costs of planning and development of the Project; costs relating to any
acquisition of the Project; costs of investigation and feasibility studies; technical, legal
and financing expenses; legal costs including but not limited to the costs of Bond
Counsel, Tax Counsel, electric utility counsel, secured transaction and real estate
specialists, solar energy counsel, environmental counsel, bankruptcy counsel, and counsel
90187821.2 59
experienced in securing and facilitating this transaction under California, Arizona, and
Federal law, costs of obtaining permits, clearances, licenses, entitlements and approvals
or other governmental authorizations, options or rights therein; costs of preparing
agreements or other documents; and other costs relating to the Project in amounts
determined by the Coordinating Committee. .
20. EFFECTIVE DATE, TERM AND EXPIRATION.
20.1 Effective Date; Execution in Counterparts. This Agreement shall become
effective on the first day when all of the following shall have occurred:
(i) this Agreement shall have been duly executed and delivered by SCPPA
and Purchaser, (ii) the Power Purchase Agreement shall have been duly
executed and delivered by SCPPA and the Power Purchase Provider, and
(iii) the Power Sales Agreement between SCPPA and the other Project
Participants shall have been duly executed and delivered by the parties
thereto. Once the Power Purchase Agreement has been executed and
delivered as set forth above, .SCPPA shall deliver a copy of the same to
Purchaser. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original.
20.2 Termination Conditions. This Agreement shall be effective upon
satisfaction of the conditions set forth in Section 20.1 and shall extend for
the term specified in Section 20.3 unless earlier terminated pursuant to an
express provision of this Agreement, or by operation of the Indenture or of
law; provided, however, that (i) any obligation to make payments to
SCPPA or any outstanding liability of Purchaser hereunder which either
exists or may exist as of the date of termination of this Agreement, or
which comes into existence at any future time as a result of any activity or
transaction carried forth under this Agreement, shall survive such
termination and (ii) any obligation of SCPPA or Purchaser hereunder to
comply with the Federal Tax Law Requirements shall continue until such
time as provided in Section 23.3.
20.3 Expiration. The term of this Agreement shall begin on the day this
Agreement becomes effective pursuant to Section 20.1 hereof. Unless
terminated earlier pursuant to Sections 20.4 or 20.5 and subject to
Section 23 hereof, the term of this. Agreement shall expire on the later of:
(i) the date SCPPA's Joint Powers Agreement (including any extensions
thereof) expires or (ii) the date on which all Bonds and the interest thereon
shall have been paid in full or adequate provision for such payment shall
have been made and the Bonds are no longer outstanding; provided,
however, that in no event shall the term of this Agreement expire so long
as the Power Purchase Agreement is of any force or effect.
20.4 Transfer of SCPPA Interest. Except as provided in Section 20.5 hereof,
and subject to any applicable provisions of any associated operating
agreements, upon the expiration of the term of this Agreement pursuant to
90 197821.2 60
Section 20.3 hereof, in the event SCPPA shall have purchased or acquired
the Facility or an ownership interest therein, SCPPA shall transfer to the
Project Participants and each Project Participant shall assume its pro rata
share of any right, title and interest in the Facility or such ownership
interest therein, as applicable, (including all rights and obligations of
SCPPA under any Project Agreement) as evidenced by a participation
agreement developed by SCPPA and the Project Participants, unless
otherwise agreed to by SCPPA and all of the Project Participants. The
purchase price and consideration to be paid to SCPPA by Purchaser for
such transfer shall consist of the payments made by Purchaser pursuant to
this Agreement prior to the date of such transfer plus any remaining costs
or obligations incurred by SCPPA in connection with the Project.
20.5 Termination of Agreement before Expiration Date. Notwithstanding the
expiration date set forth in Section 20.3 hereof, this Agreement shall
terminate, subject to Section 23 hereof, on the date, if any, by which each
and all of the following have occurred:
20.5.1 All Bonds and the interest thereon shall have been paid in full or
adequate provision for such payment shall have been made and
the Bonds are no longer outstanding under the Indenture;
20.5.2 SCPPA notifies Purchaser that all Power Sales Agreements are
superseded as a result of each Project Participant having
(i) succeeded to SCPPA's rights through another agreement or
agreements, (ii) entered into a replacement power sales agreement
or other agreement with SCPPA or (iii) entered into a
replacement power sales agreement or other agreement with one
or more Project Participants which have become Project
Participants in the Project under another agreement. The
purchase price and consideration to be paid to SCPPA by
Purchaser with respect to any such superseding arrangement shall
consist of the payments and satisfaction of all obligations by
Purchaser under and pursuant to this Agreement prior to the
effective date of the superseding arrangement plus any remaining
costs or obligations incurred by SCPPA in connection with the
Facility or an ownership interest therein, as applicable; and
20.5.3 The Power Purchase Agreement shall no longer be of any force or
effect.
21. REVISION OF APPENDICES B AND C.
21.1 Revision of Appendices B and C. The Parties acknowledge that under the
terms of the Power Purchase Agreement SCPPA may hereafter increase its
SCPPA Facility Capacity Share of the Facility Capacity and may hereafter
enter into additional power sales agreements for the purchase of SCPPA
90187821.2 61
Facility Output by LADWP and other of its members which would then
become additional Project Participants. In such event Appendix B and
Appendix C may be revised, as applicable, so as to add Project
Participants and to adjust the Capacity Amounts, Output Entitlement
Shares, any of the Cost Shares, the Point of Interconnection Allocable
Shares and the Points of Delivery (collectively, the "Appendix A and B
Designations") as set forth in Appendix B and Appendix C, as shall be
necessary to provide for any such increase in the SCPPA Facility Capacity
Share of the Facility Capacity or the addition of Project Participants;
provided that (i) any such adjustments in Appendix B and Appendix C
shall be approved by a resolution adopted by the Coordinating Committee
(which shall include the affirmative vote of Purchasers representative on
the Coordinating Committee if any of the Purchaser's Appendix A and B
Designations shall be so adjusted), and shall be approved by a
corresponding resolution adopted by SCPPA's Board of Directors, (ii) .
such adjustments shall not result in an increase or a decrease of more than
fifty percent (50%) of the then existing Capacity Amount, Output
Entitlement Share, any Cost Share, or the Point of Interconnection
Allocable Share of Purchaser, and (iii) such adjustments shall be in
compliance with this Agreement and from and after the Acquisition by
SCPPA of the Facility or an ownership interest therein shall be subject to
and shall comply with the applicable provisions of the Indenture. The
Parties further agree that any such adjustments in Appendix B or
Appendix C shall be made pursuant to the terms of this Agreement as
entered into by the Parties and shall be treated as an element of
administration and not an amendment of this Agreement. The revised
Appendix B and Appendix C upon receipt of the approvals as provided
above and upon compliance with the other requirements set forth in this
Section 21.1 shall become Appendix B and Appendix C, respectively, to
this Agreement in replacement of the prior Appendix B and Appendix C
hereof.
