20110105Answer.pdf

R E í~~\'iI'STA.
Corp;
2011 JAN -5 AM 10= 08
January 4,2011 UTI
Utilities Commission
ashington Street
93702
Email: jean.jewellCipuc.idaho.gov
Orem Family Wind, LLC v. Avista Corporation, IPUC Case No. AVU-E-IO-06
Avista Corporation' Answer
Dear Ms. Jewell:
Please find enclosed for filing an original and seven copies of Avista Corporation's
Answer to the complaint filed by Orem Family Wind, LLC in the above-referenced docket.
Please let me know if you have any questions regarding this fiing.
Michael G. Andrea
Senior Counsel
Enclosures
cc: Peter Richardson
Gregory M. Adams
MICHAL G. ANREA (ISB No. 8308)
A vista Corporation
1411 E. Mission Ave., MSC-23
Spokae, W A 99202
Telephone: [phone]
Email: michae1.andrea(gavistacorp.com
R.. c (' i: r,, .,-V(~
Z3fJ JAN -s AM 10: OB
BEFORE TH IDAHO PUBUC UTIT COMMSION
OREM FAMILY WIN, LLC,
Complaiant,
)
) CASE NO. AVA-E-IQ-06
)
) ANSWER
)
)
)
)
)
)
v.
A vista Corporation dba A vista Utilities, Inc.,
Defendant
A vista Corpration, by and though its attorney, Michael G. Andrea hereby answers the
complaint ("Complaint") of Orm Famly Wind, LLC ("Orem") in the above-captioned matter.
I. Intruction.
1. In its Complaint, Orm requests that the Commssion declare that A vista is in
violation of the Public Utility Regulatory Policies Act of 1978 ("PUR A") and that the
Commssion order A vista to "execute a stadard PUR A power purchase agrment with Orm
Famly Wind, LLC contang Avista's avoided cost rates on fie for QFs under 10 aM in
Order No. 31025, and the terms deemed reasonable by the Commssion for the disputed clauses
describe in (Orm'sJ Complait." Complaint, PryerTl 1,2.
2. Orm alleges, among other thngs, that Avista has rejected Orm's attmpt to
obligate itself to a power purchase agrement contaning Commssion-approved terms of a
stadad PUR A power purchase agrement and has refused to negotiate reaonable terms
Page - 1 ANSWER
regarding (i) environmenta attbutes, (ü) delay default liquidate dages and seurity, and (iü)
wind integrtion charges. E.g., Complaint, Intruction.
3. On or around November 22, 2010, Orm sent A vista a power purchase agreement
executed by Orm ("Orem PP A", attached hereto as Atthment 1) along with a letter discussing
cert issues regarding the Orm PPA ("November 22 Letter"). (The November 22 Lettr is
attched hereto as Attchment 2.) At no time prior to Avista's receipt of the executed Orem PPA
did Orem mae any attmpt contat A vista. Rather, Orem simply took a dr power purhase
agreement provided to another developer and unilateraly changed material term to that dr
power purchase agreement. Pror to A vista's reeipt of the Orm PPA, Orm did not contact
Avista or mae any effort to negotiate the terms of the Orm PPA.
4. In a letter dated Deember 1,2010, Avista rejected the Orm PPA, but mae clear
that A vista stood ready to engage in the necessar discussions to negotiate in goo faith a
mutually acceptable power purchase agrment with Orm ("December 1 Letter"). (Te
December 1 Letter is attched hereto as Attchment 3.) On December 9,2010, Avista engaged
in a brief discussion with Orem regarng the terms of the Orem PP A at which tie A vista
indicated that it was not willng to accept certn terms demanded by Orm, but A vista was
willng to negotiate in goo faith. Following that brief discussion, Orm filed its Complait
alleging, among other thngs, that A vista has negotiate in bad faith and has violated PUR A,
PERC's implementing regulations, and the Commssion's orders. Complaint,' 28, Pryer' 1.
Orem aleges that Avista has violated PURA by, in its view, unjustiably (a) refusing to
disclaim ownership of environmenta attbutes in a power purchase agreement that wil contan
published avoided cost rates, (b) insisting on delay liquidated dages and delay security
Page - 2 ANSWER
amount of $45 per kW nameplate capacity, and (c) reuirng Orem to pay 50 percent of the
stadard wind integrtion charge. Complait, TI 23-25.
