20051026Part I Thompson 1st response.pdf

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O. Box 7218 Boise, ID 83707 .. 515 N. 27th Sr. Boise, ID 83702
October 25, 2005
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
POBox 83720
Boise 1083720-0074
RE: Case No. A VU-E-O5-O7
Dear Ms. Jewell:
Enclosed please find an original and three (3) copies of the THOMPSON
RIVER CO-GEN, LLC, RESPONSE TO FIRST PRODUCTION REQUEST OF THE
COMMISSION STAFF.
I have also enclosed an extra copy to be service-dated and returned to us for
our files. Thank you.
Nina Curtis
Administrative Assistant
encl.
CERTIFICATE OF SERVICE
I hereby certify that on this 25th day of October, 2005, the THOMPSON RIVER
CO-GEN, LLC RESPONSE TO FIRST PRODUCTION REQUEST OF THE COMMISSION
STAFF was sent to the following parties as shown:
Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
iewell~puc. state.id.
( ) U.S. Mail, Postage Prepaid
(X) Hand Delivered
( )
Overnight Mail
( )
Facsimile
( ) Electronic Mail
Scott Woodbury
Idaho Public Utilities Commission
472 West Washington
Boise, Idaho 83702
swoodbury~puc. state. id. us
( ) U.S. Mail, Postage Prepaid
(X) Hand Delivered
( )
Overnight Mail
( )
Facsimile
( )
Electronic Mail
David J. Meyer
Vice President, Chief Counsel for
Regulatory & Governmental Affairs
A vista Corporation
PO Box 3727
Spokane W A 99220-3727
(X) U.S. Mail, Postage Prepaid
( )
Hand Delivered
( )
Overnight Mail
( )
Facsimile
( )
Electronic Mail
Kelly O. Norwood
Vice President, State & Federal Regulation
A vista Corporation
PO Box 3727
Spokane W A 99220
(X) U.S. Mail, Postage Prepaid
( )
Hand Delivered
( )
Overnight Mail
( )
Facsimile
( )
Electronic Mail
Signed ~~S
Nina M. Curtis
THOMPSON RNER CO-GEN, LLC
CERTIFICATE OF SERVICE -
Peter J. Richardson
RICHARDSON & O'LEARY PLLC
515 N. 2ih Street
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peter~ri chardsonando I eary. com
Mike Uda (pro hoc vice application pending)
DONEY, CROWLEY, BLUMQUIST, PAYNE & UDA
Suite 200
Diamond Block
Helena, MT 59601
[phone]
[phone]
muda~doneylaw .com
Attorneys for Complainant Thompson River Co-Gen, LLC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
THOMPSON RIVER CO-GEN, LLC a
Colorado Company,
Complainant,
vs.
AVISTA CORPORATION, dba, Avista Utilities,
a Washington Corporation
Respondent
CASE NO. A VU-OS- 7
THOMPSON RIVER CO-GEN'
RESPONSE TO FIRST
PRODUCTION REQUEST OF
THE COMMISSION STAFF
Thompson River Co-Gen, LLC
, ("
TRC"), acting by and through counsel, hereby submit
the following answers to the Commission s discovery requests of October 5 2005. These
answers were prepared by Michael Underwood of TRC, Mark Thompson, a consultant employed
by TRC, as well as two air qualify control experts in Hal Robbins and Gary McCutchen
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.1: Does Thompson River Co-Gen have any currently effective agreements
with any party for the purchase and sale of electrical energy output from the Thompson River
Co-Gen facility? If so, please provide a copy of such agreements.
Peter Richardson, Michael Uda, and Mike Underwood prepared this answer. Mr.
Richardson and Mr. Uda are attorneys for TRC, and Mr. Underwood is one of the principles.
Mark Thompson will sponsor this answer at hearing. Mr. Underwood's telephone number is
[phone], and Mr. Thompson s telephone number is [phone]. The record holder
in this instance is Mr. Underwood, and the records are located at TRC's offices located at 8 1
Street E., Suite 205, Kalispell, MT 59901.
Response to Request No.1: Thompson River Co-Gen ("TRC") has a temporary, interim
agreement with NorthWestern Energy ("NWE") to purchase TRC's output for six months or
until TRC is able to secure a long-term power sales contract. (Attachment I-A) Through email
messages (Attachment I-B) between TRC and NWE (Frank Bennett, NWE Energy Supply)
NWE acknowledges the Sept 12, 2002, TRC- NWE Cogeneration Power Sale Agreement
(Attachment I-C) was terminated under its own terms.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.2: Has Thompson River Co-Gen ever had any agreements in the past with
any party for the purchase and sale of electrical energy output from the Thompson River Co-Gen
facility? If so, please provide a copy of such agreements along with documentation that such
agreements have been canceled, expired, or otherwise terminated.
See response to Request No.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.3: If the answer to Request No.2 is affirmative, please explain why past
power purchase/sales agreements have been canceled or terminated. Do the prior contract
purchaser(s) have a right of first refusal or any contract rights regarding future output of
Thompson River Co-Gen?
This answer was prepared by Mr. Richardson, Mr. Uda, Mr. Underwood and Mr.
Thompson. Mr. Thompson will be the sponsoring witness, and Mr. Underwood has the original
records in his possession at TRC's offices in Colorado.
According to Mike Young (NWE Counsel), the Sept. 12, 2002 NWE Cogeneration
Power Sale Agreement terminated specifically due to Section 2.2(b) which provides that the PP
shall automatically terminate" if the Contract Operation Date has not occurred within 515 days
of NorthWestern s written notice to TRC that the plant has passed the Section 2.2(a) inspection
by Stone & Webster, irrespective ofTRC's best efforts to meet the Contract Operation Date
requirement. Section 1.9 defines the term "Contract Operation Date" to mean the date, certified
by TRC, subsequent to a Successful Project Test. The term "Successful Project Test" is defined
in Section 1.39 to mean "a consecutive five-day test of the Project, during a period nominated by
TRC, supervised and certified by a Registered Professional Engineer reasonably acceptable
to NorthWestern, during which time the Project generates a total of at least 1 300 megawatt
hours." Section 3.3 of the PPA, as amended by the January 14 2004 amendment, requires
that "TRC shall use best efforts to cause the Contract Operation Date to occur within 555 days of
execution of the PP A." The Contract Operation Date was never met. Because the Contract
Operation Date was never met, the automatic termination provision of Section 2.2(b) was
triggered. Mike Young also notes that there is no discretionary language within Section 2.2(b).
Thus, the parties did not have the ability to delay or modify the automatic termination provision.
Absent a formal amendment of Section 2.2(b )'s automatic termination language (which the
parties did not do), the PP A terminated at some point during the year 2004.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.4: Please provide a copy of all agreements that Thompson River Co-Gen
has with NorthWestern Energy that will be necessary in order for Thompson River Co-Gen to
sell electrical energy to A vista.
This answer was prepared by Mr. Richardson, Mr. Uda, and Mr. Thompson. Mr.
Thompson will sponsor the answer to this request. Mr. Thompson is the record holder at his
offices at 83 Burning Tree, Butte MT 59701.
The NWE transmission services agreement is attached.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.5: Please provide a copy of any agreements Thompson River Co-Gen has
for the sale of electrical energy and/or steam to the Thompson River lumber mill. Ifno such
written agreement exists, please describe the terms of and electrical power and/or steam sales
between the two facilities.
This answer was prepared by Mr. Richardson, Mr. Uda, and Mr. Underwood. Mr.
Underwood will sponsor the answer to this request. Mr. Underwood has the original of this
agreement in TRC' s offices in Colorado. The agreement is attached.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.6: Is there any common ownership of the Thompson River Co-Gen facility
and Thompson River Lumber Mill? If so, please describe.
This answer was prepared by Mr. Richardson, Mr. Uda and Mr. Underwood. Mr.
Underwood will sponsor the answer to this question.
There is no common ownership between TRC and Thompson River Lumber Mill. There
is no common ownership of the Thompson River Co-Gen facility and Thompson River Lumber
Company of Montana.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.7: Are there any facilities used in common by both the Thompson
River Co-Gen facility and the Thompson River Lumber Mill? If so, please describe.
Mr. Underwood will sponsor this answer. This answer was prepared by Mr. Underwood
with assistance from Mr. Richardson and Mr. Uda.
Portions of the water gathering and distribution systems are commonly used. The green-
fuel handling system has common elements that enable woodwaste delivery from TRL to TRC.
There are common elements to the plant's electrical system. There are also common elements to
the steam delivery system.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.8: Please provide a complete history of the gross monthly generation
produced by the Thompson River Co-Gen facility from the time when the facility first became
operational until the present.
This answer was prepared by Mr. Richardson, Mr. Uda and Mr. Underwood based on
spreadsheets prepared from actual monthly output figures gathered by Curt Boydston ofTRC.
Fred Busch ofTRC will sponsor this answer and Mr. Boydston has the generation data at TRC'
offices in Kalispell, as identified above supra.
Attached are the monthly generation spreadsheets showing gross output from TRC since
its initial operation in December 2004 through September 2005.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No.9: Please provide a complete historical breakdown of the gross monthly
electrical energy by the Thompson River Co-Gen facility into the categories of: a) electrical
energy sales to Thompson River Lumber Company; b) electrical generation used internally by
the Thompson River Co-Gen facility; c) electrical energy sales to NorthWestern Energy; d)
transmission losses incurred in the delivery from the facility to NorthWestern Energy.
See the answer to Request No.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No. 10: If the Thompson River Co-Gen facility has the capability to generate
more than 10 aMW on a monthly basis, please describe how Thompson River Co-Gen intends to
limit its generation in a contract with A vista to no more than 10 aMW on a monthly basis.
This answer was prepared by Mr. Richardson, Mr. Uda, and Mr. Underwood. Mr. Busch
of TRC will sponsor the answer to this request.
The plant has the physical metering capability to monitor generation provided to both
TRL, and to the transmission interconnection at the high side of the substation, thus continually
monitors plant generation net of station load. Though the plant has yet to demonstrate the ability
to generate more than 10aMW, operators have the ability to reduce load or shut down the plant
based on a potential need to ensure compliance with the maximum allowable 10 aMW contract
limit.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No. 11: Does Thompson River Co-Gen intend to sell any electrical energy to
NorthWestern Energy after a power sales agreement with A vista becomes effective?
This answer was prepared by Mr. Richardson, Mr. Uda, and Mr. Underwood. Mr.
Underwood will sponsor the answer to this question.
Thompson River Co-Gen does not intend to sell any electrical energy to NorthWestern
Energy after a power sales agreement with A vista becomes effective.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18 , 2005
Request No. 12: Please provide a copy of the draft contract that Thompson River Co-
Gen prepared and offered to Avista in response to Avista s August 2005 draft contract. Please
mark those sections of the contract that Thompson understands that A vista will not accept.
This answer was prepared by Mr. Richardson, Mr. Uda, and Mr. Underwood. Mr.
Underwood and Mr. Thompson will sponsor the answer to this request.
A copy of the contract signed and tendered to A vista is attached. Thompson River Co-
Gen does not have in its possession a comprehensive document informing it of each individual
element of the attached contract that is unacceptable to A vista. Thompson River Co-Gen is
aware, however, that A vista objects, inter alia, to the inclusion of the standard contract rate and
standard insurance and security provisions.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No. 13: In reference to the October 5 2005 article in the newspaper Missoulian
please discuss whether the Thompson River Co-Gen plant is currently operating. If the plant is
not currently operating, please explain why, and when or if the plant is expected to again become
operational? What actions must be taken before the plant can again become operational?
Please see the attached statement. This answer was prepared by Mr. Richardson, Mr.
Uda, Mr. Frank Crowley, and Mr. Hal Robbins. Mr. Robbins will sponsor the answer to this
request.
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
Request No. 14: Has the Thompson River Co-Gen plant been able to meet all federal
and state air quality standards since it has been operational? Please discuss any current standards
that are not currently being met, any past or outstanding fines for failure to meet all standards
and all corrective actions that have been or will be taken in the future in order to meet all
required standards.
See answer to No. 13.
RESPECTFULLY SUBMITTED THIS 25th DAY OF OCTOBER 2005
By: ~O~
Peter J. Richardson
THOMPSON RIVER CO-GEN'
RESPONSES TO PUC STAFF PRODUCTION
REQUESTS OCTOBER 18, 2005
ATTACHMENT
THOMPSON RIVER CO-GEN, LLC
8 First Street East, Suite 205
Kalispell, MT 59901
Phone [phone] Fax [phone]
August 29, 2005
NorthWestern Corporation
Attn: Mr. Frank Bennett, Manager of Contracts
40 East Broadway
Butte, MT 59701
Re: Temrination of Co-Generation Power Sale Agreement between Thompson River Co-Gen, LLC
and NorthWestern Energy, LLC and Interim Power Sales Agreement
Dear Mr. Bennett:
Thompson River Co-Gen, LLC (UTRCn) and NorthWestern Energy (UNWE") (collectively, "the Parties
recognize and agree that the Co-Generation Power Sale Agreement, dated September 12, 2002, and amended
by mutual agreement on January 14 2004 automatically tenninated under its own terms on or before May 13,
2004.