21.2 Agreement Subiect to the Indenture. It is recognized by the Parties hereto
that SCPPA, in undertaking the planning and financing, development,
acquisition, operation and maintenance of the Project, must comply with
the requirements of the Indenture and all conditions, permits and
approvals or other governmental authorizations necessary for such
planning, financing, development, acquisition, operation and maintenance
and it is therefore agreed that this Agreement is made subject to the
provisions of the Indenture and all such conditions, permits, approvals and
governmental authorizations
21.3 Comply With the Indenture. SCPPA covenants and agrees for the benefit
of Purchaser to comply in all material respects with all terms, conditions
and covenants of the Indenture and all conditions, permits, approvals and
governmental authorizations relating to the Project, provided that SCPPA
shall not be prevented from contesting the validity or applicability of any
90187821.2 62
such conditions, permits, approvals and governmental authorizations in
good faith by appropriate proceedings.
22. SEVERABILITY. In case any one or more of the provisions of this Agreement shall for
any reason be held to be illegal or invalid by a court of competent jurisdiction, it is the
intention of each of the Parties hereto that such illegality or invalidity shall not affect any
other provision hereof, but this Agreement shall be construed and enforced as if such
illegal or invalid provision had not been contained herein unless a court holds that the
provisions are not separable from all other provisions of this Agreement. .
23. CONDITIONS TO TERMINATION OR AMENDMENT.
23.1 No Adverse Effect. So long as any of the Bonds are outstanding under the
Indenture, .this Agreement shall not be terminated, amended, modified or
otherwise altered in such a manner (i) as will materially reduce the
payments pledged as security for the Bonds or extend the time of such
payments provided herein, (ii) as will materially impair or materially
adversely affect the rights of the owners from time to time of any Bonds,
or (iii) as would be prohibited by any applicable provision of the
Indenture.
23.2 Rights Among Project Participants. None of the Power Sales Agreements
may be terminated as to any one or more of the Project Participants, or be
amended as to any one or more of the Project Participants so as to provide
terms and conditions materially different from those contained therein
except, subject to the provisions of Section 23.1 and consistent with the
Indenture, upon written notice to and written consent or waiver by the
other Project Participants, and upon similar amendment, if appropriate,
being made to the Power Sales Agreement of the other Project Participants
requesting such amendment after receipt by such Project Participant of
written notice of such amendment.
23.3 Continuing Compliance with Federal Tax Law Requirements.
Notwithstanding anything contained in the Power Sales Agreements to the
contrary, all obligations of SCPPA and the Project Participants with
respect to compliance with Federal Tax Law Requirements with respect to
any Bonds shall survive any termination of the Power Sales Agreements
until such time as all Bonds to which such Federal Tax Law Limitations
shall apply shall have been fully paid or redeemed and discharged or such
earlier time as SCPPA shall determine upon consultation .with Bond
Counsel or Tax Counsel, or Bond Counsel or Tax Counsel shall have
rendered an opinion to the effect that such Federal Tax Law Requirements
shall no longer be applicable.
24. REPRESENTATION AND GOVERNING LAW. The Parties acknowledge that each
.Party was represented by counsel in the negotiation and execution of this Agreement.
This Agreement was made and entered into in the County of Los Angeles and shall be
90197821.2 63
governed by, interpreted and enforced in accordance with the laws of the State of
California. All litigation arising out of, or relating to this Agreement, shall be brought in
a State or Federal court in the County of Los Angeles in the State of California. The
Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State
of California and waive any defense of,forum non conveniens.
25. ARBITRATION AND ATTORNEYS' FEES. If a dispute arises between the Parties
which the Coordinating Committee or the Board of Directors is unable to resolve, the
Parties may by mutual agreement submit the dispute to mediation or non-binding
arbitration. With respect to any such dispute the Parties agree that each Party shall bear
its own attorneys fees and costs. Notwithstanding the foregoing, Purchaser and SCPPA
recognize and agree that SCPPA's attorneys fees associated with any matter relating to
the Project or this Agreement, including any dispute relating thereto, shall constitute a
Project cost which shall be allocated and billed as set forth in Sections 4 and 7 of this
Agreement.
26. PURCHASER'S CONTRACT ADMINISTRATOR. Purchaser's contract
administrator for this Agreement shall be the person so designated by the individual
authorized to receive notices on behalf of Purchaser pursuant to Section 27 herein, and
Purchaser's contract administrator shall have the authority to administer this Agreement
on behalf of Purchaser.
27. NOTICES. Any notice, demand or request provided for in this Agreement shall be in
writing and shall be deemed properly served, given or made if delivered in person or sent
by registered or certified mail, postage prepaid, to the persons specified below:
Southern California Public Power Authority
Attention: Executive Director
225 South Lake Avenue, Suite 1250
Pasadena, California 91101
City of Azusa
Director of Utilities
City of Azusa Light and Water
P.O Box 9500 (729 N. Azusa Ave.)
Azusa, California 91702-9500
28. AMENDMENTS. The Parties acknowledge and agree that any amendment to this
Agreement shall be in writing and duly executed by the Parties.
[SIGNATURE PAGE FOLLOWS]
90187821 1 64
IN WITNESS WHEREOF, the Parties hereto have duly caused this Agreement to
be executed on their respective behalves by their duly authorized representatives.
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY
M
MARCIE L. EDWARDS
President
Attest:
BILL D. CARNAHAN
Assistant Secretary
CITY OF AZUSA, CALIFORNIA
By:
Printed Name:
Title:
Attest:
Printed Name:
Title:
90197821.2 65
APPENDIX A
DEFINITIONS
The following terms, whether in the singular or the plural, and initially
capitalized, shall have the meanings specified below:
1. Acquisition. Acquisition shall entail the procurement of SCPPA's rights and obligations
pursuant to the Power Purchase Agreement and applicable Project Agreements, the
acquisition resulting from the exercise of the purchase option pursuant to the Power
Purchase Agreement, any purchase of the Facility or an ownership interest therein,
including the purchase of rights and interests under any of the Power Purchase and
Security Agreements, SCPPA financing arrangements for the foregoing, and all rights
and entitlements associated with the acquisition, development and implementation of the
Project, including those resources, contracts, rights, benefits, entitlements and
arrangements as may be necessary, desirable or appropriate to the Project to further
SCPPA's and the Project Participants' goals and those associated structures and services
procured, retained or acquired by and on behalf of the Project Participants as part of the
Project and which have been approved by the Coordinating Committee and, where
applicable, the Board of Directors. Acquisition also includes the rights and interests
under any consents to assignment and related agreements, and taking foreclosure action
(or a deed in -lieu -of foreclosure) under and pursuant to any of the Power Purchase and
Security Agreements, or a purchase at foreclosure sale, and, if and as applicable,
associated financing, and all rights and entitlements of SCPPA under the Power Purchase
and Security Agreements or other Project Agreements associated with the development
and implementation of the Project.
2. Act. All of the provisions contained in the California Joint Exercise of Powers Act found
in Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California,
beginning at California Government Code Section 6500 et seq., as amended from time to
time
3. Additional Facility. "Additional Facility" shall have the definition set forth in the Power
Purchase Agreement
4. Anaheim. The City of Anaheim, a California municipality.
5. Ancillary Documents. "Ancillary Documents" shall have the definition set forth in the
Power Purchase Agreement.
6. Annual Budget. The budget approved by the Coordinating Committee and adopted by
SCPPA pursuant to Section 5.4.1 of this Agreement not less than 30 days nor more than
60 days prior to the beginning of each Power Supply Year, including any amendments
thereto, which shall show a detailed estimate of the Total Monthly Costs under the Power
Sales Agreements and all credits, charges, revenues, income, or other funds to be applied
to such costs, for and applicable to such Power Supply Year.