5. With regard to Orm's speific allegations, the Commssion has not speifcally
ruled on the issue of ownership of environmenta attbutes with regard to PUR A projects and,
therefore, the disclaier of rights to such environmenta attbutes reuested by Orm is not
reuired. Second, delay liquidated damages and securty of $45 per kW nameplate capacity is
consistent with power purchase agrements executed by other developers and approved by the
Commssion. E.g., Order No. 32144 (approving agreement between Idao Power Company and
wind developer contaning $45 per kW delay liquidated daages). Finally, the Commssion
approved a wind integrtion charge in Order No. 30500. Avista's reduction of the stadard wind
integration charge by 50 percent due to Orem's circumstaces is consistent both with that
Commssion order and the purses of the wind integration charge. Orem's allegations ar
without merit. Moreover, Avista taes exception to Orm's allegations that Avista negotiated in
bad faith.
ll. Answer
6. Avista hereby provides the following answer to the allegations in Orem's
Complaint. Except as expressly adtted herein, A vista denies all material allegations of the
Complait.
7. A vista adts the allegations of pargrph 1 of the Complait.
8. A vista lacks suffcient informtion or knowledge regarding the allegations
contaned in paragrph 2 of the Complaint and, therefore, neither admits nor denies those
allegations.
Page - 3 ANSWER
9. Pargrphs 3, 4, and 5 of the Complaint contan conclusions of law that reuir no
response and, therefore, A vista neither admts nor denies those allegations.
10. Avista lacks suffcient information or knowledge regardig the allegations
contaned in paragrphs 6, 7, 8, and 9 of the Complaint and, therefore, neither adts nor denies
those allegations.
11. A vista adts the allegations of pargraph 10 of the Complaint.
12. Paragrph 11 of the Complaint contas conclusions of law that reuire no
response and, therefore, A vista neither admts nor denies those allegations.
13. In response to pargraph 12 of the Complaint, the documents referenced in
pargrph 12 of the Complaint spe for themselves.
14. Avista adts the allegations of pargrphs 13 and 14 of the Complaint.
15. In response to pargraph 15 of the Complaint, Avista adts that it refused to
agre to terms unilateray proposed by Orem in the Orm PPA regarding ownership of
envirnmenta attbutes, delay liquidated dages and security, and the wind integration charge.
16. In response to pargraph 16 of the Complaint, A vista admts that it refused to
agree to terms unilaterally proposed byOrem in the Orm PPA regarding ownership of
environmenta attbutes. In response to the remaining allegations in Paragrph 16 of the
Complaint, the Idao Power Company and Rocky Mountan Power PUR A PPAs referenced in
pargraph 16 of the Complait speak for themselves.
17. In response to paragraph 17 of the Complait, A vista admts that, in the brief
discussion it had with Orem, it would not agree to delay liquidated daages and securty clauses
contaning damages and security amounts less than $45 per kW. To the extent implied by
Page - 4 ANSWER
paragraph 17 of the Complaint, A vista denies that its proposed delay liquidated daages and
seurity amounts are not reasonable.
18. In response to pargraph 18 of the Complaint, Avista admts that, in the brief
discussion it had with Orem, it agr to reduce its stadard wind integrtion charge by 50%
beause Avista understads that Orm wil schedule energy to Avista's electrcal system on an
hourly firm basis. The remaining allegations of pargrph 18 of the Complait either conta
conclusions of law for which no response is requir or A vista lacks suffcient informtion or
knowledge and, therefore, A vista neither admts nor denies those allegations.
19. Pargrph 19 of the Complaint contans conclusions of law that reuire no
response and, therefore, A vista neither admts nor denies those allegations. To the extent a
response is reuired the documents referenced in pargraph 19 of the Complait speak for
themselves.
20. A vista lacks suffcient information or knowledge regarding the allegations
contaned in paragrph 20 of the Complaint and, therefore, neither admts nor denies those
allegations.
21. In response to pargraph 21 of the Complaint, A vista incorprates its responses to
pargraphs 1-20 of the Complait.
