20051026Avista 1st response requests 1-3.pdf

Avista Corp.
. 1411 EastMission PO Box 3727
Spokane, Washington 99220-3727
Telephone [phone]
Toll Free 800-721-9170
October 25 2005
Scott Woodbury
Idaho Public Utilities Commission.
472 W. Washington St.
Boise, ill 83720-0074
RE:
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A VU-05- 7 / Thompson River Cogen
~~~'iI'STA~
Corp.
A vista Corporation hereby submits three copies of its response to IPUC Staff Data Request Numbers
1 through 3.
Questions regarding these responses should be directed to either Bill Johnson (509-495-4046) or Bob
Lafferty (509-495-4460).
Sincerely,
Mike Pi
Rate Analyst
Avista Utilities
Enclosures
CC. Richardson
Uda
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATI(9NI \/ E 0
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JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO:
Idaho
Av'U-05- 7
IPUC
Data Request
DATE PREPARJj:q: ,-lQ-JJ-0~L1
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RESPONDER: "in;)Qbp,$p
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DEPARTMENTtTii 'TRow~
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REQUEST:
What purchase price would be offered by A vista if the Thompon River Cogen facility is deemed
to be greater than 10 aMW and thus not eligible for the published avoided cost rates? Please
provide an explanation of how this price is determined, along with supporting documentation.
Include input and output AURORA files if that is the basis for determination of the price.
RESPONSE:
The Company has made an offer to Thompson River Cogen based on the plant being in excess of
10 aMW and thus not eligible for the published avoided cost rates. The purchase price offered to
Thompson River Cogen was based on the Avoided Cost published on page 6-32 of the
Company s 2005 Integrated Resource Plan (IRP). The table of avoided costs from the 2005 IRPis attached.
Because the first year of the IRP avoided cost is 2007, forward market prices were used for the
years 2005 and 2006. The 20-year price stream, 2005 through 2024, was then levelized and
tilted at a 1 % escalation rate per year. The annual prices were then seasonalized using a factor of
08 for the months of July through February and .84 for the months of March through June.
Finally the seasonal prices were split into on-peak and off-peak prices assuming a $5/MWh
differential between on-peak and off-peak prices. The worksheet showing these steps is
attached.
The input and output AURORA files used to develop the IRP avoided cost are being provided
with Avista s data response to Staff No. lC. The materials provided contain CONFIDENTIAL
information and are separately filed.
6 Summary This section focused on market prices used
to select the Preferred Resource Strategy, and
discussed many regional costs and benefits of
certain market actions. The next section will
focus on how the Company used this information
in creating the PRS, and the effect of the various
scenarios and futures on the PRS.
Using a regional approach to calculate market prices
and to calculate the value of resource options
provides for more robust results when compared to
an analysis that separates resource modeling from
price forecasting. The Company also believes that
using a stochastic approach to evaluate risk is more
valuable than simply creating scenarios.
Table 6.4: Avista Avoided Costs Compared to Mid-Columbia Price Forecast ($/MWh)
2007 51.49.2017 46.49.
2008 46.47.2018 47.49 50.
2009 44.44.42 2019 50.51.
2010 42.42.2020 51.52.
2011 43.44.2021 52.54.
2012 41.44.2022 53.54.
2013 42.44.2023 54.56.
2014 42.45.2024 55.57.
2015 44.46.2025 57.57.
2016 45.47.2026 59.59.42
1 0- Yr.44.20- Yr.Lev. Cost 45.Lev. Cost 47.48.
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JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
REQUEST:
RESPONSE:
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
Idaho
A VU-O5-
IPUC Staff
Data Request
Staff -
DATE PREPARED: 10/24/2005WITNESS:
RESPONDER: LaffertyDEPT: Energy Resources
TELEPHONE: [phone]
Please provide a copy and citation of the "net output" rule of FERC as
referenced in Avista s Answer to the Thompson River complaint. If the "net
output" rule of FERC were to be adopted by the Commission in this case for
purposes of measuring the output of the Thompson River Co-Gen facility,
please describe or indicate by way of sketch exactly where the point of
measurement of the facility s output would be.
Please find the following attached citations concerning FERC's ruling on
net ouput."
1) Connecticut V alley Electric Company Inc. v. Wheelabrator Claremont
Co., LP et. aI., 83 FERC 61 116, at p. 61,410 (1998) (discussion
beginning p. 61,416).
2) Penntech Papers, Inc. 48 FERC 61 120, at p. 61 422 (1989)3) Occidental Geothermal, Inc. 17 FERC 61 231 , at p. 61,444 (1981)
Please see drawing labeled "Thompson River Co-Gen Facility Net Output
Appropriate Measurement Location" showing the appropriate location at
which facility net output should be measured.
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61,410 Cited as "82 FERC 1 ..845 2-25-98
where transportation service could be provided
without fuel being used and that the Commis-
sion permitted them to charge less Cor fuel
when those specific Cacili lies were use~. K~h
states its riling is consistent with the theory in
these Ca5e$ in that it has proposed a set oC
points. pipeline interconnects. that would
eligible Cor the DNFS service when transporta-
tion between those points meet certain operat-
ing criteria.J The only difference, according to
Koch, is that it must identify the discrete
pieces of pipe which would not require fuel on a
daily basis, rather than on a permanent basis,due to the operating characteristics of its
system.
With regard to. cost shifting from DNFS cus-
tomers to other customers. Koch states it wilJ
bear the burden of showing that transactions
that occur during the base and test periods did
not in (act require fuel. If it does not meet this
burden oC proof, it will include these volumes in
the Cue I calculation and reduce the fuel
retainage percentage appropriately for all cus-
tomers. Under this proposal, Koch claims it
will still. bear the risk of under-recovery of fuel
between rate cases, just as it does now.
Koch also proposes to eliminate the lost and
unaccounted for gas percentage from its propo-
sal. It states ' that the currently effective fuel
percentage -is 1.6 percent of which 0.3 percent
is related to lost and unaccounted for gas.
Thus, it is proposing to eliminate only 1.3 per-
cent. the Juel,charge, Crom its charge for DNFS
serv ice.
In the alternative, Koch asks the Commis-
sion to allow it to provide the DNFS service on
an 'experimental basis for six months. beginning
February 1, 1998. At the end of this period.Koch states it would provide a report detailing
the transactions, the criteria used to make the
decisions. and actual experience of fuel used in
the specific, transactions.
Discussion
In, both Williams and Florida Gas, the Com-
mission required the .pipelines to identify spe-
cifically the transactions which do not involve
the use of fuel. In both cases, the pipelines
identified specific receipt and delivery points
and specific portions of their systems that did
not require fuel. Here, Koch initially stated' the
service would be offered at points that were,
pipeline interconnectsS and now states that the
service is for transportation between those
points.' It is unclear whether Koch is proposing
the DNFS serviCe 0 Cor transportation 'Crom any
receipt or' any delivery ' point to"8 pipeline in-
terconnect, or as it states in its request. for
transportation between pipeline interconnects.
I~ any event. contrary to the cited cases, Koch
has not identified specific portions oC its system
Cor which it claims that fuel is not required Cor0; transportation service.
It is also unclear what criteria Koch will. use
to determine that fuel is not required. In Wil-
liams and Florida Gas, the transactions were
backhauls and transportation on unpowered
laterals, both regarded as requiring no Cuel.' In
its proposal, however, Koch stated that its de-
~ermination oC eligible points will be b~d
the volumes tha~ are scheduled to flow Cor the
month and on the scheduled nominations Cor
the previous se~en days.7 It al~ stated that the
points would be $elected on the criterion that
theoretically" . the transaction would use no
fuel.8 The Commission finds these criteria are
vague. and, by Koch's own admission, do not
identify transactions that would not actuaJly
require fuel. Thus. Koch's proposal is inconsis-
tent wit~o the Commission s decisiQns in Wil-
liams and Florida Gas because it does not
supply objective criteria to determin~' transac-tions that do not actl~ally require fuel Cor
transportation 0 .
Since' ~och's proposal is incl?nsistent with
Commission precedent. it is ounnec~sary to
reach Koch's bther arguments.
The Commission orders:
The .request for rehearing is denied.,
0 .(1f 61,116)
Connectic1i~ yalley Electric'pompany~ Inc. v. Wbeelabrator Clare~ont Com-
any~ L~P.. Wheelabrator Environmental 'Syste~s ~n:c.. Sign3;1 Enyiron-
mental Systems.-Inc..SES Claremont t~inpan:r. L.. NHJyT o~ne~gy
, J Koch lists the inter~onnects in~~it A to its
Requ'est.
' ., ,' ". .. ..- , - ,
C Each day, key portions of Koch's system may
r'eve~ flows; Request at 3 n.
5 Filing of N~vember 12, 1997 at 2, Docket. No.
RP9~6-000.
1f'61.11f?
, ~
~~u~~ ~l 3 and ,Exhibit A.
7 Filing o(Nov~mber 12. 1997 at 2, Docket No.RP9~6-QOO.
" ,. ,
8 Filing of November 12,., 1997.. at 3,' Doc!cet ~o..
RP9&46-000.: oX .
' , "
0 ;'
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Federal Eneru,Ga,lidelines
851 4-8-98 CommisSion Opinions, Orders 'and, Notices 61,411
rporation, and Wheelabrator New Hampshire Inc., Docket Nos.
" EL94-10-000 and QF86-177-OO1
Carolina Power & Light Company ~. Stone Container Corporation, Docket
Nos. f:L9+62-:OOO ~~d QF~S:-~O2-OO5 .
Niagara M'ohawk Pow.er Corporation v. Penntech Papers, Inc., ,Docket Nos.
, EL96-1-OOO and. QF86-722-OOJ
..
Order Granting !Req~ests for ,Declaratory' Order 'in Part and Denying Requests
for Declaratory Order ,in Part~ Denying Requests for Revocation of QF
, ~~~tus, a:~d' Annou~cing ,Policy ~oncerning the ~eg~latory ,Consequences
arid Remedies for Sales in Excess of Net' Output
' " ,,;; , " "' , ", ,' ",, "
:' (Issued February 11.1998)
, ., ' , ': '
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, '-, "
Before Cominissioners:'James J. Hoecker;Chair~an; Vicky A. Bailey, William'
. ~;, ,
L. Massey, Lmda Breathitt, and Curt.I:I.~~~rt, Jr.
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I. Introduction :
: -
rule (I8'R"~ 292.3O3(a).(l))'(I997)), which.
This order addr~ three "cases "culTent1y t~e Q~~ arg~e, entit~es' QF facilitieS 'to Sell their
before" the 'Commission: Connecdcut Valley gross output. ,and simultaneously 'buy" station
Electric Cciirlpany, Inc.v: 'WneeliJbrator ClaJie.. power needs, Cram the utility-purchasers ~f: QF
mont Coihpany,': P:. ' et' al., Docket NOs~ p6wer~' A number, oFState regu)atory ~uthori-
EL94-10-000 and QF86-I77-00I; 'Carolina ties have drafted standatd -QF power sales con-
Power, :L;ght Company v. stone COntainer tracts based on the apparent beJie! that the
Corp., Docket Nos. EL94-62-000:' ',and simultaneous buy~lI' rol~ permits, QFs tQ sell
QF:85-.JO~;QO~; : ~d ': Njagara, Mohawk Power grPS5 :out:P1Jt, to utilities , and pur~hase, back
GprP9ratjo~ :'!i- PCJ?n~et;h Papers, ln~.. pocket st"'tion'po~r needs (often at a:lowe,r rate). ' '
Nos~ ,EI:.~6.: l-OOQ and
, ,
Qf':89-7~-OO3. The thr:ee ' TI1e utili ty-purchasers of F power point to'
cases r~se: ~h~",iollo~j~g ..iss~~: (1) WAether a Commission precedent in slating that QFs mayqualifying I~Uity :(QF.)~:~n~er ,the. Public,Util- only sell net output. They argue that under. the, ity Regu1~to9' J'
,,?,
I~c~~, ~c;:t o~: ~9!~.JPURPA) CQmm~ssion pr~cedent..
, ,
;;1, QF'lI!ay only ~11 itsand the, ~o~misslon~s PURPA'regulations. net loUtp~t; ,.!aciJity th~,t seJ1~,m.o~e:.t~, ,it~iriay'SeU: its gT~s-:-o~~p\it':-as oPPoSed"lo i.s':net n~t output ~ot satisfY. the.. pwq~~hip: re-,
'" , ", , ", ..- ,
output: "(groSs' outj:nit 'less station power 'needs q~ir~m,ents.(or ,QF,status"undeI:'~~q~s '3(1~and-Jine joses'lb"the point 'of'interconnect:ion).
~q ,
(18) 'of ,~e f.edera,l P,~er ~~~. (J;':PA). apdto' the; utility~purcnaSer.' and' ~(2) if rio t. wtiat ~~,tion ?9?~P6,"of... t~ (C9mp1,is~iqn:'~:..r~guJC!-:-,are' the:"rcgUlatorY consequ~ces aIM: remedies ~ioru;;' ~nl~,tl,1~ ~Qc;r~~ental,c~p'!,~ity, ,js s~~~lyif' a ' faCility'
' '
~eJls' m6re!::output='1han ,js from ,cog~~~ti(;)O
p'~'
~~alJ: pQwer-: prQduction,
permissible? :' :':.
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.. f;;1~i1i~i~.$ee: iT""rn~ F.aJJs ~~m~tf:C! P~n~r,:,
Inthis'oroer-tneCorrimissi'Cin:.
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6~:,~ 11.
(1) reitet~tes i~s 199fdeteifujiJ'cit1d.:i"ihata" (199.nfT~~ F;#,s).
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QF ~,ay I)o~,~ll iq,e:!(;c~s of i!::S QPt;"O\,1~p'u~;" . " The,initial issue.:raised by the:,t:J:iree'c~'is
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~.I, whether-,:t:heQFs':and the.Stateregulatory,au-, (2) anIJounces'a Comnl1sslon,pobpy r~ard,.
' ,
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, ontles' ,correct y: aye _lDterprete "t e .slmu -109 the regu,latory c~psequ,ences, oC pC!-St, 304, taneous buy-sell: r-u1e lri .Jight :0(,; :Commissionfuture sales by QFs 10 excess !)f..net ':Qutpu,t;: preceaeni.:, In , addressing: this . initial :issue;orie.
~~::,;..::,:, "'; ;',
,r
, ~:"._
) oftheqtiestionS:that'anses:is:.the period,of..time'
(3)" fll)9~' ,~ha~ revoca:tjQn::~f:QE':~~aJu$::;~s: dver:which"a'faci1ity.~s output' st1ould 'be'calcu-
. '
Jl.9t warr~tedjn the: thre~ ~,aqdr:~ :in lated: -This;question, arises..because'
~ '
generation,' tni~ or:q~r.:.I;:;: :'1:"
"';:':" (,:::.,-,,, ,
. facility s actual output varies over"tinie,du~ to
,.,-, .-....- .. ,
anumber..oC extef,nal3actor:s.inc1uding ,temp-er-:-,
ature" humjdiW, and fu,~ quaUty. T~, QFs
hav.e' argu,'eci 'that 'th'if: Conimi~sibtr-sfibiild -not
rhe~ke::~a~iti~i ;ri~t
::'~~~~~(;
:dn' :
;:.
, ~ontirluolis-
bi1s&
' \,
bUl.Sk
, ~~
id:lo~F r 'cl "to"SeI(u
, ....,
~i\
_'."
J.'their net capacity at any time. This is be-
C'ause/,'if':a:;;~F buys 'back: its :station
" :
po'Wer
;::.::,:..:;,:, ,,"::', :!:::,
;i:;";:~;"
" ,.., . "..--.. ..., - .'-
li. Suiiiniary'--
The three cases arise 'beCau~cr ~i::::seert-.idg:
coQf1iF'J, ~t~t;~n -il ,~9m~!ssion. regulatjoQ .im-plementing " PURPA ' and 'Coi:aj~i~~~p; "P.r.~c:;-dent under PURPA. The Commission has a
regulation :. ca1led, :th'e:
, "
~siiiiultane'olis. ;biJy"sdl"
~"~~~,
..':i'
' ::":';~~:;' '~..";::" "
IA OF's c':erofidl" kiet '~ap'a'city: i:Filie: i'riaiiirium
. fiet output of-the 'fad6tY'which:can ~'achie,;ed S8:Cely:'
and: 'feliaDIy.' under'"tk most : favol"iible C:=onCiitions
likely to occili-:overii period'ofsevertiryean.':~'
;;'
:i-:.
FER,Riiporu,
::":' :'~~;:,::'-;!
,rS1i1:16t
, "
61,412 , Cited as "82 FERc-,851 ,4-8-98
needs. it is possible for the QF at times to sell III. Background of Pending Cases
more than its actual net output but still sell The three cases now before the Commission
less than its certified net capacity. As a res~lt, all involve allegations by a purchasing electricthe period' over which net output is measured utility that a Commisslon-certified QF lias
will affect how much energy a QF may sell. made sales iei excess of its net output and that,
The second issu~ raised is, what are the regu- therefore, the QF no longer meets the 'owner-
latory consequences and remedies if the Com- ship requirements 'for QFstatus, contained in
mission finds that a facility has sold more FPA Section 3(17)(CXii) (Cor a qualifying small
output than is permissible. This issue :involves ,power production facility) .and FPA Section
whether such a facility should be decertified:as ' 3( l8)(BXii) (Cqr a qualifying' cogener:alion Cacil-
a PURPA QF, In addition, it, presents how.tlle . ,tty). ';I;"hose sectio~s oC iJ:1e F~A were ~dded by
Commission should calculate the ra~~, under the P~RPA. They provide 'that QFs must be
FPA during any period of non-compiicfuce and "'owned '.by a person not primarily engaged in
whether such rates should be appHcable to all , the gener~tiQn or sale of electric power (other
of the facility s sales during the period or' non~ than electric power solely from cogeneration
co~p'liance or just the incremental amou~,t of fa,t;jlities or , small powe ' pro~uction
the sale above the permissible level., Final1y"we "facilities)."Z
, ,
must consider whether, and if so under -"vhat , The three QFs with cases no~ before uscircum!!tances, to revoke or permit the cQntin~- claim, notwithstanding Commission precedent
iI1g app1icabiUtY. oC PURPA regulatory exe~p~ on the subject di~ussed below, that, the Com-
ti.Q~s .(see ~8 R. ~ ~.292.~J, .60~ 0997)) mission\~)~per~it tl1e s~e of ~ross output.unng the, pe,n9rl of- npnco~phance. A, related They cite too thj: "simultaneous buy-sell" rule.questio~ is , whether ,~o" reform , QF contracts sut)Sections 292.303(a) aD'd, (bi, of our reguia-with u~ilii~es fpr the -sale of output,abpve per- lions provide a$CoIlows:,
, " ", "::
mi!,'si ble levels., ' E'~~~ic " uiiUty obligatio':'s,under, thisFinally, there is an: issue as to the effective ' subpart., I
, '
date: ~f"any 'c~sio
~, ,
firSt :~ith respect ,to ~,~6 ', (a) Obligation to purchase' froirJoclualifylng
t~ree Case-specICI~ disputes before the Commls- facilities, Each' electric' utility' shallon",and then w.~th respec to'any',other;,QFs purchase in '~i:cordance 'with: ~292:304,(3)'
that, maY:,ge, ~lIing, in ~ces~,of permissiple ': anY :ene
;gy '
and capacity,which ':mad;l~v~~.
, :","'" ,
, ,avail:able froma'qualifyingfacility:' :i'
" In: this' order, ..~e' aimounce that,' as" a:'le~al 'i)'Di~eciiy t9, th~'~ibdnc(uti1ity:
' ..: , "
t~~~. :Q~: ma~~ot;seU'in~ess : i~s n~!'
.. '
(2) jndi;ei:tIy t~ 'th~ ,ei~c~ric'uthity,i~,:~~Qi;;u .Put. , ~~e;,er
: '
~ause ~ a, ac o ,c, an' ~Y dance with pm-agrnpiHd) ,of.this sectioiJ~ "
' '
t~"ommlSSlonSSlmutaneous ,uy-se"rue; ,":i
:" , ,,:, , ;'" ~"...
the' ComffiisSirin will not revoke the QF'status :t,(b)::9bl!ga,t)on ,to, ~11. .tq, qualifymg, ,lacl1,-
oC arty fac'i"liW'which :made sales' in excess of 'fief : o~Je.s. );~:~ch. ~I~ta:c utl~J\y"; ~h~n
: ,
~II, 0 t9: "
~y,
output pursuafit to a'contract eritered'into:orl "quaJlfYJ , !~C;:lhty.. 11), accprd~~c~';wJth
or heCol'e the date oHssuance oC' Turners: FaIls.' ~ ~92.;305, l~),. ,any ~Qergy: and, c~pacity, re-
We pick this, date 'beCause tli'at db:isi()lf re-' quested by the qualifying facility.
,:. ,
rrioved any' ambiguity 'concerning' the' effect' of Below we di~u,~: th~ :p~icu~~ fa~~s and
such sales on a facility s :QF 'status. ': also ~guments r~sed ~n ,~ach of the cas~s
, , '
find-thatafacility snet,output,shouldbe'n'iea- "
, ..,,::~', "' :,:, ' "', ... ~
surccton an hour-by-hour basis.We,announce:a A. ConnectJcut Va1I~y Electric Company, !nc.
policy, regari:ling the r.eg-ulatory:consequeIices of v~: Whee.labratoroClarelh"ont Company; L ~ et
past:and,Ititur.e sales in excess of !let output.: a1.(Docket'N~:EI:.9+-'lO..()O()'an.d'
FinaI1y.,'in applying' the legal'and,pblicy,deter,. QF86-:I77-OO1)
,"':",.. ;" ': :, "
minations,announced,in.thisor-der-to the three, Connecticut Valley Electric Company,' Inc.
cases ,pending~ before the,Commissiori",we find (ConnectiCut' Valley): filed,a complaint, against
that QF ,revocation is,:nQt:'wan-ant~d' iIi any, of Wheelabf.a:t'or,: Cla,terrionl =Col1'ipany~' L:P.
the ,pending cases.
, ;,
":0
",, '::, , '
: '0 :;
, ;:, ,
: (Claremont).S Claremont owns and 'operateS: a
, " .... '..."" , , ', ;", , .., ..! ' " ,.. ..
:01 Th~e; secti~~~ 'ar~ ,t~~ basis of. t~e' ~oin~iSsjon
Qf' ownerShip crlteria c~ifiei:i'in '5ectioit292:206 of
th~' "C6m';'issi~n '~'
: '
r:eg:~lati~ns~" ~e~ti~~ '292"'~~(.1i)'
s~Cifies' the (::6mmissiori's 'gJrieral"QF: ovmersMp rule:
,::::";;,,y
1~8,.:F-'
~~=
2~a)q~7).
" ,::,, "
,:1
, ,
,'3 r8 F;R:'~292.~Ai'(i997) provides fdr rai~fo~'
:~:~~~;,~~:~~::' ;~,::": ': ~:;: ,~~'' ,
A ,~()~ep'e.r:~~o n f~cili~y:,~ small P9~er ,p~~~ctio!Jfacility may not be owned by a person primarily
.. engaged 'io"'ilie generation' or sale on~lectik power(Qlher:~'el~clrit; power solely,tr:on:t cogener;,lti9,Dfacilitiesor sq1a~1 power"p~~~c~~n:(a~ilr~es):: "'
;' 4, 18 C;F.~29~:~5:(l9970) provi,des .(oriates'for
..,
ut~~!Y~~o!.oQ~s.~, '"On,
..,......"
" ~ J:h~ ,co~plain~ :"!".as ~Is~ fi~~: ~al~Sl affiliates
Cl~p1ont, ,as ,wc:1J ~:,~g~m;t.~~g~~ ~ny~ro~m~n~1
'L61,:~ 1.6?Federal Eneru ;~~i~~.~ne
---./
845 2.25-98 Commission Opinions, Orders and ,Notices 61,413
biomassfuclcd small power production facility
in Claremont. New Hampshire. The order
granting certification of 'the facility as a QF
noted that it had an electric power production
capacity of 4.5 MW. See Signal Environmental
Systems. Inc.-Claremont. 34 FERC ~ 62.212
(1986). C1aremont's partners are all wholly-
owned subsidiaries of Wheelabrator Environ-
mental System~. Inc.. the successor in interest
to Signal EnvironmentaJ'Systems. Inc.
The Claremont facility produces power for
sale to Connecticut Valley using solid waste, as
an energy source. The facUity began commer-
cial operation in March 1987 and. pursuant to
a Powe~ Purchase Agreement approved by the
New Hampshire Public 'Utilities ,Commission
(New Hampshire Commission), has sold its en-
tire output to Connecticut Valley. In addition.
the Claremont facility has purchased sufficient
electric energy from Connecticut Valley to
serve its station power needs.
In its complaint, Connecticut Vaney alleges
that Claremont has been selling its entire gross
output to Connecticut Valley. while purchasing
back station power !"Ieeds. Connecticut Vaney
claim~ that Claremont cannot operate ~s a QF
in the manner specified ,in the Power Purchase
Agreement. Connecticut Valley claIms that
became aware in May 1993.that Claremont'
sale of the facility s gross output 0(4.5 ,MW to
Connecticut Valley. rather than its net output
of 3.9 MW. violated Commission precedent.
For this reason. Connecticut Valley seeks revo-
cation of the qualifying status of the Clare-
mont facility. recision or reformation of ,the
Power Purchase Agreement. a determination
the just 'and reasonable rates for what it claims
is a 'wholesale power sale subject to this Com-
mission's jurisdiction under the FPA, and re-
funds with interest. In the "alternative,
Connecticut Vaney asks the Commission to re-
form the power sales contract to allow Clare-
mont to sell only the ne~ ele~trical output
the facility. and asks that 'Claremont : be or-
dered to refund with interest' all revenues it
received for the sale of the incremental output
between its net and gross output.
Notice of Connecticut Valley s complaint
was publlshcd in the Federal Register. 58 Fed.
Reg. 64.301 (1993). with comments, protests.
or motions to intervene due on or before Janu-
ary S. 1994. Timely motions to' Intervene and
notices of intervention were filed by Granite
State Hydropower Association. Sullivan
County Regional Refuse Disposal District and
the Southern Windsor/Windham Counties
Solid Waste Management District (collectively,
the Districts), ,the New Hampshire Commis-
sion, National Independent Energy Producers,
Southern California Edison Company. the Pub-
lic Utilities Commission of the State oC Califor-
, nia, and the Center for Energy Efficiency and
Renewable Technologies. An untimely motion
to intervene was filed by the City of'Vernon.
California.
In its answer, Claremont admits that it sells
its entire (gross) output to Connecticut Vaney.
It states that this arrangement is required by
the terms of the Power Purchase' Agreement
and was approved by the New Hampshir~
" Commission in settlement of litigation? Clare.
mont states, that the simultaneous purchase
fiUld sale ar~~gement is fully consistent with
this Commission s "simultaneous buy-sell"
rule. Claremont points to the preamble to the
Commission s rules implementing PURPA for
the proposition that the Commission intended
to anow the sale of a QF's gross output wJ1en it
promulgated the simultaneous' buy-sell rule.
Claremont claims that' it is entitled to reiy on
the simultaneous buy-sell rule, until it is
amended or rescinded by the Commission.
Claremont further claims that amendments toCommission regulations may not
retroactive.
Claremont also c1aims that the arrangement
is fully consistent with the New' Hampshire
Limited EleCtrical Energy 'Producers "'Act
(LEEPA). which implements PURPA in New
Hampshire. as wen as the New ~ampshire
Commission s orders' implementing PURPA
and'LEEPA.
Claremont claims thai it, as well 'as' many
other developers, relied, on the Commission
simultaneous buy-sell rule in developing QF
i .
(Foo~J:lote Continued)
Systems. Inc. (the ori~nal applicant ~or: QF Slat~s Cpr
the facility) and its affiliates.
Ii Specifically. Connecticut Valley st~tes , that, for
the sale of the, incremental output. paremont should
refund ,the di!!erence between the avoidc;d ~ost rate
which Claremont makes sales to Conl1ecticut Valley,
and the retail rate at whichClatemont purchases
station power.
7 On February 23, 1983. Claremont s predecessor
in interest. Connecticut Valley and the staff oc the
New Hampshire Commission entered into a settle-
FERC-Reports ,
:: '
ment '~grc:ement which in part provided that Connect-
icut Valley would "'purchase (or'twenty (20) years all
energy and capacity 'oc the '(FaCility) 'at a, priceoC'9j'
per kilowatt hour:. ; . .. (emphasis added). The Settle-
mentlagreement (attached as Appendix,to the com
plaint)' ,was appr9ved ,py ~he ,~!=~, Hampsh~r~
Commission on March 2, 1983. The Power Purchase
Agreement (attached as Appendix 4 to the complaint)
subsequently' was execuled'by the parties on Decem.
l?er.l2. 1984,
, ,
61J 116
61;414 Cited as "82 FERC 1
projects. Claremont statcs, that substantial in-
equities would result if the Commission were to
require Claremont to operate in: a manner dif-
ferent from, what had been planned, when it
contracted with Connec.ticut Valley. It notes
that revocation of its QF status . would. harm
the sanitary districts which supply fuel (solid
waste) to the facility. It .al50 notes that. Con-
necticut Valley s petition, if granted, would
have the effect of jeopardizing the QF status
other facilities in New Hampshire that, puJ'"$u-
ant to other .power sales contracts approved by
the New, Hampshire Commission, sell their
gross output puJ'"$uant to simultaneous buy/sell
provisions. .
: ' . ,
B, Caronna Power & Light Company v, Stone
Container Corporation (Docket Nos.
EL94-62.()()() and QFB5-1O2-OOS)
Carolina ' Power & Light Company (CP&L)
filed a complaint and motion Cor revocation of
QF status against Stone Container Corporation(Stone Container). Stone Container owns and
operates a topping-cyc1e 'cogeneration facility
located at Stone Container s linerboard mill
and manuCacturing plant in Florence, South
Carolina. The facility contains one steam gen-erator and one extraction/condensing steam
turbine-generator.' The extracted steam is used
in the linerboard manufacturing procesS. The
primary fuel for the facility is pulverized coal,
supplemente4 with wood ~aste.
In its initial application for certification,
Stone Container identified its net power capac-
ity as 64.5 MW. Stone Container stated that
the gross power production capacity of the fa-
cility was 68 MW and the auxiliary power
requirements would be 3.5 MW. The Commis-
sion gJ1U1ted Stone Cont~ner s application for
QF status. ~e Stone Container CorporatioQ.
FERC W 62,Q36 (l9~5). Subsequently, Stone
Container sought recertification for a .QF with,
an:~mended capacity (74.8 MW net ,capacity,
79 MW gross capacity, 4.2 MW auxiliary load).
The Commission graI:l,ted recertification. See
one Container Corporation, S5 FERC
W 62~205 (i991).
" .
The electricity generated by the Stone
Container facility is sold to CP&L puJ'"$uant to
a 20-year "Electric Pow~r Purchase Agr.~-
q'lent that wa~, ,executed on Dej:ember 17,
~984,' and WCis subsequently ,amended on
March 9, 1-989~ and on ,October 14. 1992. (The
Power Purchase Agreement and the amend-
ments are ,attached to the 'complaint as Attach-
ment 1.)
84S 2-25-98
p~agraph 100b) of the original agreement
gave Stone Container the option to switch to a
buy-an/~U-aJl" mode of operation. In the sec-
ond amcndmen t to the agreemen t, Stone
Container exercised its option to switch to the
buy-aJl/seU-all mode of operation.
CP&L claims that the switch to the buy-aUf
seU-aU mode of operation, "(b)ecause or the
configuration of the interconnection betw~n
CP&L and the Stone Container racUity" (Com-
plaint at 4), has resulted in Stone Container
selling CP&L its gross output from tl1e facility.
CP&L states that the switch to the buy-all/
selJ-all operation has resulted, in Stone
Container s losing its OF status and becoming
a public uti1ity subject to this Commission
rate regulation under the FPA.