90187821.2 A-1
7. Azusa. The City of Azusa, a California municipality.
8. Billing_ Statement. The written statement prepared or caused to be prepared each Month
by, or on behalf of, SCPPA which shall be based upon certain of the information in the
Annual Budget and shall show for such Month the amount to be paid to SCPPA by a
Project Participant in accordance with the provisions of Section 7 of its Power Sales
Agreement.
9. Board of Directors. The Board of Directors of the Southern California Public Power
Authority.
10. Bond Counsel. Nationally recognized legal counsel having background and experience
in the issuance of municipal bonds, including the Federal Tax Law Requirements relating
thereto, and selected by SCPPA to evaluate and advise regarding the Bonds with respect
to specified cases, transactions and matters from time to time.
11. Bonds. The bonds, notes, bond anticipation notes, certificates of participation,
commercial paper or other evidences of indebtedness issued or incurred by SCPPA and
outstanding pursuant to the provisions of the Indenture to finance or refinance the Cost of
Acquisition and any Capital Improvements, and, where applicable, the purchase of the
Facility or any part, portion or component thereof, including purchase of the rights and
interests under the Facility Credit Agreements or any consents or agreements relating to
any assignment. Bonds shall include but not be limited to the taxable and/or tax-exempt
bonds, notes, bond anticipation notes, certificates of participation, commercial paper or
other evidences of indebtedness issued or incurred by SCPPA to finance any purchase of
the Facility or an ownership interest therein, including purchase of the rights and interests
under the Facility Credit Agreements or other applicable Project Agreement, or bonds,
notes, certificates of participation, commercial paper or other evidences of indebtedness
issued to redeem or refund such bonds, notes, certificates of participation, commercial
paper or evidences of indebtedness, and any and all other obligations which SCPPA
issues or incurs relating to the Project. Bonds shall also include any additional Bonds
authorized by the Indenture or any supplement thereto and issued or incurred pursuant to
the provisions of Section 13.2 of the Power Sales Agreements and any refunding of
Bonds issued pursuant to the provisions of Sections 13.3 or 13.5 thereof. Bonds may
constitute other categories of bonds eligible for certain tax benefits under the Internal
Revenue Code, including but not limited to tax-exempt bonds; tax credit bonds, "build
America bonds" or "qualified bonds" within the meaning of Section 54AA of the Internal
Revenue Code, "new clean renewable energy bonds" within the meaning of Section 54C
of the Internal Revenue Code or "qualified energy conservation bonds' within the
meaning of Section 54D of the Internal Revenue Code.
12. Burbank. The City of Burbank, a California municipality.
13. Capacity. The ability or potential to generate, produce or transfer electricity, expressed in
kilowatts ("kW") or megawatts ("MW"), including, when feasible, ancillary or regulating
services or other valuable non -energy products or services from a generating facility.
90191821.2 A-2
14. Capacity Amount. "Capacity Amount" means, with respect to a Project Participant, such
Project Participant's Project Cost Share of the amount of the SCPPA Facility Capacity
Share of the Facility Capacity.
15. Capacity Rights.
"Capacity Rights" means the rights, whether in existence as of the
Effective Date or arising thereafter during the term of this
Agreement,
of SCPPA to
Capacity of the
Facili!y, including resource adequacy,
associated
attributes and/or
reserves or any
of the foregoing purchased by SCPPA
under the
Power Purchase
Agreement, or,
if SCPPA acquires the Facility or an
ownership
interest therein,
associated with
the electric generating capability of the
Facility or
such ownership
interest therein.
16. Capital Improvements. Any unit of property, property right, land or land right which is a
replacement, repair, addition, improvement or betterment to the Project or any
transmission facilities relating to, or for the benefit of, the Project, the betterment of land
or land rights or the enlargement or betterment of any such unit of property constituting a
part of the Project or related transmission facilities which is (i) consistent with Prudent
Utility Practices and determined necessary and/or desirable by the Board of Directors or
(ii) required by any governmental agency having jurisdiction over the Project.
17. Chairperson. "Chairperson" is as defined in Section 6.1.
18. Colton. The City of Colton, a California municipality.
19. Commercial Operation. "Commercial Operation" shall have the definition set forth in the
Power Purchase Agreement.
20. Compliance. Following a Payment Default, a Defaulting Project Participant shall be in
compliance with its payment obligations under its Power Sales Agreement if it (i) no later
than the last day of the Cure Period fully pays all amounts owed as reflected in any
Default Invoice; (ii) pays any monthly Billing Statement which comes due during the
Cure Period; and (iii) replenishes any reduction made to the applicable operating reserve
account, Debt Service reserves or other Reserve Fund as a result of any Payment Default.
21. Consent Agreements. All consents to assignments and all agreements relating thereto
entered into with any lender, financial institution or other Person for the purpose of
consenting to the assignment of the rights of the Power Purchase Provider under the
Power Purchase Agreement.
22. Coordinating Committee. The Coordinating Committee established in accordance with
Section 6 of this Agreement.
23. Cost of Acquisition. "Cost of Acquisition" is defined in Section 4.4.
24. Cost Share. "Cost Share" means and includes, with respect to any Project Participant; the
Project Cost Share, the Delivery Point Output Cost Share, the Transmission Services Cost
Share and the Indenture Cost Share, as applicable, with respect to such Project
Participant.
90187821.2- A-3
25. Cure Period. That period of time beginning on the date of a Payment Default and
concluding sixty (30) days thereafter.
26. Cured Payment Default. A Payment Default which has been cured in accordance with
Section 15.3 of this Agreement. If at any time during the Cure Period the Defaulting
Project Participant is in Compliance, then the requirements of a Cured Payment Default
shall be deemed to have been satisfied as of the date of receipt of such payments by
SCPPA and the Cure Period shall expire.
27. Debt Service. The debt service payable with respect to the Indenture pertaining to any
category of Bonds, any Bonds issued pursuant to Section 13 of this Agreement, or other
applicable series of Bonds, as determined by the context; provided that in the case of any
Bonds, Debt Service may, to the extent provided in the Indenture, be reduced by the
amount of any applicable cash grant or rebate payable by the Federal Government to
SCPPA (or to the trustee under the Indenture) with respect to interest on such Bonds.
Debt Service shall also include any payments required to be deposited into the Debt
Service Fund under the Indenture to pay, for example, amounts due under any interest
rate swap agreements or other derivative agreements.
28. Debt Service Fund. The Debt Service Fund or account, or similar fund or account,
established by the Indenture to pay Debt Service. The Debt Service Fund shall not
include the Debt Service Reserve Fund(s) under the Indenture.
29. Default Invoice. An invoice during the Payment Default Period and the Cure Period
issued to a Defaulting Project Participant pursuant to Section 15 of this Agreement that
identifies the total defaulted amount owed, including late payment interest, to achieve a
Cured Payment Default. During the Cure Period, the Default Invoice shall also include
the amount that must be paid to achieve Compliance.
30. Defaulting Project Participant. A Project Participant that causes a Payment Default
which has not been remedied and where the Defaulting Project Participant has not
effected a Cured Payment Default.
31. Delivery Point Output cost component. "Delivery Point Output cost component' is
defined in Section 4.8.1.