In consideration thereof, NOR and TRC desire to perform under an interim sales agreement for the delivery of
the entire energy output from TRC under the specific tenDS and conditions set forth herein. The interim sales
agreement shall commence upon written acceptance by NWE and terminate at the earlier of i) six months from
the commencement date; or ii) upon TRC's notification that it has completed a long-term power purchase
agreement with another entity. Upon such notice from TRC, no energy shall be delivered to NWE.
During the effectiveness of the interim power sales agreement, the Parties agree that the price shall be equ~ to
the Dow Jones Mid-Columbia Daily Non-Finn Daily On Peak and Off Peak Index minus $3.00 MWH
provided that in no event will the average monthly net price for electric energy sold by TRC to NWE be higher
than of $45.00 MWH, or lower than $40.00 MWH. The tetms and conditions for payment and delivery of
unit contingent energy under this interim power sal~s agreement shall follow the Western Systems Power Pool
(WSPP), Schedule B.
The Parties furthermore agree that settlement of all energy deliveries since the inception of deliveries from
TRC shall be reconciled to reflect the price terms set forth above. Any settlement due to NWE shall be setoff
against the next energy payment.
TRC appreciates the opportunity to work with NorthWestern. Please contact me with any questions or
comments. I can be reached at 303-534-1119. Thank you.
Very truly yours
Mike Underwood
Manager, Thompson River Co-Gen, LLLC OCT ':l ,!~;r,"'
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CC:Micha~l Young, NorthWestern
Kelly Flint, TRC
Jim Jenson, TRC
ATTACHMENT
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From: Bennett, Frank V (mailto:Frank.Bennett(9)northwestern.comJ
Sent: Wednesday, August 24, 2005 12:35
To: Mike Underwood
Cc: Hines, John
Subject: Thompson River generation
Mike, it is our understanding that the September 12, 2002 , Power Sale Agreement between
Thompson River Co-Gen LLC (TRC) and NorthWestern Energy (NWE), as amended, hasterminated under its own terms. NWE and TRC are currently in negotiations to replace the Power
Sale Agreement and wish to provide a means by which TRC can sell its test energy to NWE until
the earlier of the point in time in which NWE and TRC have a replacement Power Sale
Agreement in place, or until January 1 , 2006.
If you agree and respond to this e-mail, NWE will agree to compensate you for test energy
delivered only during this time period, at the average daily price as published by the Dow Jones
Mid-C index, for Firm deliveries less $3.00 with a floor of $40/MWh and a ceiling of $45/MWh.
This will allow us to get your August check out and we will follow this email up with a letter of the
same language.
Thank you.
-----Original Message-----
From: Mike Underwood (mailto:lmucO(9)msn.comJ
Sent: Wednesday, August 24, 2005 8:45 AM
To: Bennett, Frank V
Subject:
Frank
This message is meant to confirm that Thompson River CoGen understands the current
power sales arrangement with NorthWestern Energy is based on a sales price of Mid-minus $3., not to exceed $45 but in any case not lower than $40. This arrangement isan interim arrangement while a long-term power purchase agreement is completed for
TRC.
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Thank you-
Mike Underwood
Manager, Thompson River CoGen, LLC
This message is for the named person s use only. It may contain confidential , proprietary orlegally privileged information. No confidentiality or privilege is waived or lost by any
mistransmission. If you receive this message in error, please immediately delete it and all copies
of it from your system, destroy any hard copies of it and notify the sender. You must not, directlyor indirectly, use, disclose, distribute, print, or copy any part of this message if you are not theintended recipient. NorthWestern Corporation and its subsidiaries each reserve the right to
monitor all e-mail communications through its network.
ATTACHMENT
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EX1--IlB r L
CO-GENERA nON POWER SALE AGREEMENT
, ". .
This Co-generation Electric Power SaJe Agreemen~ dated this 12th day ofS~tcmber
2002, is ~etwe~ ThompSon River CO-:gen, LLC, a Colorad~ Linrlt~ Lia~i1ity .ComPany
SELLER") and NQrtb Western Energy, ~,' a Delaware ~ted Liability Company
. .
~UYER.;)~ SELLER and BUYER are sometimes r~ferred to ~erein,collectively as thc
'Parties~' and Individually as UPmy:tI
Section 1: Definitions
A13 used herein,-the folloWing termS have the ~o~~wing meanings when used With ini~a1
capitaliZation, whether singular or plural:
1..2
..
Affiliate" means, Vri~ respect to any person, any other person (other
. ,
~diVid~) directly or direCt1:y,.~ugh one or more intermediaries, controls, or is
controll~ ,by, or is under co~on control With, such perso~ Fo~ this. purpose~ "cont!Ol" means
the, direct or in~t own~hip of 5 p~ent or ~orc oith~ ou~ding capital ~ock or o~er
equity interests baving oJ."d41arY .votin~ power.
1".3 Ancill~ Services'" means all ancillary products assOciated with the generation
of Power including, ~thC?ut limit~on, spinni g reserves, non-spinning res~rves, reactive power
and voltage cOntrol.
1.4 Base Power" means, in respect to ~e Initial Term.. the first ~3 mega~att hours of.
Power de1iv~ to BUYER in any hour and in respeci to any Extended Term, the first five
megawatt hours ofPowcr .deliv~(lto BUYER Pt any hour.
l'.S Base Rate" means'per annum rate equal to 125 pCrcent ofth~ rate annoUnced
pub~cly from time to time by Morgan Guaranty Trust Company of~ew york iii New York,
, '. ,
COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RIVER
. '
CO~EN',~ANDNOR~'1'ERN~9X~LLC
" ", ..
PonlndJ-140U64.OOI9436.00003 . . '
: ,' '. '' "'. ", '
New Yark 'as ~ts "Piime Rate
. .
Each chaD.ge in said prime rate shall be effeetiveon the date 'such
change is publicly aImounced by Morgan GWii'arity Trust Company of New y.
1~,Bonus Scheduled Maint~hance HoW's means the amount, if any, that Lost
Generation Hours associated with Schedule Maintenance in any Year are less than ~he Scheduled
Maintenance Target Amount.
~apacity Entitlement AImunt" me~ the amount .of Power that is to be m~de
available to B~ .from the Project in any hour as provided for in Subsection 3.
Capacity Test Amounts" means the total generating c~pability of the ProjeCt
(s~ted in total n1ega~att hours), as established in the Successful Project Test or a Periodic
Project Test
1.9 ~ontract Operation Date
" .
the da~, certified by sELi.ER; subsequent ~-a-
. Successful Project Test.
Credit Support mP.m\S collateral de1ivered either to the SELI.J;m. o~ to
independent trUstee acceptable to the ~ELLER for the benefit of the SET .T .in the. form.
, ~' .
either (a) c~ (1?) oDe or 1OOre irrevocable, tranSferable standby le~ters o~ credit is~ by a l!~$.
Commercial or a foreign bank with a U.S. branc~ with sucJ:1 bank ~ving a credit rating of
at least u
~' ~~
Stan~ & ~oors Rating Group or its successOr e'S&P") or "
" ~~,
Moody s h1~siorsServices, Inc., or its successor ("Moody ), in a form acceptable to.the
, " "" .~~
(c) a guarantee, funited to the amoUnt of Credit Suppo~ req~ of a persOn or
(1) having a lang-term senior debt ~ating .of ~BB-or better frorri S&P and. "B8a3" or better
from Moody , in each case confirmed by the rating agency in coD:Dection with the giving of the
guarantee, arid (2) having Consolidated net tangible assets of at least $300 million, or (d) other
security acceptab~e to the SRI :1 .PR,
CoGENERATION POWER SALE AGREEMENT BETwEEN TIlO~SON RNERCO-GEN, LLC AND NORrHWESTERN ENERGY
Ponlnd3-1~.1 0019436-00003
En~~nta1'Attributes" meanS any and all credits
, "
green tags
" ~
benefits,
emissions reductions, environmental air qUality credits, and emiSsions reduction credits, offsets
and allowances, howsoever entitled, resulting from the avoidance of the emission of any gas
chemical, or other Substance attributable to Power mnde available hereunder, inc11JOmg without
. "
limitation, any of the same arising out of legislation or regulation concerned with oxides
~g~n, Sulfur Qr carbon, with particulate matter, soot or mercwy, or implementing the Uni~d
Na~ons FI1l1mwork Conv~tion on Climate Change (the ') or ~,Kyoto Protocol to
the uNFccC ~t crediting "early action" with a view theretO, or laws or regulations involving or,
Rrlministered by the Clean Air Markets Division of the Environmental Protection Agency or
Successor arlmm;~or. The. term "En~nm:mta1 Attn1)Utes" mcludes any 0 ther environmental
credits or benefits recogni7~m the future and attributab1e to Power Tmde available hereunder.
SELLER shall, upo~ a timely req~t from BUYER ~e all reasonable actions necessary to
establish EnviroIrinental Attributes in connection with the Project. "EDviroinnental Attributes
~ball D:ot include any"tax ~ attributable' to the Project m any way, irrespective of the basis
for We tax credit and ~h tax. credits shall remam the exclusive property ot the SRI .T .'RR.
~~s Scheduled Maintenance Houts" treaDS the amount, if any, that Lost
Generation Hours associated with Schedu1ed Outages _exceed the Scheduled Mamtenance Target
A1munt.
~'FBR.C" fTVI'.8nS the Federal Energy Regulatory Commi~sion or any. successor
agency.
1'."14 "F~rced Ouiage~' T11P.$In~any Project outage or reduced generating capability that
is not a Scheduled Maintenance. Outage.
'Forced Outage Target Aroount" means 700 hours per Year.
- C OG E NBRA TI 0 N POWERS ALE AGREEMENT B BTWEE N TH 0 lv1P SON RIVER
. ,
CO-~~N, LLC AND ,NORTHWESTERN ENERGY
Portlnd3-1408464.001943~
1.1
: "
Insolvency E~ent" means anyone of the following events:
(i)"ET J .'ER shall: (a) become insolvent, (b) become generally unable to pay
its debts as they beCOtre due, or (c) can a ~eting of creditors for the' composition of debts;
(Ii)
~~"
shall ~rmit, or acquiesce in, an 'order for relief .entered With
respect to it under, or shall co~nce a vo1untary case or proceeding under, any applicable
bankruptcy, insolvenc~ ~r other s~ar law now or hereafter in effect, or shall consent to the
entry of an, order for reijef in an involuntary proCeeding or to the con~ersion of an involuntary
proceeding to a voluntary proceeding under any SW?h Jaw ,or shall ~t to the appoin~t of
at taking possession by a ~iver, trustee or oilier custodian for the Project Of fat an'
~~'
substantial part of-its prope.rty~~R shall make any assizn~for the benefit of ~t~rs
or sJ:uill be unable or fail, or admit in wx:iting its inability, to pay its debts as such deb~s become
due
, .
or t~ "Board of COntrol S~ (or any connnittee ~reof) adopts any resolution or
otherwise authorizes action to approve any of the for~going;
( iii)an involuntary. proceeding shall be commenced ag~t SElLER" under
any applicable bankrUptcy, insolvency, reorgan17.atiOn, .receivership, arrangement or
readjustment of debt or other similar law now or her~after in effect, which proceeding is not
dismissed, stayed or vacated withiI190 days thereafter, or a decre~ or order of a conn having
jurisdiction for the .appoin~n of a: receiver, liquidator,- sequestrator, trustee, custodian; or o~r
officer having similar powers over SEI..I...ER ~r over the Project or all or a substantial part of the
Assets shall have been "en~red, or an interim receiver, tn;tstee or other custodian of SEU..ER or
of an 9r a substantial part of the Assets shall have been appo..inted or a warrant of ~~t
execution or sirrnlar process against any substantial part of the Assets shall have been issued, and
COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RIVER
, CO-GEN,LLC AND NORTHwEsTERN ENERGY, LLC
PordndJ-1408464.1oo190436-00003
in any such event not been s~aye~ d-i~~~ bonded or discharged within 60 days of entiy,
appointIrent or issuance; or
(iv)th~re shall' occur any seizure vesting or intervention by or under the
authority pf a government by which sELLER'
~ ,
management is displ~d or its authority in the
conduct of its business is materially curtailed
(v)s~ shall experience a Material Adverse Change.
Lende~' means any entity providing construction financing, permanent financing
or refinancing for the "AssetS, or a ~tee for oa bol4er of debt, the prqceeds of which are used to
, .
provide such financing or refinancing.
Letter of Credit Agr~t" means the Letter. "Qf Credit Agre~nt between
.. "
Parties of even date herewith, which obligates RT.T .R:R to issue a 1etter of credit to.BUYER
within 365 qays of the date fir~t set forth above.
Lien" means any Irongage, pledge, lien, claim, charge, encumbrance, security
interest, conditional sale agreement or title retention ~eement against or with respect to any of
pro,perty or interest in 'pro~ny which is part of the Assets.
1.20 "Lost Generation ~~urs" m:ans the number of hours ~uring each Year that the
Project is .not available, for any reaso~ to generate the Capacity Entitlement ~tmt.