Notice of CP&L's complaint and motion for
revocation was published in the Federal Regis-
ter. 59 Fed. Reg. 24,491 (1994), with com-
ments, protests or motions to intervene due on
or before June 2. 1994. Timely motions to inter-
vene were filed by Westinghouse Electric Cor-
poration, Ge1co Corporation, Granite State
Hydropower Association, and Claremont. Addi-
tionally, a number of late-filed letters contain-
ing additional comments were filed. Motions to
strike some oC the ' motions to intervene were
filed, and answers to' those motions were nted.
Finally, m6tions to' hold the matter in abey-
ance, as weU as a motion to expedite, were
filed.
. I~ its ans"';~r to CP&L's complaint and mo-
tion for revocati€?n. Stone Container states that
it never has sold power to CP&L in excess of
the certified qualifying capacity of the facility.
Stone Container states that it has thus always
been in compliance with the requirem~nts Jor
QF status, as in~erprete~ by the Commission in
Turners Falls and related PURPA cases. Stone
Container stat~ that the essence of CP&L's
complaint is that Stone Container has sold in
excess of what Stone Container, r~f~~ to as its
actuai net output." Stone Container urges
that CP&L~s 'interp~etation of Tl,lrnerS"fa,!ls is
iUogic~1 because it :would attr1buf;e no ~eaning
to the certified qua1i(ying capacity of a
facility.
Stone Container further urges that its mode
of . operation. sinc~ ,1991 l1as been consi~tent
with 'this Commission s 'simultaneous buy-
seU" rule. It also states that CP&L's reference
" the ,configuration of the interconnection
misguided. because CP&L is contractuaUy cnli-
tIed to con~rC?1 the ' configuration 'of the
interconnection.
, ', ,
8 Regardless or the mode of operation, paragraph
33(e) provides that the maximum amount which can
be sold to CP&L is 68 MW,
~ 61,
.. -.-.. -. '. '
Federal EnerlY, ~,,:,Jde!i,,~s
-., ,-.. -,, .. -, --..---, , ',.._,--, ,
84S 2-25-98 Commission Opinions, Orders and Notices 6"1,415,
Finally, Stone Container argues that if it hasnot complied with the Commission s QF regula-tions in any 'respect. the Commission should
exercise its equitable powers .to grant waiver any such violation. In this' regard, StoneContainer points out that any waiver. would be
Cor a limited time (beginning with the date of
commencement oC the buy-all/sell-all mode oCoperation). Stone Container alleges that CP&L
should be equitably estopped from asserting
that the facility has lost its QF status because
CP&L proposed the simultaneous "buy-all/seJ)-
all" provision in. the contract (which Stone
Container exercised) and understood what the
mode oC operation entailed. Stone Container
Curther argues that any non-compliance with
the Com.mission s regulations is the result oC
the Commission s departure from its PURPAregulations' and precedents on which StoneContainer reasonably relied.
C. Niagara Moh~wk Power Corpqration v.
Penn tech Papers. Inc. (Docket Nos.
EL96-1"()()() and QF86-722-OO3)
Niagara 'Mohawk Power Corporation (Niag-
ara Mohawk) filed a' petition 'for, d~laratory
order revoking the QF status oC the cogenera-
tion Ca~ility' operated by Penn tech Papers, Inc.
(Penn tech Papers).9 The Penntech Papers' fa-cility is located in Johnsonburg. Pennsylvania.
Extraction steam from the facility is used to
supply the pulp and' paper mill process require-
ments of Penntech Papers. The facility origi-nally was certified as having 33.433 MW (net)
capacity. See Penntech Papers. Inc.. 36 FERC'62 973 0986). Subsequently. Penn tech Pa-pers sought recertification to reflect. amongother things. an ,increase in generating capac-ity, The Commission granted recertifjcation to
reflect the increase' in capacity. except to the
extent that Penntech Papers proposed to sellits entire capacity (52 MW) to Niagara Mo-hawk and purchase its entire auxiliary load
(5.1 MW) from West Penn Power Company.
See Penn tech Papers. 1m;.. 48 FERC t 61,120(1989).
Power 'from the Penn tech Papers facility is
transmitted over' a 7;.mile 115 kV'line to' the
Ridgeway substation oC' Pennsylvania Electric
Company (Penelec). The power is then wheeledby Penelec, to Niagara Mohawk. Because Niag-ara Mohawk informed Penn tech Papers that, it,would not "dynamically" schedule deliveries.
Cram Penntech. Paper s Cacility,l1 but..wouldrequire that .actual deliveries Cram the Cacility
equal Penn tech Papers' previously scheduleddeliveries with Niagara Mohawk on an hour-
by-hour basis. the transmission agreement pro-
vides that Penelec will purchase from Penntech
Papers inadvertent excess generation producedby the CaciJity. The transmission agreement
also provides that Penelec will seta PenntechPapers "make-up" power Cor delivery to Niag-ara Mohawk at times of inadvertent shortCallsor reductions in facility output.
According to Niagara Mohawk. this provi-sion for the purchase and resale oC make-up
power, by Penn tech Papers means toat
Penn tech Papers is selling Niagara Mohawk
power Cram 'sources other than cogeneration or
small power production facHitles. and thus can-
not satisfy the ' ownership requirements Cor QF
status under the holding oC Turners Falls.
Notice of Niagara Mohawk's Petition for de-
claratory order revoking QF status 'was pub-
lished in the Federal Register, 60 Fed. Reg.
53.917 (1995), with comments. protests or mo-
tions to intervene due on or before November
. 1995.
A notice oC intervention was filed by the New
York Public Service Commission. Timely mo-tions to intervene were fil~ by Penelec and by
Wiliamette. on behalf of Penn tech Papers
, "
In its answer to Niagara Mohawk's peti-tion.J:z Penntech "Papers states that Niagara
. .
, The Penntech Papers facility is now owned 'by
Willamelte Industries. Inc. (Willamette), which pur-
chased the Penn tech Papers plant and assumed the
rights an obligations ,under the Power Purchase
Agreement wjth Niagara Mohawk. While Penntech
Pape
~ ,
is ~ciw an operating division oc Willamette,' ~ewill refer to Penntech Papers as 'the facility owner Inthis order. '
, ,
IIi On February 8, 199;3, Penn tech Papers filed ~
otice oC selC- recertification to reflect its "as built
description of the lacility. In its notice oC 5eU-ree:er-
Ufication, Penntech Papers stated that the maximum
rated outp.ut 01 the lacility would be 57 BQO kW/hr.and that average po~er ge~eration. net' of station~wer ne~ds was ~xpec~~ to be 45,~w.lhi-. (or
394';200 MWH per year). '
11 Dynamic scheduling provideS' the metering:' .
telemet~ri!'lg, computer soCt~e, hard'1"are, commu-nications. engineering and administration requir~;to
FERC Reports.
" '
.- u_-
... . -- - --- ,-, ,.
allow remote generators,lo.follow closely the moment-
to-moment variations 01. a local load. In effect. dy-
namic scheduling elec~ronlcally move;; load out,of the
control area in whi~h it is physically located and into
another control area. See Promoting Wholesale Com-
tition Through , Open Access Non-DiscriminatoryTransmission services by PUblic VWities;,Recqvery of
Stranded Costs by Public Utilities and Transmitting
UtiJiti~ Order No. 888. 61. Fed. Reg. 21.540 (1996).
FER,C Statutes and ,Jlegulations. Regulations Pream.
ble~ )anuary 1991-)une 19$?6 ,131.036, at pp.31,709-10 (1~6)"order on reh'
g.
Order No. 888-A. 62
Fed. R~g. 12.274 (1997). FERC Statutes and Regula-
ti~ns f 3'i;~8; at pp. JO,2JS-.J6 (1997). order on reh'g.Order' No. 888-8. 81 FERC "61.248 (1997) (Open-
Access Rule);
12 The answer was 'filed by Willamette on behaU
01. Penn tech Papers.
,;, .~ '
61, 116
- , , -.. ., , , ..--,..--
61,416 Cited as "82 FERC ,84S 2-25-98
Mohawk's petition rests on significant mistakes
of fact. Penntech Papers argues that Niagara
Mohawk's pelition represents an effort to abro-gate its contract with Penn tech Papers as part
of its ongoing' eHart to renegotiate contractswith the many QFs from which it purchases.
Penntech Papers states that it has adhered
to ,the Commission s directive in its recertifica-tion order (48 FERC at p. 61.424) that it may
not sell,' the gross output of its facility.
Penn tech ,Papers states that the cogeneration
facility is'an integral part of its paper mill, andnot a "PURPA machine:' Penn tech Papers
states that it uses a portion of the output froni.its generating turbine to serve auxiliary loads
(station power), uses another portion ,to serve
loads' associated with its paper mill,and sel1sthe remainder to Niagara Mohawk at a rate of
6" cents per kUowatt,: hour. ,Penntech Papersstates (at 8) that "((Jor (Niagara Mohawk'
convenience. the portion of the net cogenera-
tion output that is sold to (Niagara Mohawk)is 'scheduled' through Penelee, the transmit-
ting utility," In addition, under the terms ofthe tr~nsmission and scheduling agreement
with, Penelec, Penntech Papers is required topay Penelec, as line losses, three percent of the
power it delivers t~ Penelec.
Penntech Papers states that although 'its, net
output undeniably exceeds the amount of
power sold to Niagara Mohawk, the de minimisamount, of .inadvertent" power advance4 byPenelec to Penn tech Papers (amounting to lessthan 1.96 percen~ oC the scheduled sales to
Niagara Mohawk in 1993 and 0.69 percent oC
the scheduled sales to Niagara Mohawk in
1994) is done to balance the power output
schedule with the amount of power wheeled,
and is advanced at the insistence~ and for thebenefit, oc Niagara Mohawk. Penntecn Papers
argues that the inadvertent power sales 'to Ni-agara Mohawk should not be a basis to decer-
tify Penn tech Papers' QF status. 'PenntechPapers states that this Commission 'has ap-
proved the transmission agreement under
which Penelec advances power to Penn tech Pa-
pers' for inadvertent energy difCerefltials.
Penn tech 'Papers further states that there
would be no' inadvertent energy diCfer~ntialshad " Niagara , Moli'awk accepted dynamic
sch~duling.
' ', "
Penn tech Papers' further states that ,the
power purchase agreement between ' Perinteeh
Papers ,and Niagara Mohawk specifical1y, ree-
ogniz~ that Penn tech' Papers ' deliveries" toPenelec viou~d not exac~l)' match the sch~duleddeliveries, and that Penelec would provide
make-up power. Penntech Papers argues, that
it receives no benefit, and indeed loses money,from the make-up arrangemenL Penn tech Pa-
pers Curther argues that the provision Cor the
sale DC inadvertent excess generation and
purchase of make-up power tends to even out
over time, so that there is no continuing sale or
power produced by a CaciJity other than a QF.
I V. Discussion
A. Procedural Matters
Pursuant to Rule 214 of the Commission
Rules of Practice and Procedure, 18 C.
~ 385.214 (1997), the notices or interventionand the timely, unopposed motions to inter-vene serve to make the entities which filedthem parties to the proceedings in which theyintervened. Further, we find good cause to
grant aU DC the untimely or opposed motions tointervene. and will consider aU supplemental
pleadings, in light oc the interests they raise
and in order to complete aU oc the arguments of
the parties.
B. Statutory and Regulatory Framework
1. Statute and Regulations
As noted above, in FPA sections 3(l7XC)(ii)and J(18)(B)(ii) Congress provided that QFs
must be:
Jo)wned by a person no~ primarily, engaged
in the generation or siUe of electric power
(other ~han electric power solely fro~
cogeneration faci~ities or small power ,produc-
tion facilities). . . .
16 U.C. ~ ~ 796(i7)(C)(ii) and (18)(B)(iO(1994). Section 292.206(a) oC the Commission
regulations. 18 C., ~ 292.206(a) (19-97),tracks the statutory language almost verbatim.The current cases present the question 'whether the sale oc more than net output vio-lates the statutory and regulatory criteria Cor
QF,status.
2. Commission Precedent Concerning
OutputIn 1981, the year after, the Commission
promulgated its QF regulations, the Commis-
sion, in Ocddental Geothennai, Inc.17 FERC
n 61,~Jl (1981) (Occidental), first adqressed a
issue releyant to the o~e now before us' when it
was required to address' the " power productioncapacity" of a Cacility. T~ Commission deter-mi~ed ~hat the power production capacity oc a
Caciiity is:" '
(TJhe' maximum' net output of' the facility
, which dm, be, safely and reliably ,achieved
under the most favorable operating condl:.
tions likely to occur over ~' p~ttOd:. q ( 'Yea~
, '.. ', ' "
, IJ There is no requirement in our PURPA or open
access regulations that an electric utility purchasing a OF's power do. so under'a 'dynamic: 'sched~lhigan-anllement. '
" '.. ':, ;;
1f'61,116
" ,::: ".: "
Federal EnerIY Guldelhie.
7' - -
-----------,_.
/ '\, ..-/" .
84S 2.25-98 Commission Opinions, Orders and Notices 61,417
The net output of the facility is its send out
after subtraction of power used to operateauxiliary equipment in the facility necessary
for power generation (such as pumps. blow.ers. fuel preparation machinery, and excit.ers) and for other essential electricity uses in
the facility from the gross generator output.
17 FERC at p. 61,445.14 ,
While, in hindsight, it seems clear that the
Commission in Occidental did not intend topermit a QF to setJ in excess of its net output(i.e. its power production capa~ity), the issue in
that case was more limited; whether the pro-
posed facility would exceed the 80 MW limitfor qualifying small power production facUitiesset forth in Section 292.204(a).
Four years later, in 1985, the Commission
again had occasion to addreSs qualifying facil.ityoutput issues. In Power Developers, Inc.,
FERC V 61,101. at p. 61,276 (1985), reh.de-nied 34 FERC V 61,136:(1986) (Power Devel-rijiers),16 the application raised the issue whether "the qualifying capacity of the facility
(is) gross or net electric' power production capa-bility?" 32 FERC at p. 61,275;
Th~ Commission an~wered net. The Commis-
sion stated that were a QF to sell i~s grossoutput to a utility at the utility s avoided costand purchase power for intemal use f~om the
utility, ,it ~ould, in essence,' be sel1ing morepower than the facility, standing alone. is capa-
ble of delivering. In other words. the QF wouldbe receiving avoided costpi"ices for an amolint
of power that it does not enable the purchasingutility to avoid generating. 32' FERC at 61,276. The Commission stated that ,such aresult would be inconsistent with the require-
ment of PURPA and the Commission s imple-menting regulations that utilities (and : theirratepayers) be in the same financjal p9Sition: asif they.had hot purthased, QF power. Id. (dting
Order No. 69, FERC Statutes and Regu,lations,
ReguJation~ Preambles 1977-1981 r 30,28, atp. 30 871). However, ev~o though the. CQmmis-
sian in Power Developers found impli~it in ~ts
Occidental discussion that QF sales are limited
to net output, the Commi~s~on stiR did not'
reach .th~, specific question of wheilier a ' QFthat ~ol~, in exces~ 'of ~et autpu,t wouJd be' (ou~~f. violate, the ,primafi , e.rig~ged" ownershipl~mitati(;m i~ the statute '~(i' Ol!~ re~l~tio~s. '
Finally, in 1991, the C~mmission addressed
this issue in its order in Turners 'Falls. In t):1a
order, the Commission stated, tor the firsttime, that the prohibition against a QF's selling
in excess of its net output was based not onlyon policy considerations, but also on the statu.
tory requirement. that a QF be "owned by a
person not primarily engaged in the sale electric power (other that electric power solelylrom cogeneration facilities or small power-pro-duction facilities).16 U,
~ ~ 796(1 7)(CXiiK 18XBXii) (1994). In Tuiners
Falls, the Commission found, based on its re.
view of the language and legislative history
PURPA and the policies underlying en;tctment
oc PURPA and issuance of the Commissionimplementing regulations, that a' QF whichsought to sell the incremental power in excessof its net output as' non-qualifying power,would cease to"be a QF, because it no longerwould meet the statutorY and regulatory re-striction regarding utility ownership oc QFs. 55FERC at p. 62.667.
Before addressing the merits or the, individ-ual petitions filed with the Commission in theabove-referenced.proc~ngs, we will addressthe general legal and 'policy issues raised by
these "net(gross" cases.
C. QF.Output Issues
. l.:Can a QF sell in excess olnet output?
We agree with the parties that it is not clear;on the face of the "simultaneaus buy-sell" nilethat a QF is limited to selling its net output.Section 292.3O3(a) provides that "(eJach 'elec-tric utility shalf purchaSe. . . ~y energy
' '
andcapacity which Is made available frqm a quali-
fying facility:' (emphasis added).' Similarly,Section 292.3OJ(b) provides that' U (eJach elec-tric utility shall sell to any qualifying facility
. .,
. any energy and capacitY. requested by the.qualifying facility:' (emphasis added). In addi-
tion, the' Commission s statements leading upto its promulgation of the "simultaneous .buy..sell"rule also were not absolutelyclear,as to.whether the Commission intended .that a QF,able' to sell gross output. at avoided ,~ost .whilepurchasing station power co.. the purchasingutilitys retail- rat
The Commission first 'addressed the .'simid-.taneous buy-senu rule In its PURPA notice of
proposed rulemaking. In the ~OPR, '~e Col!!-~is~iQn, djsc~se~ the ~tuation
: .
~~ which.
CQg~nerator or small :p~wer produc~r desires to
sell all qf, .its' ~~~p~t, to.a ,~ility and purchase
14-1n Malacha Power Project. Inc., 41 FERCf 61,350 0987), the Commission clarified ,that. linelosses to tl1~' point of 0 ~nt~n:oQnec;tioi1' Wi~tj" die ,Bndalso, are subtracted from, groSs ~ene\"a:tc:ir ,Qutput' to-d~~ermine the' power prOducJip~ cap.K:ity.o '
' ,:" '
, 0 ' I
' ,~,:', ..' " ~'" ". "'
, oThe, currentversipn: dc-: the regulation wasamended to reflect the Solar, Wind, Waste. and Ceo"'
FERC, Reports"
, ,: - '.---
..0.., 0 .
, ,.-,,.. , . -
thennal Power' Production Incentives Act of 1990.Those, chang~ are n~t r~levan~ ~o the, ~ssues ~Core usin these proceedingS. "
, ", ". ". . ::, -'
L",' ,
, ', ,
" o
"" , ,, ., '" , "; . ,
16 Set!:oalso Penntech' Papers. .Inc.. 48 FERC
U61,120(1989). '
..
1f 61,116'
.. -- - . ,,-.
00, _0_- .. .
.... - ..
61,418 Cited as "82 FERC ,845 2.25-98
all of its needs Crom the utility simultane-
ously." Small Power Production and Cogenera-tion Rates and Exemptions. FERC Statutesand Regulations, Proposed Regulations
1977-1981132.039, at p. 32,446 (1979). The
Commission stated that this rule was necessary
to encourage QFs only to the extent it applies
to "new" capacity. However, because the dis-
cussion applied to both small power production
Cacilities (which normally have no ongoing need
to. purchase Crom a utility other than station
power) and to cogenerators (which often have a
need to .purchase power Cor industrial purposes
other than generation), the discussion was am-
biguous about the pennissibility of selling all
output and simultaneously buying back station
power. See also Stalf Paper Discussing Respon-
sibilities to Establish Rules Regarding Rates,
and Exemptions for. Qualifying Cogeneration
and Small Power Production Facilities' Pursu-
ant to Section 210 of the Public Utility Regula-
tory. Policies A.ct of 1978, .44, Fed. R~. 38,863.
38,870 Uuly 3. 1979).
In Order No. 69, adopting regulations for the
impiementation of PURPA. the Commission
indicated that the "simultaneous buy-seU" rule
would be applicable to both qualifying small
~ower production facilities and qualifying
cogenerators. and again noted that avoided
cost rates would nonnally only be available for
new capacity. FE,RC.Statutes and Regulations.
Regulations Preambles 1977-1981 V 30 128. at
p. 30;877. As with its NOPR statements" the
Commission s discussion waS not clear ,about
the permissibility oC seUing "all" output and
bl:lying back station power needs.
Moreover. it appears that several State regu-
latory authorities implemented PURPA based.
on a plausible interpretation that the "simulta-
neous buy~Il" rule pennitted' the sale ol
QF's gross output.' For example, the New
Hampshire Commission s standard QF sales
contract contains.a provision that allows for.
the :sa1e of gross. output and the buy back of
auxiliary (station)- power.~ From the QF filings
we have received.it is apparent that, there. are
other QF sales contracts. approved by other
State regulatory ,authorities. ~hat contain simi-
lar provisions.
: .' "
, However. as discussed above. this ambiguity,
was clarified to a significant degree iri. 1985 '
Power Develope~ There, ,the Comm~ssion
made clw that a' QF may not sell 'more than'
its net output at avoided cost rates~.Fina1ly, in
1991. in Turner Falls. the Commission removed
any remaining ambiguity about whether the
simultaneous buy-sell" rule permitted a sale
in excess oC net output. The Commission clearly
stated that a sale in excess of net output would
deprive a facility of its QF status. unless the
incremental sale was of power solely from
cogeneration or small power production Cacili-
ties,11 See supra 13-14 (discussing orders). Ac-
cordingly, in these cases. the Commission
removed any ambiguity and all industry par-
ticipants were put on notice that the "simulta-
neous buy-sell" rule was not intended to permil
a QF to sell its gross output to a utility at
avoided cost rates, whi1e buying back station
power at a lower retail rate.
As a result, we disagree with the QFs' read-
ing of the "simultaneous buy-sell" rule. It
clear to us that a .QF .facility can . only sell
energy and capacity from its Cacility which is
actually available, and that. given' our inte
pretation of what a QF is able to seU Crom its
facility. this capacity is limited to the net
output of the 'QF. Thus, th~ requirement
Section 292.3O3(a). that an electric utility
pu~chase any energy' and capacity made avail-
able from a QF, is' limited to the energy and
capa"city,a QF, actually haS avaiiable, which is
its, net energy a d c~pacity.
, The Commission, in promulgati~g the simul-
taneous buy-sell rule. did not indicate other-
wi~. Indeed, the rationale behind the rule. as
indicated in the pre~ble to Order No. 69, was
as follows; .
The eCCect of this proposed ride was to sepa-
rate the production aspect of qualifying
facility from its consumption function.
Under this approach. the e)ectricaroutput of
a facility is viewed independently of its. elec-
trical , needs~ Thus, if a cOgeneration facility
: produces five megawatts. and consumes
three megawatts. it is treated the Same' as
another qualifying facility,that produces. five
. megawatts, and that 'is located. next to
factory that uses three megawatts. (18
In this example. the Commission dearly was
considering 'the case of a cogeneration facility
where the fact~rY. ~sociated with' the cogener:a-
tit~~Jadli~y co~sumed power 'generated by the
facility for industrial purposes. That the exa~-
pIe was a cogeneration' facility 'is meaningful
because a cogeneration facility, unlike a small
power producer. can have electric power needs
other than for station power. When a cogenera-
17 The C~minission in Turncri Falls was not faced .
with a factual situation where a QF sought to sell
more than its net output and the additional power
was "solely from cogeneration or small power produc-
tion facilities." Neither is ..the Conunission faced With
that situation in the instant cases.
'6.116.
18 Ord~r 'No. 69. Small Power PrOduction an
Coge.neratiori Facilities. Regulations lmpl,:menting
section 210 orthi! Public. Utility !legulatOty P~licies
Act of 1978, FERC statutes nd Rl:gUlatian5, Regula-
tions Preambles 1977-1981. 1 30.128. ,at p. 30.877
(1980) (emphasis added). '
Federal EnerlY Guidelines.
.-1
. ,..", '""-
, 85!4-3-98 Commission Opinions, Orders and Notices 61,419
tion QF ;supplies its industrial 'hast's electrical
needs itse1!,' it displaces, power 'on the:system
that,ottrerwise would have been'supplied:by the
rchasing' utility. This is 'not true"when a
cogenerator or small power "Produeer' supplies
, its own 'station power; the, 'supplying 'of station
power ,by a QF does not displace power which
would have' otherWise been supplied by the
purchasing 'utility.J9,' ,While : a quaHfying
cogeneration faci1ity" may sell its entire ' net
output arid buy back power 'from its purchas-
ing' utmty for ' non~lectric geneiation uses (for
example, manufacturing uses), by the thermal
host,20 a QF~ whether a cogeneration !racility or
all jjbwer'production facility; may not, Sell
ts:gross output 'to its purchaSihg ,utility, and
buy back auxiliary (internal station) Power.
Indeed, whiie"the' Commission : did 'not '~d-
, dress' whether aiQF would:..I~ its qualifYiJlg
status if it :5Old in 'eii:ess 'of net' output in Power
Developers. the CommiSsion ' in 1985 did" ad:.
dress' :ih~' n1'e aning 'C 'Se~iion 292.3o3(a) (part
of the simultaneOus buy-self rule): The Com-
mission stated:
, Our regulations dd !i1bt contemplate a quali-
fying facility selting its 'gross output to' a
utility. Although Section 292.3O3(a) states
,that electric utilities are' required to
purchase "any , energy and, capacity which
is made available from' a qualifying facility.
the Commission has 'interPreted' 'the capacity
of a qualifying facility for purpoSes of ob-
taining-qualifying $tatu$ to 'be' its' .'let power
.. production" output. rather 'than 'its grOss
output.:,
'::,. , '
32'FERCat'61;2?l5.
' '" ." '. ;,:.' ;:, ":, : . , '
: r
, ..
" I,
:' .., " ,; '
Accoq:~ingly, ~e reiter~te,UI: ~arlie~ fil,1dings
th~t, a QF cap onjy $,eJ), its ~,e~, ~~i:put.
, ,
~n~r.tra.t
t~e ,~l~ ot ,~r., ~th~r" ~o~~r: v.:i11 r~ult in , ~he
loss or QF status, unless, that power is '.solely
from cogeneration or small power production
facilities.
, '
2. What date is appropriate for applying' the
net output rule for purposes 'Of QF status?
AS noted "above; 'we uriderstand that many
QF$ '.md purch:i!;ing'utiliti~' have entered into
contracts which r~u'ire, or Pemiit, the simulta-
neous Sa:Je' of grciSs output' and' the p!Jrchase
back cif auxiliary (internal station) power.
While there :m-ay have been' some ' ambiguity
when 'our PURJ::-A regulations ~ame effec-
tive; with the issuance of Turners FaiTs, the
Commission Clearly enunciated that a 'sale of a
QF's output in"e~cess of 'riet outpui ~ouJd re-
suidri the: loss 'of a facility s QF status.Zl O~r
. i'nt~reiatiori of' the "statutOry ownership" re-
quirements in Turners FallS represented' ".
issue or' first impresSion""~ Moreover, the deci.
sion ' in "Turners Falls rested not on the plain
meaning of.:the statutory language'involved,23
but on an 'interpreta~ion of the s~atute based on
policy ,grounds., For these reaSOnS., we, believe
that it would be unfair to .revoke the QF certifi-
cation: of any, facility which is selling its gross
output, to a utility-purchaser, ,and b\.lying back
auxiliary power and/or ,Jine losses :to ,the point
of interconnection, based on a QF"contract ~n-
tered into on, or, before t~e date of issuance
Turners Falls. tl:1at is on or .-before .june"ZS,1991. ,
:.. ' :,
We beJieve that 'thi~ policy is 1:onsistent with
our policy against inva1i~ating'contracts for
which a: ,PURPA-based' challenge ,was" not
: timely rai5ed..,....that is" before the., contracts
were executed., In our judgment", it would not
, be consistent with .Congress..directive to, en-
courage cogeneratiQn and small' power., produc-
tion"to upset-, the, settled expectations. of parties
" .. . . "... .. ," "
l~'The ,CommiSsion~ in,:its btieC-to..the, United
, States Court, of. Appeals .for ,:the DiStrict of ~olumbiaqrtuit ,dj:fending :Qrder. No. ~!:J. ,also, '~~l;15tr3:t~I,tJ'!e
validity of its simul~aneou~:buY:-Se1J rule 'Yi,th:.r~fer-
ence to a cogeneration example. 'American Elr:ctric
Power. Scl'Vice Corporation; ;et. al; v; FERc...Docket
~o. 8O-J.7089"May IS. 1981, bri~C:at ,52. The Commis-
sion. in i~ brief",als~!,'recogn~:the's.ignific!l':l~e of
displacement. ,Brief. at ,58,111e court, in upholding the
simultaneous buy~ell rul~,likeWi~e
' '
point.e:d"'" the
cogere~iiQ!i' ~~cirri'ple as, J~t;i,Cy~n
g;,
~e '~~m~it~~eous
buy-sell hJle'-see' American EleCtric Power service
C9rporati~n: v.' FE!1c.1 t)7~"f,,~~. ~226, )?3~"
(().
Cir, ,1 ~82)
.,
re.v. :c!-on ,o~er /lTO.unds, su nom. ,~eriCWJ
Paper Institute ,\i' Ariu!rican , Electric 'Power ServiCe
~or3tion.46X(j~;'40t,d~s.lj.
, "::: " ,, :,
,c"
,:;::"", : ... ,
20 Se~ ' ~nJ9n '~;u:Pic!~i:c:.qr:por tiQn ~ FER
I, ~:1.1~" ~!J,~:d~!I!fd,
~~,,
~f:R~..I, ~,J,~~ '~89)
~:.." :: ,
~! As not'ed/-tfie :.excepiion is', if:, the 'lncrement3l
,output: :sold~; i.: 'abOve:, net, loLltput.: is~, solely ,Cr.om
cogeneratjo~ or.5m,a,!;I:pow~r',P.~~c~~.:(Ii',~Ji.ti~; , ;'
, "
12 SSFERC ;a(p. 667~:'see aEici id,--it.t ,,: '62;672-.
FERC Reporti '
,::::"::::,;::, ,
2.J'The Commission 'stated iri 'Turners Falis that
"~ause'both' the stitute'and' the'le8islativcd~istory
are' uncl~~;;wt 'finO:'lt appropriate :'ti/consider the
ollcy rea.5o~s of interpreting the,statute:as requeSted
byTui-ne~Falls:'. ld.at p~'62,669;,
" :'' "' "; ';' ,: ,, ,.. , ,, '' "
24 ~ N~"';, Y or~: 'stat~ Electric ~~. ~a,r; CprPo
don, 71 FERC f 61,027, at ,p. 61~~17 oi:tJe;.. d,enying
reconsideration, 72 FERC "61 067 (i~95): apPeal
dbiiniSseCl; New York'State,:Elecftric & GaS ;Coipora-
don' v; 'FERc.; 11;r,:FoJd,1473-CD:C.' Cir.
: -
1997); Con-
necticiii Light,
&:
Power- :Company,,70 FERC 1,61'012,
order:d~nying'recoris!d,er:atJon~, l:fERC:1 ql,03~..,~t
, pg.:
~l"I53-.S4 .o~9s) (conf~io~ re~ing l1?eaniDJf:O(
Corillnission,s regul~tioqs, made, application of n~w
p~licy to ~~iing. QF con~c;~ inapp Qpri~ie).flp..
~~j
dism~: s~1? om. ~i~fI.~ Moh~.Ji~ Po~~'" (;oi:-
p~~,
~~~:r , l:J;;k9.'n~ ,
~:: ~~,
" CI?,~. ~i.r~J~.r):
Sou tliem California .E:dis COfrip~y' and'Safj Diego
Gas Ie' Electrlc"Co,:npany: 7if FERC 6'%;21'5:a(p.
61"178
;:'
~on~der3iJoirde,:;;ei:lj 71:FERC:f61~69; iat
- ' " p:'
62.079 (l,995), '' ;: ::;:,: "r;, " ;,
, . '" '' :
::1(.:'6.1;,116
61,420 Cited as "82 FERC 11 ....851 4-8-98
to. and to invalidate any of their obligationsand responsibilities under. such, executed
PURPA sales contracts.
, However. we see no legitimate basis to excuse
a facility that. subsequent to the date of issu-
ance of Turners Falls. either entered into a
contract to sell more , than' its net ' output~ or
executed an amendment to' a pre-Turners Falls
contract that increased output. unless that
amendment was pu~uant to a provision in the
pre- Turners Falls contract that specificaUy au-
t~orized such amendm~nt. We will. therefore.
revoke 'the QF status oc any faciJity which sells
in excess oC its net output, pursuant to a con-
tract entered into after the date of issuance oc
Turners FaJls; unless the additional amount
sold !s solely Crom cogeneration or s~all power
rod~ction faciJitie~.