32. Delivery Point Output Cost Share. "Delivery Point Output Cost Share" is defined in
Section 4.5.
33. Delivery Term of the Power Purchase Agreement. The time period for the delivery of
energy pursuant to the Power Purchase Agreement as set forth therein.
34. Designated Point of Delivery. means, at any time and with respect to a particular Project
Participant, the Point of Delivery designated by such Project Participant, as provided for
in this Agreement, at which such Project Participant is to receive SCPPA Facility Output
or Replacement Energy.
90187821.2 A-4
35. Development Work. All work and activities in connection with the development of the
Project, including, without limitation, all planning, designing, acquiring (by prepayment,
purchase or otherwise), mitigating impacts, constructing, installing, investigating, cost
monitoring and control activities, negotiating and administering contracts, purchasing,
environmental monitoring, scheduling, .protecting, erecting, supervising, expediting
inspecting, testing and training activities, recruitment and training of technical,
operational and administrative personnel, insuring, accounting, budgeting, public
information services and activities, services of consultants and legal counsel, preparing of
manuals and reports, and activities relating to securing requisite actions, permits,
licenses, approvals and certificates from governmental agencies and authorities.
36. Dynamic Scheduling. "Dynamic Scheduling" shall mean the automated scheduling of
Energy from the Designated Point of Delivery with respect to a Project Participant to
such Project Participant's control area or electric system, provided that said dynamic
schedules adjust at four second intervals, or other intervals as specified by WECC, to
match the amount of Energy actually delivered to such Designated Point of Delivery of
the Project Participant from the Facility.
37. Energy. "Energy" shall have the definition set forth in the Power Purchase Agreement
38. Energy Prices. "Energy Prices" means the respective purchase prices, as provided in
Appendix A to the Power Purchase Agreement, for SCPPA Facility Output and
Replacement Energy, as applicable, delivered at the. respective Points of Delivery.
39. EnviroMission (USA) Inc. EnviroMission (USA) Inc., a Delaware Corporation, or its
successor.
40. Environmental Attributes. "Environmental Attributes" shall have the definition set forth
in the Power Purchase Agreement.
41. Facility. "Facility" means all of the facilities including those resources described or
defined as the Facility, the Site, the Lease, Purchased Assets, Permits and facilities
referred to in the Power Purchase Agreement or such portions of these facilities, interests,
assets and rights as are provided SCPPA by way of the Power Purchase Agreement and
the other Power Purchase and Security Agreements and all of the Acquisitions, related
assets and accompanying rights and obligations associated therewith and all rights,
interests and obligations under the Ownership Participation and Related Agreements
associated with such facilities, including the rights interests and obligations under
agreements for Transmission Services and under any other of the Ancillary Documents.
Facility shall also include all Capital Improvements.
42. Facility Capacity. "Facility Capacity" shall have the meaning provided in the Power
Purchase Agreement.
43. Facility Energy. "Facility Energy" shall have the definition set forth in the Power
Purchase Agreement.
90187821.2 A-5
44. Facility Credit Agreements. All agreements, assignments and security related documents
associated with the financing of the Facility, or of the rights or interests held in
connection with the Facility, by the Power Purchase Provider or any of its affiliates and
any other agreements or documents providing for security for the performance of the
obligations of the Power Purchase Provider.
45. Federal Tax Law Requirements. "Federal Tax Law Requirements" shall mean, with
respect to the issuer of Bonds, any and all requirements and limitations to which any
specified type or category of Bonds are subject under the Internal Revenue Code or
related Treasury regulations in order that such specified Bonds initially qualify and
maintain qualification as that type or category of Bonds.
46. Fiscal Year. The twelve-month period commencing at 12:01 a.m. on July 1 of each year
and ending at 12:01 a.m. on the following July 1, or such other time frame as determined
by the Coordinating Committee or Board of Directors.
47. Force Maieure. "Force Majeure" shall have the definition set forth in the Power Purchase
Agreement.
48. Fund or Funds. Any fund or account created under the Indenture.
49. Guaranteed SCPPA Energ . "Guaranteed SCPPA Energy" shall have the meaning
provided in the Power Purchase Agreement.
50. Glendale. The City of Glendale, a California municipality.
51. IID. The Imperial Irrigation District, a California Irrigation District.
52. Indenture. The indenture of trust, trust agreement, credit or loan agreement and other
similar agreements with respect to the Bonds, between SCPPA and a Project Trustee or
Lender, as from time to time amended and supplemented in conformity with its
provisions and of this Agreement. Under such agreements, SCPPA may enter into, or
authorize the entering into of, interest rate swap agreements, other derivative agreements,
and such other agreements as are authorized or permitted under such agreements.
Indenture shall include, but not be limited to, any and all indentures in connection with
any bridge loans, bond anticipation notes or other notes, or draw down bonds or with
respect to any other type of bonds, and the indentures of trust, trust agreements or other
similar agreements entered into between SCPPA and the Project Trustee or Lender to
effect the redemption or refunding of any bridge loans, bond anticipation notes or other
notes, draw down bonds or other bonds, as from time to time amended and supplemented
in conformity with their provisions and the provisions of this Power Sales Agreement.
53. Indenture cost component. "Indenture cost component' is defined in Section 4.9.5.
54. Indenture Cost Share. "Indenture Cost Share" is defined in Section 4.6.
90187821.2 A-6
55. Initial Payment Default Date. The earlier of (i) the end of the fifth day following the first
Payment Default for which no remedy in payment has occurred and been received by
SCPPA, or (ii) the last day of the Month in which the first Payment Default has occurred
for which no remedy in payment has occurred and been received by SCPPA.
56. Interconnection Contracts. The contracts providing for the interconnections and
associated facilities which interconnect the Facility with the transmission system and
substations and provide for the delivery of SCPPA Facility Output.
57. Internal Revenue Code. The Internal Revenue Code of 1986, as amended.
58. Joint Powers Agreement. The "Southern California Public Power Authority Joint Powers
Agreement" dated as of November 1, 1980, as amended and modified from time to time,
entered into pursuant to the provisions of the Act, arnong SCPPA and its members.
59. Lease. "Lease" shall have the meaning provided in the Power Purchase Agreement.
60. Major Contracts. The Project Agreements and, to the extent not finalized or effective on
the effective date of an applicable project management agreement, any other contract or
agreement so identified by the Coordinating Committee or the Board of Directors, as
such contracts or agreements may be amended or supplemented from time to time.
61. Milestone. "Milestone" shall have the definition set forth in the Power Purchase
Agreement.
62. Milestone Security. "Milestone Security" shall have the definition set forth in the Power
Purchase Agreement.
63. Month. A calendar month.
64. Monthly Costs. "Monthly Costs" is defined in Section 7.1.
65. Mortgage. "Mortgage" shall have the meaning set forth in the Power Purchase
Agreement.
66. New Facility. "New Facility" shall have the definition set forth in the Power Purchase
Agreement.
67. Operating Budget. The operating budget approved by the Board of Directors, which shall
show a detailed estimate of all Project operating costs, including all revenues, income or
other funds to be applied to such operating costs, for and applicable to a Power Supply
Year.