Material Adverse Change" means (1) in respect to a Party or its assignee, that the
P~'s (or ~ Party s assignee s) long-terin~or secured or unsecured debt rating has fallen
bel~w both '~BB~" fr91!l S&P and
, "
Baa3'" from Moody
Mid-C Off~Peak Index'UvamJS the Dow JonesTM Mid-Golumbia firm off-peak
index, as calculated by Dow Jpnes, for each Monday through Saturday, excluding NERC-defmed
holidays; provid~ m the event the. Mid-Columbia Daily Off-Peak ~dex is' not available from
, '
COGENERATION POWER S~ AGREEMENT BETWEEN !HOMPSON RIVER
CO-GEN, u.c AND NORTHWESTERN ENERGY, ,LLC "
' ,
Pan1Dd3-1408464.10019436-00003
Dow Jones for any given day then the value posted from the previous like day of the week shall
be utilized.
~d-C On-Peak Index" meanS the'Dow JoneS Mid-Columbia firm on-peak
inde~ as calculated by Dow Jones, for each Monday through Saturday, excluding l':ffiRC:-defmed
holidays; provided, in the event the Mid-Columbia Daily On-Peak Index is not ayailable from
Dew Jones for any given day then the value posted from the preVious like day of the week shall
be utilized..
Mid- Sunday and Holiday Index" means the Mid-Coll.11I11?ia fum24-hour index
as c~cu1ated by Dow Jones for
~~
S~y 8D:~ NI;RC-defmed boliday; provideg, in the even~
~ Mid-Columbia Daily sUnday and Holiday Index is not available .from Dow Jones ~or any
giVen day then the value posted from the previous Like Day of the week shallbe ut11i'7~
Mill Servi~ Reqillrements" means, actual electrical requir:ements of the
Tho~son ~er Lumber Mill. as presently co~d, not to exceed ~o mega'Yatt bours during'
any hour ~r ,15,768 megawatt hours during any Year.
'Mo~y Powet Charge ~~s the monthly charge ~mp~
Subsection 5.2 or 5.3.
Operative Do~n~" mean all agreementS, commitmen~ or 'contracts executed
by or on behalf of SRi .T .R'R,in connection with the cbnStructio~ installation or .operation' of, the
Project, or the supply of water t~, or the retmval of waste from the Project or property, whether
now existing or'hereafter entered into by S RI.T .F."R., including but not limited to: (a) engineering,
procurement or construction contiacts~ (b) co~tractS for water supply; (c) -contrac~ for
tran~gsion or interco:nnection seI:Vices or facilities (d) COntracts for sale of steam, (e) contraCts
for goods or services, and (f) assigIiable au$orizatio~, consents
, '
approvals, regis~tions
, penDits and licenses from governmental authorities; provided, that "Operative DoC\lIre1lt" sba11
COGENERATION POWER SALE AGREElv1BNT BETWEEN THOMPSON RNER
CO-GEN, LLC AND NORTHWBSTBRN ENERGY, LLC
Portlnd3 -1408464 .1 0019436-00003
Dot include any agreement, contract or other committnent for the snle of power; 'any agreement
contract, debt mstr1lIrent or other document associated with or ~lated to financing of the Assets;
9r any agreement,. contract or other document associated with Of rela~ to the ilirect or indirect
ownership interests in ~ ~ts, including equity ownership and reInted equity matters with
respect to any entity owning the Assets.
1.28 ~ena1ty Hours" means each ~ur of a Y ear tha~ the Project is not available to
generate B~'Capacity Entitlement Amo:lmt except: (i) Lost ~eneratioD Hours associated
with Scheduled Maintenance Outages ~t are .not Exces~ Scheduled Maintenance Hours
, .
or (n)
Lost Generation Megawatt Hours associated wi$ Forced Outages ca~ by Uncontrollable
Forces not exceediIig 11 0 ~rcen~ o~tbe Forced Outage Target AImimt.
'Periodic Project Test" me~ a test of the generating capability aftbe Project
conducted pursuant to Subsection 3.
Point of Delivery" xreans the priniary, 'high voltage side aftbe Project
transfo~r, or ~uring the Extended Term any 'o~r point as mutually agreed
P~wer" xreans elect:rical energy generated by the Project de1iv~
BUYER hereunder.
1:32 Project" means tbe thermal electric generation facility and related tranmni~sion
and interconnection uip~t owned and operated by SRI .1 in proximity to Thompson
F~, Montana with a bus bar rating of approximate~y 16 tregawatts and 8$de~bed with
greater P~cu1aPty in Ex1noi~ A to this Agreement ~gether ~ith an additions, improvements
and IOOdifica~oDS thereto and personal property or '~fu1 in connection therewith.
- C OG ENERA TI ON POWER SALE A G RaEME NT B B1WaBN TH 0 lv1P SON RIVE.RCO-GEN, LLC AND NORTHWESTERN ENERGY, u.c,
Podlnd3-1408464.10019436-00003
PropertY' .treans the real property on which the Project is located or used or
useful with respect to the Project and' owned by SEI.LER and all tene1reD.ts, easements,
rights-of-way, rights and privileges and appurtenances relating tbe~to.
Prudent Electric Practice ' means those practice~, methods and acts w~ch:
(a)w~n engaged in are comm:mly used by independent p6~er prodUcers
p~nt engineering and operati~ns to operate electric equipment-and. associated
mechanical and civil facilities lawfully ~4 with safety, reliability, efficiency and
expedition; '
(b)in exercise of reasonable judgment considering the facts known 'Yhen
engaged in, co~d bave be~ expected to achieve the desired result consistent with
applicable la~, safety, reliability, efficiency and expedi~on.
Prudent Electric Practice is not
~~
to the optimmn practiced method or act rather ~ a
spectrom of possible practices ~thods or acts.
Relev~t Mid-C Index" means, as among the Mid-C Off-Peak Index, the Mid-
On-Peak ~d Index and the Mid-C Sunday and Holiday In~x, the index that corresponds to the
hour when Test Energy is de~ered "to ~
Scheduled Maintenance Outage" means any Project outage or. reduced
generating capability associated with maintenance or repair of the Project made kno~
BUYER at least 24 hours in advance of i~ occurrence.
Sc~u1ed Maintenance Target Amnmt" .means 625.hours per Year.
Stone & Webster Report TnP.nn&a report from St~ne & Webster Consultants, or
other independent expert chosen by BUYER, and reasonably acceptable to S~ that
concludes, following an analysis of the Project and Operative Documents that:
COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RIVER
CO-GEN, LLC AND NORTHWESTERN: ENERGY, LLC,
" '
Pon1nd3-1408464.10019436-00003
a) The Project has ~en or will be ~igned and constrUCted. consistent "with Prudent IPP.
Electric Practice
b) Plans for Project maintenance have been established ~d 'such plans are reasonably
consistent with ~t IFP Electric Practice
c) The operation of the Project after the Cqntract Operation Dare will comply with "
applicable laws and regulations:
d) the Project is financially.feasible and reasonably be e~ to afford the
sE1l..ER. an adequate rate of return,
e) the Project can re~nably be expected to be available sO as to comply witb sEI.l..BR.'
obligations hereunder and
f) the Co~tract Operation Date can reasonably be expected to occur ~n or before 475 days
fo!lowing the executi.on of tbis AgreeIreIlt
Successful Project Test" means a ~~tive five-day test of the Project, during
a period no~8ted by .sET "J .RR,supervis~ and certified by a ~gistered Professional Engineer
reasonably accept~le to ~UYER, during which time tPe Project generates a to~ of at least
1 ,300 ~gawatt hours
Supplemental'Power" means Power delivered to, BUYER in any hour that is not
Base Power.
Test Energy" shall have the meaning a~Du.ted to such term in Sectio~ 3.
1'.42 Test Period~'.shallbave the meanmg attnbuted to such term in Subsection 3.1~.
Uncontrollable FOrces" means causes descn'bed in Section . 10 of this Agreement
COGENERATION powER SALE AGREEMENT BETWEEN TIlO~SON RNBRCO-GEN, LLC AND NORTIIWESTBRN ENERGY, u..c
PoItlnd3 -140 8464 .1 001943 6.00003
Year' means a calendar year during the term of Agreement; provided
however n~rical ann~ require~ts provided for hereunder shall be prorated in r~gard to
partial Years that occur after the Contract Openuion D'Me and at the conclusion of the Term or
any Extended renD.
Section 2: Teim and Tenninarion
SELLER Authority. SRI.T .'RR repre~ents and W3lTants that this Agreement has
~n duly and validly ex,ecuted and delivered by SEI .T .~lt ~d constitutes a valid and legally-
bindjng agreemen~ of SBI .T .enforceable ~ainst SRI .T .RR.
~ .
acco~dance with its terms
(except as the foregoing may be limited by:, . (a) bankruptcy, insolvency or sin'rilar laws affecting
Creditors generally and (b) equitable principles of general applicability).
Termination Prior to Expiration Date. This Agreemmt shall terminate without
any liability or of any ki,nd by either Party to the other, except as provided in the Letter
of Credit Agreerrent, and have no further force or effect prior to the expiration date estab1ished
in paragraph (e) under the following circumstances:
(a)If the Stone & Webster Repon lias.not been delivered.tQ ':BUYER within
30 days of the execution of this AgreeIreJ;lt, notwithstanding the Parties' best efforts to obtain
such fC?port Agreement shall automatically terminate "as of such date~ provided however, if
Stone & Webster Report is not delivered within such 30-da y perio4, S~ may pro vide
written no rice to BUYER it wishes to attempt to cure any deficiency in the Project. that
prevented the Stone & Webster Report from issuing, in which event, the termination of this
Agree~nt sball be delayed f~r an additlonal120 days pending remedy by Seller and the
final review and issuance .of a favorable Project repan from Stone and We1?ster. To the extent
the Stone & Webster Repon is not delivered to BUYER within 30 day~ of the execution of tbis
10 - COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON, RIVER
CO-GEN, UJ; AND NOR TIIWESTERN ENERGY t LLC.
Ponlnd3-14084~.1 00190436-00003
Agree~nt mid sUch delay in delivery is not ~ any way caused by S"FT :i ' s 'failure to
coopera~e the delivery date shaD ,be extended for a period of rime s~cient to permit Stone
& Webster to render its report on the Project.
(b)If tQe Contract Operation Date bas not occurred within 515 days of
BUyBR's Writte!:l Notice (as defined in the Letter of Cred~t Agreement), notwithstandin&
SEI;LER's best efforts" to 'caUse it to" occur Agreement shall automatically terminat
as of Such date.
(e)S~ does not deliver the Letter of Credit to B in confotmity
Wi~ Subsection 2.ofthe Letter of~t ~ment, notwithstandin
g '
lO-~ys' written
notice fromB~ of SElLER's- failure to dO ,, this Aweement may be terminated by
BUYER
~~
itS providing m.T .with 'written notice of :BUYER's election to
elmWate.
(d)~xtension Option.By providing written notice to SPI J .RR.at least one
..
year prior to tOe date"that this Agreement would otherwise telmUlate pursuant to
paragrap~ (e), B~ may elect to exten~ the term of thiS Agreement for an additional
five years (subject to the pricing provisions of Subsection 5.~) so that it tetminates 15
years following the Contract Operation Date; This additional five-year period
referred to as the "Extended Teim'
(e)Except as otherwise provided in this SQ.hseCtions 2.2,
Agreement shall terrnTnate at 2400 hours Pacific Time, 10 years following the Contrac~
Operation Date.
11 - COGENERATION POWER SALE AGREEMaNT BBTWEEN THOMPSON RIVER
CO-GEN, LLC AND NORTHWESTERN ENERGY, 1LC '
PcII11Dd3 .14 0 8464 .1 00 1943 6-OOOOJ
Section 3: ~hase and Sale otrower
Purchase and S~e.BUYER agree~ to purchase and SET .T .agree~ to sell all of
available electtic output 9f the Project, net of station service requirements and Mill Service
Requirements, and re1at~d Ancillary Services and ~vironmen~ Attributes~ on the tenDS and
~ondirions set forth in Agreement.
:3.Test Energy. Prior to the Co~tract Operation bate, it is e~pecte~ that Project
will generate electric energy during testing phases ('Test Energy"). sELLER sball provide
BUYER ~ith at least 72 hours advance notice of th~ availability of sUch Test Energy and shall
deliver SUch T~t Energy to BUYER at the Point, of Delivery as it is generated. BUYER shall
accept the Test Energy and pay SRTJ .Rl~:provided fat. in Subsecti~n ~.
3~3 Contract elation Date. The Contract Operation Date shall occur afte;r ~
Successful Project Test, but no earlier than OctOber 1, 2003.
~~
$ill use be~t etrorts t~
cause the Conti'aCt Operation Date to occur wit1)in 455 days of the execution of this Agreement
BUYER's sole r~y ~or a delay ~ the ContraCt Operation
~~
during the period prior to the
eanination of this Agre~ment pursuan~ to Paragraph 2.2(b)shall be that provided for in tJ;1e
Letter of Credit Agree~nt. Subsequent to the c;ontract Operation D ate, and subject to the termS
and conditions of this Agreexrent, SELLER shall make the Capacity" ;Bntitle~nt
~unt, together with all associated Ancillary Services and Enviro111reIltal Attributes, to
BUYER for the balance of the term of this Agreement.