22. Paragrphs 22-28 of the Complaint contans conclusions of law that reuir no
response and, therefore, A vista neither adts nor denies those allegations. To the extent any
response is required, Avista denies the alegations in paragraphs 23, 24, and 25 and fuer
denies that Avista's actions ar unjustifiable or unreaonable. Avista taes parcular exception
to the allegation in pargraph 29 of the Complaint that A vista negotiated in bad faith, which it
also denies.
Page - 5 ANSWER
23. In response to the Prayer for Relief contaed in the Complaint, Avista denies that
Orem is entitled to the relief prayed for.
WHREFORE, A vista respectflly requests that the Commssion issue an order denying
the relief sought by Orem in its Prayer for Relief.
Respectflly submitted ths ~t:day of Januar 2011.
~
Michael G. Andrea
Attorney for A vista Corporation
Page - 6 ANSWER
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POWER PURCHASE AGREEMENT
BETWEEN
Orem Family Wind, LLC
AND
A VISTA CORPORATION
TABLE OF CONTNTS
TITLE
DEFINITIONS
WARRNTIES
CONDITIONS PRIOR TO COMMRCIA OPERATION
TERM OF AGREEMENT AN COMMRCIA OPERATION
DATE
MECHACAL AVAIABILITY GUARTEE
WI ENERGY FORECASTING
SCHEDULING
PURCHASE PRICES AN PAYMENT
SECURITY
CURTAIMENT, INTERRUPTION OR REDUCTION OF
DELIVERY
OPERATION
INTERCONNECTION AN TRSMISSION
FORCE MAJEURE
INEMNITY
ASSIGNMENT
NO UNSPECIFIED TH PARTY BENEFICIAS
DEFAULT AN TERMATION
DISPUTE RESOLUTION
RELEASE BY SELLER
GOVERNMENTAL AUTORI
SEVERA OBLIGATIONS
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22 IMPLEMENTATION23 NON-WAIVER
24 AMENDMENT
25 CHOICE OF LAWS AN VENU~ HEADINGS
27 SEVERABILITY28 COUNTERPARTS29 TAXES
30 NOTICES31 SURVIVAL
32 ENTIR AGREEMENT
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
ExhibitH
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POWER PURCHASE AGREEMENT
Ths Agrment is made by and beee A vist Corpraon, a Washigtn corpraon
("Avista"), and Orem Family Wind LLC an Oregon LLC ("Seller"). Avista and Seller
are sometimes referred to individualy as a "Par" and collectively as the "Pares."
RECITALS
WHAS, Seller wi design cons own ope an mai a 10 megawa
electrc power generatig facility ("Facility") at Lexington, OR as more fuly described in
ExhbitG;
WHREAS, Seller wil opera the Facilty as a QufYin Facilty, as defied by the
Public Utility Reguatoiy Policies Act of 1978 ("PUR A"); and
WHREAS, Seller will deliver and sell, and A vist wi purha, elecc energ
generate frm the Facilty subject to the terms of ths Agrement.
NOW, THREFORE, in consideration of the mut agments set fort hein the
Pares agree as follows.
1 DEFINITIONS
Excep as otherwse defied in ths Agrent whenever us in th Agrent and
exhbits hereto, the followig terms shall have the following meangs:
1.1 "Agrement" mean ths Power Purhase Agreement, including all exhbits, and
any wrttn amendments.
1.2 "Alternate Point of Delivery" shall have the meang provided in Section 12.3
of ths Agreement.
1.3 "Avoided Cost Rates" or "Base PUR A rate" shall have the meanng provided
in Section 8.2 of ths Agrement.
1.4 "aMW" means average megawatts). An averge megawatt is caculated by
dividi the tota genertion in MW over a given period of tie (e.g., a caenda month) by the
number of hour in that period of tie.
1.5 "Ancilary Servces" means those services that are necessar to support the
trmission of capacity and energ from resources to loads while maitag reliable operation
of the electrca systems in accordace with Pruent Utility Practices and any existg or futu
WECC reuiments.