3. How is net output to be calculated?
In order ,to determine if a'facility has,sold in
excess oC its net output. it is necessary to define
how to measure net output. The utility-pur-
,chasers in the instant proceedings urge'that net
output be calculated as actual net production
on an hour-by-hour ,basis. On' the other hand,
the QFs, urge that net capacity be the measure
, of the limitation on a QF's sale. They argue
that while QFs may not seH in excess of their
certified net capacity,' they should be able to
sell in excess oC actual net production at anymoment in time. The QFs state that this is
, ~hat the Turners Falls decision requires. '
, The ,QFs are ,only partially correct. Turners
Falls does stand for the proposition that the
Commission will: neit certify a QF to sell, in
excess of 'its, net capacity ' and that the sale
above net capacity would result in the loss ,
QF status.. Turners Falls; however,' also con-
tains 'additional language concerning "the'sale
, of incremental output." 5S FERC at p.62.672. '
While T~rners Falls clearly ~tates that QFs are
limit~d to,sei~ing nefcap'~city,,th~,or:i:1er does
pot ,directly address ,the saie o(what has been
. refe.l'r,ed to in the ,instan~, pr.~~eqins:s as
, "
~c-
tual net production;", We,understand ",thatpurchasing utilities could reasonably read
Turne;rs Falls and its reference to "the sale of
. iocremental output" to limit 'the sales QY QFs
~ctual n~t pr~~ction. ,
.. ' ,
, W~ ,iind, that the ' uii1iti~' interPretati~n ~fthe calculations more' closely comports with
Commission, precedent and policy:, In Turners
FaJIs; the 'Corii'missioiJ.'inferpr-eted"PURPA to
'limit the , certification'of'QF::to ,its net capac-
ity. In ' interpreting PURPA~ 'the "Commission
und" 1h3,t 'die' plaIn .Iangu.a'
~: '
of' tne statute
VI~,s:n~~ ,~le#: a~~)~~t .the,tatut~iYi:listdryon
Jh,~'l~,gl,l,~ge i~yolved ,was,cleai, 1)!.it that
J?ot~:~r.,underiying '~0.R.PA'"4,isposith;e.
Th~,policY"~hich the"Commjs~iori IOoked to wthat PURPA was 'tended' t~' ~,
~ '
progr:
~~ :6'~ ;l;l'
providing for, inc~eased efficiency in, ,the use of
.!acilities and resources." (55 FERC at p.
62.670. quoting Section ,oC PURPA). The
Commission found, that the economic distortion
inherent in the sale oc the incremental output.
e.. the difference between a facility s net and
gross output. would inconsistent with the
intent of PURPA, The Commission further
found that i! it were to permit Turners Falls to
sell the incremental, output. Turners Falls
would deri:ve, an undue beQefit from its qualiCy-
jng status. ld. As a result. while the Commis-
sion in Turners Falls was directly addressing
ho~ much capacity it would certify (net capac-
ity), it Qased the certification decision on its
finding,that P.U~PA, dpes not permit a sale in
excess oJ net outP,ut., The ~~illties' proposal
that compliance with, the net/gross rule be
measurect' by moni toring ~ctual net ' output on
, " '' '
an hour-by:-hour basis mofe, accurately mea-
S1Jres compliance with this PURPJ\., limitation
than the QFs , proposal that compliance be
asured on ~ ~nual basis~ '
Moreover, measuring compliance with the
net/gross rule on an hour-by-hour basis Is con-
sistent with Commission precedent op measure-
ment oC a facility s net capacity. In American
Ref-Fuel, of Bergen County. , FERC 161.287
(1991) (Ref-FueT), the Commission used a "roll-
ing one-hour period" .for ,J;Tleasuring' the size
lim~tation (80 Mw) applic;tble 'to qualifying
small power p..cxluctionJa~ilitie9, In that case,
Ref.:,Fuel argued ,that because of the,substantial
variation in, the heat, content of. sqJid waste. the
net output of the facility would often exc~ 80
, but that it would be able to compensate
for the substantial variation in the heat con-
tent' (jf the fuel source ' with an automatic con-
trol system tor~tore 'net generation 't~ 80 MW
when it exceeded' 80 MW~ Ref-Fuel stated' it
could maintain the' 80 MW riet output level on
average' over a 60 minute'time span measured
at-any. point: in' time---the '~~rolling one-hour
period." The -Commission 'agreed to,the rolling
o~E:-:hour peri~..:stating that:'
' ' ,:..' , . ".. : ," ': '", "" '' "
" generation output ,f1uctuat~ instantaneously
: and; accordingly must be ,adjusted-many
" '
times
' "
eacho hour",to':fol1ow:,system load
, , cn~ges:o Sys~eni l()ad :or consumer demand
" typiCally -is determined by' averaging energy
)J~ oy'~r: ti~: 6(tif!1~,?f 1:~ ib ~~nut~s.
S4,FERC ,at'p. 6i.817. Tne Commission noted
; '
that Form' NciF l ' requifeS~' utilities ~o" compi.i~~e
the nee'peak demari~f'(outP,ut) on gthietating
units by using a" 6o-infriate' measurement pe-
riod and that, cUstomer' demand' meters: 'typi-
cally ~inp'loy: rileiistii-e'fnent 'periOds' 6r1S.. 30-:' or
60, minutes..ld.: at p.':61 817 :n.5",The .Commis-
sion further' noted, t)hat"a' 6();.ininute I:t'ime 'inter-
val for,:iri~a'5Urin:g ::power oufputco"F peak-load-is
~OraHllqQ ,~ri:::th~, ..inq.u~~D'.:. "4 'E~~9: 'at p.
Federal Ener:&y',del~nes
, __'0 -,
'. ---,.... --.',,-,
::), ,
851 4-8-98 Commission Opinions, Orders and Notices 61,421
61,81-7, 1'he Commissi'on recognized that a fa-cility s generation output varies'constantly and
tAa , net ,94c~P':l.t in exc~s oC does not
autpm;Jt~,cally "yiolate, th~ ,size limit~tio~ re-
q~ir~q1ent'lJf, the sta~1,1te (ciUng OccIdent/!! Ge-~th~a.I. I!1c.",FE~c; 161.231 , at p. 61,+JS
09&1))""
,..
FinaJly the, Commission, ,recognized that use
of a,rolling:'one-hour period does not offer any
potential for: manipulation; of the maximumsize Jimitation.This is because the facility,'if it
exceeds the. SO: MW net producti~nJiaiitation
at ohe moment
. ,
would'h~ve to,adjust net pro:.
duction below" ,so MW, dliring part of.. the hourto account for,the,exce5S'generation.
, : We believe': that' ' the
' '
rationale for using: a
rolling one-hour periotl for' measuring the net
production of a "faCility for'sizcdirriltation pur-
pOseS is equally
: :
appJicable ' to measuring' riet
prOduction for co~plia:nce"with the net/gr~soutput 'rule~: Contrary to the QFs' arguments.
'use of a
' '
one-hoUr 'period dOcs' not make, thecertified capacitY of 'a facility, meaningless,
and 'indeed Is consistent 'with this Commission
measurement' of 'C'ei-tifie\:f capacity. We con-clude that !ei 'fadlity's' net' outpu('should '
measur:e4 On'~ rol1~g-:o,m~ ~I)~r, periog, for 'pur-poses ,Pf deter:miniQg" ,:wh~~~er:th~" rC:\~il~tymakes sales ,in ,~cecss ~f.i~s 'J1.,et o~tpuJ.:I;I1 :OP1erwords. ,3 facility cannot ,sel1,eac:;h ~our'ml?rethan,jts net ,outp.J.It-for t;h.e, h9,ur.
",
:' J,
" , , "
How does~'transmjsSjon, of OIi"- power:by
third p'arty:utilIty affect,net output?
" Tht;'P~nntech"'P~p ri- Jc~ raiSes M isSueconcerri'i i1if the'
:'
rrie~remeiit of net' output in
si"tuations ",here' QF power is' 'transmitted by athireJ party 'to the,~t..ir~h3iing: utility: We' haveaddr.essed this, matter:. in;our:Open,.Ac~s, Rule.
In Order No. 888-A, the COin~issiolJ explaj~ed
~l-!a~
.:!:\/", :""'::";"';:':!"
,;, a ' Q~ i,~g~II)~t'Jor ~e :~f~~P.~ or
: '
' ~9,~~r L~s *ry~~ ,or ~.;m~, ~ry:'i~, frorr:, the transmission.,prov.idt;r or. third.par,tY,for
.. :
, i:~e ,purP~ :' sonjpi~ting ~ ;-~~~~~s~i~~" ' tran:;actionls, 'not ,~ ~le.,for.-r~~e~ of power
~:"
by,
..~ '
.QF ,~~smiss~~n,
~\~~~"
.t~a..t ~~~J~violateo~r-.Q~,.rules.l~~l inJ:,
!: :~:",:~ .:
In Order No. 888-8, the Commission recently
clarified ,the matter as f01lows:
(W)hile a QF can never sell more power than
its net output at its point of intercoimection
with the grid, its location In relation to ,itspurch~t-' (and thus Its losseS) may be rele-vant in the calculation of the avoided cost
, which it is entitled for, the power' it doesdeliver to, its electric;utility purchaser.How-ever.. . the, receipt, oc Real Power Loss Ser-
vice' or ancillary services is' not' a sale-for-
" 'resale oC power.. ' Radier.. :they are part 'of' the
, cOsts' 6f: transmission,:'whichi the, QF, must
, bear, in th~ absence' of' an iagreement ,ta sharesuch cost"S with 'the transmitting utility: Wl,In c;onc1usioI:1. the p~rc;:h~ of tine ,loss ser-
vice for losses' beyond the point oc interconnei:-
tlon' 'or an andllaiy service '' a QF from athird,party does not result'in the QF!s engagingin a sale-for-resale of power produced, by a
fa~ility Ptl)er:t!l~,a QF, v.:hich woul~Ir:.~~lt inJoss of.QF.,stCJt,us~ 'I:,
: ~, ,' '" "
'D. Regulatory Consequences,a,nd Rem~jes'J:QrSaJesin E~Cf:$s 01. Net Output" "'0:
:.. .',:", '
Any"facility 'which 'has sold in excess' of 'itshet'"ot.1'tput. plirsuarit" to a contratt entered: into
after 'the' date' of issuance :'of: Tumers::Falls,unless' the incre~~nt
, '
output ~~ solely:fromcogeneration or smaJf 'power prOduction , facili-ties. must file rates pursuant to"Section!-20S the FPA within 60 days of the date"of'publica-
tion '0(., this' order in ~he Federal Register.
..
tha~, filing.. the.. facilitym,ust ,inc;licat~ :whet,l:t~,it intends,to:continue t9 It)aJu~:~es jn'e~~~,net: output.28 For 'facilities, which 's~~te. ,th~~they will discontinue ,the., $3.le" of o~tp,ut...in 'ex-
cess of,netoutput.as of the,date'of;L~r-.QU~,the r:ate,'!or.,the ,pr:ior;;~~:of ,any outp~~ a~venet, output' ,will!~ detennined ~sin.g :th~ ,metl:rod610gy, ,announced :,-in G&E-WestmoI:f:land'Southampton"76r i'F'ERC;'1f ~I:;HQ':'(1:99.f?)(hG&E)." ,reh'g: pencllng.'7'J, The,:,r~t~:fof:..,alJ
;,uiiounts:,sold',up: tp; the ~aciUty~s"l)e1' Qutp~tshould be the co.ntrac~ 'ratt;... ref1~t~d jn: .
p~~ies~ ,agreeII),el:1~" ~~u~if1~, s~ch :r:~,te-,is., nohigherthan the' appncabl~ ~v:qidea
~~,
" r~t~
" ,
. ,I '
.. ,,".", ""::;'
'i:'
;~';;":~,::,~::~::,
r:)n:
.-",:,....
rl(,"
",',:':";:::,.. ,
~': ~tTh~J.cernrJl;~H::aRa:cHY ,~r'~!QF~.!
.,. ~~, ,
~f;t t!"3~1' ~~:~~r ~~ de~c:~~j~
' ~~" ,
tJ;1e ,P,~~,
~ ~
capacity, i$ ,the maximum, net,output, that. the facility th!=:p.ow.ersalesag~me.nt.
" ': ":;', """-""""""""""'
1, "
"""""''\::"
'~,I.""
~;~
~~i~~;;~~I~;s~j:t:;~~~~~~~TI~;r'A;J;~;
:~
;, Z9:i~:tq~~,
~; ~~~
~i~i
~~ ,
;i~~; ~;9F ,~hi~~ons',~~e~r: to'i?c!~r: i~vei"
~ ~~~"~~~,
~7C:~::,'iaU~ :
~~ '
sat,i~fY"J~~' ~9r;i:i,~i5;S.i~~ 's: ~ei:~~al req~~~
~~'
F~~~,~~i~t~'~!f~e~~~~m:f.~~.o.4~
~~,
~. W~n.\!oj-'::~r:s~~i~~ ;duri~(. "~:~f"p~ri~:'~f ,
~~~
30~~~"
. :-::,~ "":-~.. ::'~::'~ ~:':;":.., ":~..
:!=~n1~- ~~~~~IC?~~~,pu~~~t~o ~cti 5~r~
., .., ., ,, :"., ,"!., ;,".. ,
, 0,1 :I'~,_
" -;,
"!" FPA"at"a~rate ta'o"fUghc:r tnBil'wnat:the'utIUty"pur-
"'- ,.
Z~Order 888-.B,.snp Dp"aL4~,..-
---.., ,-,--,-- . "'"
chase," would "have paid ior--energy 'had, it 'made '
." :'
~ .Iqhe (~cility, ~~id~ ,to seU C!~\y, i~'J;I~"~1.JtPut, _
~~,
o~9,J:?i5A,dsl " to: p'u~~~~~, fr~r.n ,
~!: ,
non-;c;o~ply-ii"'c i(Lr.e'g~n~Q#.'st~tus on-a :~i-~pec'tiv.ebasis from int Q~;,,;(n .tJ1f;:~~c~~"of'a fiO\i:~Qm:~J~'Hu~, 't9 lD~_~tain
~~~ ~~~~'
A:*ji~~'J~,,~!.r.!i~~y
, ~~'
~~~~fp:~t.~b~~y~~! QF stcitu's;' tne
"':
omrrti i~n expiainecJ.' ~~~,i~; ~o~l~whether itS "tempfif3i'y' IOSSlof'Q!i"St'atUs'would' jeopar- grant all other exemptions from regulation otnel"Wl5ediu its po..v:;r'=saies"'maiIgetnenFisl a~n1ath~F,;,c5i, COh~ available;toQF-6.
~ ,:'
::~f~:,
",:~ ;.~: .
: ::l;; ~ ;'
q:;; ,.,.,;', .~
FER
' '.""-
t'--
'j..
.:1.. epor.'-W~".';~ 0 : i..,l.r ,1f :6,;1)Ji.l'
61,422 Cited as "82 FE,RC "
, . . .
851 4-8-98
established by the State regulatory authority
or nonrcgulated electric utility. Facilities mak-
ing, Section 205 filings that reflect the' cessation
of power sales in excess of net o~tput may ask
for all other exemptions granted QFs, and we
w~l1 grant such exemptions pursuant to the
policy announced i~ L(!&E.
For any facility that indicates in its Section
205 filing that it will continue to sell power in
excess of its net output, pursuant to its current
contract, we will not differentiate between past
and future salcs., or allow different, rates Cor
sales lip to or in excess"C1f, net output. Rather,
the ;former QF wjJl be required to cost justify
its rates for past and future periods;
E. Applicat"ioI:1 otp'olicy,to Pending c~ses
, 1. Connecticut Valley Electrk Company,
.Inc. v.Wheelabrator Claremont Company,
P., et al. '
daremont, a small power production facH:"
ity, is selling its gross capacity to Connecticut
Valley and buying back auxiliary power. This
sale clearly violates the prohibition 'on the QF
sale of amounts in exceSs ' of net output :enunci-
ated in Turners Falls and earlier ,cases. ~nd
'Y!'~ul~ r~sult , i~ the loss of QF st~tu~ were it
ta)ting, place pursuant to a sales contract ,~n:-
teJ;'ed ,into after the date u.une 25, 1991) ,
issl,lanc~ of Tum~ Fails. ~ere,' however,t~e
sale: takes place, pursuant to a c~ntract, exe-
cuted: on ,December 12, 195:4.
, '
Pursuant to the policy articulated above in
this order, we ",mnot enforce 'the, net/gross
policy against Claremont during the term of its
power 'purchase agreement with" Connecticut
Valley~':assuming the contract 'has riot been
amended 'to increase: output, ,after, the' date
Ourie 25~ 1991)' of"issuance of'Turners:Falls,
unless that amendment was pursuant'to a, prO'"
vision "in the pre- TurnelS Falls,contract that
spetificaJly,authoriied such ainendment~'Based
upon this assumption,. .we..wJ11, therefot'e.., not
revoke the .oF' status bt the G:1aremont ifacility
bi" 'take' otlier 'remedial actitm. .
, '
' 2; Carolin'a povve/&' Light CompaiJY v: Ston~
Cc)lJtaJrier COrporation
" ,, ':' ": ', ",.. -, ,, ""
The sale of QF power by Stone Container is
not as dear. Stone 'COntainer -repre~nts lhit it
has at aU times limited itS'sale'to no: mote than
.ts "actuaJ net output'" Tile ,~l1~gation by
CP&L is' that "Stone Contalner. porSuant 'to a
oJ:iti-a:c~ bPt.ion'~Qntalried)~ it: corii~act ~n~;er~
into, prior "to the' dat~, of .ssi.i~ce of tu~ei-s
F.alls:but exerci~~~ter th~ da~e o(i~u~~e'
, " '-
.": jo Of c~u~e, 'iite' rcih-s1er' QF
' '
uldi s:;;ek,'iq;iiket-
p~~
~#t~' ~\J thority"f~f ~""~eS p~~u~n(~o ~~;"~DIi~
~~~~?~~:~;":::;;"
'i'
~:"
3J supra note 24 and cases cited, ~rein.
" :', '
11"'
~:II J.
: :.
Turners Falls, is at times selling in excess of
actual net output.
Because Stone Container is operating pursu-
ant to a contract executed prior to the date of
issuance of Turners Falls. its sateS will 'not
result in the toss of QF status, even if it at
times has sold in excess of its net output-. While
its contract was amended; after ,the date
issuance of Turners Falls, to, take advantage of
the option to switch to' the '~buy-all/sen-an"
mode, of oPeration, the exerciSe of the option
took place pursuant to the' 'original contract.
The right to the "buy.:aJl/seU-aU" mode of op-
eration was contained In the original. pre-. Turn-
ers Falls contract. Depriving Stone Container
of QF status in these circu~stances would ~ot
~ consistent with maintaining ~e parti~
' ~-
pectalions when, the contract was signed. Mor
over, CP&L. to the extent, it encol.I:raged the
switch (as represented by Stone Container:),
should ,not now be heard to c~air:n that the mode
of operation, which it e~cour~g~d deprives the
facility of .it\i QF ~tatus. ~he t;mc; ~or ~P~L
have objected to the
, .'
buy-a~VseU-an" contr~c-
tUaI provision was prior , to ,it\" e~ecutiQO, and
not long ,after it~.irJ1pl~men~ati~n.
' .. '- '
YVe" therefore conclude : that. under the 'policy
announced' :in this" order, tM's Sale does' not
resuW in the loss of Stone Container s QF sta-
tus,' aria 'we wiU not revoke the QF status of the
Stone Container facility or take other remedial
action, assuming, that ,the contl"act has not been
further amended to increase, output after
, ,
the
date UI,1Qe 25, 1990 ,of issuance; of Turners
Falls, ' unless that amendment was pursuant to
a provision in th~ pre-T~rners Falls cont~act
that specif~caily: ~,\:'thor,i~d sucl:1 a~~n~ment. '
, 3." Niag3ra' Mohawk ;Power::Coiporation"~,
Penn tech Papers; Jnc.
' ," ,; "
Niagara Mohawk argues that the Pennt-e&
Papers' purchase 'or power ~rom: Penelec; both
of "rriake':up
~ ';p'
ower 'under, a 'provision' of
Perin tech 'Papers' transmission contract with
Perteief;~"~d ,Une' losseS'during transmission
, ,pursuant:"
' "
ihe :same , contract, :causes
Penn tech: Papers' to ~ell to Niagara Mohawk
power from a facility,other-thari'a QF. '
In' 'Order
' -
N c;. 888. the Commission qeter-
mined tt-at 'energy imbal~ce 'service , is' one
six 'ancillary serviCes which must ~"'Pro-
yi"ded'tinder" 81.1 ~p'~n" access ,transmi"ssion
tariff :u., Ttie)lescs:f~i)o,i i' enerBr iIncal~~e
serVice;' and the serVice providea by Pene~eC to
pennteeh 'PaPfb'rs' to ~cori-~ct"'in'adv~rterii"hob~-
ances indicate t~at they are t~~, ~ame servi'ce~
, :', ,'.' ,, ", ", "'-: "" " ," ,
FERC' Siatui~ 'an'(J "Regulatipn-;; 'Rbji,j~tions
Prc~~~~j~;?#i,i~~;j~~'1~; ~:~~6~;",
~(~
31.,7.~:
~~~
Is.D Q~,er:
~~:~~!,
f,~Rq ~t"'~I!
andR.~lo!1t.i~nsf.~l,~~'PP J9,
~~~":: :;: :;.:,;,
Federal Ene(:U:~J~~4"II"'~
...----, , ....
: \
I..
--_.,"-
851 4-~98 CommiSsion O"pinions Orders and Notices 6r~423
" "
I1r61,lJ7l'
. ,' "
YSG P,ipetine Compa~y, J;)o'o. CP97~2(j2-OO1 '
, ' ": , '
, I ,
" ..: ,,
Order ~eriying:Re~~;,lring, ~~d/or ~onsideration
As ,'this is ancillaiy 'serVice as defined in
6~d~r NoS. 888' arid '~A, it does, not canst!-
~ute' 3' :sa:I~-'!or:'reSale ana does not 'affect
Penntech PaperS' 'QF stat\1s:" L.kewise, ,the
pur.ch~ ', line: ~~" ~rVice' by ~en:ntech: Pa-
pers Cor transm.sSion serVic~ provid~
p~
'ttie
poiin aC interconnection wlth'Penelee does 'riot
, affect ; 1"15: OF : status. We :wi11, 'lhe)-efore;' not
revoke Penn tech Papers' QF status or t3ke
other remedial action
. ". '' ",, ",, :';,. ":' ':..
The'Commission orders:'
, ':' "
' (:1\) 'The petitiCins 'r deClaratory order'are
fi~reby granted iii"part' and denied in 'part,' as
disCu~d in the body oC this order.' '
. d3) Th~ motion of COni1~dcut V~~ley fil~d:an
Docket Nos. EL94-10-000 and QF86-177.:oo1
to revoke the QF status of Clarem!:mt is herebydenied. "
,, " '~ "
, (C) The motion of CP&L'!i1ed in Docket' NOs.
~L94'-62:'()()() and ',OF8$-102-OO5 to: revokc:"the
.oF status ~C St~ne Con'taiii~r, is hereby denl~.
CD) The motion of Niagara Moha~k fi1ed In
Docket Nos.' EL96-1.()()() and QF86-i'22-003 to
revoke the '.oF status oC" Penntech, 'Papers' is
hereby denied. ,
' ' , :,, ,
r' (E)'Any facility:whichby virtue oC,this'order
is 'required' to file rates pursuant to Section' 205
C?C;th~';FPA s~fmake'suc~'a filing ,within,
days oC-the 'date oC publlcation'o! this order;!n
t)1~' ~edera1 R'egister, as disCussed in ~he body
oCthis'orde
" "" ,.. ' " " '
(F)' The Secretary is hereby directed to ar-
range'Cor publication of this ,order :in ,the Fed-
erai Register as soon ,as pOSsible. ,
":,,, "
11:,
. " ' , " ':, , ..:: :: ,:... ,, ,:!: : .. , , ', :: ':' "," ,
(lssued' February 1-1,1998), " , 0'
,.. ' , , , j , :': ,
Bef~re Commissioners: James J~ Hoecker, Chairman; Vicky A.Bailey~ WiJlia
: L.Massey~Lind'aBreathitt~"andCurt Hebert Jr.
, ' ':, , ':: .. ' " "'' : '
N~~~'~~s ~~titjo hav fil~ ~p
~~~~'
~ l~w ::~e, wUi:~deny 'n.;;,~titio~s f~~~ehearing
' ..', '. ",
titions, for rehearing, ~C, th~: Commission order and' :t1)e auth.orlzadons requested tI~c;reiri. "
issued iJ! DO'=ket No. CP97:-202-Ooo o,n Octoper
'. , , " , ' '' "
17, 1997.1 IO' that 'ord~r, 'tl:t~:,Cpmn;1ission t~) 'iiritj~~jy motii:Jris'Iciinterve~'e andpetiti6ns
authorized USG. pipeline Company (USG' Pipe- for rehearing and other supplemehtal Pleadings
, ",,"; "': " ',
i",' IIline) to, c~nstruct, own' artd" opera~e ~ert~n NotiCe" 'or U~G Pipeli~e's ap'p'li~t.ion , in
:pipeline facilities, to provid~:se.rYice: to its ,so.le p'~k~t'N;o:C~~-2Q~~"
~~ :
i~~~~,ri)~~-
customer ~d aIfi1iated manufacturing facmty, ary, :n. - J997, apc;i, pu~~ished hi the Foo~1
,.." '. '
United States Gypsum Company, (Gypsum); Register, (62 Fed. Reg.977)' on" 'February 10,.. " , ' i,
, " .. '
J '(~~ grant~:U:~G,:~i~lir.e:s r:e.qI,1~te~ v.:~y;ef oC 1997. Motions to intervene and riohces oc'inter-
Ute' Co~~~~iqI:1 s, no~al tariff;(eq4ir.em.~t~, ve~tJo
~~'
~eJ~~' fii~ PY"Re~fii.~~t~~7.
inc1u~ing..wai,?~r ~f the obligati~n"tQ fil~' ac- 'In ~dd~tioI:1~ all p'~ies d~iring'seek rehear-
counting ,reports" notes "and , ~ar#Cs involvlng ing oC t~eOctQber 1'7 o~~er w~t~.requ~r~d!i() file
pSG Pipeline and, tl:1e,m~ufacturing:faci~ty; their petitions Cor' rehearing' on 'oi- before 'Nov.-
and (3) conditio~ed ~e aQov~ authorizatjPQ,-to e~be(17 )997.
" ,: ,.-: ," ", ''" '' :":~:'
reqt,lire USG ,Pipeline, prior t(tplac~g i!;; pipe- .-' Wit~,the'~ception of twQ rehearing petiti~n-
ne: in ,service,:lo file an, appp!:;ation fox:-,~ part ers (the
, ,
East Tennessee' Group, ~d ,1\1"ario~)
.. ,, .' "
, ~84 ,~lanket certifiq;tte: G~f~ring l open~~9,c~S "tha~, were ~tc::d i~teryer:tor s~~~~~ in the' pc-
transportati~n.,r.or: U1e., rea?Pn~:,disC\!.~~;
~- '
tci'ber 17 ohler-.J ~6i1e oCthe reheari'hg p~tition-
: ".. ...,::,:" :",:,, "" .. " ,.,", ..' -' '. '" :..," .
: 1 -lJSG;.Pipeline, ' Company,-, 81 ;FERC' '"61~O39
(1997) (hereinafter ,:referred tQ;as.'the :October: 17
, 9r:der:'), ..In ~ir r~qu~~, J9I" re~~!1lik the Marion
County Farm Bureau and the Tennessee Farm Bu-
reau 'Feder:ation (jointly) (collectively,refen-ed to as
'~Farm ,Bureaus ), "Mar-ion' Natural "Gas System
(Marion) and the City:ofSOuth'Pittsburg.. Tennessee
(South Pittsburg) GoinUy), and Galaxy Carpet alsorequested, in ~e, aller:nati~e' ~t ,t~,
" .
~~m~ission
reopen the evidentiaiy record to take addi~ona1 evi-
dence. Cheryl Kellennann, Galaxy, Marion ,and South
Pittsburg also ask~:(nor Ii,'stay' of the implemehtation
FERCR8~OrtS
" ,.-:::,::."--' ..,": , .' , ;, ''" : ': ,.- , ;.. ,
and enforcement' of:the ,October..17~order.The' ~ast
Teni1~ Group' also seeks, clarification, of ,
~~, ,
O~to-
i:)er 11 o!"rl~r:.
z On November 12, ,997. 'USG Pipeline accepted
the certificate,i~sued in the Qct:ober 17: -ord~., , '
, ,:" : ,,;
, 3 M~Qn:: a~d' S;ut;h :;pi~tsb~~ 10i~~~ ,ri~~i.::a
~m~ly. p,i!tition for ~he~"g., Mario~ (b~~ not So~tt1
Pittsburg) was made an:int.c;~~noT;:by ~Q.ctq~r,
order. South Pittsburg now requests such status in its
joint rehearing petition wit11'Maiioiir'
' ,;; "",:,' ..
~61:1.:1i7
61,422 Cited as "48 FERC ~ . . . .440 8-17-89
Penntech Papers, Inc., Docket No. QF86-722-001
(~
61,120)
Order ,Granting Application for Recertification as a Qualifying Cogeneration
' Facility
, , (Issue~.JuIY 27, 1989)
Before Commissioners: Martha O. Hesse, Chairman; Chade's ,G. Stalon, Charles
A. T:i'abandt Eliz~beth Anne Moler andjerI:Y J. ~angdon;'
""
On March 14 ' 1989 , as supplemented on The requ~st to '~lude a transmissio~ line asMay'16 :and June 30, 1989" Penntech, Papers pa~l of the facility is the ,result of two opt~ors.Inc. (Penn tech or,Applicant), oLWhite Plains now available to j)ennte'ch to tI:ansmit,the ,elec-New York; filed an, application puisuant 'to tI-ic 'P9wer prOduced by, the facility to Niagarasection, '292.207 of. the , Commission~s regula- Mohawk:
tions , for recertification, as a qualifyingcogeneration facility, of a topping-cycle facility,
to be located at Johnsonburg, 'Pennsylvania.Applicant: seeks recertification .to,reflect (1) ,
increase, in" the' electric, pow er 'productioncapacity of the facility from' 33 433 kW ,000 kW; and (2) inclusion of a IlS kVtransmissipn line" to ,transmi t power, to" thepurchasing utility, Ni~gani MoQ~wk Power
C;::orpor~tion (Niaga,~ Mo~~~k).
' " "
Notice' of the application ' was published in
the Federal Regist'er ~n- April 2, 1989 2 'withcomments, protests or motions to intervene due
on :or before Ma:y.', 1989. No' comments ,have
been filed.
" ',.," '' ,, .::' , - :', " '. " ,
, The Penntech facility will consist of twp (ioal-fired boilers; one, waste-fired boiler:~; :and:, one
extraction/condensing turbine generating ' unit.Ste~m p'roduc~Q by the facility will. be, used to
s~p'pl~,B~ip '~' p'~per 1!1~I1. pr6ccss :requiI:~-
ments. Tbe .primax:y.'ener'gy sources wil be coal
nd':bl~ick liquor ,waste~ Natural gas will' be
~~d as a: bi1~lc..~p f~~l. Insia,ll~tiori pf ti1.e.r~c~!,
itY. begai1 ,iri' early' t 987. ,fadlity' ~as previ~
ously' ce rtiti~~( as,
: ~ '
!iiify"ing ," c6generatiq~facility on jl.tiy23, 1986 (36 FERC ~ 62 073): '
The proposed increase in electric power pro-
duction capacity from 33,433'kW to'OOO kWrefers to the maximum rated capacity of the
facili~y 0, The entire, 9ulput ;.v.m :, solQ ~.Q ,
~~~g-
ara, Mohawk ~If(t ~~e ~I1~~!E( ;,!,uxiJ~a& lo~d ;:~~,the site (5 1 MW),ill be purchased from ,West"Penn Power" ,tQ~,pany (West
' .
Pe~n):,:the
existing- supplier,
~..