Notice of Commencement ofDeiiveries.During the ~t week of October2003!
RI.T .F.R shall commu~kate in writing to B~,s then-best estimate oftbe initial
availability of Test Energy and of the ContraCt Operation D~e. ET.T .F.R shall provide ~U'(ER
with written notice of the actual COJ;lt:ract Operatio~Date no.1ess than $ree business days.
12 - COGENERATION POWER SALE AGREaffiNT BETWEEN THOMPSON RIVER.
CO-GEN, AND NORTIIWESTERN E~GY t LLC
" ,
~ 1408464.1 00 1943 6.()()003
advance of such date. Such date s~ not be changed after notice of it has been given to
Capaci~emen~ AImunt. ExCept during Scheduled Maintenance OQ.tages
and Forced Outages, SELLER sha11 opera~e the ~ject during eac~ hour at its maximuIn
generating capability, coDSistent with Prudent Electric Practice, and deliver an available electric
o~tput, net of station service requir~ments and Mill Service R~q~ts. to B~, at the
Point of Delivery. NotwithSuui~g the foregoing~ S shall not be obligated to deliver
more than 13 megawatt hours of Power to the ~UYER during any hour and BUYER shall not be
obligated to purchase more than 16 megawatts ofPow~r ~g any hour. The Project shall be"
d:eemed unavailable to ge~erate the Capacity Entitle~nt Amount during any hour when actual
Project generation is less than 8.5 megawatts.
3~6,Scheduled Maintenance Outages. Subsequent to the Contract 'Operation Date
SEU..ER ~mply with all oPerating, repair and maintenance standards as are required to
permit the~orcemen~ of all material warranty ch$Ds with respect to the Project or any part
thereof. In Consultation with B'JYER; S RI .T .shaD schedule Scheduled Maintenance Outages
including major overhauls, consistent wi~ Prudent ~lectric ~tice, Project warranties and
manufacturers' maintenance ~ecornmendations. Except under unusual circumstances, Scheduled
Maintenance Outages shall be scheduled when requested by B~ To the extent that Lost
Generatio~ Hours associated with Scheduled ~ainteriance are less than the Scheduled
Maintenance Target Amount, they shall constitute Bonus Lost Generation Hours. Lo~t
Generation Hours in e~cess of 11 0 percen~ ~f the Scbeduled Mamtenance Target .AIoolDlt shall
constitute Excess Scheduled Maintenance Hours; provide
g,
howe~, SELLER shall be allowed
to carry fo~ard up to 12q Bonus Scheduled Maintenance Hours each Year, not to exceed a total
13
-"
COG~ TION POWER SALE AGREEMENT BE1WBEN THO~SON
CO-GEN,LLCANDNOR~TERNBNERGY,LLC
. .
PccUnd3-1408464.1 0019436-00003
accunmlation at the end of any Year of 300 Bonus Scheduled Maint~ce Hour~, ~or
connection with future ~chedu1ed Maintenance Outages that exCeed the Scheduled Maintenance
Target AIOOunt.' In ~tio~ from tiIre to:
~, '
with- the co~nt of BlJYER required Scheduled
Maintenance Outages may be shifted among Years with con-esponding adjustments IDActe to
Scheduled Maintenance Outage Target Amount. ,Excess Scbedu1~ Maintenance Hours that are
not offset by Bonus Scheduled Maintenance Megawatt H~Urs
, ~
constitute ~enalty Hours.
Forced Outages. At such tiJ:res ~ Forced Outages occur, SEUER shall promptly
determine, in itS reasonable judgmmt, and so inforIil BUYER, whether such Forced Outages
were reasonably attributable to Uncontro11a1?le Forces.
uccessful Pro'ect Test. While it is estimated that the Project wiD be capable of
reliably generating 125 1regawatt hours per hour~ its capability will not be p~ly known until
it is constructed. Actual project generating capability sJ1al1 be tested duriIig a consecuti~e five-
day period designated by .T .F.R prior to the Contract Oper~on Date ('vrest Period"
m J .may schedule as many Test Periods as it chooses prior to the Con~t Operation D~e.
During any Test Period, the Project shaD be operated at its.full capability.during each bo~ in
compliance with all laws, roles, regUlations, approvals, authorizations, orders or other
require~nts of governmental or regulatory agencies or authorities. SET.T .F.R may terminate any
such test prior to its completion and schedule a future Test Period SRI.T .R'It shall promptly
notify BtJY:BR as to whether itno-r":,,inates any completed test as the Successful Project Test.
RI.T .F.'R.does not nominate a Test Period as a successful Project Test, it shall promptly sc~u1e
a future Test Period Any Project test conduCted for purposes of this Subsection shall be
supe:ivised by an indepen~nt Registered Professional Engineer reasonably acceptable to
14 - COGENERATION POWER SALE AGREEMENT BETWEEN THO:MPSON RIVER
CO-GEN, lLC AND NORTHViEsTE1Uf~GY,' LLC
Putlod3-1408464.10019436-00003
BUYER and the results of any test, Dominated by SID J ."F\R.to be the Successful Project Test
shall be certified by such Registered Professional Engineer.
feriodic Project During September of any Year, BUYER may request that
SElLER test the generating capability of the Project consistent with the procedureS set forth in:
Subsection 3.8 and SELLERsbaD. perform such test within 20 days of BUYER's request
10 Source ofPower
. '
Absent BUYER's written consent to a substitute source of
generation, SRI.T .shall only deliver Power hereunder that has been generated at the Proje~
Section Operatio!)
Operating Standards. SET.T .'ER shall construct, operate and maintain the Project
in a safe manner in accordance with ~t IPP Electric Practices, the requirements of all
app1icable Federal, state and 10ca11aws and the National Electric Safety Code as such code may
, ,
be from time to time and consistent with any interconnection agreemmt related to the
de1ivery of Project output at the Point of ~1iveiy FJ.T .shaD 0 blain and comply with aD.
permits, licenses, autOOrizations and 0 tber rights required to co~ own, oPerate, use and
maintain the ProjecL SET.T .FIt shall furnish to B~ on request, copies of all documents
granting, evideD.cing or otherwise related to such permits, licenses, authorizations or rights
1nfoIn~~on: Upon reasonable notice, SRI .T.shall peuiJit representatives of
BUYER to visit the Project site during constrUCtion and during maintenance outages to ascertain
the Status of such construction or maintenance. . RI .1 JUt Shan promptly furnish ~UYER
copies of such plans, specifications, records and other information lating to the Project as may,
be reaso~ly requested by BUYER from time to time. If and to the extent any information or
do cume n 18 turn i g 1y.A to B are confidential or pro Pfie. t ary to. S BLLBR., UYER shall treat
tbe same as such and shall take reasonable steps to proteCt agnirist the unauthorized use
15 - COG ENERA nON POWERS ALE A RBEMENT B E1WBE N TH 0 MP SON RIVER.
C~GEN, LLC AND NORTHWES~ ENERGY, LLC
PardDd3-1
~.
J 00 1 M 36-OOOm
disclosure 'of same; provided:, however, that Such info~ti~n and documents
conspicuously marked or otherwiSe clearly i~ntified as confidential or proprietary when
furnished By requesting~ reviewing or conXnentingupon any documents
, '
BUYER.sball not. be.
~~
to be assuming or waiving any 'of S~'obligations under this Agreement.
SEU.ER hereby releases and shall defend,
indemnify and hold harmles~ B~ '~m an cl~, losses harm, liabilities, damages
penalties, fines, costs and expenses (including, but not limited to" reasOnable attorneys' fees)
arising ~ut of or in ~lm.ecrion with the consttuction or operation of the Project. To the fullest
extent permitted by applicable law, the foregoing s~ apply regardless C?f any fault, negligence
stri~ liability or product liability otBUYER and to any claim, action, suit or proceeding brought
. any employee '6~~. Howevet:, SELi.ER shall not be required to. so defend, indemnify
or hold harmless BUYER fro~any claim, loss, harm, liability, dm"l1a , cost or expense caused
by or resulting from ~e negligence or contributory negligence of BUYER or its direct~rs,
officers, employees; agents or representatives.
4~4.BUYER hereby releases aDd shall defend,
indemnify and hqld harmless S~ ~m all claims, losses, harm, liabilities, penalties, ~es
dmnAg , costs and e~nses (~cluding but not limited to, reasonable attorneys f~) ~ing out
of or in Co~ection with its use of Power received at the Point of Delivery. .Tothe fullest extent
permitted by applicable law, the foregoing shall apply regardless of any fault, negligence, strict
liability or p~d~t liability ofS~ and to any claim, action,. suit 'or proceeding bro tight by
any employee ot~~ Howeyer, B~ shall not be req1rired to so ~fend, indemDify or
hold harmleSs
~~
fro~any c1aiin, loss, harm, liability, ~'lT(tng t cost or expense caused by
16 - COOENBRA TiON POWER SALE AGREEMENt BErw.eEN THOMPSPN RIvER.
CO-GEN~ AND NORTHWESTERN E~GY, LLC
" "' '
PorIlDd3-1408464.1OQl9436-00003
or resulting ~om the negligence or contribu~ory negligence of S~,~r its directors, officers
eIDp~yees, agents or representatives
Insurance Commencing on the Contract Ope~ation Date and contiriuing
throughout the ~enn of this Agreement, SRT J .P.R shall mamtam or cause to be mamtained
property ,insurance covering ~e Project to the full replacement value of the' Project, blanket
, ' . '
comprehensive" ge~ ~bility insuran~e ~inclnding all risk ~ndorsemei1ts contractual
liability coverage) y.rith a combined single ~t of not less than $10,000,000- for each oCCUlTence
anc!" workers compensation coverage, all in accordance with standard insurance industry pr~tices.
Evidence of required insurance shall be Foyided mm~y 'to 'B~ BUYE~ its officers,
directors and employ~es shaU be nmred as additional insureds. Subject to required Lender
approval, proceeds of property insurance shall be p~yable,so as to insure that such proceeds are
to 1'q)air, replace or otherw~e r~tore the Project to at least as good condition or state
repair as it waS in prior to the occurrence.wi$ ':respect to which such proceeds are payable. If,
subsequent to the .-Contract Operation Date, the Project is destroyed and ~ot able to be rebuilt at
its 'eXisting site, subject to any: req~ consent of Lenders and the agreement betw~ SBLLBR
..
B~ ~:u .T .RR.shan use such insurance i'i.oceeds to use beSt e~orts 'to reb~d tre Project
at another site with reasonable transmission access to .the Point of Delivery.
Section 5: Pricing
:r esLEnergy BUYER shall pay SET J .R"R,the Relevant Mid -C IDdex less $3 per
megawatt hour for each1Df?gawatt hour ofTes~ Energy delivered to it at the Pomt of Delivery.
Subject t~ the provisions of
SubseCtion 11.2, in respect to each month that Pow~r is delivered d~g the Initial Term,
BuYER shall pay ~ner a t-4onthly Power Charge equal to $e result of the following equation:
17 - COGENERATION POWER SALE AGREEMENT BETWEEN !HaMPSON ,RIVER.
Co.qEN.LLCAWNQRTHWESTBRNENERGY IiC .
" ,, ", '" '
Ponlnd3 -. i 00 194 3(..oOom
B X 40 + S X p::: Monthl Power Char e stated in dollars
"Where:
B ::: AImunt of Base Power delivered to BUYER during the month
, unt of Su letnental Power which shall be e ual to all Power in excess of
megawatts in any pour delivered ~BUYE..R durint! the month
P ::: Lower of: a 34.00 or bY the 'averaQe of the Relevant Mid-
hour of.!Pe month.(weig~ity of Supp1ementaLPower deU-vered) less U:.QQ
~Power CharQe Purlng Extended S':lbject to t4e provisions of
Subsection 1~.) m fcespect to eachIJX)n~,tbat Power is'C:lelivered from Project or another
mu.tually agr~ Point of Delivery during any Extended T~~:BUYER shan pay SRI .T ..
~onth1y Po~er.Charge equal to the result of the following equation:
Where:
::: AnDuntQfJ3ase power ~1ivere~R during tPe month
S ::: Capacity anq associa~ ener~y in excess of 5 me2awatts. bu~ in no even~
~ement&Power exceed & megawa\ts delivered t2-B~ during $e month
the avera e Relevant Mid-C Index a licable to each ur of the month
5 .00 or
b be less' than 32.00.
The Monthly Power Charge shall constitute full ~mpensation to Seller for all
Power, Anci11ary Services and Envn-onroen~ Attributes ~de av:ailable to BUYER ~reunder.
:4;'
~.
Within 60 days of ~xecution of this Agreexrent, SELLBRsball
file this ~nt with the FERC pUrsuant to Section 205 of the Federal ~ower Act and request
18, - COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RNBR
CO-GEN) LtC AND NORTHWESTERN ENERGY,LLC
' " . "
P0dbd3. 1408464. 1 0019436-00003
waiver of any ~c rules that would otherwise require a later filing. The Parties shall afford
each other a reasonable oppo~ty to review and coImrent ,in advance upon any Written
materials proposed to be submitted by them to the FERC in connection with this Agre~t.