-3-
1.6 "Availabilty Factor" shal equa the ratio of the availability of all tubines (the
"Numeratof') as compaed to the planed availability adjus for Force Majeur and Schedule
Outaes (the "Denomintof'). The Numerator shall be calculated by tag the number of hour
for which each tubine is available multiplied by its nameplate capacity ratig and summing
these resultig values for al tubines in the Facility. The Denomiatr shall be cacul as the
naeplate capacity ratig for each tuine multiplied by the result of the tota numbe of hour in
the Calenda Month less Scheduled Oue hour durg the Calenda Month less Forc Majeur
hour durg the Calenda Month for each tubine and summing these resultig values for all
tubines in the Facilty. Accordgly the formula that will be applied to calculat the Availabilty
Factor is:
Avaiabilty =
Factor
~naeplate capaity for each tuine * number of hour such tubine
was available dur the Calenda Month
.(naep1at capaity for eah tuine (tota hour in the Calen
Month - Force Majeure hour - Scheduled Oute hour))
A sample calculation is attched as Exhbit H to ths Agrement for ilustrtive puroses only.
1. 7 "Balancing Authority Area" means an electrcal system or systems bounded by
intercnnection meterig and te1emeti, cale of contrll generaon to maita its
intehae schedule wi other Balancing Autority Ar and contrbut to fruency
reguation of the intercnnection. A Balancing Autority Ara mus be certfied by the
applicable reliabilty council (such as WECC or other reliability council).
1.8 "Business Day" mean every day other than a Satuday or Sunday or a national
holiday. Nationa holidays shall be those holidays observed NERC.
1.9 "Commercial Operation" means the Facility is fully operational and reliable, is a
Qualified Facility and Seller has fulfilled all of the conditions reuir by Section 4.2 of the
Agreement.
1.10 "Commercial Operation Date" mean the day followig the date tht the
Facility fi achieves Commercial Opration.
1.11 "Commission" means the Idaho Public Utilities Commission, or its successor.
1.12 "Delay Liquidated Damages" means the damages payable to Avista due to
Seller's failur to achieve Commerial Option by the Scheduled Opration Date as set out in
Sections 4.3 and 4.4 of ths Agreement.
1.13 "Delay Period" means all hours withn a given calenda month for all months
and paral month pas the Scheduled Operation Date until Seller's Facilty achieves
Commercial Opration.
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1.14 "Delay Price" mean the positive difference, if any, of the Market Energy Price
minus the Net Avoided Cost Rate applicable for the Delay Period as specified in Section 8.2 of
ths Agreement. If ths calculation results in a value less than 0, the result of ths calculation will
be O.
1.15 "Delierable Net Output" means Net Outut less any applicable Losses and
other applicable adjustments associat with the trmission of energ frm the Point of
Interconnection to the Point of Delivery or to an Alternate Point of Delivery, if any.
1.16 "Effectie Date" shal have the meang provided in Section 4 of ths
Agreement.
1.17 "Excess Energ" shal have the meang provided in Section 8.3 of ths
Agreement.
1.18 "Facilty" means the electrc energy generating facilties, including all equipment
and stctues necessar to generate and supply electrc energy, more parcularly describe in
ExhbitC.
1.19 "Facilty Servce Power" mea the electrc energy generated and used by the
Facilty durg its operation to operate equipment that is auxliar to primar generation
equipment includig, but not limited to, pumping, generator excitation, cooling or other
operations related to the production of electrc energy by the Facility.
1.20 "Force Majeure" shall have the meang provided in Secon 13 of ths
Agreement.
1.21 "FERC" means the Federal Energy Reguatory Commission, or its successor.
1.22 "Independent Engineering Certfication" means certfications detaled in
Section 3.4 provided by a professiona engieer regire in Idao or the st in whch the
Facility is loc who ha no dit or indit, legal, or equitable ownership interest in the
Facilty.
1.23 "Initial Capacity Determination" shall have the meang provided in Section
3.5 of ths Agrement.
1.24 "Intil Expecte Energ" shal have the meanng provided in Section 3.6 of ths
Agrment.
1.25 "Interconnection Agreement" means, as applicable, the agreement between
Seller and A vista or Seller and a Trasmittng Entity tht is providing interconnection service
which govern how the Net Ouut is delivered to Avista's or the Tramittg Entity's elecca
system at the Point of Interconnection durg the Term of ths Agrement.