The electrical configuration
0(. ,t~e .faci~it;y conte~platcs tot~l sep~rationbetween po\'Yer purcna'sed from West Penrj 3:ndthe power generated and sold to Niagar
Mohawk:
' ,! '.';
a 7~mile, 115 kV line running south along an
existing 'railroad right of way to the Ridgeway substation of Pennsylvania, Electric
Company (Penelec). Tl1e power will then be
wheeJed by Penelec to N'iagara Mohawk; or a
58~mhe; .115 kV li~e runrting north along an
existing railroad right of w~y 'to a point twomiles south' of Salam anca, NeW York 'whereit Vim tie 9irectly to Ni~gara Mohawk.
, ,, "" ,' , ..
Penn tech will be the sole owner 'and ,operator,of eilh~r'line, The choice of options will depend
~pon ~.he,: PuJcoI:J1'e ,of PenntecQ's on~gotiations'
with Penelec, ~ith respect, to a wheeling agree~
ment.: If :lhe negotiat~ofls ar~ successful
, ,
theAppli~qt ,v.:ill construct' the 7.-mH~ transmis-sion Hne and will deliver electric, power ,Niagara Mohawk via the dedicated 7-mile lineand the Penelec transmission system. Alterna-tively, if Penn tech is unable to negotiate ' a
wheeling; !ieT;v.~ce, ag~eement with Penel~(; Jhat
is acceptable to ,r-e~ntech, Pennt~ch will' c~n-
s~ruc~ and operate tl)e, aJternative.., 58-mH
tra~!"~issi~n Jip~ directly intercon~t;~~i~g: with
Niagara Mohawk. Penn tech states, that the,sole
p~rpos~'of "ihe tr~~s~.issi9~: li~e, ~ili.'ge"to,
tr,a~s~it, p'o~er fro~"the facility, ,to Ni~gara
Mohawk. The transmission line will not be used
or r~,ceiviI)g 'n;ain~~~ance. bac~~p or ,suppi.e-mental power, ,Since,the, facility will be located
~4~~~n ,"W~:;,
~ ":~~p~
s ,~~rvic~,. ~~r~itory,:/W~~
Penn "will "prQyj!;ie: the , facil~ty, :with.. any
required rniiintenance backup or supplemeniai'powe-r: '
:;:'
:r:
, ,.... '" '.. " "":" :" ''- ,, :. ' ,: ,
Discussion
" ,, ", "",
: w~ ,~ilY .i.~aritShe;'~ppli~~tj9~.. 'Fi'rsi;"9ase~~pon 'th~ iij!~r~at~o~"P!oYid~d by', t~~ Appl~~cant;' the Jai:ili~ysa:tlsfies "the bper~ting and
.. '.. '.. ,'" " , ', ".., ....,,,.. ': :,
' 3 Th!! was~e
" ,
con~ists, o!: a black
: ,
liqu~r chemicalrecovered in the paper plant process,
, :'
I:,~8::(:~r.o~J,~~2:i':~1988).
' '," :; ,
254 Fed,Reg. 14;136'(1989):' '
.."
t!,120
, .. - -"-
Federal Energy'uldelines
( ", -
440 8-17-89 Commission Opinions, Orders and Notices 61,423
efficiency standards of the Commission s regu-
lations.
With respect to certification of the electrical
power production capacity of the facility, use
of the facility s maximum gross output, as the
Applicant appears to 'propose, is, inconsistent
with our holding that OUf regulations do notcontemplate a, qualifying facility selling its
gross output; Power Developers Inc. (Power
Developers), 32 FERC; 161;101 , at p, 61 276
(1985). In the Power Developers. prqceeding,.we were presented with a similar factual situa-
tion; that is, an ,applicant planning to
, ,
~heel
the gross, output of the proposed facil~ty to an
indirectly, interconne!=ted purchasing utility,
whi1e' obtaining from, th~ local utility the, elec-tric power nc;cessary, to 'the power productIon
proces~. As we' pointed out, Hie sa~e "Of gross
output would amount to a sale oc' more powerthan' the facility has to dis~Qse of, and e~able
utiliti~~ to avoid generating or purchasing. In
t~e process of g~nerating power; the facility
m\l~t consume SOITl~ eJectric power foi:awciJiary
equipmen~ ~~~h'' pumps/, ~lowers, f~n~, etc,
the e1ectric , powe~, consumed' is not taken
direcdy from the facility, as would normai1y be
the case, it' must come, from another source.
Therefore, the amount of electric power actu-any capabJ'e of being ' displaced by a facili'Ly' is
the facili s output 'n~t of such auxHhiry ~uses
that is, the gross
' '
electric pow~r output of the
facility less the electric power'c'ohsuined by the
fadl~' in ~he power producti,on process: SeeOcCidental Geothermal 17 FER-C" 61 231
(1981). According1y, we certified the fadlity'
net pOWer production output as its power pro'-
duction capacity.
, Th~' fa~ts a~e no difier~~t 'here. Pen~~~~h is
e.k1ng' certific~~,i:On of th~, ni~xim:u~ rated
ct,i,pacity, which wi)) be :S"old ,~o ,Niagara
Mphaw~, wni.le lia.ving a 5. t'M\y, a4xiiiar)'loa
supp~i~d 'by' Vfeg~ '~en~: AUow!ng 'Penntech tc)
~ell the gross '94tP!J~ at' ,on~ ,util~ty
' :
~vo,q~,
cost rate~ whUe 't.h'coge~eratoi:purcl-iases 'he,
au~iliary' power'at another ut1lity s retajf rates
rnitY\~ery wen r ' in '3.h etoh6rriic ~aistottion
This oCCUr's beca'us~ :the a xi1~ary"p~~:\;er' nece~
'::
sarY to operate 'die: facility .'and enable it 'to
generate electricity is properly an internal cost
of the faciJitY., just as losses, boiler efficiencies
etc::.'Since'only, the' net:Qutputwili -be 'capable
being avoided on the combined system; the" us
of such' n ~t amo~ni is 'ap'propriate for' ce~tifica-
lion 'rpos~s, 'Based' up~n 'thIs: 'terpretation
: "'" ', "" '" ,
of power production capacity of a qualifyingfacility, we will not include the difference
between the gross, and net output of thePenntech facility in our calculation of the facil-
ity s power production capacity.
The Commission has previously certified
transmission lines as part of a qualifying facil.ity, finding that section 210(a) of the Public
Utility Regulatory Policies Act ~f 1978(PURP A)s can be construed to incIude trans
mission Jines within the definition of qualifying
facility, since one of the goals of PURPA is to
provide a market for , power ge~erated by such
facilities and achievement of that goal would
b~ greatly, hindered, if such facilities were sub-ject to traditional ~ti1i'ty regula.tion. ClarionPower,Go, (Clarion)39 FERC W'61,317 (1987);
see ~lso Sycamor~ Cogeneration Co.40 FERC
ff 6~;237 (198,7), and Oxbow Geothe~mal Corp.
43 FERC f 61,286 (1988), However, in Clarion
the ComQ1ission also ~pecified th8:~~ : -
(O)ur approval is limited in that the sole
purpose oc the transmission line is to trans-
, ,mit power from ,Clarion s qualifying -facility
to. ,Penelec a.nd to :trarismit, standby, 'mainte-
, nance, and 'backup ,power from, Penelec to
'Clarion. Any other use of the line' could resultin a' finding' of jur~sdiclion under ,the: FP A;
39 FE:RCat p. 62 Ot:4.
" '. ':" , "
:rlJe facts' h~;e' a;r~ "ar:ialogQus \0 the facts j,
those, cases.. save 'for the .fact, that Penn tech
currently has two options available for 'trans-
" """ ", '
missio , In ,tber ,c~se, however" we find the;
tran~anissicin 'Ifne is necessary to ~he' qperation
of" and integral to; Perin~ecti's qualifying I~cil~
i~y and is e1)!=omp~ssep ,within PUR~A 's' ~iatu-t9iy" ambit. Further
.. '
' in Clarjp,n; our
approviii l:liri1'ited' in that' the
' '
p!-ir'pose p~ thetransmission line is to' lransmit ' power fromPenntech's qualifying facility "to P.enelec, for
subseque w.heeling jo 'Niagara 'hawk
di~ectJY to 1'lja,gara, Mohawk
, ,
as the:' case' may
~e,
: ,, " ;:, .':,' ,:: '" ': ,' ":' ': ,; ,: ,, ,
The,C~mn:Jjssjon orders:,
, ,'.''..
(A) The application for' recerlificati~ri as
' '
iI:
q,ualifying cogeneration' faciJit:y: filed' by
Penn tech ,Papers; Inc. on' March 14, -1989, ahdsupplemented' on M:iy, 16
: ,
1-989
, '
pursuahl' to
se'Ct.ion 292:207- of"the , Commission s' regula"
tiOns,' and section: 3(i8) of the 'Federal', Power
Act; is' h~reby' granted, provided 'the, facility
operates iri'tn~:manher described in the appli-
cation..
:::::,:,:.::,: ;:'::', '..,::,:\~~~
18
;'~,
~~iq?,
(~~~~. :~: ,, '; :,
516 U,C:. ~824a-3 (1982),. .
.. ,
6 Certification as a qualifying facility serves only
to: establish', elig'ibility' for :benefit"S::provided by the
Public: tJ~ility ~~gulatory:..Policie& Act :of:"1975
, ,
implemented by ' the Co~mission~s~ :1;egu.la~!4?~s. is,
FE;RC ~,epor:t.~ ..
:,"
R. Part 292 (i988).' it does :riot reiieve a:' fi:dilty
of any other requirements of local, state or federal
I~;
" '
in~14~~~~'
, '
ih~;;'r;, ~~~~'ri:Ji~~:,ti!1
g, '
constr c~iQJ:1,
.. , j" '' , , ..,' , .., " ., ..
, operation, IJcensing,:an~ ,pollut~ol) ,ba,temeQl, ~eI:tif~-
...., ':' " , :.... ,"....,., , "'.
catit!~ does , n~t esta~lish: anY, PFop~rt~" righ~, r~olv~,
c;ompeting claims for a s~te or author~~e ,cQns~r,1,lction
1~O
61,424 Cited as "48 FERC ~ . . . .440 8-17-89
(B) The certified eleclric power productioncapacity of lhe Pennlech facility shall be the
net capacity of lhe facility as described in the
body of lhisorder,
Commissioner Trabandl concurred with a
separate statement attached,
Charles A. TRABANDT, Commissioner, con-
~urring:
I agree that the higher rate the Public Util-
ity Regulatory 'Policies Act (PURPA) provides
for qualifying facilities (QFs) applies to the
power the Penntech Papers, ~nc. (Penn tech)
facility sells net of what it uses itself, rather
than the entire amount the facility generates, I
write to explain my views on the other ,issue in
this case: QF ownership of transmissitm' lines.
Today s decision not only reaffirms but takes
further previous Commission 'case law on this
subject.
1- mentioned in my partial dissent in Mid-
way-Sunset Cogeneration Company, 47 FERC
ff 61 273 ' at' p. 61 957 ,(1989)' that under
PURP A and our regulations transmission lines
do not form ,part of a qualifying facility. In one
harmless" case Clarion Power Company, 39
FERC 161 317 (1987), we aIJowed the ' QF toown a one-mile long transmission' line. Having
opened the door a crack in ~ si'ngle ca~e, ~he
Commission ' proceeded to try ,to treat the
~ception as if-it were the rule. In the Notic~ ,
Proposec;I Rulemaking on the Administrative
Determination of Avoide~ Cost (ADFAC
NOPR), RMBB-6-.000, the majority expanded
on Clarion to consider allowing QFs ge(l~rically
to own transmission jines. :"
, '
Even 'while the generally worthwhile' ADF AC
NOPR has become mired along wi~h the other
two notices we 'issued "at the' same time, the
Commission has, as this order recites, slip ot,..
at 3, routinely made transmission lines part'
QFs. I ;have :expressed my views on ,this issue
because I think the matter deserves closer con-
sideration. First of ,all, we have received c;:om~
m,ents in the ADFAC NOPR docket oppo~ing
thaJ.. part 0(, ,the, regulation. As "long as the
Commission ac~, in individua\,c~ses an9 keep~
the r em""king, On the books" Jhe agency rpaydisregard' the ~ornments , with the n\;ltion that
we will deal with them in RM88-6-000, In .fact
that' aspect of the ADFAC 'NOPR and those'
comments hav~ b i:o~e irrel~vl!ont, ..
S~co , on policy gro~rids i ' oppose all~wing
Q~s to own transmlssioh' lines ' exc'ept in lim-
ited tircumstances (a shori line as in Clarion
or for' geothermal' projects' as in Oxbow Geo-
thermal 'Corporation 43' FERC W 61 286
~ 6i,120
, .., .--"-"
(1988), where the developer has no choice).
Nevertheless, the debate has progressed to the
point that the rest of the Commission has
accepted QF ownership of transmission lines as
a fact oc life. Indeed, the practice has become
so common that originally, the Director oc the
Office of Electric Power Regulation would have
issued this order under the authority the Com-
mission delegated to him for routine and set-
tled matters. I, therefore, concur rather than
dissent further,
However, one aspect oc this still troubles me,
As I mentioned in Midway Sunset, QF owner-ship of transmission carries with it the danger
that the facility may sell to anyone besides the
purcha:sing utility, such as a high voJ'ume con-
sumer, The customer would only need to con-
nect along the Hne s route and we will have
turned PURPA'into a law setting up an alter-
nate, competing electric indu~try with its own
transmission grid and exempting it from' fed-
eral utility regulation. The law does not envi-
sian' that result. Though the CommissIon has
placed restrictions oX) the QF using the line in
such a fashion, I find that ineffective.
rimarily I am concerned that we have "
effettive way of enforcing (those ,restrictions),
Midway Sunset, 47 FERC at, p, 61,957, This
order. makes things worse because Penntech
ll own ,a line that will run to a connectingutility, not ,the one that will pur~hase
Penntech's power. This opens further possibili-
ties for abuse as wheeling enters the, pictu!e.
Finally, I think we describe too mildly the
consequences that should follow if we find that
e QF has disobeyed our prohibition agai~st
third-party sales. We ,state, slip' op. at 4, quot~
ing from Clarion, that, "A.!1Y' ot1)er use of the
could result In ' a, finding of jurisdiction
under the ,F:PA," (Emp~asis added).I prefer
"wilt" result." While I linde~stand, as the Staff
said' at ~pe Commiss~on meeJing" that under
ce~'ta.in ,circumstanct;s we W9uld not' 'V~nt." to
~hat, I still think 'we sho~ld say "will ~rdiriarily
, "
resu
:, ' ,
, Th"(s ~ay we: c~n 'stiil account for 'individu~i'
circumstanc~s
' ,
such as if the QF' jjse~, t~e line.
fqr transmitting power to anothe ' f~!=i\iiy it
owns. Howeyer" that Joqnulation show~ i~ t):1e
sttongest ,terms our, determination to prevent
QF ownership oJ transmission line!! .from
becoming the means 'for creating, by stealth, a
new electric industry.
' ,
" For these rea~nsi rather tlia:~:again, record
my 'dissent, to allowing the ,GF tei own the'
transmission lines, I concur.
Federal ,Energy Guidelines
61,444 Cited as "17 FERC 1....77 1-21-&
service to Winnfield remains the existing full
requirements contract rate and terms of
service. LP&L did not file notice of its intentto increase its full requirement rates to
Winnfield based on average system costs. Itfailed to file a cost of service study to justify
such an increase. The Federal Power Act and
our regulations place the burden on ~he utilitycompany to justify its proposed changes inrates. I, therefore, must dissent from my
colleagues' decision to grant LP&L a rateincrease for which it did not apply nor justify.
Moreover, I do not believe the Commissionshould set a precedent of encouraging utilities
to make inappropriate and inapplicable filings
knowing that the Commission would order
expedited proceedings and that its staff wouldundertake the requisite cost of service studyupon which the Commission would rely award prompt rate relief.
(1f 61 231)
Occidental Geothermal, Inc., Doc~et No. QF81-7-GOO;Small Power Production and Cogeneration Faciliti.e&-Qualifying Status,
Docket No. QF81-7-o00
Order Granting Application for Commission Certification as a Qualifying SmallPower Production Faci)ity
(Issued December 11, 1981)
Before Commissioners: C.M. Butler ill, Chairman; Georgiana Sheldon, J. DavidHughes and A.G. Sousa.
On November 21 1980 OccidentalGeothermal Inc. (Applicant) filed with theFederal Energy Regulatory Commission
(Commission) an application for certification
of a proposed facility as a qualifying smallpower production facility pursuant to~ 292207 of the Commission rules. The
Applicant requests that the Commission issuean order certifying that a small powerproduction facility is a qualifying small power
production facility as defined in section3(I7Xc) of the Federal Power Act (FPA) as
amended by section 201 .of the Public Utility
Regulatory Policies Act of 1978 (PURPA) andsection 643 of the Energy Security Act of 1980
(~~).
Notice of the application was published in
the f'ederaJ Register on January 21, 1981.1The Applicant waived his rights, with respect
to ~292.207(bXS) of Commission s rules . on
Febroary II, 19tH. On February 19 1.981 thePeople of the State of California and the Public
Utilities Commission of the ' State of California(CPUC) timely filed a Notice of ,Intervention
pursuant to ~ 1.8 of the Commission s rules. On
March 2, 1981 the Commission issued an OrderExtending Time For Commission Actionpursuant to ~ 292.207(b)(S) of its rules, .TheC;PUC initially .requested' that aT! evidentiary
hearing be held by the Commission . to ,resolvethe factual issues raised by the application. On
August 10, 1981
, .
the CPUC fi1ed a withdrawalof its request for an evidentiary hearing.
The' facility 'will be 'located' in Lake
County, California. There are no other small
~ 61 230
-" "'- ..,
... h"
'..,
power production facilities owned by theApplicant and located at the same site orwithin one mile of the facility for whichqualification is sought. The facility will usegeothermal steam as its primary energy source.
The CPUC raises two issues, with regard tothe qualifying status of the Applicant
facility. First, the CPUC contends that the
power production capacity of the proposedfacility could exceed the size limit of 80megawatts for small power productionfacilities. Second, the CPUC asserts thatcertification of the proposed f~cility as
qualifying smaJl' power production facility
would discourage the full development of the
,geothermal resource.
Net Capacity
The issue raised by the. CPUC regarding
the capacity of the Applicant s proposedfacility requires the Commission to define the
power production capacity" of a facility ' as
that term is used in ~ 292.2O4(a) of the
Commission rules. Section 3(17XA) of the
FPA, as amended by section 201 of PURPA
requires inter alia that a small . powerproduction facility have "a power production
capacity whiCh : is 'not greater than 80megawatts.Th~. Conference Reportaccompanying PURPA' indicates' that. the
power production capacity of the facility is its
rated capacity;"
The Commission notes that in deterinining
the "power production capacity" of iI. facility it
F~eral Energy GuidelineS
,.,. ".- ----- ,.-'-'.
" "..- ,' '
77 21-8Z . Commission Opinions, Orders and Notices 61,445
will not necessarily look only to the nominalrating of generating equipment in the facility,
Generally, the electric power industry
determines the nominal rating of a powerproduction facility under standard operating
conditions such as cooling water temperature,steam pressure and steam temperature for
steam generating units, water resource head
for hydropower units, and altitude and air
temperature for combustion turbine units. The
actual output of a power production faciJity
may vary as these operating conditions changeor because of a restriction on the rate or rates
at which primary energy is supplied.
Furthermore, a facility s power production
capacity is not necessarily determined by the
nominal rating of even a key component of the
facility. For example, while economy dictates
that a large facility be built so .that all its
components have nearly the same operating
limits, thus minimizing the costs of unutilized
component capabilities, it is not uncommon for
smaller facilities' to find it most economic toemploy commercially available componentssome of which have individual capabilitiessignificantly exceeding the overall facilitycapabilities.
The Commission will consider the "powerproduction capacity" of a facility to be the
maximum net output of the facility which can
be safely and reliably achieved under the most
favorable operating conditions likely to occur
over a period of several years. The net output
of the facility is its send out afler subtraction
of the power used to ,operate auxiliary
equipment in the facility necessary for powergeneration (such as pumps, blowers, fuelpreparation machinery, and exciters) and for
other essential electricity uses in the facility
from the gross generator output.
The, occasional occurrence . of poweroutputs of more than 80 megawatts does not
. necessarily indicate a power productioncapacity exceeding the qualifying limit if the
occurrences are rare, such as once or twice in a
five year' per:iod, and if they are clearly
attributable to unusual circumstances. Thus
an applicant s statement that under certain
circumstances the send out may exceed 80megawattS does not in itself prevent qualifica.
tion:. An applicant's statement , that ~he power
production capacity of the facility will notexceed 80 megawatts is accepled as
determinative, in .the absence of evidence. tothe contrary, consistent with the principles
discussed above.
Occidental states that the n~t power
production capacity 'of the facility' will not begreater than 80 megawatts as required by
~ 292.204(aX1) of the Commissibn s rules. TheApplicant indicates that. the facility may,
FERC Reports016-59
under certain circumstances, input more than80 megawatts into the electric grid. TheApplicant states that, for , example, favorableclimatic conditions reducing auxiliary load onthe power plant may cause an input of more
than 80 megawatts into the grid. However, theApplicant indicates that the facility will not
normally operate with net output exceeding 80
megawatts and conditions of less than 80megawatts production will occur for significant
periods of time,
The Commission finds that this type of
increase or decrease in power capacity for
limited periods, as a result of circumstances~yond the control of the Applicant, does not
violate ~ 292.204(a)(1) of the Commissionrules,
Full Dew:lopment of the Resource
The CPUC alleges that the Applicant willlimit the electrical output of the facility to 80
megawatts in order. to obtain qualifying status
and that the capacity of the geothermal lease-hold held by the Applicant exceeds 80
megawatts. Thus, the CPUC , contends that
certification of the proposed' facility as aqualifying small power production facility
would serve to discourage the development ofthe geothermal resource.
The Applicant answers this assertion bystating that the 80 megawatt ceiling criterion
refers to actual net power production capacity
of the facility, it does not refer to leasehold
potential, and that the statute and the rules donot require that a facility be sized to achieve
the .maximum output of an energy resource.
The Applicant also submitted an order of
the State of California Energy Resources
Conservation' and Development Commission
(CERCDC) which found that steam was
available at the ' Applicant's site to p~oduceonly 77 megawatts of electric energy.
BUed on the information submitted by the
Applicant, specifically the findings of the
CERCDC, the facili ty will not exceed the 80
xnegawatt jurisdictionallimit,
The Commission finds:
The geothermal. small power production.facjlity as described in . the applicatioh
,: ~ubmitted" by. ~he Occidental ~eotJ:1.ermal
Company, meets the requirements established
, ~ 292.2O3(a) of the Commissi~~s rules,
The Commission orders:
, The application for., qualifying status filed
on November 21, 1.980, by the' Occidental
Geothermal Company, pur:suant to ~ 292.207
ohhe Commission s rules and section(3)(17)(C)of the Federal, Power Act, as. amended by
'If 6'1,231
. ..., --.---.,----.
61,446 77 1.21&Cited as \\ 17 FERC
, . . .
section 201 of the Public Utility RegulatoryPolicies Act of 1978, is hereby granted
provided the facility operates ,in the manner
described in the application.
Energy RcioUrcC5 Conservation and Development
~ommilSion. Docket No. 81-AFC, March 10, 1981.
I The Commiuion notel that section 201 of
PURPA is silent on a requirement of full
development of a relOurce in a Imall power
production centeJ:t.- F ootnote8
1-46 Fed. Reg, 6044 (1981),
I Determination n:: Commercial AvailabiUty of
Geothermal RCIOUrce:s and Order, State of California
(, 61,232)
ranlCODtmental Gas Pipe Line Corpor-ation, Docket No. GP80-24
Opinion No. 135; Opinion and Order Remanding for Limited Purposes
(IBBued Decembel- 11, 1981)
Before Commissioners: C.M. Butler ill, Chairman; Georgiana Sheldon, J. David
Hughes and A.G. Sousa.
(Note: Initial Decision granting motions for summary judgment, diRm;ui
third party prOtests in part and granting petitions to intervene was issued
May 8, 1980, and appearS at'll FERC 163 018.
Appearances
Judy M. Johnson for A.C. Glassell
W. T. Benham for Amoco Production Company
William T. Miller and Stanley W. Balis for Arizona Corporation Commission
Frederick Moring and Jennifer Waters Hitt for Associated Gas Distributors
Judy M. Johnson for Bel Oil Corporation,
Carmen C. GoIlZBlt!z and of?ert S. Wheeler for Cities Service Company
Daniel Guttman for Congressman Andrew Maguire
Marilyn P. Jacobsen, Bruce F. Kiely and Charles M. Darling, IV for Coquina Oil
Corporation
Nancy J. Hubbard and Bernard A. Foster III for Diamond Shamrock Corporation
Judy M. Johnson for Do~, Chemical.company
Philip C. Wrangle for Exploration and "Production Division ()f sOuthern Natpral
: Gas Company, Individually, and ~s Man~ger of the Southern Natural Gas Company-
~~ijlips Petroleum CoII)pany Joint Ve~t~
Douglas Rasch C. Roger Hoffman and Martin N, Erck for ,Exxon Corporation
Daniel Guttman for Florida Cities
Wimam T. Milierand Stanley Balis for 'Gas,Consumer's Group
GordolJ GOoc~, C~a.rles Darling, IV and Charles SIiff1i~ for General
American Oil Company of Texas
Judy M.Johnson for George R. Brown
11 61,231 Federal Enero Guidelines01~22
. ,.._--..., ._, ..-- . - - ... , ,, .. ,, "
C "j
~~;
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
REQUEST:
RESPONSE:
AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
Idaho
AVU-O5-
IPUC Staff
Data Request
Staff -
DATE PREPARED: 10/24/2005WITNESS:
RESPONDER: LaffertyDEPT: Energy Resources
TELEPHONE: [phone]
Please provide a copy of the draft contract referred to on page 6, item 8, of
Avista s Answer to the Complaint of Thompson River Co-Gen that Avista
provided to Thompson River Co-Gen in early August 2005. Please mark
those sections of the draft contract that A vista understands Thompson will
not accept.
Please see the attachment labeled "FIRM POWER PURCHASE
AGREEMENT BETWEEN THOMPSON RIVER CO-GEN, LLC FOR THE
THOMPSON RIVER CO-GEN LLC PROJECT AND A VISTA
CORPORATION" dated 8-, which is the draft contract proposal sent by
Avista to Thompson River Co-Gen. Also attached are two email
transmittals, dated 8-, from Avista to Thompson River C-Gen that were
used to transmit the contract documents and also to correct a few typographic
errors in the contract.
Please see attachment labeled "Attachment A - A vista Corporation Response
to Staff Data Request No.3" which provides a summary list of objections of
Thompson River Co-Gen to various sections of Avista s draft contract
proposal.
Please also see the comparison document which compares the A vista draft
proposed "FIRM POWER PURCHASE AGREEMENT BETWEEN
THOMPSON RIVER CO-GEN, LLC FOR THE THOMPSON RIVER CO-
GEN LLC PROJECT AND AVISTA CORPORATION" dated 8-05 to the
Thompson River Co-Gen counter-proposal document dated 8-19-05. The
compare documents shows the changes proposed by Thompson River Co-
Gen. The comparison document is also provided in electronic form in order
to show the color-coding associated with changes that Thompson River Co-
Gen made to the 8-05 draft A vista contract proposal. The last page of the
compare documents provides the color-code index showing what type of
change is represented by which color. For example, the color blue indicates
an insertion, the color red indicates a deletion, and the color green indicates
text that has been moved.
Lafferty, Bob
rom:
Sent:
To:
Subject:
Silkworth, Steve
Friday, October 21 , 2005 1 :11 PM
Lafferty, Bob
FW: Draft TRG Power Purchase Agreement
-----
Original Message-----From: Silkworth, SteveSent: Monday, August 08, 2005 1:24 To: 'Imuco(Q)msn,comSubject: Draft TRC Power Purchase Agreement
Mike -- Attached is a Draft Power Purchase Agreement (and attachments) for TRG that should facilitate further
discussions of a potential agreement between TRG and Avista.
To help facilitate your expressed desires to manage your transmission, we have included language for the implementation
and operation of a deviation account. We believe the shaping services that you are contemplating purchasing from
NorthWestern will likely provide the flexibility needed for the deviation account. The deviation account, if implemented, will
require a three-party agreement between TRG, NorthWestern, and Avista. Once you have an initial opportunity to review
the draft agreement, it would probably be most productive to have a discussion to review several examples as to how the
deviation account and other aspects of this contract will operate.
The prices provided in Attachment A are based upon Avista s 2005 Integrated Resource Plan and are the same prices
sent to you on July 5,2005. The price offer is lltilted" at 1 % and is adjusted seasonally.
Je look forward to further discussions with regard to this draft agreement.
Please call me if you have any questions,
. " '","::"
i:j~ .
TRC PURPA Exhibit A TRC offer EXHIBIT B TRC rRC to AVA one line Engineers
mtract (00337955-4 7-0S,xls.., 8-0S.doc Exhibit C ... :ertification Exhibi...
Steven G. Silkworth , P.
Wholesale Power Manager
A vista Utilities
E 1411 Mission Avenue
O. Box 3727
Spokane , VV A 99202
[phone]
[phone] Cell
[phone] Fax
steve.silkworth (g) avistacorp.com
FW: Draft TRC Power Purchase Agreement Page 1 of 2
Lafferty, Bob
From: Silkworth, Steve
Sent: Friday, October 21 , 2005 1 :11 To: Lafferty, Bob
Subject: FW: Draft TRC Power Purchase Agreement -- Errata
-----Original Message-----
From: R. Blair Strong (mailto:r.blair.strong(Qjpainehamblen.com)
Sent: Monday, August 08, 2005 1:48
To: Silkworth , Steve; Lafferty, Bob; Johnson, Bill; Miller, Dave; Lloyd, Rick; Hamilton, Lori; Mattern, Kim;
Stevens, Rich; Smith Jeff
Cc: Terry York
Subject: RE: Draft TRC Power Purchase Agreement
There still are a few typos that slipped in the 08-07-05 draft:'11.
- Tile heading for Section 3, EVIDENCE OF REPRESENTATIONS - should be underlined
- Sections 4(d) and 4(e) - "commissions" should not be capitalized
- Section 9(a) Maximum deductable for Liability should be 5%, not 0.
- Section 18 - last line should read cubic feet per second, not cubic fees per second
Blair
From: Silkworth, Steve (mailto:steve.silkworth(Qjavistacorp.com)
Sent: Monday, August 08, 2005 1:27
To: Lafferty, Bob; R. Blair Strong; Johnson, Bill; Miller, Dave; Lloyd, Rick; Hamilton, Lori; Mattern, Kim; Stevens
Rich; Smith Jeff
Cc: Terry York
Subject: FW: Draft TRC Power Purchase Agreement
This is the draft contract we sent to Thompson River Co-Gen on 8-
-----Original Message-----
From: Silkworth, Steve
Sent: Monday, August 08,2005 1:24 PM
To:Imuco(Q)msn,com
Subject:Draft TRC Power Purchase Agreement
Mike -- Attached is a Draft Power Purchase Agreement (and attachments) for TRC that should facilitate further
discussions of a potential agreement between TRC and Avista.
To help facilitate your expressed desires to manage your transmission, we have included language for the
implementation and operation of a deviation account. We believe the shaping services that you are
contemplating purchasing from NorthWestern will likely provide the flexibility needed for the deviation account.
The deviation account, if implemented, will require a three-party ag~eement between TAC, NorthWestern , and
Avista. Once you have an initial opportunity to review the draft agreement, it would probably be most productive
to have a discussion to review several examples as to how the deviation account and other aspects of this
FW: Draft TRC Power Purchase Agreement Page 2 of 2
contract will operate.
The prices provided in Attachment A are based upon Avista s 2005 Integrated Resource Plan and are the same
prices sent to you on July 5, 2005. The price offer is "tilted" at 1 % and is adjusted seasonally.
We look forward to further discussions with regard to this draft agreement.