Additional FERC Review The methodologies utilized for pricing p~oseS '
this Agreement and the prices and pricing formulae spe~ified her~in shall remain in effect
through the term of A~eement and neith~r P~y .shall petition the FBRC p~t tQ
provisions of Sections 205 or 206 of the Federal Power Act to amend such methodologies, prices
or f9ImuJ.ae or support such a petition filed by any.third party.
Section 6: .Project Log
Pro 'ect Availabili 1..0 " SELLER. shall maintain a log showing actual Project
generation and the nature of the fuel used in the Project during each hour of the term of this
AgreeIreD.t subsequent to the Contract Operation Date. Such log may be re~ew~d (including
for purposes of v~rifying outages characterized as Uncontrollable Forces, pursuant to SectiC?n
10.1) ~d copied, ~ BUYER upon givin~ reasonable adv~~ no~ce of itse1ection to do
~tion 7: ~tering. ~try andJransmission
Metering SELLER shnIl install, own" maintain and test the me~rs and associated
eqWpment
~,
in
~~'
jud
, "
are reasonably required to determine the amnmts and
time of deliveiy 'of Ppwer under this Agr~t BvYER shall have access to such meters
during non:n8l business hours. ,BuyER shall have the right to req~, at ~~"s ewense, a
test of such ~ters semi-annuaIly. In the even~ 'any me~ering is f?und to inaccurate' by more
than two ~ter ~adings and billings .foJ; the period of inaccuracy (which sba1l n~t
exceed the period s~ce the last meter test or 12 roontbs, whichever is shorter)
19
.. ' ,
COGENERATION PoWER SALE AGREEMENr BETWEEN THQMPSON' RIVERCO-"G~~AND~ORTHWESTERNENERGY,LLC,
. '" ,.. :
Pod1Dd3; 1408464.1 00 1943 6-00003
retroactively ~juste~ for one-ba)f o( the azm~t of the variance and SET .1 .shall promptly
cause the inaccurate ~ter(s) to ~. repaired and corrected.
ThJeinetn
~ "
SEiLER shall install ~d pay for such modifications to the Project of
~ standard type and manufac~er as are reasonab~y .f~uired. to permt BDYE:R to monitor the
level ofPr~ject generation on'a real-basis. B~ pay for the installa~on of such
JD)difications t~)3UYER's sys~emcontrol c~ter ins~t trims~ormers and auxiliary
~nt" of a standard type and manufacturer are 're~nably requir~ to permit B~.
rmnitor the leyel of Project generation o~ ~ rew-time basis. Equipment installed at the Project
site shall be oWned and maintained by S~. Equipment install~ on BuyER,' 8 premises
sha11 be ?wned anc;1 maint&ned by
Transmission
. .
SE1.UR shall be Solely. respo1lS1Dle f,?r permits, licenses fees
and agreements necessary for
$~
to 'de~yer.. Power to me Point of Delivery mcludm f
generation iIiterconnection agreement. It is un~rstood that the mte~on of the Project may
require the
~~
to operate the Project in 'accorwmce with the tr~sion provider
~al action scheIres.
Billing. Billings ~o e~ under this Agreement shall addressed as fo1lO~s:
NorthW~ern Energy, LLC
East ~rqadway Street
Butte, MT 59701
, :, ' "
Attention: Vice President
, ;"'
Energy Supply
C?f to such other address as B~ may ~signate in writing in the ~ture.
S~ shall bilt"BQY:BR 1?y the 15~ cIay of each IOO~ aomn;
~~
bi~lby,
~lecopy, for ~o'wer ~e ~vau~bl~ to BUYER during ,the ~.~Dth If the statement is an
20 - COG~TION POWER SALE AGREEMENT BETWaEN THOMPSON RNER
C~o.EN~ u..c AND NOR'I'HWESTBRN ENERGY, LLC
' ' ,: ... '
PodLd3-1408464.10019-436-00903
estimated bill., any adjustment req~~d' $Bh be TJJ~de in the ensuing ~ntb' stat~nt. ~If the
est~ted bill exceeds 1~ pe~;nt" Qf the ~Unt finally billed, the mrount o~ the ~justment
shall include interest at the Base Rate for the period betwe~n billings. BUYER'~ pa1.suCh
a1IX)unts
, ~y '
transfer of good federal ~ds w~thin 20 days, .of receipt .of suchbi1l in
aCcardance with instructions giv~
~y' ~~
~o B trY$..
~~
time to "~' I?ro.Vided
instructionS are gIven at l~ast two days in advance of~ date of e~ted paytI16lt~ Interest shall
on any Unpaid ~~ts during the period of delinquency, if any, ,& the B~~ R8:.t,e..
.. ~~
pays 'any bill under protest and its position is subsequently upheld, .or if an errOr In any
billing is diScoVered within two
y~
of when it w~ submitted, interest shall accrue at the B~e
Rate an the ~unt of any overcharge.
~~:
PuelUse Certification.sElLER shall inc~ in each bill a certification of the-
perce1;l~ag~ of.P(;nver delivered during the Im~th to which the bill 'applies that was generated with
wood waste.
~3'Delinquent Pa~tS
. .'
If:a:uY:ER fails tQ pay any bjl1 within 60 days .of receipt
aDd continues to fail to pay. ~h b~, f~~ ten days f9llowing written notice or such non-p~~nt
fi?~ S~ RT .T P."R.
~y.
te~ate Agreemmt
Section 9: Notices
Any notice .or n~tificatioii required, pemntted or contemplated hereunder shall be in
writing, shall be addressed to the Party to be notified at the ~ss se~ forth belo:w or at
other address as a Party may desigriate for itSelf from tm to by notice hereunder, and shall
be de~med to have been -yalidly served, given or de1iver~ (i)the next business
~y
after such
notice w delivered to a regularly scheduled ve~ght delivery carrier with deJivery fees either
21 _COGBNERATION POWER SALE AGREEMBNT;BETWEEN THOMPSON R.lVER. Co-q~~tLCANDNORTHWES~,E~9Y"~,
: ," ' , ., '
PcII11nd3-1408464.1'oOl9436-00003 ,
' .. '
prepaid or an arrangement" satisfactory with such carrier m~de for the payment of ~h fees
, ', '
(~) ~pon receipt of notice given by teleeopy, mailgram, tele~am, telex. or personal cIe1iv~ry:
SELLER:ThomPson River Co-gen. LLC
clo Professional Recovery Systems, MT
285 2nd AvenueW. N.
" ,
Kalispell, MT.. 59901
Attn: Mr. Barry A. BateS: '
Phone No. 4061257-2263
Telecopy No. 4fJ6f257-7578
. "
WI a: copy'tO:
. '. .' "~'
Thomas Tenenbaum, Esq.
Gorsuch IGrgis LLP
15~5 Arapahoe, T,?~er I , Suite 1000
Denver, CO 80202
Phone No.' 3031376-5081
Telecopy "No. -303/376-5001
BWBR;:NorthWestern Energy, LLC
40 East Broadway Stree~
Butte, MT 59701 .
Attn: Vice Pr~sident - Energy Supply
P~ne No. 4061497-3607
Telecopy No. 406/497-2150'
Section 10:ncontrollable Forces
"1.():i~ When Perfoimance Excused.No Party shall be considered to be ~ def~t in the
performance of any of its obligations under this Agreement (other obligations of said' Party
to pay amounts due hereunder) when a failure .of perfprmance shall be due to an Uncontrollable
Force.
~ ,
t~ "Uncontrollable Force" shall any Cause beyond the contiOl of.~ ;Party
affected, including but not restt?cted to .f~ure ~~ or threat of failure of facilities, floo~
earthqwlke~ tornado , Stox:mw fue 1igh~mg epi~, war, tiot,terro~ civil disturbance or
disobedience, ia~r dispute 1abor, or material shortaget sabOtage, restraint ~coUrt order or
public aUthority, and action or nonaction by or failure "to obtain me necessary autho~ons ~,
22 - COGENERATION POWER SALE AG~'~~N THOMPSQN
..
CO-GENt LLC NORTHWESTERN 'ENERGY, LLC .
' :'
Ponlnd3-1408464.OOl9436-00003'
approvals .fro~ "any goveimDental agency or authorityJ which by exexcise of due diligence such
party co~d ~~t reasonably have been expected to' aVoid and which by exercise of due diligence it
. .' '
s~ be ~a~~e o~~me. ~othIng contained herem. shan be cOnStrued ~o as ~o r~
't~ ~tile 'imy s~e or ~bor dispute in w~h it may.be involv~ 'Any party rendered ~rible to
fulfill. any of its obligatio~ uDder this ~greei:re~t ~y re'asOi1 of a#. Uncontrollable Force shall
. '. .
give prompt written notice of such 'fact to .other r~ and shall exercise due diligence to
~exrove suc~. inability with all ~asonable dispatch.
Section 11 ~Remedies
Rights and Remeilies Except with re$pect to' SubseCtiO1lS 2.2 mid
;3~3"u~n the breach-by 'either Pany of its ~~ligations hereunder, the other Party shall ba~ aD
the rights and remedies ayailable hereunder, under ,any,other agreement ~tween the Parties and
under all applicable lawsJ all of which rights and reIredies be ~1ative 'and nonexclusive
to the ' extent peimitted by 1a~; ProVide~ however, that:
~(i)neither Party sball1?e entitled t~ 'reco~er C?nsequential or special damages;
" (n) neither Par:tY shall be entitled to seek to tel III; II ate this' Agreement, e~ept
as expres~y pro~ded in Agreement. '
Loss of Project Availability
11.2.~o the exten~ Penalty Hours ocCur in ~Y month, the Monthly Pow~r
Charge 0 therwise applicable to suCh Imnth $ban be 'reduced by. an aIm unt equal to the result
, '
the following equation:
Where:
23 - COGENERATION poWER SALE' AGREEMENT BETwEEN. TIiOMPSON 'RIVER'CO-QE~J ~AND~O~THWES~BNERGYt LLC,
:' ", ". .
Portlnd3-1408464.1 .194 36-OOQO3
Monthl Power Char e that would otherwise be o
P= Number .of Penalty Bours during tpe mOnth
H = Total number of hours in the mOnth
~.~~2 To. the extent that. the Capacity Test Am:nmt es~aplished hi a Periodic
Project Test ~ less than 1 200 megawat~ bo~, for the following 12 rmnths7 Month1y P,?wer
~ge that would otherwise 1?e owing shall be rDnitiplied by a fractio~ tl?e n~or of wl1ich
is the Capacity Test Amount and ,
~ '
denQ~tor of w~ch is 1 200 megawatt hOurS. .If ~a
Periodic Project .T~ is request~ by BUYER Put not perfo~ bY sEJ;um. within 20 days
the request . the Monthly P~wer Charg~ that would otherwise be owing shall be redUced
~y,,
percent until such as the Peri9dic Project Test is perfonred.
. If, dUring any consecutive 36-xmnth period, the total Penalty Hours
exceeds 1,600~ti)':aR, uPon learning of~h occuIrence, sb.all~otify each Lender of such
o~Ce and deliver a copy of each notice.to SBI).lm..
.11.2.4 If, ~re .than 2,000 Penalty Hours occur in 81J.y consecutive 36-m~
period, B~ in addi~on to. its rights under Section 11.2.1, may elect to eXercise the
rights descn'bed in Sectia~ 11
1J~3.:
addition to. an ofBUYER~sother rights hereunder, upon the
oCCUlTence of an Insolvency Event ar the. eveD:t descnDed in Subsection 11.2., if operation of
the Project is not as~ by any Lender, BUYER shall have the right, btU: under DO.
circumstances the oQIigarion, to. assume ope~nal responsibilityf6~ the'Project in the place and
24 - COGENERATION"POWER SALE AGREEMEN't :aETwEEN THOMPSON RivERCO-GEN LLCANDNORTHWBStERNENERGY LLC'
" .' .' '" ., " " ', .
PDrtlndJ-1408464.10019436-00003'
stead of~ and as agent fo~~ in order to complete construction, continue operation
comPlete any necessary repairs so as to preserve BUYER's right to purchase Po~~r under this
Agr~nt; p~vided, bowever,"thm. B~R's rights under this Subsection 11~3
~ ,
SubordiQate to the rights 'of any under. BU'(ER give writte~ notice to S~T.T .~.an~
Lenders at least 30 days in advance of the contemplated exercise of its rights under this
Subsection 11.3.. In no event Shan BUYER's election to oPerate the Project be deemed to be a
transfer of title or a transfer of SRI ~T,.s obligations as owner ,thereof. In the exercise of such
ope~aring rights, BUYER shall be sEi..LER's agent, and all liabilities in~ed in the ope~tiOn .
the Project shall be in~ f9 S~'s account withoUt liability to 'B~-' For the purpose
ofimplemenrib.g the foregoing, upon the e~ercise o~BUYER's rights hereunder" ~
appoint BUXER as SRY .T .' s, attorney, ~ith ~wet to, operate the Project if BUYER elects
exer~ such operating rights. This power bemg coupled with an interest is irrevocable until this
Agreement is terminated
11.3.B~ shall undertake to comply with Prudent EleCtric Pr~tice in
the exercise of the ~peraring .s gran~ed in Su~tion 11.3.1, pro~~ however, that in
addition to tne 1imi~tion;; set foit,hin Subsection ~1.~:uYER shall have no liability to
SElLER" ot to any person ~vmg an inter~ in S~ in Connection with the exercise
,such rights except f~r Wre~t damages arising out o~
~~'
S gross negligence or wil1fu1
misconduct in tbe exercise of such rights. any period that BUYER is ~xercising the
9perating rights granted p~t to Subsection Il~3
' ,
(i) ~,deliver all revenue
~m the ,Project received by i~ to BUYER ~ (n)
~~
hold all ~venue from the
Project received by it (iIicluding; without limitatiOn; all payments due frOm, BvYER hereunder)
B1;fYER dis~bute such revenue in the following priority: (a) first
, ~
Lenders all ~-due
25 - . COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RIVER
CO-GEN J LLC AND NQR'IHWEsTERN ENERGY, LLc
Ponlnd3-1408464.10019436-00003
regularly-sc~du1ed, non-accelerated payments; (b) se~on~ in p~ytJ;)CIlt of ~ance ~emi~
maintain insunince as required by Subse~tion 4.6; (c). third in paylnent ofrea1 estate taxes
, .
asse~ed ag~t the Project;. (d) fourth, in pnymen,t of all re~nable operating costs of the
t; .