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1.26 "Interconnection Facilties" means, if applicable, all facilities required to
connect the Facility to the Point ofInterconnection, including connection, transformation,
switching, relaying and safety equipment. Interconnection Facilities shall also include all
telemetr, metering, cellular telephone, and/or communicaton equipment requir under this
Agreement regardless of location.
1.27 "Losses" meas the loss of electrical energy expressed in kilowatt hours (kWh)
ocuring as a result of the transformation and transmission of energy between the Point of
Interconnection and the Point of Delivery.
1.28 "MW" means megawatt. One thousand kilowatt equals one megawatt.
1.29 "MWh" meas megawatt-hour. One thousand kilowatt-hours equals one
megawatt-hour.
1.30 "MAG Shortall" shall have the meaning provided in Section 5.2 of this
Agreement.
1.31 "Market Energy Price" means the monthly weighted average, based on daily
on- and off-peak Net Output, of the daily On- and Off-Peak Dow Jones Mid-Columbia Fir
Index (Dow Jones Mid-C Fir Index) prices for fir energy.
1.32 "Mechanical Availability Guaranty" or "MAG" shall have the meaning
provided in Section 5.1 of this Agreement.
1.33 "Nameplate Capacity Rating" means the maximum generatig capacity of the
Facilty, as determined by the manufacturer, and expressed in kilowatts (kW).
1.34 "NFRC" means the Nort American Electrc Reliability Corporation or its
successor.
1.35 "Net Avoided Cost Rates" or "Net PURA rate" shall have the meaning
provided in Section 8.2 of this Agreement.
1.36 "Net Output" means the electric power generated by the Facility less Facility
Service Power that is delivered to the Point ofInterconnection, expressed in kilowatt-hours.
1.37 "Off-Peak" means all hours other than On-Peak hours.
1.38 "On-Peak" meas the hours ending 0700 though 2200 Pacific Prevailing tie,
Monday though Sunday, excluding national holidays.
1.39 "Operating Year" means each 12-month period from Janua 1 though
December 31.
-6-
1.40 "Point of Delivery" means the location, as specified in Exhbit C of ths
Agrent, where the elecc energy prouce by the Facility is deliver to A vi's electrcal
system.
1.41 "Point of Interconnection" mean the lugh voltae side of Seller's stp-up
trformer at the point of intercnnection between Seller's Facility and the Tramittg
Entity's electrc system, wluch is commonly referred to as the "busbar."
1.42 "Prudent Utiity Practices" mean the pratices, methods, and acts commonly
and ordinaly used in electrcal engieering and operations by a significant porton of the
electrc power generation and trmission industr, in the exercise of reasonable judgment in
the light of the facts known or th should have ben known at the tie a decision wa made, that
would have been expete to accomplish the desir result in a maner consistent with law,
reguation, reliabilty, safety, environmenta protetion, ecnomy, and expetion.
1.43 "Qualifyng Facilty" or "QF" means a generating facility wluch meets the
reuiments for "QF" sttu under PUR A and pa 292 ofFERC' s Reguations, 18 C.F.R Par
292, and wluch has obtaed certcation of its QF statu.
1.44 "Scheduled Operation Date" means the date specified in Section 3. i when
Seller anticipates aclueving the Commercial Operation.
1.45 "Scheduled Outage" means any outae which is scheduled by the Seller to
remove electrca or mechacal equipment frm servce for reai, relacment, maitenance,
safety or any other reason, and wluch thereby limts the generatig capabilty of the Facility to
less th the Initial Capacity Determination.
1.46 "Start-Up Testing" means the sta-up tests required by the factory and/or Avist
that prove that the Facilty is reliably proucing electrc energy.
1.47 "Term" shall have the meanng provided in Section 4. i of this Agreement.
1.48 "Test Energ" shal be the energ generated durg Sta-Up Testig and shall
have the meang provided in Section 8.4 of ths Agrement.
1.49 "Transmittng Entity" means any entity or entities that provide transmission
and/or intercnnection servce to deliver electrc energy frm the Facilty to Avist's electrca
systm at the Point of Delivery, if applicable.
1.50 "Transmission Agreement" mean any agreement(s) entered into between Seller
and a Tramittng Entity under wluch the Tranmittg Entity shall provide firm trsmission
and any necessar Ancilar Servces to faciltate deliveries hereunder frm the Facility to Point
of Delivery for the Term of ths Agreement. The Tramission Agreement(s) is attched hereto
as Exhbit D.