Please call me if you have any questions.
oe::oe::TAC PUAPA Contract (00337955-4) 8-05 pm.DOC~~ oe::oe::Exhibit A TAC offer 7-0S.xls~~ oe::oe::EXHIBIT B TAC
0S.doc~~ oe::oe::TRC to AVA one line Exhibit C 8-0S.ppb~ oe::oe::Engineers certification Exhibits E F G TRC 8-
OS,doc~~
Steven G. Silkworth, P.
Wholesale Power Manager
Avista Utilities
E 1411 Mission Avenue
O. Box 3727
Spokane, WA 99202
[phone]
[phone] Cell
[phone] Fax
steve.silkworth ~ avistacorp.com
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
FIRM POWER PURCHASE AGREEMENT
BETWEEN
THOMPSON RIVER CO-GEN, LLC
FOR THE THOMPSON RIVER CO-GEN, LLC PROJECT
AND
VISTA CORPORATION
INDEX
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
DEFINITIONS .....................,................................................,......,.........................
REPRESENTATIONS
""""""""""""""""""""""""""'"....................................
E~IJC)ENC=:E OF ~P~SENTATIONS................................................................
TERM OF AG~EMENT
..."............................,..............,....................................
SALE OF POWER.................................................................................................
DETERMIN'ATION OF PAYMENT
....................................................................
MIN"IM1JM DELIVERIES.....................................,...............................................
DE~IATION ACCOUN"T................,.......,.............................................................
SECURITY
INTERCONNEC=:TION AND TRANSMISSION ..................................................
OPERATION
SClIEDULIN'G ....
..... ... ......... ..,....... ............... ......... ..... ..........................., ... .... ... ...,
PAYMENTS
METER IN'
FORCED OUTAGE AND FORCE MAJEURE............,................................,......
INDEMNITY
ASSIGNMENT ......................................................................................................
WATER RIGHTS .............,............................................,.......................................
NO UN"SPECIFIED TIDRD PARTY BENEFICIARIES ......................................
DEFAULT
ARBITRATION ...........
........... ..... ..................... ..................... ...................., .... .......
RELEASE BY PROJECT DEVELOPER......,
..... ....... ............... ............. ...............
GOVERNMENTAL AUTHORITY ......................................................................
EQUAL OPPORTUN"ITY...................... ...
.......,................... ...... ......... ...." ,......... ...
SEVERAL OBLIGATIONS ..................................................................................
IMPLEMENTATION ...................................,........................................................
NON-WAIVER ................. ......... ......... ..............
.... ...... ......... .............. ..... .......... ..............................................................................................................,. ..... ... ... ......... .... ...... ..... .......... ... ....... ... .................................. ...... .............. ........ ..... ....... ...... .................... .......... ............. ... ...... ........ .... ...,........................ ......... ... .... ......... ....,.. ...... .... ......... ..... .......................... ..., ... ................................... ......... ... .... ............... ............. ............................. .......... ... ....... ......... ..... ...... ....... ...........................................
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
28.
29.
30.
31.
32.
33.
34.
35.
36.
AMENDMENT ...
.... ............. ............, ...,........... .................................... ..... .............
CHOICE OF LA WS............................................................................................... 24
COMPLIANCE WITH LAWS .............................................................................. 24
VENUE .....................................................................................................,.. 24
lIEADIN"GS
........,.......... .......... ...., ....... ............... ........... ........ ................. .............
TRANSMISSION AGREEJv1ENTS .................. ........ .......... ............
......................
AD MIN1S TRA TION FEE ..................................................................................... 25
NOTICES ..,........................................,...........................................,................ 25
EXIIIBITS ...............,........................................................................................ 25
Exhibit A Total Firm Energy Fixed Costs
Exhibit B . Description of the Facility
Exhibit C Electric Power Delivery One Line Diagram
Exhibit D Electrical One Line Diagram of Facility
Exhibit E . Form of Engineer s Certification of Design and Construction Adequacy
Exhibit F Form of Engineer s Certification of Operations and Maintenance Policy
Exhibit G Form of Engineer s Certifications of Ongoing Operations and Maintenance
Exhibit H Form of Mortgage
This Agreement, effective August , 2005 , is made by and between A vista
Corporation, a Washington corporation ("Avista ), and Thompson River Co-Gen, LLC ("Project
Developer ). A vista and Project Developer are sometimes referred to herein individually as a
Party" and collectively as the "Parties.
WITNESSETH:
WHEREAS, Project Developer has or shall have a Qualifying Facility within the
meaning of the Public Utility Regulatory Policies Act of 1978 and the rules and regulations
thereunder;
WHEREAS, Project Developer owns, operates and maintains a thermal power plant
capable of generating 13 MW, net of Facility Service Power, near Thompson Falls , Montana
the Project") located within the boundaries of Section XX, T. X N., R. SS W., XXX, Sanders
County, Montana. The site is owned by Thompson River Lumber, LLC ("TRL"
WHEREAS, Project Developer and TRL, has entered into an agreement for the purchase
of extraction steam by TRL from Project Developer under a forty-five year agreement
representing approximately 15% of the total thermal energy output of the Project;
WHEREAS, Project Developer has entered into an forty-five year agreement to for the
sale of electric energy from the project to TRL;
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
WHEREAS, Project Developer s Facility is located in an area served by NorthWestern
Energy, LLC ("North\Vestern ) in Montana;
WHEREAS, Project Developer has entered into an agreement for the interconnection of
the Facility to NorthWestern;
WHEREAS, The Project Developer has entered or shall enter into an agreement
NorthWestern Transmission Agreement") under which NorthWestern shall provide firm
transmission of power to Avista s point of interconnection at Burke, Idaho;
WHEREAS, A vista is obligated under the Public Utility Regulatory Policies Act of 1978
and the rules and regulations of the IPUC to purchase power from Qualifying Facilities; and
WHEREAS, Avista, NorthWestern, and TRC have executed or shall execute an
agreement for the provision of Deviation Account services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows.
EFINITI 0 NS
Whenever used in this Agreement and exhibits hereto, the following terms shall have the
following meanings:
(a) A2reement" means this Finn Power Purchase Agreement, including all
exhibits , and any written amendments.
(b) A vailable Net Electric Power" means the electric energy generated by the
Facility net of Facility Service Power and net of electric energy sales by the Project Developer to
TRL as measured at NorthWestern s meters located on the high-side of the 13.2kV/115kV step-
up transformer at the Thompson River Co-Gen Substation.
(c) A vista
, "
~ect Developer
, "
Party" and "Parties" shall have their
respecti ve meanings set forth above.
(d) Construction Activities " means all design, engineering, procurement and
construction activities related to the construction, inspection, testing, start-up, repair
replacement, improvement, alteration or modification of, or addition to, the Project.
(e) Delivered Net Electric Power" means all electric energy generated by the
Facility, net of Facility Service Power, net of the electric energy sale by the Project Developer to
TRL, and net of electric energy used to compensate NorthWestern for transmission losses
associated with the scheduling of electric energy to A vista at the Point of Delivery.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
(f) Deviation Account" means the account established, under a separate agreement
between Avista, NorthWestern, and TRC for the purpose of accounting for any hourly deviations
between the Available Net Electric Power and the Delivered Net Electric Power. A positive
deviation occurs when Delivered Net Electric Power is greater than the sum of the Available Net
Electric Power plus transmission system losses based upon Delivered Net Electric Power, for
each hour. A negative deviation occurs when Delivered Net Electric Power is less than the sum
of the Available Net Electric Power plus transmission system losses based upon Delivered Net
Electric Power, for each hour.
(g)
Deviation Account Accumulation means the continuous summation of
positive and negative balances accumulated in the Deviation Account, expressed in MWhs, as
separately accumulated for HLH and LLH time periods
(h) Facility" means the electric generating facilities, including all equipment and
structures necessary to generate and supply power, more particularly described at Exhibit B
(Description of the Facility).
(i) Facility Service Power" means the electric power used by the Facility during
its operation for facility service power, including, but not necessarily limited to pumping,
generator excitation and cooling, as further illustrated in Exhibit D (Electrical One Line Diagram
of Facility). For clarification, Facility Service Power does not include any electric power sold by
Project Developer.
(j)
FERC" means the Federal Energy Regulatory Commission
(k) Firm Energy Cost" means the rate, fixed for the term of the Agreement, in
dollars per megawatt-hour, to be paid by A vista for all Energy produced by the Facility
beginning with the Operation Date. The Firm Energy Cost is specified in Section 6 and
Exhibit A.
(I) Forced Outage" means any outage that either fully or partially curtails the
electrical output of the Facility caused by mechanical or electrical equipment failure, plant
related structural failure, or unscheduled maintenance required to be performed to prevent
equipment failure.
(m) "Generated Net Electric Power" means all of the electric power generated by
the Facility less the Facility Service Power.
(n) Heavy Load Hours
" ("
HLH"means the hours ending 0700 through 2200
Pacific Prevailing Time, Monday through Saturday inclusive, excluding North American Electric
Reliability Council holidays.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
(0) Independent Engineering Certifications" means certifications provided by a
professional engineer registered in Montana, Washington or Idaho, who has no direct or indirect
legal or equitable, ownership interest in the Facility.
(p)
Interconnection Agreement" means the agreement between Project Developer
and NorthWestern by which Available Net Electric Power may be delivered into the
transmission system of NorthWestern.
(q)
Interconnection Facilities" means all facilities required to interconnect the
Facility for the delivery ~o the Northwestern transmission system of Available Net Electric
Power including connection, transformation, switching, relaying and safety equipment.
Interconnection Facilities shall also include all telemetry, metering, cellular telephone, and/or
communication equipment required under this Agreement regardless of location.
(r)IPUC" means the Idaho Public Utilities Commission or its successor.
(s)Light Load Hours
" ("
LLH"eans all hours other than Heavy Load Hours.
(t) Monthly Deviation Account Accumulation means the amount of energy in
the Deviation Account at hour ending 2400 the last day of each month.
(u) Operating Year" means each 12-month period from January 1 through
December 31.
(v) Operation Date" means the date, as confirmed in writing by Avista, upon
which the energy deliveries commence. Project Developer shall have the duty to obtain the
confirmation from A vista. Such confirmation shall not be unreasonably withheld by A vista. The
Operation Date shall be the later of the following dates:
(1) The date following the day during which the Facility has reached a degree
of completion and reliability, such that it is capable of operating to delivery of power
continuously to A vista s System. Such degree of completion and reliability must be
demonstrated to A vista s satisfaction.
(2) The day following the day Avista receives from the Project Developer
Federal Energy Regulatory Commission certification of the qualifying status of the
Facility, pursuant to the Code of Federal Regulations 18 Part 292, Subpart B. or the date
A vista receives notice of any other approval required to be issued by the Federal EnergyRegulatory Commission.
(w) Point of Deliver~" means the point of interconnection between A vista and
North Western in Idaho at A vista s Burke substation , or if not available, the alternative Point of
Delivery shall be the Bonneville Power Administration s Hatwai Substation located in Idaho.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
(x) Prudent Utility Practices" Prudent Utility Practices at any particular time shall
mean the practices, methods, and acts (including but not limited to practices, methods, and acts
engaged in or approved by a significant portion of the electric utility industry), in the exercise of
reasonable judgment in the light of the facts known or that should have been known at the time a
decision was made, would have been expected to accomplish the desired result in a manner
consistent with law , regulation, reliability, safety, environmental protection, economy, and
expedition. With respect to the Facility, Prudent Utility Practices include but are not limited to
taking reasonable steps to ensure that:
(1) Adequate materials , resources, and supplies are available to meet the
Project's needs;
(2) Sufficient operation personnel are available and are adequately
experienced, trained, and licensed as necessary to support and operate the Facility
properly and efficiently and are capable of responding to emergency conditions knowing
that the Project shall be designed and constructed to operate in an unattended mode;
(3) Preventive, routine, and non-routine maintenance and repairs are
performed in a manner designed to ensure reliable , long-term and safe operation, and are
performed by knowledgeable, trained, and experienced personnel utilizing proper
equipment and tools and procedures;
(4) Appropriated monitoring and testing is done to ensure equipment is
functioning as designed and to provide assurance that equipment shall function properly
under both normal and emergency conditions; and
(5) Equipment is not operated and geo fluid and working fluid liquids are not
handled in a reckless manner, or in a manner unsafe to workers, the general public, or the
environment, or without regard to defined limitations including, but not limited to geo
fluid and working fluid temperature and pressure, operating voltage, current, frequency,
rotational speed, polarity, synchronization, and control system limits.
(y)
Scheduled Outage " means any outage which is scheduled by the Project
Developer to remove electrical or mechanical equipment from service for repair, replacement
maintenance, safety or any other reason , and which thereby limits the generating capability of the
Facility to less than its full tested capability.
(z) Transferring Entities means NorthWestern or its successors or assignees and
other third parties as necessary to provide transmission and interconnection service to deliver
power from the Facility to A vista s system at the Point of Delivery.
(aa) "Transmission Agreements" means agreements entered into between Project
Developer and Transferring Entities.
DRAFT 08:"07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
(bb)
successor.
,","UTC " means the Washington Utilities and Transportation Commission or its
REPRESENT A TIONS
Project Developer represents:
(a)that the Facility is or shall be certified by FERC as a Qualifying Facility;
(b)that Project Developer is sole owner of the Facility;
(c) that all licenses, pennits, and authorities required for the operation and sale of
electric power and steam therefrom have been obtained or shall be obtained in the name of or
assigned to Project;
(d) that Project Developer has obtained or shall obtain, prior to the Operation Date
necessary firm transmission rights, including shaping or ancillary services necessary to delivery
electric power to A vista;
(e) that Project Developer is or shall be discharged from any legal obligation to
provide electric power to NorthWestern Energy pursuant to the CO-GENERATION POWER
SALE AGREENIENT BETWEEN THOMPSON RIVER CO-GEN, LLC AND
NORTHWESTERN ENERGY, LLC, as amended; and
(0 and that the undersigned is authorized to execute this Agreement in Project
Developer s behalf.
EVIDENCE OF REPRESENTATIONS
Upon request by A vista, Project Developer shall deliver to A vista certified copies of
Project Developer s articles of incorporation, articles of organization, and by-laws or articles of
partnership as applicable and any and all filings made to the Federal Energy Regulatory
Commission to obtain or maintain the Facility s status as a Qualifying Facility and to make sales
of electric power therefrom. Upon request from A vista, Project Developer shall also deliver to
A vista all licenses, pennits, and authorities authorizing the sale of electric power and steam from
the Facility and all copies of contracts for the transmission of electric power, including shaping
or other ancillary services , necessary to deliver electric power to A vista. The Project Developer
shall provide to A vista all contracts , letters , or other documents pertaining to the discharge of the
legal obligations of TRC to sell and deliver power to NorthWestern.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
TERM OF A GREElVIENT
(a) This Agreement shall become effective on the date when all of the following
conditions are met:
(1)Agreement has been executed by both Parties;
(2)Project Developer has received FERC Qualifying Facility Certification;
(3) All materials requested pursuant to Section 3., Evidence of
Representations, have been received and verified; and
(4)IPUC approval has been received.
(b) The term of the Agreement shall end at 2400 hours 20 years following the
Operation Date, unless terminated earlier by terms and conditions contained herein. If the
conditions stated in 4(a) and Operation Date have not been achieved by December 31, 2005,
notwithstanding force majeure, then this Agreement shall terminate.
(c) All obligations required to be performed by the Parties are preserved regardless of
the termination or expiration of this Agreement where so required by terms and conditions of this
Agreement.
(d) The payment provisions of this Agreement shall be contingent upon the
Commission s determinations discussed below.
(1) Upon execution of this Agreement by the Parties, A vista shall file this
Agreement with the IPUC for its approval and determination of the associated costs as
prudent. The effectiveness of this Agreement shall be based upon the IPUC'
determination in accordance with this Section 4.
(2) If upon filing with the WUTC by A vista for approval of recovery of
expenses associated with A vista s purchase of power under this Agreement A vista is not
allowed to recover such expenses in its rates for the sale of electric power by A vista at
retail in the State of Washington, then A vista shall cease making payments for electric
power required by this Agreement, and Project Developer shall cease delivering electric
power toA vista.
(3) In the event that the WUTC or any other government agency or court
which regulates the rates for the sale of electric power by A vista in the State of
Washington does not allow A vista to recover through its retail rates expenses associated
with A vista s purchase of electric power under this Agreement, Project Developer shall
have the right to request that the IPUC allocate all such expenses exclusively to A vista
retail rates in effect in the State of Idaho. Should the IPUC decline to so allocate all such
expenses exclusively to Avista s retail rates in effect in the State of Idaho, then this
Agreement shall terminate. Nothing herein shall preclude Avista from appearing before
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
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NOT TO BE CONSTRUED AS A BINDING OFFER
any government agency or court of law to propose to oppose any allocation of such
expenses.
(e) A vista shall endeavor to obtain approval of the respective Commissions as
required herein.
SALE OF POWER
Project Developer shall sell and deliver and A vista shall purchase electric power from the
Facility. Notwithstanding any other term of this Agreement, Project Developer shall be
obligated to sell and A vista shall be obligated to purchase all Delivered Net Electric Power from
Thompson River Co-Gen, LLC. Project Developer shall make available Delivered Net Electric
Power to A vista at the Point of Delivery, and shall bear full responsibility and expense for
having such output delivered to A vista s electric system at the Point of Deliveryby arranging for
firm transmission of such output by the Transferring Entities. In the event that both the primary
and th~ alternative Points of Delivery are unavailable, then the Project Developer shall make
reasonable commercial efforts to make deliveries at a mutually agreed upon alternative delivery
point in the State of Idaho. Delivered Net Electric Power generated by the Facility which is
scheduled and delivered pursuant to the Transmission Agreements to A vista at the Point of
Delivery shall be deemed power sales.
DETERMINA TION OF PAYMENT
Unless otherwise provided for in this Agreement, payments to Project Developer by
A vista each month for electric energy purchased by A vista shall be Delivered Net Electric Power
delivered in each month, multiplied by the Firm Energy Cost as set forth in Exhibit A
MINIMUM DELIVERIES
(a) Notwithstanding force majeure or any provision of this Agreement, the
Agreement may be terminated at A vista s sole option, if any of the following conditions occur:
(1)Project Developer abandons the Facility; or
(2) There have been no energy deliveries to A vista from the Facility for a
period of twelve (12) consecutive months; or
(3) The energy deliveries from the Facility to A vista fail to exceed 87 600 000
kWh during any rolling period of twenty-four (24) consecutive months after energy
deliveries to Avista commence; or
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NOT TO BE CONSTRUED AS A BINDING OFFER
(4) Facility ceases to be a Qualifying Facility; or
(5) NorthWestern ceases to make available for any reason firm transmission
service or Deviation Account services in connection with this Agreement.
DEVIATION ACCOUNT
(a) Governing Principles.Contemporaneous with this Agreement, Project Developer
and A vista shall execute a Deviation Account Agreement with NorthWestern. The Deviation
Account shall be used for the purposes described herein and shall not be used by NorthWestern for
the purpose of taking advantage of particular market or pricing conditions to NorthWestern
advantage or A vista s disadvantage.
(b) Operation of a Deviation Account.The Deviation Account shall record and
accumulate, on a HLH and LLH basis , the difference between Delivered Net Electric Power and
the sum of Available Net Electric Power plus transmission system losses that are based upon
Delivered Net Electric Power.
(c) Deviation Account Limitations.If at any time during the term of this Agreement
when the Deviation Account Accumulation for either HLH or LLH amounts as separately
accumulated are:
(1) Between negative 400 MWh and positive 400 MWh (Band 1) no
adjustments to schedules shall be required.
(2) Between negative 400 MWh and negative 800 MWh or between positive
400 MWh and positive 800 MWh (Band 2), the schedule for the Delivered Net Electric
Power from NorthWestern shall be increased or decreased at Avista s discretion at the
rate of one megawatt per hour (or by an amount mutually agreed upon) to reduce the
balance in the Deviation Account to either a negative 400 MWh or positive 400 MWh.
(3) If at anytime during the term of this Agreement the Deviation Account is
less than negative 800 MWh or greater than positive 800 MWh the schedule from
NorthWestern shall be increased or decreased at Avista s discretion at a rate up to 10
megawatts per hour to reduce the balance in the Deviation Account to either a negative
400 MWh or positive 400 MWh (Band 3).
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NOT TO BE CONSTRUED AS A BINDING OFFER
SECURITY
(a) Business Insurance. Upon execution of this Agreement, Project Developer shall
provide documentation for each of the costs set forth herein. Project Developer shall obtain an4
maintain insurance coverage of all of the following types with limits as shown:
Type Minimum Coverage Limits Maximum Deductible
Liability $2 million, per occurrence 5% of the policy limit
Catastrophic Perils 60% of plant cost 0% of plant cost
B oiler/Machinery 90% of equipment cost The lesser of 5.0% of
equipment cost or $25.000
Loss of Income (Business
Interruption)
75% of estimated daily income
up to 20% of annual
10 days of income
All Risk Property 90% of Facility cost The lesser of 5 % of
Facility cost or $25,000
(1) Commercial general liability insurance for bodily injury and property
damage with limits equal to fifteen percent (15%) of the total cost of the Facility, or two
million dollars ($2 000 000), whichever is greater, each occurrence, combined single
limit. The deductible for such insurance shall not exceed one-half of one percent (0.5%)
of the total cost of the Facility.
(2) All risk property insurance with minimum limits not less than ninety
percent (90%) of the total cost of the Facility. This insurance shall be written on a
replacement cost basis and shall include the following:
(A)Standard fire policy;
(B)Extended coverage endorsement; and
(C)Vandalism and malicious mischief endorsement.
(D)The deductible for this coverage shall not exceed five percent (5%)
of the Facility cost, or $25 000, whichever is less.
(3) Boiler and machinery insurance with minimum limits not less than ninety
percent (900/0) of the total cost of the equipment covered in Section 9(a)(3)(A) below.
This insurance shall include the following:
(A)All boiler and machinery coverage must be written on a
comprehensive form" basis to provide coverage against the
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NOT TO BE CONSTRUED AS A BINDING OFFER
(B)
(C)
sudden and accidental breakdown of all boilers, machinery and
electrical equipment, turbines, generators and switchgear;
Coverage under this coverage must be written on a replacement
cost basis;
The deductible for this coverage shall not exceed five percent (5%)
of the total cost of the equipment covered in Section 9(a)(3)(A)
above, or $25 000, whichever is greater.
(4) Earthquake and flood (catastrophic perils) insurance with limits not less
than sixty percent (60%) of the total cost of the Facility. The deductible for this
insurance shall not exceed five percent (5%) of the Facility cost.
(5) Business interruption (loss of income) insurance with minimum daily
limits of not less than seventy-five percent (75%) of the Facility s estimated daily
electrical revenue. Total policy limits shall not be less than twenty percent (20%) of the
Facility s estimated gross annual revenue from the sale of electrical energy. This
insurance shall include the following:
(A)
(B)
(C)
(D)
(E)
Coverage shall include Project Developer s loss of earnings when
business operations are curtailed or suspended because of a loss
due to an insured peril.
Coverage may be written on an actual loss sustained basis.
This insurance must be endorsed to both the All Risk Property
Insurance policy and the Boiler and Machinery Insurance Policy.
The deductible for this insurance coverage shall not exceed thirty
(30) days gross daily revenues from the sale of electrical energy.
The estimated gross daily revenue and estimated gross annual
revenue shall be computed on the basis of the estimated kilowatt-
hour production.
(6) The form of all insurance policies, and the insurance companies issuing
the policies shall be acceptable to A vista, provided however, that any approval by A vista
shall not be unreasonably withheld, and must have an A.M. Best rating of A- or better.
Project Developer shall provide copies of all insurance policies to A vista as' proof
insurance. All insurance policies required to fulfill the requirements of this Section 9(a)
shall include language requiring that any notice of cancellation or notice of change in
policy terms be sent to A vista by the insurance carrieres) at least sixty (60) days prior to
any change or termination of the policies.
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NOT TO BE CONSTRUED AS A BINDING OFFER
(7) In the event Project Developer fails to pay, when due, any premium
required to maintain the effectiveness of any insurance policy required under this Section
9(a), A vista may at its option, pay such premiums. In the event that A vista exercises its
option to pay such premiums, the amount of such payments shall be immediately due and
payable to A vista by Project Developer. Payment shall be made pursuant to Section 13.
(8) A vista shall be an additional named insured on all insurance policies, and
shall also be named an additional loss payee on the policies for all risk property
insurance, boiler and machinery insurance, catastrophic perils insurance, and business
interruption insurance.
(A)
(B)
(C)
In the event of catastrophic or boiler/machinery failure, Project
Developer shall promptly notify A vista of such loss to the Facility.
Avista may make proof of loss if Project Developer fails to do so
within fifteen (15) days of the casualty.
Unless the parties agree otherwise, Project Developer shall repair
or replace the damaged or destroyed Facility. Proceeds from said
casualty insurance policies shall be paid into an account with
A vista and Project Developer as joint signatories. Disbursements
from such account shall be used first for repairing or replacing the
insured property unless otherwise agreed. Upon completion of
repairs or replacement of the Facility, the balance, including
accumulated interest, if any, remaining in such account shall
become property of Project Developer and shall promptly be
released to Project Developer by A vista.
In the event that the Parties agree the insured property cannot be
economically repaired or replaced, the amount, including
accumulated interest, in the joint account described in Section
9(a)(8)(B) above, shall be used first to satisfy the Project
Developer s obligations to A vista as determined herein. The
balance, including accumulated interest, if any, remaining in such
account shall become property of the Project Developer and shall
be promptly released to Project Developer by A vista.
(9) At the end of every fifth Operating Year following the Operation Date, the
minimum coverage limits for the liability, catastrophic, and boiler/machinery insurance
shall be adjusted by increasing or decreasing the underlying original plant cost to reflect
changes in the appropriate regional heavy construction deflator as published by the
United States Department of Commerce.
. (10) All business insurance coverage listed in this Section 9(a) must remain in
place at all times during the contract term. Project Developer shall annually submit
evidence of such insurance coverages. Should any of the coverages above lapse, Project
Developer shall immediately notify A vista in writing of such lapse of coverage.
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NOT TO BE CONSTRUED AS A BINDING OFFER
(b) Engineering Certifications. Prior to the Operation Date, Project Developer shall
obtain and provide to A vista Independent Engineering Certifications as follows:
(1) as to the adequacy of the design and construction of the Facility to operate
reliably during the term of the Agreement in substantially the form shown in Exhibit E;
and
(2) as to the adequacy of the Operations and Maintenance Policy substantially
in the form shown in Exhibit F.
(3) In addition, every third year, following the year of the Operation Date
Project Developer shall obtain and provide to A vista Independent Engineering
Certifications of the adequacy of the continuing operation and maintenance procedures
substantially in the form shown in Exhibit G.
(c) Lien Rights. Project Developer shall grant to A vista lien rights in the Facility
sufficient for A vista to assume operation of the Facility should it be necessary in the event of a
default by Project Developer under the Agreement.
(1) Before A vista shall become obligated to make any payment to Project
Developer hereunder, Project Developer shall make and deliver a mortgage of the
leasehold interest and improvements constituting the Facility in the form attached hereto
as Exhibit H in favor of A vista, together with a policy of title insurance obtained at
Project Developer s expense insuring the lien of the mortgage as prior to all other liens
and encumbrances including mechanic s or materialman s liens , except a first mortgage
lien granted by Project Developer for a maximum of $1 000 000, provided that, said first
mortgage lien does not by its terms permit future advances to be made subject to the lien
of the mortgage for any purpose other than advances contemplated by the construction
mortgage without the consent of A vista, which consent shall not be unreasonably
withheld.
(2) Project Developer shall also execute and deliver to A vista such financing
statements, fixture filings, or other documents necessary to grant A vista security interests
in all personal property, fixtures, contract rights, including but not necessarily limited to
contract rights to receive delivery of fuel and to wheel or transmit electric power, water
rights, permits, licenses, or other rights or privileges which Project Developer has
obtained or shall obtain in conjunction with the construction or operation of the Facility,
subject only to the first mortgage lien referred to above.
(3) At the time the mortgage in the form of Exhibit H is delivered to A vista
Project Developer shall also deliver a commitment from Lender agreeing that in the event
of a default under Lender s first mortgage, Lender shall provide A vista with notice of the
default and an opportunity to cure the default. Project Developer agrees that a default
under such first mortgage shall also constitute a default under this Agreement.
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NOT TO BE CONSTRUED AS A BINDING OFFER
(4) A vista, at its option, may advance sums to cure any default under Lender
first mortgage lien , and all such sums advanced by A vista shall be secured by all security
interests given by Project Developer to A vista under this Agreement.
(5) A vista shall execute such documents as are necessary to release its
security interests in Project Developer s property at the completion of Project Developer
obligations under this Agreement.
10.INTERCONNECTION AND TRANSMISSION
(a) Project Developer shall design , construct, install, own, operate and maintain the
interconnection equipment so as to allow. safe, reliable generation and delivery of electric energy
to NorthWestern for the full term of the Agreement. Prior to the commencement of the first
delivery of Delivered Net Electric Power, Project Developer shall provide A vista with a copy of
the executed Interconnection Agreement with NorthWestern.
(b) Prior to the commencement of the first delivery of Delivered Net Electric Power
Project Developer shall provide A vista with copies of executed Transmission Agreements
reasonably satisfactory to A vista, providing for the firm transmission of Delivered Net Electric
Power from the Project to the Point of Delivery. Project Developer shall not consent to any
modification of the transmission agreements without A vista s advance written approval, which
approval shall not be unreasonably withheld.
(c) All power hereunder shall be transferred from the Facility to Avista over the
facilities of Transferring Entities pursuant to the Transmission Agreements. Project Developer
shall provide advance notice to A vista when there is to be a scheduled change in status of the
Facility in delivering or not delivering power to A vista. All costs associated with the transfer of
power from the Facility to the Point of Delivery shall be borne by Project Developer.
(d) In addition to the above costs where applicable, Project Developer shall reimburse
A vista for any costs or expenses , if any, incurred by A vista in accordance with the Transmission
Agreements including, but not necessarily limited to, any charges, reimbursable expenses or
other amounts payable by A vista to the Transferring Entities. Further, to the fullest extent
pennitted by applicable law, Project Developer releases and shall defend, indemnify and hold
harmless , A vista from all claims, losses, harm, liabilities , damages, costs, and expenses
including, but not necessarily limited to , reasonable attorneys' fees, arising out of any act or
omission of Project Developer in connection with the Transmission Agreements, including, but
not limited to, any breach of or default under any of the Transmission Agreements by Project
Developer.
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NOT TO BE CONSTRUED AS A BINDING OFFER
11.OPERA TION
(a) Project Developer shall operate and maintain the Project and all equipment
needed to generate and deliver the electrical energy specified in this Agreement according to
Prudent Utility Practices.
(b ) Project Developer shall provide to A vista information and specifications and
perform tests reasonably requested by Avista which are required for the purpose of determining
the operating capability and characteristics (including mechanical and electrical characteristics)
of the Facility. A vista may observe any such tests.
(c) Project Developer shall maintain an accurate Facility operating log, keeping track
of Scheduled Outages , Forced Outages , generation records, and other data pertinent to the
operation of the Project. Project Developer shall provide A vista a copy of such log upon request.
(d) A vista may require Project Developer to curtail, interrupt or reduce deliveries of
electric energy if A vista determines that curtailment, interruption or reduction is necessary
because of force majeure or to protect persons and property from injury or damage, or because of
emergencies , necessary system maintenance or system modification. A vista shall use its
reasonable best efforts to keep any period of curtailment, interruption, or reduction to a
minimum. In order not to interfere unreasonably with Project Developer operations , A vista shall
gi ve Project Developer reasonable prior notice of any curtailment, interruption, or reduction, the
reason for its occurrence and its probable duration.
(e) Project Developer shall notify Avista promptly of any complete or partial Project
outage or any significant changes in the level of generation including increases. Project
Developer shall give A vista reasonable prior notice of any complete or partial Scheduled Outage
of the Facility or significant change in the level or generation, the reason for its occurrence and
its probable duration.
(0 In the event of an emergency requiring a curtailment, interruption or reduction in
deliveries , the curtailing, interrupting or reducing party shall use its best efforts to promptly
notify the other party of the action taken or to be taken, the reason for such action and its
probable duration.