(~)
to 13UYER in reimbursement for an ~easo~ble expens~ in ex~r~ its
operating rights; and (f) sixth, after the accumulation of $~,OOO,OOO in the trust fund,the balailce
. .
~~R; provided, however, in the event ~f an acceleration of~a~i obligations ~y
Lenders such revenue ~iIl be distributed as Wrec~ by such Lenders.
During the period ~YYER exercises. such o~ating rights, (i)
F.! .1 .shall have no right no~ 0 bliganon to operitte the Pro j~t no right to exercise any rights
inconsis~ent with the exe~ by BUYER. of such rights, nor any right to receive any payment
. .
otherwise due in connection with the Project except m tnist f91- the sole purpose of delivering
suchpayrrellt to.~UYER p~t to Subsectiori 1~.3; (ii) all-payments rece~ by'
in co~ection with the Project shall be held by it in trust for Lenders and bnrnediatel:y de1ive~ed
to:B~ pursuant to Su~o~' ~ 1.3.3 in their original fo~ together with all ~dorse~nts
reqcired to permit BUYER to negotiate such pa~ts, (m) s .T .shaD. penoml ap. steps
reasonably requested by ~ttiER to facilitate the exercise by
~~
of such rights and (iv)
Mill Service ReqUirements shall be suspended.
On each occasion ~n which .BUY:ER elects to exercise sUc;h rights
BUYER may exercise such rights until the later of (i) 30 days after the date the Insolvency Event
~bich gave rise to BUYER.'~t to exercise such rights, if any, is cured, or (n) ~ ~t
anniversary of the date "on whic~ BUYER .began such exercise of such rights; provided, however
~uYER may elect at any time
. .
~~mjnate .its then exerciSe of such rights upon the date
' , ' .
specified bY BUyER in a notice to SRI .T :R~(~th a Copy to
~)
as the date on which it wiD
~6 - COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RIVER
CO-GE~I UA: AND ~O~~RN ENERGY, ~C
POltlnd3-1403464;1 OOl~36-00003
Cease exercising such rights, V!~ch notice shall be given at least 6Q.days before such date, unless
such sh9rter pe~od is approved by ,0-ders;
' ,
provIded, ~owever, that ~h notice may be given no
less than 1 0 '4aY~ ~fqie such date in the event Lenders accelerate the pa~nt 0 bliga~ions.
Section 12: Waiver
Failure .by ~ '~arty to exer~ise any right, remedy or option hereunder or under any rela~
~greement or ~lay in exercising such right
~y
or 'option win not operate as a waiyer by
such Party of its right to exercise any such right, renledy or option. No waiver by a Party will be
effective unless it is in writing and signed by ~h PartY, and then oilly to the extent specifically
stated.
Section 13:bitrarion
The Parties shall make best effortS .to settle all disputes arising under this
Agreement as. a matter of nonDal business without recourse to either arbitration or litigation.
If any dispute arises under this Agreement, the Parties shall arbitrate the lllatter berore an
arbitrator who ,is an attorney or engineer f~nniliBT with contraCts governing the operation of
electrical systems~ iuJ.y arbitration shall be co~nced within. a year of when a dispute arises
and shall be coIrnnmced by either Party submitting to the other a NotiCe of Arb~tr~on.
Parties shall ba~e 30 days following the submittal of a Notice ~f Arbi~ation by either Party to
attempt to IID.1tWll1y agre~ upon an ar~or. ~ the Parties are Unable to agree on arbi~ator
within that time, either Party may request tl18:~ a judge of the UD:ited ~iates Circuit Court for
Tenth Circuit designate an arbitrator.
The arbitrator shan have d~etion to establish a scb.edUle and procedure for the
arbitration and may co~duct the arbitration upon written submittals. The arbi~tor may
27 - COGENERATION POWER SALE AGREEMENT BETWEEN THOMPSON RIVER
Cq-G~1 lic AND NORTH)VESTBRN ENERGY, LLC
P artlDd3 - 140S464.1 00 194 36-000()1
afford the Parties any or all of the discovery rights provided for in the FecIeral Rules of Civil
Procedure.
At the co~nc~nt of the arbitrat~on bearing, each Party s1:uijl ~t
~posed Arbitration Award and the arbitra~or shall be required to adopt in full t~ PT?posed
Arbitration Award of Q~e of me Parties and the Arbitration Award select~ shall be final and
biniling on Parties.
Party wh?se proposed Arbi~ati~n Award is not selected shall pay the
costs of the arbitration, including the .osts and
~ .
attomeys~ fees ~f prevailing Party.
4: Assi
~either Party shall ~sign this A&reeJre.nt ~~ut the prior .written consent of the other
Party, which shall no~ be unreasonably withheld; pr~vided, however, no. consent shall.1)e req~
for an assigntren
t~).~ any ~rporation or other ~tity into which or with which a Party is
merged or consolidated or to which the Party t:ranSrers substantially all of itS assets
proyi~ that all obligations hereunder by such successor entity; or
'(~):
::by ~uYBR. to .an AffiliAte ofBlJYBR
Nothing contaIDed jn this S~tion Shan be Construed to prevent the Parties from malcmg a
collateral assienmerit of the revenues due under the terms of this Agr~t. No siV"ment
IIfiger or cOnsolidation shall relieve any party o~ any obligation under this A~nt Subject
. to the foregoing restrictions in this Section, this Agreement shall be bindinf upon, inure ~ the
benefit of and be enfo~able by the Parties and their respectiVe successOrs and assigns.
28 - COG~TION POWER.SALE AGREm4EN1'. BETWEEN TIiOMPSON R.IYER
CO-GEN AND NORTHWESTERN ~GY, LLC
Poolnd3-1408464.001943~
Section t5: Covenants
Title to Assets
. ,
SELLER bas, and shan at all times Inaintain, goo~ indefeasible
and merchantable title to and ownership of the :AssetS
BUYER Credit Support. If, during the term of this Agreement, there is any
Mate~al Adyerse Change affectmg BU~ ~ ~UYER shall notify the SET J .F.~in writing of
this developmen~ ~itbin ~o business days, and the SELLER, ~ its discretion, may require the
BuYER to provide Credit Support sufficient to assure that the B~ :will continUe to meet its
current con~actual obligations under this Agreement. . Following a.demand ~or Credit Suwo.rt,
and until such time as the BUYER is no longer ~xpe~g a Mat,erial Adverse Change, the
BUYER shall maintain satisfactory c;redit Support on an ongoing basis sufficient to assure its
contrac~ obligatiQns. B~' s Credit SuppOrt shall be in an mmunt. equal to 24 tmntbs"
pro)ected accounts receivable. If the ,BUYER fails to provide such Credit Support Witbin,-lO 4aYs
of ~"request for Cred~t Support, 'or fails to maintain C~t Suppoit as set forth above, the
~~
may suspend its performance under this Agreement until such credit Support is posted.
A,t such as BtIYER. is no longer experiencing the Material Adverse Change, all Credit
Suppo,rt provided bY be~'o~ B~ shall. be relinquished and retUrned
15.:B&guest. For Informari-2Jl.. At a Party's written request, the o~ Party shall
furnish the requesting P~y finaucial infoImation as may be reasonably required to confirm that
the BUYER or the SRI.T .R'R,has not been affected by a M~tenal Adverse Change.
Section 16: Miscellaneous
THIS AGREEMENT SHALL BE INTERPRETED AND.TIIE RIGHTS
AND LIABILITIES OF TilE PARTIES DETERMINED IN ACCORDANCE WITH THE
LOCAL LA W OF THE STATE OF MONTANA, EXCLUDING CONFLICTS OF
LA W RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER CONSTRUCTI9N
29 - COGENERATION POWER SALE AGREEMENT BETWEEN !HOMPSON RIVERCO..~EN, lLC ,AND NORTHWESTERN ENERGY,.LLC
p oetlnd3- 140 8464 . fOOl ~ 36-00003
OR INTERPRETATION OF THIS AGREEMENT TO THE SUBSTANTIVE LAW OF
ANOTHER JURISDICTION, AND ALL 9THER LAWS OF MANDA TORY
APPLICATION INCLUDING THE FEDERAL POWER ACT.
This Agreement may be executed in any number of counterparts, each of which
, sha.1l be deeme~ 'be' an original and shall be binding upon the Parties.
In order to facilitate the obtammg of financing or refinanCing for the Project
BUYER 'shall execute- such consents
, '
agreements or sirmlar doCl.nD;mts as Lenders may
reasonably request in connection with the documentation' of the fmancing or refinancing for the
ProjeCt.
This Agr~nt cannot be changed orally or by the conduct of the Parties. Any
~ndmeritJ IIDdification or change may be mAde only by a writing sign~ by the party against
whom enfo~ement is sought.
(Remainder of page left intentionally b~)
30 - COGENERATION 'POWER SALE AGREEMENT BETWEEN THOMPSON
CO-GEN, LLC AND NORTHWESTERN ENERGY J LLC
PonlndJ-1408464.1oo19436-00003
~S WHEREOF, the Parti~s hereto have si~ed this Agreement as of the date
first above written.
~~eT Co- g
~f::,LL , ISUl.i!. Title: . ~tn~.
, 31 - . COGENERATION POWER SALE AGREmr1ENT B~ ,THOMPSQN
CO-GEN', lLC AND NORTHWESTERN ENERGY, LLC' '
Por1lnd3-1408464.10019436-00003
,~\
es ,eITl
Energy
40 East Broadw~y St.
Butte. MT 59701
~one; 406-497-3000
Mork D. 11I",,'pnJI Facsimile: 406-497-2535
E;tirt:1nM! ~"
TR/ep1IonO: (4lJ6) 491.3607 www,ncn~ernenergy..com
Fnalmtlf! (406) .f!l1-2150
QT/c. '11J" 71fJ1! 11Sno rtA ws t!nL CD7II
JanU81Y 14. 2004
Thompson River Q,-Gen,
Attention: L l\.fichaelUnderwood, Manager
285 2nd Avenue WN
Kal\spcll, Mf 59901
First Amendment to Co-Generation Power Sale .Agreement dated September 12. 2002
(the aCAgreement") between :Thompson River Co-Oen, LLC ("Sellerj and NorthWestem
Energy, a division ofNort'bWestem Corporation, Iii successor in interest to NorthWestern
Energy, LL C C'Buyer")
Re:
Dear Mike:
This letter shall serve as the fIrst ,amendment (the "Amendxnenf') of the Agreement between Buyer and
Sc:11er. Tfte Amendment shall be ~fr:ective a5 of the date (the ~'Effective Date ) tbatYD:u counter.sjgn
copy af.~is !~~r 1:~ sh~w your accepta-nce ofi1S terms. Any c.apiJalized term that 15 net defro.cd in tPjs
Ame!\dm,ent shan have the defDiition set out in tlle Agreement. The tenDS oftlrig Amendment shall..
control in fl1e e~erlt of.any ~6nfli~t be:tvife~n the terms of the Amendment a~d the Agreertlent. ..
, ." , .
The .greement ~ amended a~ of the Eff~tive Date! as. follows:
The definition of '13ase Power" in Section 1,4 of the A.grcemct1t is hereby modified to mean, in
resPect of me mitia1 Term, the first 16 (instead of 13) megawatt hours of Power de livered to
Buyer in any hour.
Seller hereby agrees that, effective as oftb,e Bffective Date, Buyer shall have no further
obligation to secure its obligations with Credit Support Accordingly, SeDer and Buyer agree t11at
as of the Effeetive Date (a) all references to Credit Support in the Agreement shan be of-no
further force or effect and (c) Scctions 1.10 and 15.2 are deleted from the Age eement and shall be
D f n 0 f'uriber farce or effect.
Buyer hereby agrees that, effective as of the Etfecti'le Date. Seller shaJl have no further
obligation to secure i~ obligations 1mder the Agreement with a Letter of Credit (as defined in the
Letter of Credit Agreement). Accordingly, B~ and Seller agree that as of the Effective Date
(n) the Letter of Credit Agreemmt is ltn),inated (b) an references to the Letter of Credit
Agreement in the Agreement shaD be of no further force or effect a:nd (c) Subsections 2.2(b) end
~( c) . are de1~d from ~ A cnt and ~ball be af. no ft1ttber force or effect.