68. Operating cost component. "Operating cost component' is defined in Section 4.7.1.
69. Operating Reserve Depletion Date. The date that is two Months prior to the date on
which SCPPA anticipates, assuming continued Payment Defaults by one or more
Defaulting Project Participants, that the moneys in the operating reserve account of the
90187821.2 A-7
Indenture will be fully depleted; provided, however, if as of the date on which a Payment
Default occurs SCPPA determines that the moneys in the operating reserve account held
by SCPPA will be fully depleted in less than two Months (or currently are fully depleted),
then the Operating Reserve Depletion Date shall be deemed to have occurred when such
a Payment Default occurs.
70. Operating Work. All work and activities in connection with the administration, operation
and maintenance of the Project, including without limitation, negotiating and
administering contracts, planning, mitigating impacts, purchasing, repairing, inspecting,
maintaining, investigating and monitoring all aspects of the Project, performing modeling
functions, economic analysis, quality control, testing and evaluating, recruitment and
training of operating entities and personnel, electric energy and environmental attribute
procurement, regulatory efforts, tagging, interconnecting, transmission, dispatching,
firming, balancing, exchanging and scheduling activities, supervising, expediting,
budgeting, insuring, accounting, tracking, registering, protecting, operating and managing
activities, public information services and services of consultants, operators, engineers,
contactors and legal counsel, renewals, replacements, reconstruction, and improvements,
and activities related to securing requisite permits, franchises, licenses, approvals,
entitlements, credits and certificates from governmental agencies and authorities.
71. Option Agreement. "Option Agreement` shall have the meaning provided in the Power
Purchase Agreement.
72. Output Entitlement Share. With respect to a particular Project Participant and during
each Power Supply Year, the percentage entitlement, as set forth for such Project
Participant in Appendix B of this Agreement, of the SCPPA Facility Output or, if
applicable, the Replacement Energy, delivered at such Project Participant's Designated
Point of Delivery. The Output Entitlement Share of such Project Participant may be
adjusted in connection with a revision of Appendix B as provided in Section 21.1.
73. Ownership General and Administrative cost component. "Ownership General and
Administrative cost component' is defined in Section 4.9.3.
74. Ownership Participation and Related Agreements. Any participation, tenant-in-common
or shared facilities agreements with respect to the Facility and the associated Facility
operation and maintenance agreements, and any lease, leasehold interest, rights-of-way,
deeds, conveyances, assignments, mortgages or other security instruments or any estate
or other property interests or consents or collateral instruments with respect to the
Acquisition or ownership of the Facility or an ownership interest therein by SCPPA.
75. Participants. The Project Participants.
76. Pasadena. The City of Pasadena, a California municipality.
77. Payment Default. A failure by a Project Participant to pay when due all of its Billing
Statement for any Month.
78. Payment Default Period. That period of time during which a Payment Default exists.
90187821.2 A-8
79. Performance Securitv. "Performance Security" shall have the definition set forth in the
Power Purchase Agreement,
80. Permit. "Permit' shall have the definition set forth in the Power Purchase Agreement.
81. Person. "Person" means any individual, corporation, partnership, joint venture, limited
liability company, association, joint stock company, trust, unincorporated organization,
entity, government or other political subdivision. e
82. Point of Interconnection. Point of Interconnection shall have the definition set forth in
the Power Purchase Agreement.
83. Point of Interconnection Allocable Share. With respect to a particular Project Participant,
in the event that SCPPA shall acquire the Facility or an ownership interest therein and
commencing with such acquisition, the percentage share, as set forth for such Project
Participant in Appendix C hereof, of the SCPPA Facility Output at the Point of
Interconnection. The Point of Interconnection Allocable Share of such Project
Participant may be adjusted in connection with a revision of Appendix C as provided in
Section 21.1.
84. Points of Delivery. The respective points at which SCPPA Facility Output or
Replacement Energy is to be delivered to an individual Project Participant or to any
combination of Project Participants, as set forth (or as designated by notice) pursuant to
Appendix B hereof, or otherwise, pursuant to the Power Purchase Agreement and the
Power Sales Agreements or, if SCPPA shall purchase or acquire the Facility or an
ownership interest therein, the same respective Points of Delivery for the SCPPA Facility
Output, as provided under the Power Purchase Agreement, or such other respective points
of delivery as authorized and determined by the Coordinating Committee or the Board of
Directors.
85. Power Purchase Agreement. The Power Purchase Agreement between Southern
California Public Power Authority and EnviroMission (USA), Inc., dated as of November
1, 2010, attached hereto in substantial form as Appendix F, as the same may be amended
from time to time.
86. Power Purchase and Security Agreements. The Power Purchase Agreement, the Security
Instruments, Consent Agreements, Facility Credit Agreements, and any other consent to
assignment or other agreement with any financial institution or Person relating to the
solar tower project or the Facility or any loan or other credit agreement associated with
the solar tower project or the Facility, or the Option Agreement or any other agreement
under which SCPPA might acquire or otherwise purchase or obtain the Facility or an
ownership interest therein or related resources and assets or output of the Facility or carry
forth any Acquisition all as and to the extent applicable to any particular Project matter or
matters. The Power Purchase and Security Agreements shall also include any instrument
or form of security which affords any opportunity for the purchase of the Facility or
Acquisition, whether through foreclosure or otherwise, including the Mortgage or any
other mortgage, deed or deed of trust, lease, assignment, beneficial interest, collateral
901878212 A-9
instrument or other device or mechanism providing for the ability to acquire the solar
tower project or the Facility or an ownership interest therein.
87. Power Purchase Provider. EnviroMission (USA) Inc. as the counterparty to SCPPA
under the Power Purchase Agreement, and the entity named under any applicable
operating agreement to operate or otherwise run or manage the Facility, along with each
of their successors, or any successors or assigns to the rights of these entities.
88. Power Sales Agreements. The La Paz Solar Tower Project Power Sales Agreements,
dated for convenience as of November 1, 2010, as the same may hereafter be amended
from time to time, entered into by SCPPA and each of the Project Participants for, among
other things, the acquisition of the Output Entitlement Shares.
89. Power Supply Year. The Fiscal Year, except that the first Power Supply Year shall begin
on the first to occur of (i) the date SCPPA is obligated to pay any portion of the costs of
the Project, (ii) the date upon which SCPPA first incurs or accrues costs associated with
the issuance of the Bonds, (iii) 90 days before the scheduled date for issuance of the
Bonds, (iv) the date of Commercial Operation of the Facility, or (v) the date of the first
delivery of Energy to Purchaser pursuant to this Agreement.
90. PPA General and Administrative cost component. "PPA General and Administrative cost
component' is defined in Section 4.8.2.
91. Project Cost Share. `Project Cost Share" is defined in Section 4.10.
92. Project or La Paz Solar Tower Project. The term "Project' or "La Paz Solar Tower
Project' shall be broadly construed to entail the aggregate of rights, liabilities, interests
and obligations of SCPPA pursuant to the Power Purchase Agreement, the Power
Purchase and Security Agreements and the other Project Agreements, including but not
limited to the rights, liabilities, interests and obligations associated with the SCPPA
Facility Output, or, upon purchase or acquisition by SCPPA, all rights, liabilities,
interests and obligations associated with the Facility, or any ownership interest therein, as
shall be purchased or acquired by SCPPA, and including all aspects of the operation and
administration of the Facility or an ownership interest therein and the Project Agreements
and the rights, liabilities, interests and obligations associated therewith. The term Project
shall also include those rights, liabilities, interests or obligations necessary or appropriate
to carry out the functions specified in Section 6 and to utilize or deliver the Energy of the
Facility as specified in Section 9.