-7-
1.51 "WECC" mean the Western Electrcity Coordinating Councilor its successor.
1.52 "Wind Energy Forecasting" shall have the meanng provided in Section 6 of
ths Agreement.
1.53 "Wind Integration Charge" sha mean a wid integrtion chage up to the wid
integrtion chae autori by the Commssion in Order No. 30500, or any replacment wid
integration chage authorized by the Commission. The Wind Integration Charge applicable to
ths Agreement is speified in Exhbit E.
2. WARRANTIES
21 No Warrnty by Avista. Avist makes no warties, expressed or implied,
regarg any aspet of Seller's design, speifications, equipment or facilities, includig, but not
limited to, safety, durbilty, reliability, stengt, capacity, adequacy or economic feasibilty, and
any review, acceptace or failure to review Sellets design specifications, equipment or Facility
shal not be an endorsement or a confation by A vista. A vista assumes no responsibilty or
obligation with regard to any NERC and/or WECC reliability stadard associated with the
Facilty or the delivery of electrc energy frm the Facilty to the Point of Delivery.
2.2 Seller's Warranty. Seller warants and represents that: (a) Seller has
investgated and determined that it is capable of performing and will perform the obligations
hereunder and has not relied upon the advice, experience or expertse of A vista in connection
with the trsactions contemplated by this Agreement; (b) all professionals and experts
includig, but not limited to, engineers, attrneys or accountats, that Seller may have consulte
or relied on in undertng the trsactions contemplated by ths Agrement have been solely
those of Seller; (c) Seller will comply with all applicable laws and regulations and shall obt
and comply with applicable licenses, permits and approvals in the design conscton, operation
and maintenace of the Facility; and (d) the Facilty is, and durg the Term of ths Agreement
will remai, a Quaifying Facilty as tht te is usd in 18 C.F.R Par 292. Seller's failur to
mainta Quaifying Facility status will be a material breach of ths Agreement. Avista reserves
the right to review the Seller's Quag Facilty sttu and assoiate supprt and compliance
documents at anyte dur the Term of ths Agrement.
3. CONDITIONS PRIOR TO COMMRCIA OPERATION
3.1. Time is of the Essence. Time is of the essence in the performance of ths
Agreement and Seller undersds and agres that A vist is relyin on Seller to meet the
requiments of Secon 4.2 on or before Dec 31,201 2 (the "Scheduled Opraon Date").
Seller understads and agees that Avist's acceptace of deliveries of energy from Seller is
contigent upon Seller fuly satisfying each of the requiments in Section 4.2 of ths Agrement
pror to the Commercial Opration Date.
-8-
3. License, Permits and Approvals. Prior to Commercial Operation, Seller shall
submit to Avista written proof that all licenses, permits or approvals necessai for Seller's
operations have been obtained frm applicable federa, state, trbal or local authorities, including,
but not limited to, evidence of compliance with Subpar B, 18 C.F .R. § 292.207, trbal, state and
local business licenses, environmental permits, easements, leases and all required approvals by
the Commission. Avista and Seller shall cooperate in petitioning the Commission for any
required approvals.
33 Opinion of Counsel. Prior to Commercial Operation, Seller shall submit to A vista
an opinion letter signed by an attorney admitted to practice and in good standing in the state
where the Facility is located providing an opinion that Seller's licenses, permits and approvals as
set forth in Section 3.2 above are legally and validly issued, are held in the name of the Seller,
and based on a reasonable independent review, counsel is of the opinion that Seller is in
substatial compliance with said permits as of the date of such opinion letter. The opinion letter
wil be in a form acceptable to Avista and wil acknowledge that the attorney rendering the
opinion understads that Avista is relying on said opinion. Avista's acceptance of the form shall
not be unreasonably withheld.
3.4 Independent Engineering Certfications. Prior to Commercial Operation, Seller
shall submit to Avista applicable Independent Engineering Certifications for (a) Constrction
Adequacy for a QualifYing Facility, and (b) Operations and Maintenance Policy for a QualifYing
Facility as described in Commission Order No. 21690. Each Independent Engineering
Certification shall be signed by a licensed professional engineer in good stading submitted in a
form acceptable to A vista and wil acknowledge that the licensed professional engineer rendering
the opinion understands that A vist is relying on said opinion. A vista's acceptace of such fonns
shall not be uneasonably witheld.