Buyer aarees that it shaD no longer 'have the rig1it to elect to ex\aD.d the tr:rm of the ~ement.
A:c~~y, ~ub~~~, 2.2(&1) ~"th~ first Sccti~ 5.
~ .
~f~o .A:gre,~(mtit1~ ~'Month1y
Power ChU~ DiiIiDg ~ded1erm"m hereby.deleted from tne Agreement,anci-~1 be of
, 11o fin1:iier~orefreCt. "
. ,' ,,. .:. .'. ,. '" ,'" ,.,. .. '. '.,.'..!'-' , ' "' .. ': .." ". ,
S~~h: 3 ~ Qf:fP# '~C11~ is hereby, arOOided 10 provide,Seller 8baP: use ,bes( ~ortS l
caus~t1iet~Ontract Opcra-noiJ Date ~ occur witbin 555 (ratheithan 455) days of the, execution
, the Agreement.
4) .
5).
2434657v3
Thompson River Co-OeD, LLC
J aDuary 14, 2004
page
Section 4.5 of the Agreement 15 hereby amended to -provide that the combined Ringle lim-it for the
blanket comprehensive genera.lliabHity insure.nee CQvef1\.ge that Seller is required to cany -
reduced from $'1 O OOO~OOO per occunel1C~ to $2 000,000 per occurrence:.
The defmith.1n of '~sn in Section 5.2 of the Agreement js hereby modified to be equal to all power
in excess of 16 (instead of 13) megawatt hems delivered to Buyer during the month.
Please acknowledge your agreement to the Amendment by countersigning a copy of this letter and
returning the countersigned copy to my attention.
very trUly yours,
NORTHWESTERN ENERGY - a division of
North W estern Corpofati on
By:
Name:
Its:
The undersigned agrees to the terms of this Amendment.
Dated: .TMluary!::L 2004
:1434657\'3
" .--..;~----~~~'
ATTACHMENT
NO.
'1i
Appendix A
DELIVERY AGREEMENT
BETWEEN
TH 0 MPSO N RIVER CO-GEN, L.
AND
NORTHWESTERN ENERGY
This Agreement, entered into this day of May, 2005 , is by and between Thompson River Co-Gen, a Colorado Limited Liability Company, ("TRC"), and NorthWestern Corporation d/b/aNorthWestern Energy, a Delaware Corporation ("NWE"
).
TRC and NWE are sometimes referred to in
this Agreement collectively as "Parties" and individually as "Party.
RECITALS
WHEREAS, TRC maintains the rights to all QF energy from an electric coal /
wood-waste generation project located near Thompson Falls, Montana with a
nameplate capacity of 14.0 MW ("Facility ); and
II.WHEREAS, A vista Corp ("QF Buyer ) desires to purchase from TRC, and TRC
desires to sell to QF Buyer, a quantity of flffil QF energy produced from the
Facility, and energy provided by NWE so that the energy deliveries to A vista
Corp will be in compliance with item 2 listed below and as identified in
Attachment A of this Delivery Agreement ("Attachment A") or as modified by
mutual agreement of the Parties, during each calendar year beginning in October
2005 and continuing for a period of twenty (20) years; and
III.WHEREAS, NWE will facilitate such deliveries to QF Buyer, as long as theagreement between the QF Buyer and TRC is in effect in accordance with the
general tenns and conditions set forth herein.
Therefore, the Parties agree to the following basic tenns and conditions:
2525445vl
NWE will accept the TRC QF energy generated by the Facility into its energy
portfolio.
NWE will provide a hourly flat, finn QF energy schedule from its system to the
Point of Delivery ("POD") with the QF Buyer on behalf of TRC, as identified in
Attachment A, beginning on the Contract Date and subsequently each period for
each year for the duration of 20 years.
NWE has obtained and agrees to maintain finn transmission capacity
reservations (or like reservations) from the NWE system and any other required
transmission entity in order to deliver the energy as specified in the Finn Energy
Sales Agreement between A vista Corp and Thompson River Co-Gen L.C. to
the QF Buyer s POD in the amount equal to the quantity each month, as
designated in Attachment A, and consistent with the general tenns and conditions
of the NWE Open Access Tariff.
'1.
2525445vl
Appendix A
NWE, as the exclusive scheduling agent for TRC, will provide a pre-schedule of
the QF energy deliveries to the QF Buyer in accordance with the scheduling,
remedial action and checkout protocols of the Western Energy Coordinating
Council (WECC) and North American Reliability Council (NERC). TRC will
maintain timely access to the fmal checkout of the energy schedules each month.
The hourly firm energy schedule facilitated by the flfIll transmission reservation
shall be equal to the quantity set forth in Attachment A and shall remained
unchanged for the duration of the month, unless such deliveries are interrupted
by an event of force majeure, or are curtailed by the QF Buyer or by the
transmitting entity consistent with its Open Access Tariff and Prudent Electric
Practices on firm transmission.
NWE will provide all necessary ancillary services, such as reserves, to provide
the product described in Paragraph 2, above.
TRC shall compensate NWE for the fmn transmission, energy losses, shaping
and scheduling services.
The Parties agree that the QF Buyer is a third party beneficiary of this
Agreement.
Nothing in this Agreement shall supersede anything in the Firm Energy Sales
Agreement between Avista Corp and Thompson River Co-Gen L.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their
respective names by their authorized officers.
NorthWestern Corporation, d/b/a
NorthWestern Energy
By:
Title:
Thompson River Co-Gen, L.
By:
Title:
Michael Underwood
Managing Partner
2525445v I
Attachment A
Hourly
Exchange
Ener2YMonth
January
February
March
April
May
June
July
August
September
October
November
December
Monthly
Exchange
Ener2Y
440
720
440
200
440
200
440
440
200
440
200
440
Daylight Savings and Leap year schedules will reflect the hourly nomination stated above.
Monthly Exchange Energy is deemed for easy calculation purposes only.
POD may be modified as mutually agreed by QF Buyer , TRC & NWE.
Appendix A
POD
Burke
Burke
Burke
Burke
Burke
Burke
Burke
Burke
Burke
Burke
Burke
Burke
Thompson River CoGen, LLC
Project Location:
Thompson River CoGen, LLC
249 Airport Road
Thompson Falls, MT 59873
Contact Information:
Thompson River Co-Gen, LLC *
Attn: Mike Underwood
1610 Wynkoop St, Suite 100
Denver, CO 80202
Phone: [phone]
Thompson River Co-Gen, LLC is a Colorado LLe
TRC Project Description:
Thompson River Co-Gen ("TRC") is a coal and biomass cogeneration facility located
approximately four miles outside of Thompson Falls, Montana (on Highway 200).
Project commissioned in December 2004.
Permits
FERC compliant.
Air Quality Permit in effect issued by the MT Department of Environmental Quality.
Water Permit
Waster Water Permit
Energy Products
Electricity.
Proposed twenty-year PURP electric energy sales agreement to A vista
(Idaho service territory) for 87 600 MWHs per year. (10 MW per Hour, firm)
Via firming, shaping and transmission agreement with NorthWestern.
Surplus energy sold to NorthWestern under twenty-year PPA.
Electric energy sale to Thompson River Lumber under 35-year PP A.
Steam Sales
Extraction steam sale agreement (66MM lbs) to Thompson River Lumber.
Fuel Supply
a Long-term, fixed price coal agreement with Roundup Trading International
from the Bull Mountain Mine, located in Eastern Montana, which meet all
permit and unit specifications.
a Long-term coal transportation agreement with Montana Rail Link, including
dedicated lease cars from Savage Companies, Inc.
Various waste wood supply agreements with Thompson River Lumber and
other suppliers in the area.
ATTACHMENT
NO.
POWER AND STEAM SUPPLY AGREEMENT
This Agreement is made and entered into effectivetbe
..')
day of October, 2002 (the
Effective Date ), by and between THOMPSON RIVER ~UMBER COMPANY'
MONT ANA, INC., a Montana Corpora~on (TRLII), and THOMP~ON RIVER CO-GEN, LLC, a
Colorado limited liability company (IITRC"). . (TR.L and TRC sometimes referrOOt~ Individually as
Party" and collectively as "Parties. "
ARTICLE.1. PURPOSE AND PROCEDURES
Scope of Agreement. Contemporaneous herewith, the Parties are entering into an agree~ent(the "Lease Agreement") for the purpose of installing and operating ~ co-generation plant on land
leased from TRL which will produce electricity and steam ("Energy
).
As consideration for the
Lease Agreement, TRC is to supply TRL with Energy pursuant to the tenDS and conditions ~ereof.
ARTICLE 2. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following definitions shall ha~ethe following meanings:
Business Day" means Monday through Friday, excluding national holidays; and a Business
Day shall open at 8:00 a.m. and close at 5:00 p., local time for each party's principal place business.
C/aims means all Claims or actions, threatened or filed and whether groundless; false fraudulent, that-directly or indirectly relate to $e subject matter of an indemnity, and the resulting
losses, damages, expenses, attorneys fees and court costs, whether incurred by settlement or
otherwise, and whether such claims oractions are threatened or filed prior to or after the tenninationof this Agreement.
.3 Delivery Point" for electricity means TRL's substation or other point on TRL's premi~s
designated by TRL; and for steam means the dry kiln area. Electricity delivered at TRL's substation,
ot any other point reasonably designated by TRL, shall be at ~mmercially reasonable voltages and
~~
Energy means electric energy that is delivered at TRL's nominal voltage of the Delivery
Point and steam produced by TRC and requested by TRL.
Force Majeure I' means an event ,not anticipated which is not within the reasonable control
of the Party affected by such event (the '~Affected Party"), which event causes the Affected Party to
be unable to perform its obligations under this Agreement and which event, by the exercise of due
diligence, the Affected Party is unable to overcome or obtain or cause to be obtained a commerCially
~age 1. of 8
g17 .fitI,
, (TRC)
, . '
(TRL)
reasonable substitute for such perfornlance. Force Majeure may include, but is not restricted to: acts
of God; fue;civil diSturbance; sabotage; action or restraint by court order or public or governmental
authority (so long as the Affected Party has not applied for or assisted in the application for, and has
opposed where and to the extent rt:asonable, such government action); provided, that the loss of
. TRL's or TRC's markets ' nor TRL' s or TRC's inability to ,economically use or deliver Ener~
purch~ed or sold hereunder ' ~hall not constitute an event of Force Majeure. Interruption ~y a
Transmission Provider shall not be de~med to be For~e Majeure unless (i) th~ Party con~g with
such Transmission Pro~der shall have made arrangeme~t ~th such Transmission 'Provider fo~ thefirm ~mission, as defined under the Transmission Provider's tariff, of the Energy to be delivered'
or received hereunder and (ii) $Uch int~rruption is due to ~ Fprce Majeure ,as defined under the
Transmission Provider's tariff.
' '
Period of Delivery means the period of time measured from the date phy~ica1 delivery of
Energy is to commence to the date physical delivery of the Energy.is to terminate~
2. 7 Regulatory Approv~l" means all current and future valid and applicable state and federal
regulatory authorizations, consents, or approvals.
Schedule or Scheduling means the aCts ofTRC, TRL, and/or their designated
represe~tatives, including each Partts Transmission Providers, if applicable, of notifying, requesting
and confinning to each other the quantity and type of Energy to be delivered hourly on any given day
or days during a Period of Delivery at a specified Delivery Point.
Steam m~ steam as presently utilized by TRL ~ its operations, in~luding comme!Cially
reasonable upgrades.
10 TaXes means any or all ad valorem, property, occupation, severance, generation, first use,
conservation, Btu or energy, transmission; utilitY, gross receipts, privilege, sales, use, excise and
other taxes, governmental charges, licenses, fees, permits and assessments, other than taxes based on
net income or net worth.
1! Transmission Providers means the entity or entities transmitting Energy on behalf ofTRC
or TRL to ,or nom the Delivery Point.
ARTICLE 3. TERM
of enD of A2Ceement.This Agreement shall become effective on tbe Effective Date and sba11
remain in effect as long as the Lease Agreement remains in effect.
ARTICLE 4. OBLIGATIONS AND DELIVERIES
TRC's and TRL's Obligations. Subject to Article 5: Commencing on the Contract Operation
Date:
Page 2 of 8
. ,. ";,,
~C)
a. Steam shall be delivered by TRC upon the reasonable request ofTRL and TRL shall
be entitled to receive steam at the Delivery Point, at the cost of $3 .50 per ten thousand pound per
ho~ ("Contract Steam Price
).
. b. TRC shall deliver and TRL shall receive at the Delivery Point, at TRL's request
electricity at $49.00 per ine~awatt hour ("Contract Electricity Price
). '
c. TRL has'no requirement to take any steam or electricity., TRC is not required to deliver
t9 . TRL electricity in amounts greater than. two-megawatt hours during any hour nor 15 million
kilowatt hours during any year.