93. Project Agreements. Any project management agreement, the Indenture, the Power Sales
Agreements, each of the Power Purchase and Security Agreements, any operation and
management agreement, any agreement for the provision -of Transmission Services, any
Lease, any interconnection agreement, the Ancillary Documents, other contracts and
leases, easements, rights of way and each of the Ownership Participation and Related
Agreements, and other real property arrangements or agreements associated with the
Facility or an ownership interest therein, if any, any other Acquisition agreement or
agreement for the purchase, procurement, delivery or transmission of SCPPA Facility
90187821.2 A-10
Output, including all agreements connected or associated with any purchase of the
Facility or an ownership interest therein or passing to SCPPA in connection with any
purchase of the Facility or an ownership interest therein, and including the rights and
interests under the Facility Credit Agreements or any other consents to assignments or
agreements for assignment, any intercreditor agreement, any other operating agreements,
maintenance agreements, warranty agreements, participation agreements, or any other
agreements for scheduling, dispatching, exchanging, tagging, movement or transmission
of SCPPA Facility Output, any agreements relating to any Capital Improvements and
agreements to which SCPPA is a party relating to the project design, development,
administration, management or operation of the Project and for placing of the Project
into operation or maintaining its operation.
94. Project Manager. SCPPA or a designee or designees appointed by SCPPA to assist
SCPPA to carry out SCPPA's responsibilities under the Power Sales Agreements, among
other things, and to assist SCPPA in carrying out SCPPA's responsibilities upon purchase
of the Facility or any of its resources or upon any Acquisition.
95. Project Participant(s). Those entities executing Power Sales Agreements, together in
each case with each entity's successors or assigns, identified as "Project Participants" in
Appendix B of the Power Sales Agreements or Appendix C of. the Power Sales
Agreements and such additional entities executing Power Sales Agreements as may be
added by way of a revision of Appendix B or Appendix C under the terms of this
Agreement
96. Project Purchase Option. "Project Purchase Option" shall have the meaning provided in
the Power Purchase Agreement.
97. Project Rights. All rights and privileges of a Project Participant under its Power Sales
Agreement, including but not limited to its Output Entitlement Share, its right to receive
SCPPA Facility Output from the Facility, and its right to vote on Coordinating
Committee matters.
98. Project Rights and Obligations. Purchaser's Project Rights and obligations under the
terms of this Agreement.
99. Project Trustee or Lender. Any bank or other financial firm or institution at any time
serving as trustee under the Indenture or any bank or financial firm party to the Indenture
as a lender or as agent for a lender or lenders thereunder.
100. Prudent Utility Practices. "Prudent Utility Practices' shall have the meaning provided in
the Power Purchase Agreement
101. Purchased Assets. "Purchased Assets" shall have the meaning provided in the Power
Purchase Agreement.
102. Renewable Electric Energy Resource Project. The aggregate of SCPPA's endeavors to
acquire renewable energy and capacity and to facilitate acquisition of renewable electric
90187821.2 A -I 1
generation and the means to deliver such generation either by way of the development
agreement for the Renewable Electric Resource Project as described in Section 2.6 herein
103. Replacement Energy. 'Replacement Energy" shall have the meaning provided in the
Power Purchase Agreement.
104. Reserve Fund cost component. "Reserve Fund cost component" is defined in
Section 4.8.3 and Section 4.9.4.
105. Reserve Fund(s). Those reserve accounts deemed appropriate to afford a reliable source
of funds for the payment obligations of the Project and, taking into account the variability
of costs associated with the Project for the purpose of providing a reliable payment
mechanism to address the ongoing costs associated with the Project.
106. Riverside. The City of Riverside, a California municipality.
107. SCPPA Facility Capacity Share. "SCPPA Facility Capacity Share" shall have the
meaning provided in the Power Purchase Agreement.
108. SCPPA Facility Output. All output, rights, and other tangible or intangible benefits,
whatsoever, derived from the Facility and received by SCPPA, including without
limitation, all Facility Energy, Capacity Rights and Environmental Attributes, whether
received by SCPPA under or pursuant to the Power Purchase Agreement or other
applicable Project Agreement or derived from the Facility or an ownership interest
therein by SCPPA as owner following SCPPA's purchase of the Facility or an ownership
interest therein.
109. Securitv and Assignment Agreements. The agreements and instruments entered into by
the Power Purchase Provider or any affiliate thereof and, where applicable, SCPPA,
including the Milestone Security, the Performance Security, the Mortgage and the
agreements and instruments referenced in the Power Purchase Agreement to, among
other things, secure certain performance requirements.
110. Security Instruments. The Security and Assignment Agreements, the Mortgage, the
Milestone Security, the Performance Security, the Facility Credit Agreements or other
arrangement or agreement with the Facility Lender following a purchase of the rights and
interests thereunder by SCPPA if applicable, and any and all instruments, agreements,
assignments, mortgages, deeds of trusts or conveyances or other collateral arrangements
entered into to secure the performance of the Power Purchase Provider or any affiliate
thereof under the Power Purchase Agreement or any other of the Power Purchase and
Security Agreements, or any lease or interest in real property used by or affecting the
Facility, including without limitation any security interest conveyed by way of the Power
Purchase Agreement or other agreement or instrument relating to the Project or any
Project matter creating a security interest enforceable by SCPPA.
111. Site. "Site" shall have the meaning set forth in the Power Purchase Agreement
90187821.2 A -I2.
112. Special Obligation. "Special Obligation" shall have the meaning set forth in
Section 11.3.
113. Special Obligation Billing Statement. "Special Obligation Billing Statement' shall have
the meaning set forth in Section 11.3.
114. Step -Up Invoice. An invoice sent to a non -Defaulting Project Participant as a result of
one or more Payment Defaults, which invoice shall separately identify any amount owed
with respect to the monthly Billing Statement of one or more Defaulting Project
Participants for, as the case may be, pursuant to Section 15.9.1 or 15.9.2 herein, either the
Indenture cost component of the Defaulting Project Participant(s) unpaid monthly Billing
Statement or the Total Monthly Costs reflected in the Defaulting Project Participant(s)
unpaid monthly Billing Statement.
115. Study Project. "Study Project' has the meaning provided in the Joint Powers Agreement.
116. Supplementary Services. Those services in connection with the delivery of Energy
involving additional transmission, interconnection arrangements, energy management,
firming, shaping, energy balancing, dispatching, tagging, scheduling, Dynamic
Scheduling, transmitting, interconnecting, swapping, exchanging or other services
associated with the transmission, use or disposition of SCPPA Facility Output to be
utilized by the Project Participants under the Power Sales Agreements, and to otherwise
provide for delivery and facilitate the disposition, movement, taking, receiving,
accounting for, transferring and crediting the ownership and transfer of SCPPA Facility
Output from the respective Points of Delivery to any other points or destinations, as
determined by the Project Participants. Supplementary Services include but are not
limited to delivery point swaps, stranded energy/transmission curtailments, tiepoint
liquidity improvement, transmission loss savings, tiepoint price spread optimization, on-
peak/off-peak exchanges, peak shifting exchanges, seasonal exchanges, and both
simultaneous or non simultaneous green energy exchanges.