(g)
Prior to the Operation Date, and at least thirty (30) days prior to January 1 of each
full or partial Operating Year following the Operation Date, Project Developer shall prepare in
writing and send to A vista, a schedule of the anticipated times and periods of any Scheduled
Outages -- by month for a twelve (12) month period beginning with January 1 of such Operating
Year; Except by mutual agreement with A vista, Project Developer shall only schedule down
times or maintenance shutdowns in the April 15 through June 30 period,
(h) Project Developer shall obtain and comply with all permits , licenses
authorization and other rights required to own, operate, use and maintain the Facility. Project
Developer shall furnish to A vista on request, copies of all documents granting, evidencing or
otherwise related to such permits , licenses , authorizations and rights.
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NOT TO BE CONSTRUED AS A BINDING OFFER
(i) Project Developer shall own, operate, use and maintain the Facility at its own risk
and expense in compliance with all applicable laws, ordinances , rules, regulations, orders and
other requirements, now or hereafter in effect, of any governmental authority.
(j)
A vista may interrupt, suspend or curtail delivery, receipt or acceptance of delivery
of power at the Point of Delivery, if A vista determines that the failure to do so:
(1) May endanger any person or property, or A vista s electric system, or any
electric system with which A vista s system is interconnected;
(2) May cause, or contribute to, an imminent significant disruption of electric
service to A vista s Customers;
(3) May interfere with any construction, installation, inspection, testing,
repair, replacement, improvement, alteration, modification, operation, use or maintenance
, or addition to, A vista s electric system or other property of A vista; or
(4)Is contrary to Prudent Utility Practice.
A vista shall promptly notify Project Developer of the reasons for any such disconnection
interruption, suspension or curtailment. A vista shall use its best efforts to mitigate and limit the
duration of any such disconnection, interruption, supervision or curtailment.
(k) Project Developer shall take all precautions which are necessary to prevent bodily
harm to persons and damage to any property including, but not limited to, the Project, A vista
electric system and any other electric system in connection with the interconnection of the
Facility with any electric system. Project Developer shall inspect all materials , tools, supplies
equipment, goods and other items used, consumed or incorporated in the Construction Activities
or the interconnection of the Facility to discover any conditions which involve a risk of bodily
harm to persons or a risk of damage to any property and shall be fully responsible for the
discovery and correction of, and protection against, such conditions.
(I) Project Developer shall permit A vista to inspect (and be present at all tests of) the
Facility or the operation, use or maintenance of the Facility. Project Developer shall provide
A vista reasonable advance notice of any such testor inspection by or at the direction of Project
Developer.
12.SCHEDULING
(a) Monthly Scheduled Energy Deliveries: Project Developer shall cause
NorthWestern to provide Avista with a schedule of the next month's hourly Delivered Net
Electric Power deliveries, at a minimum of seven (7) days prior to the beginning of the month.
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NOT TO BE CONSTRUED AS A BINDING OFFER
(b) Day-Ahead Delivered Net Electric Power Scheduling Estimates : Project
Developer shall cause NorthWestern to provide to Avista s preschedulers its best estimates of
hourly Delivered Net Electric Power amounts by 0600 PPT on the business day observed by both
Parties immediately preceding the day or days on which electric power is to be delivered, unless
otherwise mutually agreed by the Parties.
(c) Realtime Delivered Net Electric Power Schedules: Project Developer shall cause
NorthWestern to p~ovide to Avista s realtime schedulers notice of any material change to the
prescheduled amounts of Deliver~d Net Electric Power. NorthWestern shall use reasonable
efforts to provide such changes at least thirty (30) minutes before the scheduled hour in which
the charges are to be in effect.
13.P A YlVIENTS
(a) For each month during the tenn of this Agreement, so long as there are energy
deliveries made and/or payments due hereunder, Project Developer shall prepare and send an
itemized invoice for energy sales that reflects the energy deliveries from NorthWestern to Avista.
Payments by A vista for amounts billed shall be paid on the due date, which shall be either the
20th day of the month following the prior calendar month billing period or ten (10) days after
receipt of the bill, whichever is later. Payment shall be made at the location designated by the
Party to which payment is due. If the Due Date falls on a non-business day of either Party, then
the payment shall be due on the next following business day.
(b) If Project Developer is obligated to make any payment to A vista, A vista shall bill
Project Developer for such payments. Project Developer shall pay A vista on or before the 20th
day of the month following the prior calendar month billing period or ten (10) days after receipt
of the bill, whichever is later.
(c) Any payments by A vista to Project Developer or by Project Developer to A vista
if not paid in full within the limitations set forth in Sections 13(a) and 13(b) above shall be late.
Notwithstanding the remedies for such an event of default pursuant to Section 19, the late-paying
Party shall be assessed a charge for late payment equal to the lesser of one percent per month, or
partial month, or the maximum rate allowed by the laws of the State of Idaho, multiplied by the
overdue amount. A vista shall have the right to offset any amounts due it from Project Developer
against any present or future payments due Project Developer from A vista.
(d) Project Developer agrees that A vista may set off any and all amounts owed by
Project Developer to Avista against any payments due Project Developer under this Agreement.
(e) All payments shall be made by check or wire transfer in accordance with written
instruction by A vista to Project Developer delivered pursuant to Section 34.
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NOT TO BE CONSTRUED AS A BINDING OFFER
14.METERING
(a) The Project Developer shall cause NorthWestern to provide meter readings as
required to implement this Agreement.
(b) Northwestern shall own and maintain all meters used to determine the
Available Net Electric Power. All such meters shall be tested and inspected in accordance with
Prudent Utility Practice.. If requested by Avista, Project Developer shall cause NorthWestern to
provide copies of applicable test and calibration records and calculations. Project Developer
shall permit a representative of A vista to be present at all times the meters are being tested. In
addition , Project Developer shall test any or Facility meters as may reasonably be requested by
A vista. A vista shall pay reasonable costs for such requested test unless any of the meters is
found to be inaccurate, in which case Project Developer shall pay for such test.
(c) Adjustments shall be made in meter readings and billings for errors in a meter
reading or billing discovered within twelve (12) months of the error. Project Developer shall
permit representatives of Avista to inspect all of Project Developer s records relating to the
generation of energy by TRC and delivery of electric energy to and the purchase of electric
energy by A vista hereunder.
15.FORCED OUTAGE AND FORCE MAJEURE
(a) Neither Party shall be liable to the other Party for, or be considered to be in
breach of or default under this Agreement, on account of any delay in performance due to any of
the following events or any delay or failure to produce, receive or accept Delivered Net Electric
Power due to any of the following events:
(1) Any cause or condition beyond such Party s reasonable control which such
Party is unable to overcome by the exercise of reasonable diligence (including but not
limited to: fire, flood, earthquake, volcanic activity, wind, drought and other acts of the
elements; court order and act of civil, military or governmental authority; strike lockout
and other labor dispute; riot, insurrection, sabotage or war; breakdown of or damage to
facilities or equipment; electrical disturbance originating in or transmitted through such
Party s electric system or any electric system with which such Party s system is
interconnected; and, act or omission of any person or entity other than such Party, and
Party s contractors or suppliers of any tier or anyone acting on behalf of such Party); or
(2) Any action taken by such Party which is , in the sole judgment of such
Party, necessary or prudent to protect the operation, performance, integrity, reliability or
stability of such Party s electric system or any electric system with which such Party
electric system is interconnected, whether such actions occur automatically or manually.
(b) In the event of any force majeure occurrence, the time for performance thereby
delayed shall be extended by a period of time reasonably necessary to compensate for such
delay. A vista shall not be required to pay for Delivered Net Electric Power which, as a result of
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
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NOT TO BE CONSTRUED AS A BINDING OFFER
any force majeure event, is not delivered. Nothing contained in this paragraph shall require any
Party to settle any strike, lockout or other labor dispute. In the event of a force majeure
occurrence which shall affect performance under this Agreement, the nonperforming Party shall
provide the other Party written notice within fourteen (14) days after the occurrence of the force
majeure event. Such notice shall include the particulars of the occurrence, assurances that
suspension of performance is of no greater s~ope and of no longer duration than is required by
the force majeure, and that best efforts are being used to remedy its inability to perform.
(c) Force majeure does not include changes in the ownership, occupancy, or
operation of the Facility if such changes occur because of normal business occurrences which
include but are not limited to: changes in business economic cycles; recessions; bankruptcies; tax
law changes; sales of businesses; closure of businesses; changes in production levels; and
changes in production lines.
(d) Force majeure does not excuse any Party from making payments of money due
under this Agreement.
16.INDEMNITY
(a) Project Developer shall indemnify, defend and hold harmless A vista, its directors
officers, employees, agents, and representatives, against and from any and all losses, expenses
liabilities, claims or actions (hereafter "Loss ), based upon or arising out of bodily injuries or
damages to persons, including without limitation death resulting therefrom, or physical damages
to or losses of property caused by, arising out of or sustained in connection with the construction
operation or maintenance of the Facility. Avista shall indemnify, defend and hold harmless
Project Developer, its directors, officers , employees, agents , and representatives, against and
from any Loss, caused by, arising out of or sustained in connection with the construction,
operation or maintenance of its electrical system. In the event that any such Loss is caused by
the negligence of both Project Developer and A vista, including their employees , agents
suppliers and subcontractors, the Loss shall be borne by Project Developer and A vista in the
proportion that their respective negligence bears, to the total negligence causing the Loss.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, PROJECT
DEVELOPER AND A VISTA EACH WAIVE ANY IMMUNITY UNDER EXISTING
WORKER'S COMPENSATION LAW APPLICABLE TO THE JURISDICTION
WHERE THE FACILITY IS TO BE LOCATED AS NECESSARY TO INDEMNIFY
AND HOLD HARMLESS THE OTHER FROM SUCH LOSS, TO THE EXTENT SET
FORTH IN PARAGRAPH (A), ABOVE.
(c) PROJECT DEVELOPER AND A VISTA SPECIFICALLY WARRANT
THA T THE TERMS AND CONDITIONS OF THE FOREGOING INDEMNITY
. PROVISIONS ARE THE SUBJECT OF MUTUAL NEGOTIATION BY THE PARTIES,
AND ARE SPECIFICALLY AND EXPRESSLY AGREED TO IN CONSIDERATION OF
THE MUTUAL BENEFITS DERIVED UNDER THE TERMS OF THE AGREEMENT.
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NOT TO BE CONSTRUED AS A BINDING OFFER
17.ASSIGNMENT
(a) Project Developer shall not voluntarily assign its rights or delegate its duties
under this Agreement, or any part of such rights or duties, except as security for initial
construction of the Facility, without the written consent of A vista. Such consent shall not
unreasonably be withheld. Further, no assignment by Project Developer shall relieve or release it
to the extent of any of its obligations hereunder. Subject to the foregoing restrictions on
assignments, this Agreement shall be fully binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors, heirs and assigns.
(b) Project Developer shall have the right, subject to the obligation to provide
security hereunder, without the other Party s consent, but with a thirty (30) days prior written
notice to the other Party, to make collateral assignments of its rights under this Agreement to
satisfy the requirements of any development, construction, or other long term financing. A
collateral assignment shall not constitute a delegation of Project Developers' obligations under
this Agreement, and this Agreement shall not bind the collateral assignee. Any collateral
assignee succeeding to any portion of the ownership interest of Project Developer shall be
considered Project Developer s successor in interest and shall thereafter be bound by thisAgreement.
18.WATER RIGHTS
Project Developer covenants that it shall not divert or cause to divert for the use of the
Facility surface waters from the Clark Fork River or its tributaries any time that flows at the
Noxon Rapids Dam are less than 50 000 cubic fees per second.
19.NO UNSPECIFIED THIRD PARTY BENEFICIARIES
Except as specifically provided in this Agreement, there are no third party beneficiaries
of this Agreement. Nothing contained in this Agreement is intended to confer any right or
interest on anyone other than the Parties, and their respective successors, heirs and assigns
permitted under Section 17.
20.DEFAULT
In the event that either Party shall fail to perform the terms and conditions set forth in this
Agreement (an event of default), except for the failure of Project Developer to provide Delivered
Net Electric Power at the times or in the amounts required hereby the remedy for which such
failure is provided for in Section 8, the following shall apply:
(a) The non-defaulting Party shall give written notice to the defaulting Party of the
event of default in accordance with this Agreement.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
(b) If, after 30 days following receipt of such notice, the defaulting Party has not
taken the steps necessary to cure the event of default, the non-defaulting Party may, at its option
terminate this Agreement. Provided, however, that except for the failure to pay sums which are
due and payable, if the defaulting Party, within such 30-day period, commences and thereafter
proceeds with all due diligence to cure such default, such 30-day period shall be extended up to
ninety (90) days after written notice to the defaulting Party, as may be necessary to cure the
event of default with all due diligence. Whether or not the non-defaulting Party elects to
terminate this Agreement, it may, in addition to other remedies provided for herein, pursue such
remedies as are available at law or in equity.
(c)For purposes of this Agreement, a Party shall also be in default if it:
(1) Becomes insolvent (e., is unable to meet its obligations as they become
due or its liabilities exceed its assets); or
(2) Makes a general assignment of substantially all of its assets for the benefit
of its creditors, files ~ petition for bankruptcy or reorganization or seeks other relief under
any applicable insolvency laws,; or
(3) Has filed against it a petition for bankruptcy, reorganization or other relief
under any applicable insolvency laws and such petition is not dismissed or stayed within
sixty (60) days after it is filed.
(4)Is in default under any Transmission Agreement.
(d) Any right or remedy afforded to either Party under any provision of this
Agreement on account of the breach or default by the other Party is in addition to, and not in lieu
, all other rights or remedies afforded to such Party under any other provisions of this
Agreement, by law or otherwise on account of the breach or default.
21.ARBITRA TION
Each Party shall strive to resolve any and all differences during the term of the
Agreement. If a dispute cannot be resolved, each Party shall use arbitration before requesting a
hearing before the appropriate state Public Utility Commission. The arbitration shall be
conducted pursuant to the Uniform Arbitration Act, Chapter 9 of the Idaho Code, as the same
may have been or may be amended.
22.RELEASE BY PROJECT DEVELOPER
Project Developer releases A vista from any and all claims, losses , harm, liabilities
damages, costs and expenses to the extent resulting from any:
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
(a) Electric disturbance or fluctuation that migrates, directly or indirectly, from
A vista s electric system to the Facility;
(b) Interruption, suspension or curtailment of electric service to the Facility or any
other premises owned, possessed, controlled or served by Project Developer, which interruption
suspension or curtailment is caused or contributed to by the Facility or the interconnection of the
Facility with any electric system; or
(c) Disconnection, interruption , suspension or curtailment by Avista pursuant to
terms of this Agreement.
(d) Disconnection , interruption, suspension or curtailment of transmission service by
a TraI1sferring Entities or any unforeseen cost or increase in costs to Project Developer imposed
by Transferring Entities.
23.GOVERNMENTAL A UTH 0 RITY
This Agreement is subject to the rules, regulations, orders and other requirements, now or
hereafter in effect, of all governmental authorities having jurisdiction over the Facility, this
Agreement, the Parties or either of them. All laws, ordinances, rules, regulations, orders and
other requirements , now or hereafter in effect, of governmental authorities that are required to be
incorporated in agreements of this character are by this reference incorporated in this Agreement.
24.EQUAL OPPORTUNITY
Project Developer shall comply with all applicable equal opportunity laws, ordinances
orders, rules and regulations.
25.SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise, the duties, obligations
and liabilities of the Parties are intended to be several not joint or collective. This Agreement
shall not be interpreted or construed to create an association, joint venture or partnership between
the Parties or to impose any partnership obligations or liability upon either Party. Each Party
shall be individually and severally liable for its own obligations under this Agreement. Further
neither Party shall have any rights , power or authority to enter into any agreement or undertaking
for or on behalf of; to act as to be an agent or representative of, or to otherwise bind the other
Party.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
26.IMPLEMENT A TION
Each Party shall promptly take such action (including, but not limited to, the execution
acknowledgement and delivery of documents) as may be reasonably requested by the other Party
for the implementation or continuing performance of this Agreement.
27.NON-WAIVER
The failure of either Party to insist upon or enforce strict performance by the other Party
of any provision of this Agreement or to exercise any right under this Agreement shall not be
construed as a waiver or relinquishment to any extent of such Party s right to assert or rely upon
any such provision or right in that or any other instance; rather, the same shall be and remain in
full force and effect.
28.AMENDMENT
No change, amendment or modification of any provision of this Agreement shall be valid
unless set forth in a written amendment to this Agreement signed by both Parties.
29.CHOICE OF LAWS
This Agreement shall be construed and interpreted in accordance with the laws of the
State of Idaho.
30.COMPLIANCE WITH LAWS
Both Parties shall comply with all applicable laws and regulations of governmental
agencies having jurisdiction over the Project and the operations of the Parties.
31.VE NUE
Any action at law or in equity to enforce the terms and conditions of this Agreement shall
be brought in Idaho.
32.HEAD IN GS
The section headings in this Agreement are for convenience only and shall not be
considered part of or used in the interpretation of this Agreement.
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
33.TRANSMISSION AGREEMENTS
In the event of the termination, cancellation or expiration of any Transmission Agreement
required to deliver power to Avista under this agreement, Avista may terminate the Agreement
by giving Project Developer written notice of such termination which shall be effective upon
written notice of default for such termination, cancellation or expiration of the applicable
Transmission Agreement.
34.AD MINIS TRA TI 0 N FEE
Avista shall bill and Seller shall pay an administration fee of $100 per month during the
duration of the Agreement. Payment shall be made pursuant to Section 12.
35.NOTICES
All written notices required by this Firm Power Purchase Agreement shall be mailed or
delivered as follows:
to A vista:Vice President Energy Resources
A vista Corporation
O. Box 3727
Spokane, Washington 99220
to TRC Mike Underwood
Thompson River Co-Gen, LLC
1619 Wynkoop St, Suite 100
Denver, CO 80202
Either Party may change its address specified above by giving the other Party notice of
such change in accordance with this paragraph. All notices, requests , authorizations, directions
or other communications by a Party shall be deemed delivered when mailed as provided in this
paragraph or personally delivered to the other Party. Any verbal notice required hereby which
affects the payments to be made hereunder shall be confirmed in writing (certified mail) as
promptly as practicable after the verbal notice is given.
35.EXHIBITS
This Firm Power Purchase Agreement includes the following exhibits which are attached
and incorporated by reference herein:
Exhibit A
Exhibit B
Total Firm Energy Fixed Costs
Description of the Facility
DRAFT 08-07-05 DISCUSSION PURPOSES ONLY
--
NOT TO BE CONSTRUED AS A BINDING OFFER
Exhibit C
Exhibit D
Exhi bi t E
Exhibit F
Exhibit G
Exhibit H
Electric Power Deli very One Line Diagram
Electrical One Line Diagram of Facility
Fonn of Engineer s Certification of Design and Construction Adequacy
Form of Engineer s Certification of Operations and Maintenance Policy
Fonn of Engineer s Certifications of Ongoing Operations and Maintenance
Fonn of Mortgage
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the first date herein above set forth.
THOMPSON RIVER COGEN, LLC VISTA CORPORATION
By:By:
(Type Name)(Type Name)
Title:Title:
I:\Spodocs\11150\O4137\agree\OO337955.DOC
EXHIBIT A
Total Firm Energy Fixed Costs
$/MWh
Thompson River Co-Gen, llC
Avista Corporation
Based on 2005 Integrated Resource Plan
March - June March - June July - Feb July - Feb
56%44%56%44%
HLH LLH HLH LLH
($5.00)
level ized 43.38.55.41 50.41
2005 (1) $40.35.$ 51,$ 46.
2006 (1) $41,36.$ 52.$ 47.
2007 $41.36.$ 52.$ 47.
2008 $41.36.$ 53.$ 48.
2009 $42.37.$ 53,$ 48.
2010 $42.37.$ 54.$ 49.
2011 43.38.$ 54.$ 49.
2012 $43.38.$ 55.$ 50.
2013 $43.38.$ 55.$ 50.
2014 $44.39.$ 56.$ 51.
2015 $44.39.$ 56.$ 51,
2016 $45.40.57.47 52.47
2017 $45.40.$ 58.$ 53.
2018 $46.41.$ 58.$ 53.
2019 $46.49 41.49 $ 59.$ 54.
2020 $46.41.$ 59.$ 54.
2021 47.42.$ 60.$ 55,
2022 $47.42.$ 60.$ 55.
2023 $48.43.61.46 56.46
2024 $48.43.$ 62.$ 57.
2025 $49.44.$ 62.$ 57.
2026 $49.44.$ 63.$ 58.
(1) Market Prices, lAP Prices Start in 2007
05-Jul-
EXHIBIT B
DESCRIPTION OF FA CILITY
The Facility is a coal or wood waste fired power plant with a Babcock and Wilcox 130 000 lbs/hr
(g) 850 PSIG, 900 degree boiler, with a reconditioned 16.5 megawatt Elliot condensing steam
turbine (13 500 Btu/kWh heat rate). A Detroit Stoker 4-feeder moving grate system including
control and equipment updates. Allen Bradley controls and a Programmable Logic Controller
packaged by CPL Systems , me, a Marley Sigma five-cell cooling tower, an Anderson 2000
scrubber and six cell bag house with approximately 1 100 bags. Water treatment facilities
include a pre-filter, softener and reverse osmosis de-mineralizer for boiler water make up.
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APPEND IX E
ENGINEER'S CERTIFICATION
DESIGN & CONSTRUCTION ADEQUACY
The undersigned , on behalf himself
and hereinafter collectively referred to as "Engineer" hereby
states and certifies to the Seller as follows:
1. That Engineer is a Licensed Professional Engineer in good standing in the State of Idaho or
Montana.
2. That Engineer has reviewed the Firm Power Purchase Agreement, hereinafter " Agreement
between Avista Corporation as Buyer, and Thompson River Co-Gen, LLC, Seller
dated
3. That the cogeneration or small power production project which is the subject of the Agreement
and this Statement is identified as A vista Facility No. and is hereinafter referred
to as the "Project."
4. That the Project, which is commonly known as the
is located in Section -, Township_, Range -Meridian, Montana,
5. That Engineer recognizes that the Agreement provides for the Project to furnish electrical
energy to A vista Corporation for a twenty (20) year period.
6. That Engineer has substantial experience in the design, construction and operation of electric
power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project and
has made the analysis of the plans and specifications independently.
8. That Engineer has reviewed the engineering design and construction of the Project
including the civil work, electrical work, generating equipment, prime mover conveyance system,
Seller furnished Interconnection Facilities and other Project facilities and equipment.
9. That the Project has been constructed in accordance with said plans and specifications, all
applicable codes and consistent with Prudent Electrical Practices as that term is described in the
Agreement.
10, That the design and construction of the Project is such that with reasonable and prudent
operation and maintenance practices by Seller, the Project is capable of performing in accordance
with the terms of the Agreement and with Prudent Electrical Practices for a
year period.
11. That Engineer recognizes that A vista Corporation, in accordance with Section 11 of the
Agreement, in interconnecting the Project with its system, is relying on Engineer s
representations and opinions contained in this Statement.
12. That Engineer certifies that the above statements are complete, true and accurate to the
best of his knowledge and therefore sets his hand and seal below.
(P .E. Stamp)
Date
APPEND IX F
ENGINEER'S CERTIFICATION
OPERATIONS & MAINTENANCE POLICY
The undersigned , on behalf himselfand , hereinafter collectively referred to as "Engineer" hereby
states and certifies to the Seller as follows:
1. That Engineer is a Licensed Professional Engineer in good standing in the State of Idaho or
Montana.
2. That Engineer has reviewed the Finn Power Purchase Agreement, hereinafter "Agreement"
between Avista Corporation as Buyer, and Thompson River Co-Gen, LLC, Seller
dated
3. That the cogeneration or small power production project which is the subject of the Agreement
and this Statement is identified as A vista Facility No. and is hereinafter referred
to as the "Project.
4. That the Project, which is commonly known as the
is located in Section -, Township_, Range -Meridian, Montana.
5. That Engineer recognizes that the Agreement provides for the Project to furnish electrical
energy to A vista Corporation for a twenty (20) year period.
6. That Engineer has substantial experience in the design, construction and operation of electric
power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has reviewed and! or supervised the review of the Policy for Operation and
Maintenance ("O&M") for this Project and it is his professional opinion that, provided said
Project has been designed and built to appropriate standards, adherence to said O&M Policy will
result in the Project's producing at or near the design electrical output, efficiency and plant factor
for a twenty (20) year period.
9. That Engineer recognizes that A vista Corporation, in accordance with Section 11 of the
Agreement is relying on Engineer s representations and opinions contained in this Statement.
10. That Engineer certifies that the above statements are complete, true and accurate to the best of
his knowledge and therefore sets his hand and seal below.
(P .E, Stamp)
. Date
APPEND IX G
ENGINEER'S CERTIFICATION
ONGOING OPERATIONS AND MAINTENANCE
The undersigned , on behalf himselfand , hereinafter collectively referred to as "Engineer" hereby
states and certifies to the Seller as follows:
1. That Engineer is a Licensed Professional Engineer in good standing in the State of Idaho or
Montana.
2. That Engineer has reviewed the Firm Power Purchase Agreement, hereinafter "Agreement"
between Avista Corporation as Buyer, and Thompson River Co-Gen, LLC, Seller
dated
3. That the cogeneration or small power production project which is the subject of the Agreement
and this Statement is identified as Avista Facility No. and is hereinafter referred
to as the "Project."
4. That the Project, which is commonly known as the
is located in Section -, Township_, Range
----,
Meridian, Montana.
5. That Engineer recognizes that the Agreement provides for the Project to furnish electrical
energy to A vista Corporation for a twenty (20) year period.
6. That Engineer has substantial experience in the design, construction and operation of electric
power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has made a physical inspection of said Project, its operations and maintenance
records since the last previous certified inspection. It is Engineer s professional opinion, based on
the Project s appearance, that its ongoing O&M has been substantially in accordance with said
O&M Policy; that it is in reasonably good operating condition; and that if adherence to said O&M
Policy continues, the Project will continue producing at or near its design electrical output,
efficiency and plant factor for the remaining years of the Agreement.
9. That Engineer recognizes that A vista Corporation, in accordance with Section 11 of the
Agreement is relying on Engineer s representations and opinions contained in this Statement.
10. That Engineer certifies that the above statements are complete, true and accurate to the best of
his knowledge and therefore sets his hand and seal below.
(P .E. Stamp)
Date
Attachment A
A vista Corporation - Response to Staff Data Request No.
The following is a list of references to the sections of the 8-05 contract draft proposal
by A vista to Thompson River Co-Gen that A vista believes Thompson River Co-Gen
(TRC) would not accept.
Avista Draft
Contract Reference Topic
Appendix A Total delivered net electric power cost.TRC opposes prices
proposed.
Witnessth section TRC appears to oppose all references to previously stated
generation capability over 10 MW.
Witnessth section TRC appears to object to all references to steam and power sales
contracts with Thompson River Lumber as part of description of
the project and relationship of the sale of electricity to A vista.
Section 1 TRC objects to all or parts of several definitions. TRC appears
to object to definitions (b), (e), (f), (g), (k), (1), (m), (n), (0),
(p),
(q), (s), (t), (v), (w), and (bb). Notably, TRC eliminates the
alternate Point of Deli very in Idaho and moves it to Montana
thereby causing A vista to be responsible for wheeling power to
the A vista system.
Section 1 , (e)TRC would limit its obligation to pay transmission losses for
delivery of power to Avista s sytem in Idaho to 4%.
TRC also appears to object to representing the delivery of power
to Thompson River Lumber as a sale of electric power to a
separately owned company and instead identifies it as "other on-
site load" which inappropriately implies that the Thompson
River Lumber load is part of the project or shares common
ownership.
Section 2 (b)Project Developer is sole owner of the Facility.
Section 2, (e)Discharge of legal obligations 'of TRC to provide electric power
Section 3 to NorthWestern Energy pursuant to the CO-GENERATION
Section 4(a) (3)POWRE SALE AGREEMENT BETWEEN THOMPSON
RIVER CO-GEN, LLC AND NORTHWESTERN ENERGY
LLC , as amended.
Section 4, (c)Preservation of obligations of the Parties.
Section 4, (d) and (e)Contingency upon IPUC approval of contract. Contingency
upon WUTC approval or alternatively exclusive allocation of
contract costs to the state of Idaho.
Section 5 - Sale of power. TRC proposes a substantial re-write to this
section.
Section 6 Determination of payment. TRC deletes this section entirely.
Section 7 Minimum deliveries. TRC deletes this section. The language
from this section appears to be moved to Section 17 - Default
with some additional edits.
Page 10-24-
Attachment A
A vista Corporation - Response to Staff Data Request No.
A vista Draft
Contract Reference Topic
Section 8 , and Deviation Account. TRC deletes this entire section. (TRC now
associated prefers to have their power plant dynamically integrated into the
definitions and sub-A vista electric system.
sections
Section 9 Security. TRC objects to minimum insurance coverage limits
and maXImum deductible levels. TRC has further objections to
limits and language in many of the sub-sections under Section 9
(a). TRC objects to Sub-Section 9(b)(3) concerning follow-up
independent engineering certification. TRC objects to Sub-
Section 9(c) concerning lien rights in its entirety.
Section 10 Interconnection, Transmission and Point of Delivery. TRC
objects to several elements of subsections (a), (b) and (c). TRC
proposes to add a subsection that would obligate A vista to pay
TRC for losses caused by A vista s failure to maintain sufficient
capacity from the Point of Delivery, which is not caused by
Force Majuere. (Maintenance is not included in Force Majuere.
A vista is also required to hold TRC harmless for A vista s failure
to maintain its transmission system or provide adequate
takeaway capacity from the Point of Delivery. TRC's proposal
causes A vista to bear the costs associated with moving power
delivered to the BP A transmission interconnection with
NorthWestern Energy s system to Avista s sytem in Idaho.
Section 11 TRC proposes changes to sub-sections (d), (e), (g), U)
Section 13 Payments. TRC proposes new sub-sections and edits to (a) and
(b).
Section 18 Water Rights. TRC objects to this section.
Section 20 Default. TRC proposes several edits and additions to sub-
sections (a), (b) and (c). A new sub-section (b) is proposed
concerning termination for inability of the Facility to perform.
Section 33 Transmission Agreements. TRC deletes this section in its
entirety.
Exhibit C Electric Power Delivery One-Line Diagram. TRC deletes this
exhibit.
Exhibit D Electrical One Line Diagram of Facility. TRC deletes this
exhibit.
Exhibit H Form of Mortgage. TRC deletes this exhibit.
Page 2 10-24-
DRAFT 08-M19-
---===
OFFER
"'lOT TO BE CONST-.DIscuss/a/v PURPOSES ONLY
FIRM POWER PURCHASE AGREEMENT
BETWEEN
THOMPSON RIVER CO-GEN, LLC
FOR THE THOMPSON RIVER CO-GEN, LLC PROJECT
AND
AVISTA CORPORATION
INDEX
DEFIN"ITIONS ...... ,. ........
..... ........... ...... ....., ........... ... ... ,... ......... ... ........... ............ ....
REPRESENTATIONS ........
........ ............ ............. ...................... ........ ................ ....
EVIDENCE OF REPRESENTATIONS ......
..... .............. ......... ..... ..... ....................
TERM OF AGREEMENT ...................................,..................................................
SALE OF POWER. .............
.......... ..... ..... ............. ...................... ............................
ETERMINA+IQN OF P l\ YMENT .....................................................................~S
.............................................................................,.......~ ~
\CCOUNT
.................................................,....................................
OTELEMETR Y TO A VISTA...............................................................................
9-.7.SECURITY
-lG-.8. IN"TERCONNECTION AND TRANSMISSION ....................................................
H-.9.OPERATION
1 O.SCHEDULIN"G .................... ............. ....
.......... ....... ....,.... .......... ..... ..............,..........
H-.l1. PAYMENTS
-14--.12. METERIN" G15. ~ OUT~'\.GE l\ND 13. FORCE MAJEURE ..............................................
+6-.14. IN'DEMNITY ......
........ ................................ ......... ...................... ............ ........... .....
-1+-.15.ASSIGNMENT...... ...... ....................
..... .... ....... ......... ..... ........ ....... .... ....... ...............
18.