, '
(The Contract Steam Price and the Contract Electricity Price shall be referred to collecpvely
as the "Contract Energy Price. tI
) '' '
Transmission and Scheduling. mc shall arrange and be responsible for transmission service
to the Deliv~ry Point TRL shall be responsible for transmission and distribution service to receive
and transmit. the Energy from the Delivery Point TRL and TRC shall designate authorized
representatives and coordinate with TRL to effect the Scheduling of the Energy.
4.3 Title. Risk of Loss and~emnitt As between the P~es, TRL shall be deemed to be in
exclusive control (and respon~ible for any. damages or injury caused thereby) of the Energy
immediately upOn its delivery to the Delivery Point. Title to and risk of loss related to the Energy
shall transfer from TRC to TRL at the Delivery Point. TRC and TRL shall each indemnify, defend
and hold harinless the other Party from any Claims arising from any act or incident occurring when
title to the ~nergy is vested in the indemnifying Party.
4.4 Force Maieure. If either Party is rendered unable by F~rce Majeure to carry out, in whole or
part, its obligations hereunder and such Party gives notice and full details of the event to the other
Party as soon as practicable after the occurrence of the event, then during the pendency of such Foree
Majeure bu~ for no longer peri~ the obligations of-the Party affected by the event (other than the
obligation to make payments then due or becoming due with respect to performance prior to the
event) shall excused to the extent required. The Party affected by the Force Majeure shall remedy
the Force Majeure withilll reasonable dispatch; provided, however, that this provision shall not
require TRC to deliver Energy at points other than the Delivery P~int.
Failure to Deliver/Receive.
(a) In the event of failure by TRC to deliyer Energy, not excused by Force Majeure or as
otherwise provided in the N orthWeStern Contract, TRL may purchases Energy from a third party at
commercially reasonable rates and terms during such event or failUre, and TRC shall be liable to
TRL 'only for any difference in the cost of Energy to TRL.
Page 3 of 8
j&,. ~. ' "
(TRC) (TRL )
(b)
' ,
In the event ofa failure byTRC to deliverSteain~ not excused by Force Majeure or
othen:vise provided in the NorthWestern Contract, TRL may either produce Steam or purchase 'Steam
from a third party at TRL's ~o~ eco~omical cost. TR.t shall take all necessary steps to mitigate any
cost of replacement Steam.
Authorized Representatives. Notice. of Curtailment or Interrupllim:.As soon as practicabl~,
each PartY shall notify,the ot11er Party of the person(s) ,who will be the authorized representative of
such Party. The authorized representativ~s shall haveno power to modify the 'terms of this
Agreement. Each Party shall immediately contact the other Party's authorized'representative hi the
event of sudden or emergency curtailment or interruption of the provision of Energy hereunder. The
Parties shall ~ritact authorized representatives as appropriate' with as much advance notice as
possible regarding any such impendjng c~ent or interruption.
ARTICLE S. CONSIDERATION
As .consideration for the Lease Agreemen4 TRC shall supply Energy to TRL pursuant to
Article 4.1 at the Contract Energy Price. In addition to the Contract Energy Price, TRL shall be
responsible for its transmiss~on and distribution costs trom the Delivery Point p~t to Section 4.above~
ARTI CLE 6. TAXES
Taxes
. '
TRC is liable for and shall pay, or cause to be paid all Taxes applicable to all sales
Energy. TRC shall indemnify, defend and ~old harmless TRL from any Claims for such T8Xe~.
TRL is liable for and shall pay, or cause to be paid all Taxes applicable to the purchase, transmission
and other applicable fees related to the Energy. TRL shall indemnify, defend and hold harmless TRC
from ,any Claims for ~uch Taxes and fees.
ARTICLE 7. BILLING; PAYMENT
Billing aDd Payment . The Parties shall 8ccoUnt for all Ene~gy delivered hereunder on the
basis of delivered ho~ly quantities. The Parties shall maintain records of hourly deliveries for
accounting and operating pwposes., The accounting period here~der shall be one (1) calendar
month. On or before the tenth (1Oth) day foUowing a month, TRC shall deliver to TRL an invoice
for the preceding month specifying total quantity of Energy delivered 'and the amount due. If an
actual quantity that is necessary to derive ~e statement amount is not available by the cOntractual
billing date, TRC shall prepare the state~ent b~ed on TRC's best estimate of that quantity. The
estimated quantity, if any, will then be. corrected to the actual quantity on the following ~onth.
statement ~r as soon thereafter as the necess8ry information is available. On or before the
twenty-fifth '(25th) of the month, TRL Will pay to TRC the undisputed amount ofTRC's invoice. If
the due date is not a Business Day, then TRL's payment will be due the next Busin~ Day. IfTRL
disputes, in good faith, any portion of the ~voice, TRL shall notify TRC in writing of the reasons
therefor on or before the due date, and the Parties shall negotiate to resolve such dispute. In the
Page 4" of ~\)13017
' /'- ,\ .
,i,
,'"
\ .1 J'UJ
event that the executives of the Parties do not resolve the dispute, the di~ute may be brought indistrict court.
Method of Payment: All payments shall be made in the form and at the location as agreed to
by the Parties respective representatives.
ARTICLE 8. REPRESENT A nONS AND WARRANTIES
Necessary Authorizations. Each Party representS that it hfis all necessary business and
corPorate, legal and other authority, including Regulatory ~pproval, to enter into this Agreement and
any ~actio~ made in accordance with the terms of this Agreement, and to perform each and every
duty and obligation imposed herein, and that this Agreement, when executed by the duly authorized
representatives of such Party, represents a valid, 'binding and enforceable legal obligation of such
Party. Neither PartY to this Agre~ment shall1?e required to inyestigate the. authority of the perso~
executing this Agreement as a condition to enforcing the terms of this Agreement
ARTICLE 9.. LIABILITY AND INDEMNIFICATION
Limitation of Remedies. For breach of any provision of this Agreement for which an express
remedy or measure of damages is provided herein, the breaching party's liability shall be limited as
set forth in such provision, ~ the sole and exclusive remedy, and all other remedies or damages at
law or in equity are waived. If no remedy or measure of damages is expressly provided, the
breaching party's liability shall be limited to direct damages only, as the sole and exclusive remedy
except for gross negligence or intentional misconduct, and all other remedies or damages are waived.
Except as expressly provided in this Agreement, neither Party shall be liable to the other for
, consequential, incidental, punitive or indirect damages, in tort, contract or otherwise. To the extent
any payment required to be made purs~t to this Agreement constitutes liquidated damages, the
Parties acknowledge that the damages are difficult or impossible to determine and that such payment
constitutes a reasonable estimate of the amount of damages.
Limitation ofLiabili . Neither Party shall be liable to the other Party for losses or damages
which result from (a) an event of Force Majeure preventing performance under this Agreement, or
(b) Claims made against such other Party by third partieS due to the perfonnance or non-perfonnance
()f this Agreement, wh~ther such Claims arise in contract, to,rt or otherwi~.
9.3 Indemnification. Each Party ,shall indemnify and hold the other Party and its directors,
officers, agents, employees and contractors harmless from and against any and all Claims, damages,
costs (including attorneys fees), fIDes, penalties, liabilities, actions or proceedings in toft, contract or
otherwise which the indemnified Party may be required to pay to, or which are asserted ~r ~rought
by, the indemnifying Party's employees , contractors or agents or third Parties providing services to or
receiving services from the indemnifying Party, arising from or claimed to have arisen from the
performance or non-performance of this Agreement by the indemnifying Party.
ARTICLE 10. ASSIGNMENTS
Page 5 of 8 iSt aA
(mc)
10.Assignment. This Agreement shall be binding upon and shall inure to the benefit of, and
may be perfonned by, the suc~ssors and assigns of the Parties, except that, no assignment, pledge
or other transfer of this Agreement by either Party shall operate to release the assignor, pledgor, ortransferor from any of its obligations under this Agreement unless: (a) the other Party consents in
witing to S\iC~ assi gnment, pledge, or ~sfer (which ~onsent shaH not be u~easonably withheld)
arid releases, in wri~ing, the' assignor, pledgor, or transferor from any of its 'obligations hereunder; or
(b) the assignment, pledge, or other transfer is to an affiliate of the assignor, pledgor, or transf~ror
and the assignee, pledgee, or transferee assumes, in writing, all of the obligations of the assignor
pledgor, or transferor under this Agreement and any related agreements including without limitation,
the Lease Agreement, provided that such assignee, pledgee, or, transferee demonstrates financial
capacity a~ least equal to that of the assignor, pledgor, or transferor.
10.2 Assi . ent of Ri 15 to Pa ent. Either Party may assign its rights to' receive payment
under this Agreement without having to first obtain the consent of the other Party. Othenvise, except
as provided in SeCtion 10., neither Party may assign, pledge or otherwise transfer its rights under
this Agreement to any other entity without the consent of the other Party, which consent shall not beunreasonably withheld.
ARTICLE 11. ACCOUNTSANDRECORDS
11.Records. The Parties shall keep complete and accurate recordS, meter readings and
memoranda of their operations under this Agreement and shall maintain such data for a period of at
least two (2) years. Each Party shall have the right to examine and inspect all such records, meter
readings and memoranda insofar as may be necessary for the purpose Qf ascertaimng thereasonableness and accuracy of all relevant data, estimates, statements or charges submitted to it
here~der.
ARTICLE 12. NOTICES
12.Notices. Any notice, demand, request, payment, statemen4 or corresPondence provided for
in this Agreement, or any notice which a Party roay desire to give to the other, shall be in writing
(unless otherWise provided) and shall be considered duly delivered When received by mail, facsimile
wire or overnight courier, at the addresses listed below:
If to TRL:
Thompson 'River Lumber Company of Montana, Inc.
Attn: Larry Fiel
Montana Highway .200 East,
Thompson Falls, Montana 59873
cc:Roger Claridge
Page 6 of 8
, '
' (mC) "\ TRL) ,
LHC, Inc.
o. Box 7338
l\a1ispell, Montana 59904-03~8
cc:Christopher B. Swartley
O. Box 8957
Missoula, Montana 59807
if to TRC:
Thompson River Co-Gen, LLC~
Attn.: aany A. Bates
285 2nd Ave
Kalispell, Montana 59901
Each Party shall provide the other with all names, telephone and facsimile n~bers necessary
for its performance under this Agreement and any related transactions; and eith~r Party may change
the infonnation shown in Section 12.1 by giving written 'notice to the other Party at the address listed
above or as modified in accordance herewith.
ARTICLE 13. MISCELLANEOUS
13.1' Governing Law. The interpretation and performance of this Agreement and all Transactions
shall be ,governed by and construed in accorQance with the laws of the S~te o
Montana without regard to principles of confli~t of laws.
13.Confi....Qentiaiity. Neither Party shall disclose the terms of this Agreement to any third party
(other than such Party's employees, lenders, counsel, accountants or other advisors) except in order to
comply with any appliCable law, order, regulatory or exchange rule. Each Party shall notify the other
Party of any proceeding o~ which it is aware that may result in disclosure and shall use reasonable
efforts.to prevent or limit such disclosUre.
13.3 Entire Agreement. This Agreement constitutes the entire agreement between the Parties
relating to the subject matter hereof and supersedes any other agreements, written or oral, between
the Parties concerning such subject matter.
13.4 NoW aiver. No waiver by either Party of any default of the other Party under this Agreement
shall operate as a waiver of a future default whether of a like or different character.
13.Amendments. No amendment of the terms and provisions of this Agreement shall be
become effective except by written amendment executed by the Parties.
13.Severability. Should any provision of this Agreement for any reason be declared invalid or
Page .? of8
~,,.. ; :
TrR:c) (TRt)
unenforceable by fmal and applicable order of any court or regulatory body havingjurisdictio~ such
decision shall not affect the validity of the remaining portions, and the remaining portionS shallremain in effect as if this Agreement had been executed without the invalid portion or the court or
regulatory body may modify such invalid provisions to the fullest extent possible to remain valid andStill reflect the Parties orig~ intent. In the event any provision of this Agreem~nt is decl~
invalid, the Parties shall promptly reI?-egotiate to restore this Agreemen~ J!S near as possible to itsorigi~ intent and effect. '
, .
13.Survival.The provisions' of this Agreement concerning payment,-confidentialitY, and
indemnifiCation shall survive
~y
tennination or expiration of this Agreement.
13.Counterparts: Facsimile Signatures This Agreement may be executed in seyeral
counterparts, and all such counterparts shall constitute one Agreement binding on both Parties hereto
and shall have the same force and effe~t as an original instrument, notwithstanding that both Par:ties
may not be signatories to the same original or the same counterpart. Documents executed and
delivered by facsimile shall be accepted as originals.
13.conStruction. The language used in this Agreement is the product of both Parties ~fforts and
each Party hereby irrevocably waives the benefit of any rule of contract co~ction that disfavors
the drafter of a contract or the drafter of specific language in a contract.
, '
IN WITNESS WHEREOF, the Parties havC? executed this Agreement effective the date fmt
written above. ,
' .
THOMPSON RIVER CO~GEN, LLC
Title:
Date:
By:
Name:
Title:
Date:1(") - 3 ~,
, .
. h" .
Page 8 of 8 J3fL
-&.. ,
mc) "
' '
(TRL)