117. Supplementary Services cost component. "Supplementary Services cost component' is
defined in Section 4.8.4 and Section 4.9.6.
118. Tax Counsel. Nationally recognized legal counsel having background and experience in
tax-exempt financing and selected by SCPPA to evaluate and advise regarding the
Federal Tax Law Requirements with respect to specified cases, transactions and matters
from time to time.
119. Total Monthly Costs. "Total Monthly Costs' has the meaning described in Section 4.7.
120. Transmission Services cost component. "Transmission Services cost component' is
defined in Section 4.9.2.
121. Transmission Losses. "Transmission Losses" means the transformation and transmission
losses associated with the delivery of SCPPA Facility Output from the Point of
Interconnection to each respective Point of Delivery calculated in accordance with the
Transmission Provider's tariff applicable to the associated Transmission Services.
90 18782 i.2 A-13
122. Transmission Provider. "Transmission Provider' means Western Area Power
Administration of the United States Department of Energy or any other Person(s)
providing Transmission Services.
123. Transmission Services. "Transmission Services" means the transmission and other
related services required to transmit SCPPA Facility Output from the Point of
Interconnection to each of the respective Points of Delivery.
124. Transmission Services Cost Share. "Transmission Services Cost Share" is defined in
Section 4.11.
125. Uncontrollable Forces. Any Force Majeure event and any cause beyond the control of
any Party, and which by the exercise of due diligence such Party is unable to prevent or
overcome, including but not limited to, failure or refusal of any other Person to comply
with then existing contracts, an act of God, fire, flood, explosion, earthquake, strike,
sabotage, pestilence, an act of the public enemy (including terrorism), civil or military
authority including court orders, injunctions and orders of governmental agencies with
proper jurisdiction or the failure of such agencies to act, insurrection or riot, an act of the
elements, failure of equipment, a failure of any governmental entity to issue a requested
order, license or permit, inability of any Party or any Person engaged in work on the
Project to obtain or ship materials or equipment because of the effect of similar causes on
suppliers or carriers, or inability of SCPPA to sell or issue its Bonds. Notwithstanding the
foregoing, Uncontrollable Forces as defined herein shall also include events of Force
Majeure pursuant to the Power Purchase Agreement, as defined therein.
126. WECC. The Western Electricity Coordinating Council, or its successor.
127. [Reservedl.
9018 782 L2 A-14
APPENDIX B*
SCHEDULE OF PROJECT PARTICIPANTS
CAPACITY AMOUNTS
OUTPUT ENTITLEMENT SHARES
PROJECT COST SHARES
POINTS OF DELIVERY
Project Participants
Capacity Amounts
Output
Entitlement Shares
Project Cost
Shares
Points of Delivery**
(MW)
(as Designated by
(at Points of Delivery)
Project Participants)
Anaheim
10 MW
11.6279%
9.9010%
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
Azusa
2 M W
2.3256%
1.98020/.
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
Burbank
27 MW
31.3953%
26.7327%
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
90187921.2 B-1
Reserved
-0-
-0-
-0-
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
Glendale
12 MW
13.9535%
11.88120/,
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
IID
15 MW
100.0000%
14.8515%
161 kV Bus at Blythe
Substation or, in the
event designated in a
notice to the
Transmission Provider,
the 161 kV Bus at
Knob Substation.
Pasadena
I O MW
11.6279%
9.9010%
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
90187821.2 B-2
Riverside
25 MW
29.0698%
24.7525%
500 kV Bus at
Marketplace Substation
or, in the event
designated in a notice
to the Transmission
Provider, the 500 kV
Bus at McCullough
Substation
Total
101 MW
100% at each discrete
100%
Point of Delivery
*Appendix B may be revised in accordance with the provisions of Section 21.1 of this Agreement.
**The notice to the Transmission Provider with respect to a change in the Designated Point of Delivery shall be provided by SCPPA upon a timely
request by the Project Participant.
90197921.2 B-3
APPENDIX C*
SCHEDULE OF PROJECT PARTICIPANTS
DELIVERY POINT OUTPUT COST SHARES
TRANSMISSION SERVICES COST SHARES
POINT OF INTERCONNECTION ALLOCABLE SHARES
INDENTURE COST SHARES
Project Participants
Delivery Point Output Cost
Transmission Services
Point of Interconnection
Indenture Cost
Shares
Cost Shares **
Allocable Shares
Shares
Anaheim
11.6279%
11.6279%
9.9010%
9.9010%
2.3256%
2.3256%
L9802%
1.9802%
Azusa
31.3953%
31.3953%
26.7327%
26.7327%
Burbank
-0-
-0-
-0-
-0-
Reserved
13.9535%
13.9535%
11.8812%
11.8812%
Glendale
100.0000%
100.0000%
4.8515%
4.8515%
IID
11.6279%
1 L6279%
9.010%
9.010%
Pasadena
29.0698%
29.0698%
24.7525%
24.7525%
Riverside
100% at each discrete Point
100% at each discrete
100%
100%
Total
of Delivery
Point of Delivery **
*Appendix C may be revised in accordance with the provisions of Section 21.1 of this Agreement.
**Less applicable transmission losses.
90187821.2 C-1
APPENDIX D
OPINION OF COUNSEL TO PROJECT PARTICIPANTS
[Date]
Southern California Public Power Authority
c/o Executive Director
225 South Lake Avenue, Suite 1250
Pasadena, California 91101
[Underwriters for the Bonds]
[Bond Insurer or credit enhancement entity]
Ladies and Gentlemen:
We have acted as counsel to the [City of Anaheim][City of Azusa][City of
Burbank][City of Colton][ City of Glendale][Imperial Irrigation District][the City of
Pasadena][the City of Riverside] as Project Participant (the "Project Participant') under the La
Paz Solar Tower Project Power Sales Agreement dated for convenience as of November 1, 2010
(the "Power Sales Agreement') between the Project Participant and Southern California Public
Power Authority ("SCPPA").
We have examined originals or copies of those records and documents we
considered appropriate for purposes of this opinion. As to relevant factual matters, we have
relied upon, among other things, the Project Participant's factual representations.
We have assumed the genuineness of all signatures (other than the signatures of
persons signing the Power Sales Agreement on behalf of Project Participant), the authenticity of
all documents submitted to us as originals and the conformity with originals of all documents
submitted to us as copies. To the extent the Project Participant's obligations depend on the
enforceability of the Power Sales Agreement against SCPPA, we have assumed that the Power
Sales Agreement is enforceable against SCPPA.
From such examination, on the basis of our reliance upon the assumptions in this
opinion and our consideration of those questions of law we considered relevant, and subject to
the limitations and qualifications in this opinion, we are of the opinion that:
1. The Project Participant is a municipal corporation organized and
existing under the laws of the State of California and authorized under
[the City Charter of the City of Anaheim)[the laws of the State of
California][the City Charter of the City of Burbank][the laws of the State
of Califorma][the City Charter of the City of.Glendale][the laws of the
90187821.2 D-1
State of California][the City Charter of the City of Pasadena][the City
Charter of the City of Riverside] to furnish retail electricity within its
service area.