+9-.16. NO UNSPECIFIED THIRD PARTY BENEFICIARIES ...............................
.......
~17. DEFAULT
u-.18. RBITRATION.....,...............................................................................................
19. RELEASE BY PROJECT DEVELOPER ..............................................................
~20. GOVERNMENTAL AUTHORITY ....,..............................................,........,........,.
;?;4--.21. EQUAL OPPORTUNITY .............,......,.............................................................,...~22.SEVERAL OBLIGATIONS .............................................................................. .....
... .......... ,...... .... ..... ...... .............. ........... ...... ......,.. ... ........... ..... ............. ..... ....... ..... ..... ............... ........ ............ ..... ........ ,.. .............. ........ ...................... ....... ..... ...... ... .... ....... .... ...... ...... ....... ,... ,... .......... ........... ........................................................................................................... .....
1./ f... ~S
....... ......................... ........... ..................................... ..... ..........................., ....... ..... ........ ..... .... ..... ...................... ..... ..... ..... ..... .......... .....
-1-+8
Hl1
M12
-1+14
+&14
+915
+916
~17
U17
. =
U18
U181
~19
~12
~20
~20
~20
DRAFT 08-m2,-05 Dl-SCVSSIOIV PURPOSES ONLY NOT TO BE COI'lSTRVED 18.Bl:f!!l1f!5i.
OFFER
~23. IMPLEMENTATION ........,........,..................................................................,........ ~21
~24. NON-WAIVER........... ,.....
........ .......... ..................... ,..............................................
~21
~25.AMENDMENT...... ....
..... ............ ..... .......... ...... ...... ". ..... ....... ...... ........ ..... ... .... ........
~21
~26.CHOICE OF LAWS .................................................................,............................. ~21
~2~. COMPL~CE W)l)lH LA WS....,.,......................................,..........,...................... ~21
~28. VENUE
.... .............. ............ .................... ....... ....... .............. ................... ........
~21
~29. HEADIN'GS
.... .............. ................................ .... ............ ......... ..............................
~21
33, ~SSION i\.GRBE~1.ENTS ......................................,...........,.,.................. 25
30. ADMINISTRATION FEE..... ...................
.................................. ............................
~22
31. NOTICES
...... ........... ...... ..... ..................... ...................... ..... ............. ................
~22
-%-.32. EXHIBITS
...... .......... ...... ...... ........ .............. ..... ..................................................
~22
Exhibit A Total Firm Energy Fixed Costs
Exhibit B Description of the Facility.
Exhibit C Blectric POVJer gelivery One Line Diagram
Bxhibit D Electrical One Line Diagram of-Faei!ity....................................... ..Exhibit
Form of Engineer s Certification of Design and Construction Adequacy
Exhibit PI)Form of Engineer s Certification of Operations and Maintenance Policy
Exhibit G Form of Engineer s Certifications of Ongoing Operations and Maintenance
~ibit H Form of Mortgage
This Agreement, effective August , 2005, is made by and between Avista
Corporation, a Washington corporation ("A vista ), and Thompson River Co-Gen, LLC ("Project
Developer or "Seller ). A vista and Project Developer are sometimes referred to herein
individually as a "Party" and collectively as the "Parties.
WITNESSETH:
WHEREAS, Project Developer hasis or shall have be a Qualifying Facility within the
meaning of the Public Utility Regulatory Policies Act of 19~8 and the rules and regulations
thereunder;
WHEREAS, Project Developer owns, operates and maintains a thermal. toDDin1:!-cvc1e
wooq waste / coa1 co-1:!eneratjon facility power plant capa61e of generating 13 net of
PaeHity Service Power, near 1;l101npson Fall-s,-l\1ontana (.!!.the-Project") located--within the
boundaries of Section XX, T~. SS 'AT as further identified in Exhibit B. hereto. Under
norma1 or avera1:!e qesi1:!n and~ions. ~v will 1:!enerate no more than ten
aMW Der month XXX, Sanders County, Montana. The site is o'vvned~son River
" ;net of on-site load.
'VIIERE,,'\8, Project Develeper and-+Rh;-has entered into an agreement for the-purchase
ef extraction steam 13y-+Rbfrom Project Develeper under a forty five year agreement
representing approximately-l5% of-the totaHhermal energy output of the Project;
DRAFT 08-!ttl2-05 DISCUSSION PURPOSES O.\'LY NOT TO BE CONSTRUEB-AS-A BLVDlt!Si.
OFFER
WHERE,(\S Project Deve~as entered into an forty five year agreement to for the~cctric energy from tB:e-project to TRL;
DRAB 08-9+ 19-05 DISCUSSION PURPOSES Q"VLY NOT TO BE COl\/STlWED A.S A. BII\TDING
OPFER
'VIIERE..Project Deyel-eper ~ity is located in an area served-by-North\1/estern
Energy, bLC (Nel1h'Ncstern ) in l\10ntana;
WHEREAS, Project Developer has entered into an agreement for the interconnection of
the Facility to NorthWestern and shall rovide real-time meterin that will enable the Facilit to
be inte~rated direct! v into A vista s control area
WHEREAS, The Project Developer has entered or shall enter into an agreement
NorthWestern Transmission Agreement") under which NorthWestern shall provide finn
transmission of power to A vista s point of interconnection at Burke, Idaho;
WHEREAS, A vista is obligated under the Public Utility Regulatory Policies Act of 1978
and the rules and regulations of the IPUC to purchase power from Qualifying Facilities; and
WHEREfA , A vista, North \V estern, and TRC have executed or shall execute an
agreement f-eHhe provision of Deviation Account services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows.
DEFINITIONS
Whenever used in this Agreement and exhibits hereto, the following tenns shall have the
following meanings:
(a) Agreement" means this Firm Power Purchase Agreement, including all
exhibits, and any written amendments.
(-b) "A vai_ower" means the-electric energy generated-by the
Faeility net of Facility Service Pov.'er and net of electric energy sales-by-the Project Developer to
+RL as measured--at:-Neflh'Ncstern s meters located on t~c of the 13.2kV/115kV ~;tep
up transfonner at the Tho111pson River Co Gen Sub:;lation.
(el!) "A vista
, "
Project Developer
, "
Party" and "Parties" shall have their
respective meanings set forth above.
(d~ Construction Activities" means all design, engineering, procurement and
construction activities related to the construction, inspection, testing, start-up, repair
replacement, improvement, alteration or modification of, or addition to, the Project.
eg)Delivered Net Electric Power" means all electric energy generated by the
Facility, net of Facility Service Power, net of-the-e-lcctric energy sale-by-the-Project Developer to
DRAFT 08-fltl2-05 DISCUSSIOI\T PURPOSES OIVLY NOT TO BE CONS~NDING
OFFER
+&1...and net of-electric energy used to compensate N-eflh '.y estern for and anv other on-site load
and net of any transmission losses ~o exceed~associated with the scheduling of electric
energy to Avista at the Point of Delivery. In any e:iven month. the Delivered Net Electric Power
shall not be e:reater than 10 aMW.
(0 "~OR J.eeouBt" means the account esta13lished, under a separate agreement
between /\ vista, Nefth Vl estern, and-+RC for the purpose of accounting for any ftetH:ly deviations
bet~ve~n the J.'\.vailable-Net-Blcctric Po\ver and-the Delivered-Net--Electric Foy/er. /\. positive
deviation occurs v:henDelivered-Net--Electric Power is greater thaft--the sum of4he J.
,..
vailable Net
Blectric Power plus transmission system losses base~ivered-Net-Electric Power, fff
eaeh-hour. A negative deviation occurs when--f)eliyered-Net--Electric Power is less than the sum
ef.the J.\ vailable-Net-Blectric Power plus transmission system losses base~ivered Net
Electric Power, for each hour.
g) "
~OB J.eeount J.ecumu~ "
means the continuous summation of positivemte in dJillars oer megawa~hour~ to be oaid
pv A vis~ivered~ower e:enera~he Facility bee:innine: with theOpera~ivered~ower Cost is soecified in Section and negative
ealances accumulat:ed-ift.-the De~/iation J.ccount, expressed-ifl-MWhs, as separately accumulnted
. .
Exhibit A.
(DO "Facility" means the electric generating facilities, including all equipment
and structures necessary to generate and supply power, more particularly described at Exhibit B
(Description of the Facility).
(ig) Facility Service Power" means the electric power used by the Facility during
its operation for facility service power, including, but not necessarily limited to pumping,
generator excitation and cooling, as furthef-i.llustrated in Exhibit D (Blectrical One Line
Diagram~herwise related to the Droduction of electricity by the Facility
).
For clarification
fi:aeility Service Power docs not incffide any electric po'Ner soki-b-y-Project DevelopeF
(ill)FERC" means the Federal Energy Regulatory Commission
(Ie) "FiFm-Energ:"; Cost" means the rate, fi.xe€l for the term of -the i\greement, in
aetlar~; per 111egawatt hour, to be paid by A vista for all Energy ~he Facility
beginning 'vvith-the Operation Date. The Firm Energy Cost is s~ in Section 6 and
:g h1 It J. ,...
(I) "Forced Outa~" means any outage that eithef-fHHy or partially curtails the
electrical output of-the-Faeility caused-by mechanical or electrical-etJ:tHpment f-ailure 1*mt
relateEl structural-fatlure, or unscheElllie€l maintenance requirccl--te-ee-pefformed to prevent
~ment failure.
DRAFT 08-0719-05 DISCUSSION PURPOSES ONLY NOT TO BE CONSTRUED S A. BIND!NG
OFFER
DRAFT 08-fttl2-05 DlSCUSSIO.V PURPOSES O.7\.'LY ."IOT TO BE CONSTRUEItt!S A. BL7\.'Dlllfi.
OFFER
(aj) Independent Eneineerine Certifications" means certifications
provided by a professional engineer registered in Montana, Washington or Idaho, who has no
direct or indirect, legal or equitable, ownership interest in the Facility.
(p~
Interconnection Aereement" means the agreement between Project Developer
and NorthWestern by which f..vailable Net Electric Po\ver OutDut may be delivered into the
transmission system of NorthWestern at the Point of Interconnection
(till Interconnection Facilities" means all facilities required to interconnect the
Facility for Hie-delivery of Delivered Net Electric Power to the North'vVesternNorthWestern
transmission system including connection, transformation
switching, relaying and safety equipment. Interconnection Facilities shall also include all
telemetry, metering, cellular telephone, and/or communication equipment required under this
Agreement regardless of location.
fro)IPUC" means the Idaho Public Utilities Commission or its successor.
(s)~ours (~means all-hours other-than Heavy Load Hours.
(t) "~OR Aecount ..eeumulation" means the amount of energy in
the-Dcviation L\.ccount at hour ending 21OO-the-last-tlay of-eaeh month.
!W "~eans ~vered~ectric Power and Inadvertent
Electric Power from the Facilit in an month.
(aw "Operatine Year" means each 12-month period from January 1 through
December 31.
(VIl) Operation Date" means the date, as confmned in writing by Avista, upon
which the energy deliveries commence. Project Developer shall have the duty to obtain the
confIrmation from A vista. Such confirmation shall not be unreasonably withheld by A vista. The
Operation Date shall be the later of the following dates:
(1) The date following the day during which the Facility has reached a degree
of completion and reliability, such that it is capable of operating te-delivery of pov;erand
continuously deliverine: Dower to f..;ista s System. Such dcgreethe Point of completion~ity must be-ecmonstrated to L J. vista s satisfactionDeliverv
(2) The day following the day A vista receives confirmation from the Project
Developer that it has filed self certification as a ualif in facilit at the Federal Energy
Regulatory Commission certification of-thc qualifying status of.the-Facility, pursuant to
the Code of Federal Regulations 18 Part 292, Subpart B. ef4fle-€late i\vista receives
notice of any other approval-fet:tuirecke-bc issued-by-thc Fedefal-Energy Regulatory
Commission.
DRAFf 08-9719 05 DISCUSS!ON PURPOSES ONLY NOT TO BE CONS'FRl:J.El)-AS-A IJIND1!:!Si.
OFFER
QLJn no even~an J~arv 1.2007 nor
earlier than Januar 1 2006.
(wg) Point of Delivery means the point of interconnection between A vista and
NorthWestern in Idaho at Avista s Burke substation, or if not available, the alternative Point of
Delivery shall be the Bonneville Power Administration Hatwai Substation located--ift-Idaho.
transmission interco_h es~mission svstem.
r "Point of Intercon ection me ns the ical nd meterin interconne ti
the Facilit to the NorthWestern transmission s stem at the hi h side of the 13.2kV/l15kV ste -~ormer atJl:1e ThomDson River Co-Gen Substation,
DRAFT 08-9+19-05 D!SCUSSION PURPOSES OIVLY NOT TO BE CO.\'STRUED A.BIIVDING
--===
OFFER
(*~
Prudent Utility Practices" Prudent Utility Practices at any particular time shall
mean the practices, methods, and acts (including but not limited to practices, methods, and acts
engaged in or approved by a significant portion of the electric utility industry), in the exercise of
reasonable judgment in the light of the facts known or that should have been known at the time a
decision was made, would have been expected to accomplish the desired result in a manner
consistent with law, regulation, reliability, safety, environmental protection, economy, and
expedition. With respect to the Facility, Prudent Utility Practices include but are not limited to
taking reasonable steps to ensure that:
(1) Adequate materials, resources, and supplies are available to meet the
Project's needs;
(2) Sufficient operation personnel are available and are adequately
experienced, trained, and licensed as necessary to support and operate the Facility
properly and efficiently and are capable of responding to emergency conditions knowing
that the Project shall be designed and constructed to operate in an unattended mode;
(3) Preventive, routine, and non-routine maintenance and repairs are
performed in a manner designed to ensure reliable, long-term and safe operation, and are
performed by knowledgeable, trained, and experienced personnel utilizing proper
equipment and tools and procedures;
(4) AppropriatedAoorooriate monitoring and testing is done to ensure
equipment is functioning as designed and to provide assurance that equipment shall
function properly under both normal and emergency conditions; and
(5) Equipment is not operated and geo fluid and working fluid liquids are not
handled in a reckless manner, or in a manner unsafe to workers, the general public, or the
environment, or without regard to defined limitations including, but not limited to geo
fluid and working fluid temperature and pressure, operating voltage, current, frequency,
rotational speed, polarity, synchronization, and control system limits.
(y1) "Scheduled Outa2e " means any outage which is scheduled by the Project
Developer to remove electrical or mechanical equipment from service for repair, replacement
maintenance, safety or any other reason, and which thereby limits the generating capability of the
Facility to less than its full tested capability.
(~w Transferrin2 Entities" means NorthWestern or its successors or assignees and
other third parties as necessary to provide transmission and interconnection service to deliver
power from the Facility to A vista transmission system at the Point of Delivery.
(aav)Transmission A2reements" means agreements entered into between Project
Developer and Transferring Entities.
DRAFT 08-m2-05 DISCUSSIOl\T PURPOSES OIVg .~,rOT TO BE CON,ST~ BINDING
OFFER
fbb)
successor.
'VUTC" means the 'Vashington Utilities and Transportation Commission or its
REPRESENT A TI 0 NS
Project Developer represents:
(a)
Facility;
that the Facility is or shall be self-certified bywith FERC-as a Qualifying
that Project Develepcr is sole owner of-the Facility;
wOU that all licenses , permits, and authorities required for the operation and sale of
electric power and steam therefrom have been obtained or shall be obtained in the name of or
assigned to Project;
(Elt) that Project Developer has obtained or shall obtain, prior to the Operation Date
necessary rum transmission fights, including shaping or ancillary services necessaryrig:ht
delivery electric pov/er to i\. vista;~iver electric Dower to A vista:
(e) that-Project Develeper is or s~harged from any legal-ebligation to
provide-elcctric power to NeFiliWestem Energy pursuant to the CO GENBR.L TION PO'VER
SALE AGREEMBN+-BETVlEBN-+HO~1PSON RPmR CO GEN,bLC AND
(f!l)and that the undersigned is authorized to execute this Agreement in Project
Developer s behalf.
EVIDENCE OF REPRESENT A TIONS
Upon request by A vista, Project Developer shall deliver to A vista certified copies of
Project Developer s articles of incorporation, articles of organization, and by-laws or articles of
partnership as applicable and any and all filings made to the Federal Energy Regulatory
Commission to obtain or maintain the Facility s status as a Qualifying Facility and to make sales
of electric power therefrom. Upon request from A vista, Project Developer shall also deliver to
A vista coDies of all licenses, permits, and authorities authorizing the sale of electric power and
steam from the Facility and all-copies of all contracts for the transmission of electric power
ifteffitling shaping or other ancillary services necessary to deliver electric power to A vista. The
Project Deve~rovide to i'\vista aH contracts, letters , or othef-6ocumcnts pertaining to
DRAFf 08-fttl2-05 DISCUSS/aIV PURPOSES O.VLY ,"lOT TO BE CaJ ST~S A. BlfiPLVG
OFFER
TERM OF AGREEMENT
(a) This Agreement shall become effective on the date when all of the following
conditions are met;
----fB:11l Agreement has been executed by both Parties;
(2)Project Developer has received FERC Qualifying Facility Certification;
(3) All materials requested pursuant to Section ~,l, Evidence of
Representations, have been received and verified; and
(4) IPUC approval has been received. A vista shall utilize best efforts to
obtain such aDDroval.
(b) The term of the Agreement shall end at 2400 hoursbe for 20 years following the
Operation Date, unless terminated earlier by terms and conditions contained herein. If the
eefl€litions stated-ifl-4(a) and Operation Date haye not been achieved by December 31 2005
not~vVithstandffig-force majeure, tflen-this l\greement shall terminate.
(c) f\Jl-ebligations required--t:e-be-performed-by-t:he-Parties are preserved regardless of
the termination or expiration of-this l\.greement \vhere so required-by tenus and conditions of this
'\.greement.(d~ The payment provisions of this Agreement shall be contingent upon the
Commission s determinations discussed-below. (1) Upon execution of this
Agreement by-the Parties
, ~
1o. vista slnHl--file-this Agreement with the IPUC for its approval and
determination of the associated costs as prudent. The effectiveness of this Agreement shall be
based upon the IPUC's determination in accordance with this Section 4.
(-2) If upon filing with-the 'VU'FG-by 1\ vista for approval of recovery of
expenses assodated-with ~\vista s .f*lTShase of power undef4his ~'\.greement 1 1o.vista is not
allowed to recover such expenses in its rates for the sale-ef.electric po\ver by 1 1o. vista at
retail-ffi-the State of V'l ashington, then 1
,. "
/ista shall cease maldng payments for electric
power requirecl-ey-this ~\greement, and Project Deve~ cease delivering electric
pomer to A "'istatV 1 .. .
(3) liHhe event thaHhe \VUTC or any other government agency or court
wfti€h regulates the rates fer-the sale-ef.electric power by /'10. vista in the State of
Washington does not aHovl 1 1o. vista to recover through its retail rates expenses associated
with /'.. vista s purchase of.electric po'.ver undeF-this ~,.greement, Project Develeper shall
have the right to request that-the-IPUC aHocate a~enses exclusively to 1\ vista
retail rates in effect in the State oHaaho. ShetiM-the-IPUC deeline to so aHocate aH such
expenses exclusively to 1'\. vista s retail rates in effect in the State of-lElahe,-then this
DRAFf 08-0+19 05 DlSClJ-SSIO.r..l PURPOSES OIVLY NOT TO BE CONSTIWED .1S.1 B!ND1!i!i:.
OPPER
Agreement sftall terminate. Nethiftg-herein s~e l\ vista from appearing before
any government agency or court oHav/ to ~ose to owose any allocation of such
expenses.
(e) l\.vista sl1all-efltleavor to obtain awroval--eHhe respective Commissions as
required herein.
SALE OF POWER
Project Developer shall sell and deliver and A vista shall purchase electric power~et Outout
from the Facility. Notwithstanding any other term of this Agreement, Project Developer shall
be obligated to sell and A vista shall be obligated to purchase all Delivered Net Electric Power
from Thompson River Co-Oen, LLC.
~acilitv is desi2:ned and the Project Developer intends to ooerate in a manner in which Net
Out ut is e ual to Delivered Net Electric Power. Thus the Pro ect Develo er does not intend to
2:enerate Inadvertent Electric Power. However. in such event. A vista shall be en~o any~ower. e required to Drovi~nvcomDensation for such. as
identified in Section 11 b .
For clarification. the calculation of Inadvertent Electric Power shall be as identified in the
followin exam Ie:
~Davs:
Hours in the Month:
Maximum ~ivered~ectric power:
J anuarv 3 )
744
Therefore Inadvertent Electric Power is an Net Out ut roduced b the Facilit ex ressed in
kWh which the Pro ect Develo er delivers to Avista at the Point of Deliver that exceeds 10000
kW multi lied b the hours in the s ecific month in which the ener was delivered. As~he exa~bove. ~ower. as m~ an avera2:e monthlv
pasis wo~t Output in excess of 7.440.000 kWh.
Project Develooer shall utilize best efforts to make available Out1?uL(Delivered Net
Electric Power Ius an Inadvertent Electric Power to Avista at the orimarv Point of Delivery,
and shall bear full responsibility and expense for having such outputNet OutDut delivered to
A vista s electric system at the Point of Delivery-by arranging feF-firm transmission of such
output by-thtH'ransferring Entities.. as id~n Section 8(g1 ffi-the event that bothA vista
~have ~o maintain su~keawav caDacitv from the primary and the
alternative Points of-gelivery are unavai~roject Deve_e reasonable
commercial-efforts to malre-€leliveries at a mutually agreed-apon alternative delivery point in the
State of-Maho. Oelivered--N'et Electric Power generatecl-by-the-Faeility whieh is scheffiHed and
delivered pursuant to tae-:fransmissiofl L'\.greements to L
'\.
vista at the Point of Delivery~
deemed power sales~ as id~n Section 8QU
DRAFf 08-9119-05 mSCUSSIOIV PURPOSES ONLY NOT TO BE COIVSTRUED ,1S A. BIt'lDING
OFFER
Unless othep..vi~;e provided for in this /\greel11ent, payments to Project Developer by
Avista each n1onth for electric energy purchased-by /\vista s~ivered Net Electric Power
Eielivered in each l11onth l11ul~irm Energy Cost as set fefth-i.fl-Exhibit f..
. (0) Not\vithstandffig-force majeure or any pro"', the
Agreement may be terminated at A vista s sol~tion, if any of the--fellowing conditions occur:
(1)Project Developer abandons the Facility; or
(2) There ha\re becn no energy deliveries to !\vi~;ta from the Facility for a
period of t\vel~ 2) consecuti'v'e n10nth~;; or
(3) The energy deliveries from the-Fa€ility to /\vista fail to exceed 87 600,000
k\Vh during any rolling period of twenty four (24) consecutive month~; after energy
deliveries to i\ vista commence; or
DRAFf 08-flll2-05 DISCUSSION PURPOSES ONLY NOJ:..+O-lJE CO.\/ST~!NG
OFFER
(4)Facility ccase~; to be a Qualifying Facility; or
(5) NeFth \V estern ceases to make available-for any reason flfffi transmission
service or Deviation Account services in connection \vitlt-this l\.greement.
ACCOYN+
(a) Governing Princi~. Contemporaneous 'vVitlHhis L
'\.
greement, Project Develeper
and /\vista shall execute a Deviation l..ccount l\.greement 'vith--NOOh Vo/ estern. The Deviation
ccount shall-be used-fer-the purposes descriBed-herein and-shall not be usecl--by--Neith'V estern
fef-the purpose of-taking advantage of -particular market or pricing conditions to NetthV/estern
a6.vantage or vista s disadvantage,
(b) Operation of a Deyiation Account. The Deviation Account sltal-l record and
accumulate, on a ~basis, the-€lifference betvleen Delivered Net Electric POYNer and
the sum of A vail~ectric Pov/er plus transmission system losses that are based uf*ffi
(e) Deviation .L ccount Limitations. If at any time during the term of this L ~greement
when the Deviation .L\ccount Accumulation for eit~ amounts as separately
(1)Bet'vVeen negative 100 MWh--afld-positive 1) no
(2)Between negative 400 11Wh-and negative 800 MWh or betv.'een positi'/e
Po"vver from N-eflh'V estern shall-be increaseci-eHlecreased at
j\.
vista s discretion at the
rate of one mega\vatt per-hour (or by an amount mutuaRy agreed--apon) to reduce the
aalance in the Deviation .L\ccount to either negative~ositive 4QQ-MWh-.
TELEMETRYT I
(3)If at afl)1ime during the term of this L\greement the-Deviation Account is
A vista a!!rees ~ize reasona~o incoroora~rou!!bJelemetry
communication from NorthWestern shall-be increased-er-€lecreased at .L\vista s discretion at a
rate up to 10 megawatts perhour to reduce the-balance in the-Deviation .Account to either a
into the A vista control area. The Project
pevelooer wiU orovi~e anv consents necessarv to ensure that A vista can receive real-time
!!eneration si!:!nals from NorthWestern.
DRAFf 08-0+19-05 DISCUSSIO.\T PURPOSES ONLY NOT TO BE CO"VSTRUE~
---==
OFPER
9-. SECURITY
(a) Business Insurance. Upon execution of this Agreement, Project Developer shall
provide documentation for each of the costs set forth herein. Project Developer shall obtain and
maintain insurance coverage of all of the following types with limits as shown:
Minimum Coverage Limits
Liability $~l million, per occurrence
Catastrophic Perils 6980% of plant cost
Boiler/Machinery 9980% of equipment cost
Loss of Income (Business
Interruption)
75% of estimated daily income
~UD to 20% ef.annual
All Risk Property 9980% of Facility cost
Maximum Deductible
5% of thc policy
ltmitConsistent with
current insurance utility~tices for a similar
DroDertv
1.0% of plant
. .
eestConsistent with
current insurance utility
Dractices for a similar
DrODertv
The lesser of 5.0% of
equipment cost or
$25,000Consistent with
current i nsurance
practices for a similar
proDertv
10 days of
incomeConsistent with
current insurance utility
Dractices for a similar
DroDerty
Thc lesser of 5 % of
Facility cost or
$25,OOOConsistent with
current insurance utility
practices for a similar
proDertv,
(1) Commercial general liability insurance for bodily injury and property
damage with limits equal to fifteen percent (15%) of the total cost of the Facility, or tv;o
million dollars (000 000), ~/hicheYer is greater, 1.000.000 for each occurrence
combined single limit. The deductible for such insurance shall not exceed one half-ef
one percent (0.5%) of the total cost of the Facilitybe consistent with current insurance
Y1iliJ:y practices for a sim~roDertv
(2) All risk property insurance with minimum limits not less than ninetyeighty
percent (9Q80%) of the total cost of the Facility. This insurance shall be written on a
replacement cost basis and shall include the following:
(A)Standard fire policy;
DRAFT 08-~19-05 DISCUSSIOt'-/ PURPOSES OIVLY NOT TO BE CONSTRUED A.S A. BI."lDING
OFFER
(B)
(C)
(D)
Extended coverage endorsement; and
Vandalism and malicious mischief endorsement.
The deductible for this coverage shall not exceed-five percent (5%)
be consistent~h current insurance utilliv DractiWor a s~ertv.
(3) Boiler and machinery insurance with minimum limits not less than
ninetyeie:htv percent (9980%) of the total cost of the equipment covered in Section
(a)(3)(A) below, This insurance shall include the following:
, (A)
(B)
(C)
All boiler and machinery coverage must be written on a
comprehensive form" basis to provide coverage against the
sudden and accidental breakdown of all boilers, machinery and
electrical equipment, turbines, generators and switchgear;
Coverage under this coverage must be written on a replacement
cost basis;
The deductible for this coverage shall not exceed five percent (5%)
ef-the total cost of the equipment covered in Section 9(a)(3)(A)
above, or $25 000, whiehever is greaterbe consistent with current
insurance utilitv Dractices ~milar Dropertv
(4) Earthquake and flood (catastrophic perils) insurance with limits not less
than sixtyeie:htv percent (6980%) of the total cost of the Facility. The deductible for this
insurance shall not exceed five percent (5%) of the Facility costbe consistent with current
insurance utility Dractices for a similar Droperty
(5) . Business interruption (loss of income) insurance with minimum daily
limits of t-less-than seventy five percent (75%) of tfle-Fa€ilitys estimated daily
electrical revenue. ~imits shall not be less than twenty percent (20%) of the
Facility~:s estimated gross annual revenue-from the sale of electrical energy. This
insurance shall include the following:
(A)
(B)
Coverage shall include Project Developer s loss of earnings when
business operations are curtailed or suspended because of a loss
due to an insured peril.
Coverage may be written on an actual loss sustained basis.
(C)This insurance must be endorsed to both the All Risk Property
Insurance policy and the Boiler and Machinery Insurance Policy.
DRAFT 08-~-05 DISCUSSION PURPOSES ONLY NOT TO BE CONSTRUED ,1S BINDING
OFFER
(D)
(E)
The deductible for this insurance coverage shall not exceed thirty
(30) days gross daily revenues from the sale-ef-electrical energy.consis~h current insurance utilitv oractices for a similar
The estimated gross daily revenue and estimated gross annual
revenue shall be computed on the basis of the estimated kilowatt-
hour production.
(6) The form of all insurance policies, and the insurance companies issuing
the policies shall be acceptable to A vista, provided however, that any approval by A vista
shall not be unreasonably withheld, and must have an A.M. Best rating of A- or better.
Project Developer shall provide copies of all insurance policies to A vista as proof of
insurance. All insurance policies required to fulfill the requirements of this Section-97(a)
shall include language requiring that any notice of cancellation or notice of change in
policy terms be sent to A vista by the insurance carrieres) at least sixty (60) days prior to
any change or tennination of the policies.
(7) In the event Project Developer fails to pay, when due, any premium
required to maintain the effectiveness of any insurance policy required under this Section
(a), Avista may at its option, pay such premiums. In the event that Avista exercises its
option to pay such premiums, the amount of such payments shall be immediately due and
payable to A vista by Project Developer. Payment shall be made pursuant to Section
-l-J-. 11.
(8) A vista shall be an additional named insured on all insurance policies, and
shall also be named an additional loss payee on the policies for all risk property
insurance, boiler and machinery insurance, catastrophic perils insurance, and business
interruption insurance.
(A)In the event of catastrophic or boiler/machinery failure, Project
Developer shall 'promptly notify A vista of such loss to the Facility.
A vista may make proof of loss if Project Developer fails to do so
within fifteen (15) days of the casualty.
(B)Unless the parties agree otherwise, Project Developer shall repair
or replace the damaged or destroyed Facility. Proceeds from said
casualty insurance policies shall be paid into an account with
A vista and Project Developer as joint signatories. Disbursements
from such account shall be used first for repairing or replacing the
insured property unless otherwise agreed. Upon completion
repairs or replacement of the Facility, the balance, including
accumulated interest, if any, remaining in such account shall
become property of Project Developer and shall promptly be
released to Project Developer by A vista.
DRAFT 08-El2,-05 DI-SCU-SSIOll\! PURPOSES ONLY "\TOT TO BE COlVS'PlUJ.ED A.BLVDING
OFFER
(C)In the event that the Parties agree the insured property cannot be
economically repaired or replaced, the amount, including
accumulated interest, in the joint account described in Section
(a)(8)(B) above, shall be used first to satisfy the Project
Developer s obligations to ~ers. Secopd. any balance shall then
be utilized to satisf the Pro' ect Develo er s obli ations to A vista
if any~as determined herein. +fte
~.
anv remaining balance
including accumulated interest, if any, remaining in such account
shall become property of the Project Developer and shall be
promptly released to Project Developer by A vista.
(9) At the end of every fifth Operating Year following the Operation Date, the
minimum coverage limits for the liability, catastrophic, and boiler/machinery insurance
shall be adjusted by increasing or decreasing the underlying original plant cost to reflect
changes in the appropriate regional heavy construction deflator as published by the
United States Department of Commerce.
(10) All business insurance coverage listed in this Section (a) must remain in
place at all times during the contract term. Project Developer shall annually submit
evidence of such insurance coverages. Should any of the coverages above lapse, Project
Developer shall immediately notify Avista in writing of such lapse of coverage.