2. The Project Participant is empowered under [the City Charter of the
City of Anaheim][the laws of the State of California][the City Charter of
the City of Burbankl[the laws of the State of California][the City Charter
of the City of Glendale][the laws of the State of California][the City
Charter of the City of Pasadena][the City Charter of the City of Riverside]
to enter into the Power Sales Agreement and to perform its obligations
thereunder.
3. The Power Sales Agreement has been duly authorized, executed and
delivered by the Project Participant and, assuming due authorization,
execution and delivery by SCPPA of such Power Sales Agreement,
constitutes the legal, valid and binding obligation of the Project
Participant enforceable in accordance with its terns, subject to applicable
bankruptcy, insolvency, reorganization and other similar laws affecting
creditors' rights generally and to general principles of equity, to the
exercise of judicial discretion in appropriate cases, and to the limitations
on legal remedies against municipal corporations in the State of
California.
Certain documents that are ancillary to the Power Sales Agreement provide that
they are to be governed by the laws of the State of Arizona. We express no opinion as to those
laws or their applicability to matters covered by this opinion.
Our opinion in paragraph 3 as to enforceability is subject to the unenforceability
of provisions waiving a right to a jury trial. Also, a court may refuse to enforce a provision of the
Power Sales Agreement if it deems that such provision is in violation of public policy.
We express no opinion with respect to your ability to collect attorneys' fees and
costs in an action if you are not the prevailing party in that action (we call your attention to the
effect of Section 1717 of the California Civil Code, which provides that where a contract permits
one party thereto to recover attorneys' fees, the prevailing party in any action to enforce any
provision of the contract shall be entitled to recover its reasonable attorneys' fees).
We express no opinion as to any provision requiring written amendments or
waivers insofar as it suggests that oral or other modifications, amendments or waivers could not
be effectively agreed upon by the parties or that the doctrine of promissory estoppel might not
apply.
It is our opinion that no person, other than SCPPA, has setoff rights against
payments due from Project Participant. We express no opinion with respect to any
indemnification, contribution, penalty, choice of law, choice of forum, choice of venue,
severability or waiver provisions contained in the Power Sales Agreement.
90187821.2 D-2
We express no opinion as to any agreement or document referred to in the Power
Sales Agreement or incorporated into the Power Sales Agreement by reference, or any agreement
other than the Power Sales Agreement itself, or the effect of any such agreement or document on
the opinions herein stated.
The opinions expressed are matters of professional judgment and are not a
guarantee of result. The law covered by this opinion is limited to the present law of the State of
California. We express no opinion as to the laws of any other jurisdiction.
This opinion may only be relied upon only by the addressees hereto in connection
with the issuance of the Bonds (as described in the Power Sales Agreement). It may not be used
or relied upon for any other purpose or by any other person, nor may copies be delivered to any
other person, without in each instance our prior written consent, except that this opinion may be
included in the closing binder memorializing the Power Sales Agreement.
This opinion is expressly limited to the matters set forth above, and we render no
opinion, whether by implication or otherwise, as to any other matters. This letter speaks only as
of the date hereof and we assume no obligation to update or supplement this opinion to reflect
any facts or circumstances that arise after the date of this opinion and come to our attention, or
any future changes in laws.
Very truly yours,
90187821.2 D-3
APPENDIX E
OPINION OF COUNSEL TO SCPPA
[Date]
[Project Participants]
[Underwriters of the Bonds]
[Bond Insurer or credit enhancement entity]
Ladies and Gentlemen:
I am acting as counsel to the Southern California Public Power Authority
("SCPPA") under each La Paz Solar Tower Project Power Sales Agreement dated for
convenience as of November 1, 2009, between a Project Participant and SCPPA (collectively,
the "Power Sales Agreements'), and I have acted as counsel to SCPPA in connection with the
matters referred to herein. As such counsel I have examined and am familiar with (i) those
documents relating to the existence, organization and operation of SCPPA, (ii) all necessary
documentation of SCPPA relating to the authorization, execution and delivery of the Power Sales
Agreements and (iii) the Power Sales Agreements.
Capitalized terms used herein not otherwise defined shall have the respective
meanings ascribed thereto in the Power Sales Agreements.
I am of the opinion that:
I. SCPPA is a joint powers authority duly organized and validly existing under
the Act, as amended, and the Joint Powers Agreement dated as of November 1, 1980, among
SCPPA's members, as amended, and has full legal right, power and authority to execute and
deliver, and to perform its obligations under, the Power Sales Agreements.
2, The Power Sales Agreements have been duly authorized, executed and
delivered by SCPPA, and, assuming due authorization, execution and delivery by each of the
parties thereto other than SCPPA, the Power Sales Agreements constitute the legal, valid and
binding obligations of SCPPA, enforceable against SCPPA in accordance with their respective
terms.
3. To the best of my knowledge, SCPPA is not in material breach of or default
under, and the authorization, execution and delivery of the Power Sales Agreements and
compliance with the provisions thereof, will not conflict with or constitute a breach of, or default
under: (i) any instrument relating to the organization existence or operation of SCPPA; (ii) any
loan agreement, lease agreement, indenture, bond, note, resolution, commitment, agreement or
other instrument to which SCPPA is a party or by which it or its property or assets is bound or
90187821.2 - E-1
affected, and no event has occurred and is occurring which with the passage of time or the giving
of notice, or both, would constitute a material default or event of default under any such
instrument, which breach or default would have a material adverse impact on the Power Sales
Agreements or the ability of SCPPA to comply with its obligations under the Power Sales
Agreements; or (iii) any applicable constitutional provision, law, ruling, administrative
regulation, ordinance, judgment, order or decree to which SCPPA (or any of its officers in their
respective capacities as such) is subject.
4. To the best of my knowledge, as of the date hereof, there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, government
agency, public board or body, pending or, to the best of my knowledge, threatened against or
affecting SCPPA or any of its officers in their respective'capacities as such (nor to the best of my
knowledge is there any basis therefor), which questions the right, power or authority of SCPPA
referred to in paragraph 2 above or the validity of the proceedings taken by SCPPA in connection
with the authorization, execution or delivery of the Power Sales Agreements, or wherein any
unfavorable decision, ruling or finding would materially adversely affect the transactions
contemplated by the Power Sales Agreements, or which, in any way, would adversely affect the
validity or enforceability of the Power Sales Agreements or the ability of SCPPA to comply with
its obligations thereunder.
Insofar as the foregoing opinions relate to the legal, valid and binding effect, and
the enforceability, of any instrument, such opinions are subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and are subject, as to
enforceability, to general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
The opinions expressed herein are based upon the law and other matters in effect
on the date hereof. The opinions expressed are matters of professional judgment and are not a
guarantee of result. I assume no obligation to revise or supplement this opinion should such law
or other matters be changed by legislative action, judicial decision, or otherwise, or should any
facts or other matters upon which I have relied change.
The opinions which are set forth or which are expressed herein are limited to the
laws of the State of California.
This opinion is furnished exclusively for the benefit of the recipients to which it is
addressed. This opinion may not be provided to, made available to, or relied upon any other
party without prior written consent, except that this opinion may be included in the closing
binder memorializing the transaction.
Very truly yours,
Richard M. Helgeson, Esq.
General Counsel
Southern California Public Power Authority
90187821.2 E-2
APPENDIX F
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
ENVIROMISSION (USA) INC.
DATED AS OF NOVEMBER 1, 2010
90187821.2 F-1