(b) Engineering Certifications. Prior to the Operation Date, Project Developer shall
obtain and provide to Avista Independent Engineering Certifications as follows:
(1) as to the adequacy of the design and construction of the Facility to operate
reliably during the term of the Agreement in substantially the form shown in Exhibit E;
and
(2) as to the adequacy of the Operations and Maintenance Policy substantially
in the form shown in Exhibit F,
(3) ffi-a6tlition, every thiffi year, folloviing the year of-the-Qperation Date
Project DeYel~tain and-provide to
\.
vista Independent Engineering
Certifications of--the-aElequacy of-the continuing operation and maintenance procedures
sabstantially in the form shown in Exhibit G.
(c) bieB-Righ.ts. Project DevelepeHhall grant to .,'\vista lien rights in the-Facility
sufficient for L
...
vista to assume operation of the Faci~e necessary in the event of-a~roject Develeper under the Agreement.
(1)Before J.
...
vista shall-become obligated to malce any payment to Project
leaseflekl interest and improvements constituting the-Faeility in the--form attached hereto~avor of L ... vista, together witJ:r-a.-f)elicy of-tit.le insurance obtained at
Project Develeper s expense insuring the-lien of-the mortgagc as prior to all-ether liens
DRAFT 08-lPI9-05 DISCUSSION PURPOSES ONLY .VOT TO BE CONSTRUED :is:1 BJ.1VmNG
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OFFER
afltl encumbrances inck:l€ling mechanics or materialman s liens, except a first mortgage
lien grante~evelepef-for a maximum of-$-! ,000,000, provide6-that, said first
mortgage liefHloes not by its terms permit future advances to be ma~ject to the lien
ef-the mortgage fo~ any purpose other-than advances contemplateti by the construction
mortgage \vithout the consent of /\. vista
, '
,'hieh consent shall not be unreasonably
withheld.
(2) Project Deve~so execute and-tle-liver to i Jo. vista such financing
statements, fixture filings, or otBer-tlocuments necessary to grant A vista security interests
ifl-all personal-pfeperty, fixtures, contract rights, incffiding but not necessarily lill1ited to
contract rights to receive delivery of fuel--aftd to wheel or transmit electric po\ver, \vater
fights, permits, licenses, or other rights or ~eges whieh-Project Develeper has
obtaincd-er-sftall-ebtain in conjunction 'vVith-the construction or operation of the Facility,
SHbject only to the first mortgage lien referred to above.
(3) i Jo.t the time the mortgage in the form of Exhibit H is delivered to i Jo. vista
Project Developer sflall-al.se.-6eiver a commitment from Lender agrecing that in the event
aefault and an opportunity to cure t~t. Project De'ieleper agrees that a default
Hflfler such-first mortgage sflal.l-a.lso constitute a default under this Agreement.
(4) i Jo. vista, at its option, may advance sums to cure any default under Lender
first mortgage lien, and-all-sHeh sums advanced-by Jo. vista shall-be secured-by all security
interests given by-Project Develeper to Avista undcr this Agreement.
(5) Avista shall execute such-documents as are necessary to releaseits
security interests in Project De'ieleper s property at the comI*etion of Project DevclopeFs-
obligations under this i Jo.greement.
lG-.~INTERCONNECTION i\ND TRANSMISSION A D P
(a) Project Developer shall design, construct, install, own, operate and maintain the
interconnection equipmcntInterconnection Eauioment so as to allow safe, reliable generat~on and
delivery of electric energyDelivered Net Electric Power to North'.VesternAvista forover the full
term of the Agreement. Prior to the commencement of the first delivery of Delivered Net
Electric Power, Project Developer shall provide A vista with a copycooies of-the executed
Interconnection Agreement with--Neith \V estern. (b) Prior to the eommencemcnt of the
first delivery of-Qelivered-Net-Blectric Po'ver, Project Devel-epeHhall-providc j\vista with
copies of executed Transmission Agreements, reasonably satisfactory to A vista, providing for
the firm transmission of Delivered Net Electric Power from the ProjectFacilitv s Point of
Interconnection to the orimarv Point of Delivery. Project Developer shall not consent to any
modification of the transmission agreements without A vista s advance written approval, which
approval shall not be unreasonably vlithheld.pe unreasona~roiecLDevelooer~onsibilitv and exoense for transmission from the Point of Interconnection to
the Point of Deli very.
DRAFT 08-0719-05 DISCUSS/VI\' PURPOSES ONLY NOT TO BE CO.l\lSTRUED A.S A. BIIVDIIVG
OFFER
( C) 4'\H pov;cr hereun~be transferred b A vista shall use best efforts to
maintain sufficient takeaway caoacitv for the Delivered Net Electric Power from the Facility to
'\ vista over the-faeilities of....:rransferring Entities pursuant to t~ransmission Agreements.
Project Deve~royide-a6vance notice to A vista 'vYheH-therc is to be a scheOOled change
in status of the-Faeility in delivering or not delivering power to Avista. i\.H costs associated ':lith
the transfer of povler from the Facility to theorimarv Point of DeliveryDeveloper.~s associa~ with the receiot or transmission of the Delivered Net Electric
power from ~verv illto Av~a con~be AviMa s so~e resoonsibilitv.
~(cl In addition to the above costs where applicable, Project Developer shall reimburse
A vista for any costs or expenses, if any, incurred by A vista in accordance with the Transmission
Agreements including, but not necessarily limited to, any charges~ reimbursable e~penses or
other amounts payable by A vista to the Transferring Entities. Further, to the fullest extent
permitted by applicable law, Project Developer releases and shall defend, indemnify and hold
harmless, A vista from all claims, losses, harm, liabilities, damages, costs , and expenses
including, but not necessarily limited to, reasonable attorneys' fees , arising out of any act or
omission of Project Developer in connection with the Transmission Agreements, including, but
not limited to, any breach of or default under any of the Transmission Agreements by Project
Developer.
vis~ reimpurse ~roiectPeve~ooer for anv reasona~oss o Delivered~ower caused bv A vis~ain su~ caoacitv from the Point of
~iverv. w~h is not excused~n eveQLQf Force Maiuere. Further. to the fullest extent~aw. vi~eases a~. indemnifv and hold harmless
proiectPeve~ooer from a~osses. ~es. costs. and expenses~ing. necessari~to. reasona~ornevs' fees. arising out of anv act or
omission of A vis_ain i~mission svs~uate takeawav
caoacitxJrom ~oint of Deliverv.
DRAFT 08-0719 05 DI-8CVSSl()!t-! PURPOSES ONLY NOT TO BE CONSTRUED A.S i1 Bl~
OFFER
It-.~ OPERATION
(a) Project Developer shall operate and maintain the Project and all equipment
needed to generate and deliver the electrical energy specified in this Agreement according to
Prudent Utility Practices.
(b) Project Developer shall provide to A vista information and specifications and
perform tests reasonably requested by A vista which are required for the purpose of determining
the operating capability and characteristics (including mechanical and electrical characteristics)
of the Facility. Avista may observe any such tests.
(c) Project Developer shall maintain an accurate Facility operating log, keeping track
of Scheduled Outages Forced OutagesForce Maieure, generation records, and other data
pertinent to the operation of the Project. Project Developer shall provide A vista a copy of such
log upon request.
(d) Avista may require Project Developer to curtail, interrupt or reduce deliveries of
electric energy if A vista determines that curtailment, interruption or reduction is necessary
because of force majeure or to protect persons and property from injury or damage, or because of
emergencies, necessary system maintenance or system modification. A vista shall use its
reasonable best efforts to keep any period of curtailment, interruption, or reduction to a
minimum. In order not to interfere unreasonably with Project Developer operations, A vista shall
give Project Developer reasonable prior notice of any curtailment, interruption, or reduction, the
reason for its occurrence and its probable duration Said~s. intelTUDtions. or~ions s~be usedJo red~he minimum d~iverv ca~ions unqer this A2:reement.
(e) Project Developer shall notify Avista promptly of any complete or partial Project
outage or any significant changes in the level of generation including increases , inc~in2: an v ~rom tbgJransfelTin2: ~ties und~erconnection A2:reement or in
order to rotect the inte rit of the Facilit or transmission s stem, Project Developer shall give
A vista reasonable prior notice of any complete or partial Scheduled Outage of the Facility or
significant change in the level or generation, the reason for its occurrence and its probable
duration.
(1) In the event of an emergency requiring a curtailment, interruption or reduction in
deliveries, the curtailing, interrupting or reducing party shall use its best efforts to promptly
notify the other party of the action taken or to be taken, the reason for such action and its
probable duration.
(g)
Prior to the Operation Date, and at least thirty .(30) days prior to January 1 of each
full or partial Operating Year following the Operation Date, Project Developer shall prepare in
writing and send to A vista, a schedule of the anticipated times and periods of any Scheduled
Outages -- by month for a twelve (12) month period beginning with January 1 of such Operating
Year. Except by mutual agreement \vith Avista Project Developer shall onlyreasonaWv attemDt
schedule down times or maintenance shutdowns in the April 15 through June 30 period.
DRAFT 08-ftll2-05 DISCUSSION PURPOSES ONLY NOT TO BE Co.7\'-ST~ING
OFFER
(h) Project Developer shall obtain and comply with all permits, licenses
authorization and other rights required to own, operate, use and maintain the Facility. Project
Developer shall furnish to A vista on request, copies' of all documents granting, evidencing or
otherwise related to such permits, licenses, authorizations and rights.
(i) Project Developer shall own, operate, use and maintain the Facility at its own risk
and expense in compliance with all applicable laws, ordinances, rules, regulations, orders and
other requirements, now or hereafter in effect, of any governmental authority.
U) A vista may interrupt, suspend or curtail delivery, receipt or acceptance of delivery
of power at the Point of Delivery, if Avista reasonablv determines consis~ent Utility
Practice that the failure to do so:
(1) May endanger any person or property, or A vista s electric system, or any
electric system with which A vista s system is interconnected;
(2) May cause, or contribute to, an imminent significant disruption of electric
service to A vista s Customers;
(3) May interfere with any construction, installation, inspection, testing,
repair, replacement, improvement, alteration, modification, operation, use or maintenance
, or addition to, A vista s electric system or other property of A vista-;--ef~
(4)Is contrary to Prudent Utility Practice.
Avista shall promptly notify Project Developer of the reasons for any such disconnection
interruption, suspension or curtailment. A vista shall use its best efforts to mitigate and limit the
duration of any such disconnection, interruption, supervision or curtailment. Said curtailments.
iill:erruotions. or red~ions s~be used to red~he minimum deliver" calculations for
Dumoses o~her word~iveries would have been made but for
A vista cur_ion or red~ion wi1Lbe assumed~have mad~or ournoses~he minimum d~iverv reau~rement in Sec~
(k) Project Developer shall take all precautions which are necessary to prevent bodily
harm to persons and damage to any property including, but not limited to, the Project, A vista
electric system and any other electric system in connection with the interconnection of the
Facility with any electric system. Project Developer shall inspect all materials, tools , supplies
equipment, goods and other items used, consumed or incorporated in the Construction Activities
or the interconnection of the Facility to discover any conditions which involve a risk of bodily
harm to persons or a risk of damage to any property and shall be fully responsible for the
discovery and correction of, and protection against, such conditions.
(I) Project Developer shall permit A vista to inspect~e present at all tests of)the
Facility or the operation, use or maintenance of the Facility. Project Developer shall provide
A vista reasonable advance notice of any such test or inspection by or at the direction of Project
Developer.
DRAFf 08-9719-05 DISCUSSION PURPOSES OJ.l\fLY NOT TO BE COJ.VSTRUED 11.S A. BlNDL1\IG
OFFER
Yo s.cHEDIlLlliG
(a) Monthly Scheduled Energy Deliveries: Project Developer or its af!ent shall cause
North'Jlestem to provide Avista with a schedule of the next month's hourly Delivered Net
Electric Power deliveries, at a minimum of seven (7) days prior to the beginning of the month.
(b) Day-Ahead Delivered Net Electric Power Scheduling Estimates: Project
Developer or its af!ent shall cause North'Vestern to provide to Avista s pre schedulers its best
estimates of hourly Delivered Net Electric Power amounts by 0600 PPT on the business day
observed by both Parties immediately preceding the day or days on which electric power is to be
delivered, unless otherwise mutually agreed by the Parties.
(c) Realtime Delivered Net Electric Power Schedules : Project Developer or its agent
shall cause North ')I estern to provide to A v"ista' s real time schedulers notice of any material
change to the prescheduled amounts of Delivered Net Electric Power. NorthWesternProiect
Develooer or its af!ent shall use reasonable efforts to provide such changes at least thirty (30)
minutes before the scheduled hour in which the charges are to be in effect.
nIL PAYMENTS
Un!ess oUlerwise orovid~QJor in this Agreement. pavmen~roiect Developer
py A vista eac!l nl0t~C enenIY purchased by A vista shall be Delivered Net Electric
power qelivereq in eacp 1110nUl , tTIultiolied by the Delivered Net Electric Power Cost as set forth
in Exhibit A. All Inadvertent Electric Power roduced b the Facilit will also be delivered b
~roiectPeve~o A vi~oint of Deliverv.
(W A~ower ~v wi~elivered
the Pro' ect Develo er to A vista at the Point of Deliver . A vista shall not be re uired to
comoensa~roiectPeve~vertent Enerf!v.
-ta)-1cl For each month during the term of this Agreement, so long as there are energy
deliveries made and/or payments due hereunder vis~ orov~he hourlv meter data at the
Point of Delivery and Project Developer shall prepare and seaGorovide an itemized invoice for
energy sales-that reflects the energy deliveries from NorthWestern to .,vistaDelivered Net
Elecl1ic Power.Payments by A vista for amounts billed shall be paid on the due date, which
shall be eitheriPe 19,ter oill the 20th day of the month following the prior calendar month billing
period~ or ii'ten (10) days after receipt of the bill, v/hichcver is later. Payment shall be made at
the location designated by the Party to which payment is due. If the Due Date falls on a non-
business day of either Party, then the payment shall be due on the next following business day.
(b~ If Project Developer is obligated to make any payment to Avista, Avista shall bill
Project Developer for such payments. Project Developer shall pay A vista on or before the 20th
day of the month following the prior calendar month billing period or ten (10) days after receipt
of the bill, whichever is later.
DRAFT 08-9719-05 DISCUSSION PURPOSES ONLY NOT TO BE COI\TSTRUED ,1S BINDING
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OPFER
(e~) Any payments by Avista to Project Developer or by Project Developer to Avista
if not paid in full within the limitations set forth in Sections
(~
and above~ shall
be late. Notwithstanding the remedies for such an event of default pursuant to Section -l-9-, 17.the
late-paying Party shall be assessed a charge for late payment equal to the lesser of one percent
per month, or partial month, or the maximum rate allowed by the laws of the State of Idaho,
multiplied by the overdue amount. A vista shall have the right to offset any amounts due it from
Project Developer against any present or future payments due Project Developer from A vista.
(df) Project Developer agrees that Avista may set off any and all amounts owed by
Project Developer to A vista against ,any payments due Project Developer under this Agreement.
(eg) All payments shall be made by check or wire transfer in accordance with written
instruction by A vista to Project Developer delivered pursuant to Section M-.31.
l4-.lb METERING
(a) The Project Developer shall cause NorthWestern to provide meter readings as
required to implement this Agreement.
(b)North'vvestcrn NorthWestern shall own and maintain all meters used to determine
the
A vailableFacilitv Net Electric Po\VerOutDut.All such meters shall be tested and inspected in
accordance with Prudent Utility Practice.-:- If requested by A vista, Project Developer shall cause
NorthWestern to provide copies of applicable test and calibration records and calculations
Proiect DeveloDer.Project Developer shall permit a representative effrnm A vista to be present
at all times the meters are being tested. In addition, Project Developer shall test any er-Facility
meters as may reasonably be requested by Avista. Avista shall pay reasonable costs for such
requested test unless any of the meters is found to be inaccurate, in which case Project
Developer shall pay for such test.
(c) Adjustments shall be made in meter readings and billings for errors in a meter
reading or billing discovered within twelve (12) months of the error. Project Developer shall
pennit representatives of Avista to inspect all of Project Developer s records relating to the
generation of energy by TRC and delivery of electric energy to and the purchase of electric
energy by Avista hereunder.
FORCE MAJEURE
(a) Neither Party shall be liable to the other Party for, or be considered to be in
breach of or default under this Agreement, on account of any delay in performance due to any of
the following events or any delay or failure to produce, receive or accept Delivered Net Electric
Power due to any of the following events:
(1) Any cause or condition beyond such Party s reasonable control which such
Party is unable to overcome by the exercise of reasonable diligence (including but not
limited to: fire, flood, earthquake, volcanic activity, wind, drought and other acts of the
elements; court order and act of civil, military or governmental authority; strike lockout
and other labor dispute; riot, insurrection, sabotage or war; breakdown of or damage to
facilities or equipment; electrical disturbance originating in or transmitted through such
Party s electric system or any electric system with which such Party s system is
interconnected; and, act or omission of any person or entity other than such Party, and
Party s contractors or suppliers of any tier or anyone acting on behalf of such Party); or
(2) Any action taken by such Party which is, in the sole judgment of such
Party, necessary or prudent to protect the operation, performance, integrity, reliability or
stability of such Party s electric system or any electric system with which such Party
electric system is interconnected, whether such actions occur-automatically or manually.
(b) In the event of any force majeure occurrence, the time for performance thereby
delayed shall be extended by a period of time reasonably necessary to compensate for such
DRAFT 08-0719 05 DISCUSSION PURPOSES OIVLY NOT TO BE CONSTRUED 18.B1.'VDING
OFFER
delay. Avista shall not be required to pay for Delivered Net Electric Power which, as a result of
any force majeure event, is not delivered, Nothing contained in this paragraphSection shall
require any Party to settle any strike, lockout or other labor dispute. In the event of a force
majeure occurrence which shall affect performance under this Agreement, the nonperforming
Party shall provide the other Party written notice within fourteen (14) days after the occurrence
of the force majeure event. Such notice shall include the particulars of the occurrence
assurances that suspension of performance is of no greater scope and of no longer duration than
is required by the force majeure, and that best efforts are being used to remedy its inability to
perform.
(c) Force majeure does not include changes in the ownership, occupancy, or
operation of the Facility if such changes occur because of normal business occurrences which
include but are not limited to: changes in business economic cycles; recessions; bankruptcies; tax
law changes; sales of businesses; closure of businesses; changes in production levels; and
changes in production lines.
(d) Force majeure does not excuse any Party from making payments of money due
under this Agreement.
16-.14. INDEMNITY
(a) Project Developer shall indemnify, defend and hold harmless A vista, its directors
officers, employees, agents, and representatives, against and from any and all losses, expenses,
liabilities, claims or actions (hereafter "Loss "), based upon or arising out of bodily injuries or
damages to persons, including without limitation death resulting therefrom, or physical damages
to or losses of property caused by, arising out of or sustained in connection with the construction
operation or maintenance of the Facility. A vista shall indemnify, defend and hold harmless
Project Developer, its directors, officers, employees, agents, and representatives, against and
from any Loss, caused by, arising out of or sustained in connection with the construction
operation or maintenance of its electrical system. In the event that any such Loss is caused by
the negligence of both Project Developer and A vista, including their employees, agents,
suppliers and subcontractors, the Loss shall be borne by Project Developer and A vista in the
proportion that their respective negligence bears to the total negligence causing the Loss.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, PROJECT
DEVELOPER AND A VISTA EACH WAIVE ANY IMMUNITY UNDER EXISTING
WORKER'S COMPENSATION LAW APPLICABLE TO THE JURISDICTION
WHERE THE FACILITY IS TO BE LOCATED AS NECESSARY TO INDEMNIFY
AND HOLD HARMLESS THE OTHER FROM SUCH LOSS, TO THE EXTENT SET
FORTH IN PARAGAAPllSEcrIDN (A), ABOVE.
DRAFT 08-!ttl2-05 DISCU-SS!ON PURPOSES OZVLY .VOT TO BE CONST-JWEl)..AS A. BLVDING
OFFER
(c) PROJECT DEVELOPER AND A VISTA SPECIFICALLY WARRANT
THA T THE TERMS AND CONDITIONS OF THE FOREGOING INDEMNITY
PROVISIONS ARE THE SUBJECT OF MUTUAL NEGOTIATION BY THE PARTIES,
AND ARE SPECIFICALLY AND EXPRESSLY AGREED TO IN CONSIDERATION OF
THE MUTUAL BENEFITS DERIVED UNDER THE TERMS OF THE AGREEMENT.
t+-.~ ASSIGNMENT
(a) Project Developer shall not voluntarily assign its rights or delegate its duties
under this Agreement, or any part of such rights or duties, except as security for initial
construction of the Facility, without the written consent of A vista. Such consent shall not
unreasonably be withheld. Further, no assignment by Project Developer shall relieve or release it
to the extent of any of its obligations hereunder. Subject to the foregoing restrictions on
assignments, this Agreement shall be fully binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors; heirs and assigns.
(b) Project Developer shall have the right, subject to the obligation to provide
security hereunder, without the other Party s consent, but with a thirty (30) days prior written
notice to the other Party, to make collateral assignments of its rights under this Agreement to
satisfy the requirements of any development, construction, or other long term financing.
collateral assignment shall not constitute a delegation of Project Developers' obligations under
this Agreement, and this Agreement shall not bind the collateral assignee. Any collateral
assignee succeeding to any portion of the ownership interest of Project Developer shall be
considered Project Developer s successor in interest and shall thereafter be bound by this
Agreement.
Project Developer coyenants that it sHaH not divert or cause to divert for the use of the
Faeility surface \vaters from the-Glark Fork River or its tributaries any time that-flov,:s at the
Noxon Rapids-Dam are less-than 50 000 cubie-fees-per second.
t9-.~ NO UNSPECIFIED THIRD PARTY BENEFICIARIES
Except as specifically provided in this Agreement, there are no third party beneficiaries
of this Agreement. Nothing contained in this Agreement is intended to confer any right or
interest on anyone other than the Parties, and their respective successors, heirs and assigns
permitted under Section 15.
17.DEFAULT
(aLIn the event that either Party shall fail to perform the terms and conditions set forth in
this Agreement (an event of default), except feflncluding the failure
DRAFT 08-~19-05 DISCUSSION PURPOSES ONLY NOT TO BE CONSTRUED A.S A. 1JIN.J;)IN(;
--====
OFFER
provide Delivered Net Electric Power at the times or in the amounts required
for whieh such-failurc is provideEl for in Section 8,by this Ae:reement .the following shall apply:
The non-defaulting Party shall give written notice to the defaulting Party
of the event of default in accordance with this Agreement.
(92) If, after 30 days following receipt of such notice, the defaulting Party has
not taken the steps necessary to cure the event of default, the non-defaulting Party may, at its
option, terminate this Agreement. Provided, however, that except for the failure to pay sums
which are due and payable, if the defaulting Party, within such 3D-day period, commences and
thereafter proceeds with all due diligence to cure such default, such 30-day period shall be
extended up to ninety (90) days after written notice to the defaulting Party, as may be necessary
to cure the event of default with all due diligence. Whether or not the non-defaulting Party elects
to terminate this Agreement, it may, in addition to other remedies provided for herein, pursue
such remedies as are available at law or in equity.
(h) A vista may tennina~his Ae:reementif any o~owine: conditions occur
~ProiectPeve\Qper s rie:hts under this Section:
~eve~has a~he Facility: or
(2) ~have been no energy d~iveries to A vis14irom the Facility for a
period~2)consecutiven10~
Q) ~ivered~ower d~iveries a~ of Delivery fail to
exceed 87 .600 000
~g
any ro\!ill.gJJeriod~our (24) consecu~
ll10nths: or
(!)~y
ceases trLbe a Qualifying facility:
~he event!bg!: any o~oregoine: events occur. A vista shall orovide
wice anq an o~o cure in Sec~ exce~
resoecUo cond~bove. v~ oroviqe six~ice
proiecLDevelooer ~o comwy withlhese conJlilions. andyroiecLDevelooer shall
pave the opport~Jo cure i~ormance ~er cond~
g,bove. u~ne: the day of termination.
(c)For purposes of this Agreement, a Party shall also be in default if it:
(1) Becomes insolvent (e., is unable to meet its obligations as they become
due or its liabilities exceed its assets); or
(2) Makes a general assignment of substantially all of its assets for the benefit
of its creditors, files a petition for bankruptcy or reorganization or seeks other relief under
any applicable insolvency laws; or
DRAFT 08-fttl2-05 DISCUSSION PURPOSES ONLY NOT T-O-BE COZ"lST~S A.
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(3) Has filed against it a petition for bankruptcy, reorganization or other relief
under any applicable insolvency laws and such petition is not dismissed or stayed within
sixty (60) days after it is filed.
(4) Is in default under any Transmission Agreement:. orovided that A vista
~have ~o noilliJ?roiectPevewer of anv d~er any
Transmiss~eemen~ orovid~oiectPevewer wit)1 seven~hours
from the recei~ice o~to cure suc~der any Transmission
A~reement
(d) Any right or remedy afforded to either Party under any provision of this
Agreement on account of the breach or default by the other Party is in addition to, and not in lieu
, all other rights or remedies afforded to such Party under any other provisions of this
Agreement, by law or otherwise on account of the breach or default.
U-.1& ARBITRATION
Each Party shall strive to resolve any and all differences during the term of the
Agreement. If a dispute cannot be resolved, each Party shall use arbitration before requesting a
hearing before the appropriate state Public Utility Commission. The arbitration shall be
conducted pursuant to the Uniform Arbitration Act, Chapter 9 of the Idaho Code, as the same
may have been or may be amended.
~~
RELEASE BY PROJECT DEVELOPER
Project Developer releases A vista from any and all claims, losses, harm, liabilities
damages, costs and expenses to the extent resulting from any:
(a) Electric disturbance or fluctuation that migrates, directly or indirectly, from
A vista s electric system to the Facility;
(b) Interruption, suspension or curtailment of electric service to the Facility or any
other premises owned, possessed, controlled or served by Project Developer, which interruption
suspension or curtailment is caused or contributed to by the Facility or the interconnection of the
Facility with any electric system; or
(c) Disconnection, interruption, suspension or curtailment by A vista pursuant to
terms of this Agreement.
(d) Disconnection, interruption, suspension or curtailment of transmission service by
a Transferring Entities or any unforeseen cost or increase in costs to Project Developer imposed
by Transferring Entities.
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~20. GO VERNMENT AL A UTH 0 RITY
This Agreement is subject to the rules, regulations, orders and other requirements, now or
hereafter in effect, of all governmental authorities having jurisdiction over the Facility, this
Agreement, the Parties or either of them. All laws, ordinances, rules, regulations, orders and
other requirements, now or hereafter in effect, of governmental authorities that are required to be
incorporated in agreements of this character are by this reference incorporated in this Agreement.
~21. EQUAL OPPORTUNITY
Project Developer shall comply with all applicable equal opportunity laws, ordinances
orders, rules and regulations.
2b SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise, the duties, obligations
and liabilities of the Parties are intended to be several not joint or collective. This Agreement
shall not be interpreted or construed to create an association, joint venture or partnership between
the Parties or to impose any partnership obligations or liability upon either Party. Each Party
shall be individually and severally liable for its own obligations under this Agreement. Further
neither Party shall have any rights , power or authority to enter into any agreement or undertaking
for or on behalf of, to act as to be an agent or representative of, or to otherwise bind the other
Party.
DRAFT 08-~-05 DISCUSSION PURPOSES ONLY IVOT T-O-BE CONSTR-!i:f!;D 15 A. BIIVD1fifi.
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U-.23. IMPLEMENT A TION
Each Party shall promptly take such action (including, but not limited to, the execution
acknowledgement and delivery of documents) as may be reasonably requested by the other Party
for the implementation or continuing performance of this Agreement.
2+-.24. NON - WAIVER
The failure of either Party to insist upon or enforce strict performance by the other Party
of any provision of this Agreement or to exercise any right under this Agreement shall not be
construed as a waiver or relinquishment to any extent of such Party s right to assert or rely upon
any such provision or right in that or any other instance; rather, the same shall be and remain in
full force and effect.
~~
AMENDMENT
No change, amendment or modification of any provision of this Agreement shall be valid
unless set forth in a written amendment to this Agreement signed by both Parties.
19-.26. CHOICE OF LAWS
This Agreement shall be construed and interpreted in accordance with the laws of the
State of Idaho.
JQ-.2b CO MPLIAN CE WITH LAWS
Both Parties shall comply with all applicable laws and regulations of governmental
agencies having jurisdiction over the Project and the operations of the Parties.
M-. VE NUE
Any action at law or in equity to enforce the terms and conditions of this Agreement shall
be brought in Idaho.
~~
HEAD IN GS
The section headings in this Agreement are for convenience only and shall not be
considered part of or used in the interpretation of this Agreement.
DRAFT 08-lP19 05 DISCUSSION PURPOSES OIVbY NOT TO BE CONST~ AS A. BINDING
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33.A C REEMENfS
In the event of-the termination, cancellation or expiration of any Transmission l..greemcnt
required-te-tieliver po'vVer to ,-
..
vista undeHhis agreement l\ vista may terminate the .L ..greement
by giving Project Develeper \vritten notice of-sooh termination v/~ective ul*ffi
\vritten notice o~t for such termination, cancellation or expiration of t~icable
:rransmission ,-\greement.
M-.3J1 ADMINISTRATION FEE
A vista shall bill and Seller shall pay an administration fee of $100 per month during the
duration of the Agreement. Payment shall be made pursuant to Section 11.
JS-.3.L N OTI CES
All written notices required by this Firm Power Purchase Agreement shall be mailed or
delivered as follows:
to A vista:Vice President Energy Resources
A vista Corporation
O. Box 3727
Spokane, Washington 99220
to TRC Mike Underwood
Thompson River Co-Gen, LLC
1619 Wynkoop St, Suite 100
Denver, CO 80202
Either Party may change its address specified above by giving the other Party notice of
such change in accordance with this paragraphSection. All notices, requests, authorizations,
directions or other communications by a Party shall be deemed delivered when mailed as
provided in this paragraphSection or personally delivered to the other Party. Any verbal notice
required hereby which affects the payments to be made hereunder shall be confirmed in writing
(certified mail) as promptly as practicable after the verbal notice is given.
JS-.3b EXHIBITS
This Firm Power Purchase Agreement includes the following exhibits which are attached
and incorporated by reference herein:
Exhibit A
Exhibit B
Total Firm Energy Fixed Costs
Description of the Facility
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Exhibit C Hlectric Pov/er geli'lery One Line Diagram
Blectrical One Line Diagram of.FaeilityExhibit E Form of Engineer
Certification of Design and Construction Adequacy
Exhibit llD Form of Engineer s Certification of Operations and Maintenance Policy
Exhibit G Form of Engineer s Certifications of Ongoing Operations and Maintenance
Form of Mortgage
~emaind~ag:e Intentionallv left Blank
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the first date herein above set forth.
THOMPSON RIVER COGEN, LLC VISTA CORPORATION
By:By:
(Type Name)(Type Name)
Title:Title:
I:\Spodocs\11150\O4137\agree\OO337955.DOC
DRAFT 08-9719-
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DISCUSS!ON PURPOSES OZVLY NOT TO BE COlVSTRUED :1.S A. BINDING
A voided Her than Ten Me watts
~ivered~ower UD averaQ:e MeQ:awatJs Der month. A vis~ oav the noo-
enerQ:v once in accorqance witJb,Commission Orqer 29Q!6. as ca~
* All ra are in Mills / KWH.
DRAFT 08-0+19-05 DISCUSSION PURPOSES ONLY IVOT TO BE COt~.rSTRUED A.S A. BINDTNG
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Calculation for the Adiustable Comvonent shall be: The IPUC-avvroved Natural Gas Index vrice. multivliedbv
the corresDonditu! Heat Rate and variable comvonents.
EXHIB IT B
FACll.JTY AND POINT OF DELIVERY
PROJECT NO.
THOMPSON RIVER o-GEN PROJECT
Thomoson River Co-Gen Facility-
1/4 of the NE 1/4 of Section 13 Town hi 2) Ran e 2 We t in Sanders
1,he aooroximate uniyersa1Jransyerse mercator (lJIM) coordinIDes are Zone
lometers km and Northin 52 0.6 kill.
Seller has selected January 1. 2006 as the Scheduled Ooeration Date.