3.5 Initil Capacity Determination. Seller shall design and operate the Facility in a
maner such that under normal design conditions the Net Outut does not exceed 10 aMW in
any Calendar Month. Prior to Commercial Operation, Seller shall submit to A vista the
maxum hourly generation capabilty of the Facilty ("Initial Capacity Determination"). Such
Initial Capacity Determination shall be determined eitJer by use of the Nameplate Capacity
Rating or such other means acceptable to A vista and shall be documented and submitted to
A vist by Seller. Such documentation shall include the information listed in Exhbit 1. Upon
receipt of Seller's Intial Capity Detaton, A vist wi review such detrmon with a
reasonable time and, if acceptable to A vista A vist shall issue to Seller its wrtten approval of
the Initial Capacity Determination. If the Initial Capacity Determination submitted by Seller is
not aceptable to A vista A vist will promptly noti Seller tht A vista will not acept its Intial
Capacity Determination. In such event, Avista shall engage, at Seller's sole expense, an
independent quaified consultat to determine the Initial Capacity Determination. Durng the
Term of ths Agrment, Seller shall not cause the capacity of the Facility to be grater th the
Intial Capacity Determination by any mean, including by addition, upgrde, or replacement of
any wid tubine or tubines.
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3.6 Initil Expected Energ. Upon execution of ths Agrement, Seller shall submit
estates of the energ, in MWh the Seller expects the Facility to generate for eah month of the
first twelve month following Commercial Operation ("Initial Expeted Energy"). Initial
Expecte Energy shal be atthed to ths Agrement as Exhbit F.
3.7 Interconnection Agreement. Prior to Commercial Operation, Seller shall provide
Avista a copy of its Interconnection Agreement.
38 Ancilary Senices. In the event that the Facilty is located outside of Avista's
Balancing Authority Area, Seller shall be responsible at its sole expense for obtaining any and al
necessa. Ancilai Services reuired to deliver Deliverale Net Output to the Point of Delivery
consistent with applicable scheduling protocols. Seller shall demonstte its compliace with this
Section prior to Commercial Operation.
3.9 Security. Pror to Commercial Operation, Seller shall submit to A vist evidence of
compliance with Section 9, Securty.
3.10 Start-Up Testig. A vista agrees to take all Test Energy generated by the Facility
durig Sta-Up Testing and delivere to the Point of Delivery, consistent with Section 8.4 of this
Agreement. Prior to Commercial Operation, Seller shall submit to Avista evidence of completd
Sta-Up Testig.
3.11 Network Resource Designation. PriortoCommercìalOperation, Seller shall, if
requested by A vista provide to A vista all data required by A vista to enable the Facilty to be
designated by A vista as a network resource.
3.12 Written Acceptance. Prior to Commercìal Operation, Seller shall request and
obta from A vist written confiation that all conditions to acceptace of electrc energy have
been fulled. A vist shall use renable commercial effort to promptly provide Seller wrtt
confinnation that all conditions to acceptace of electrc energy have been fulfilled or provide
notice that such conditions have not been fulfilled.
4. TERM OF AGREEMENT AND COMMERCIAL OPERATION DATE
4J Ths Agrement shal be effective on the date last signed below or such other date
set by Commission ord (the ''Effecve Date'') and sha contiue for twenty yea af the
Commercial Opration Date (the "Term"), uness otherwse terminate as provided herein.
42 The Commercial Operation Date may occur only upon or afer:
( a) all of the requirements in Section 3 of ths Agreement are satisfied;
(b) Commission apprval of ths Agrent in a form acptale to A vist has
been received;
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(c) Seller ha demons to A vist's sataction tht the Facility is complete
and able to provide energy in a consistent, reliable, and safe maner;
(d) Seller has request in wrtig a Commercial Opration Dat frm A vist; and
(e) Seller has received wrttn confrmation from Avista of the Commercial
Opration Date, whch confation will not be unasonaly witheld by A vist
4.3 Seller shall cause the Facility to achieve Commercial Operation on or before the
Scheduled Operation Date. If the Commercial Operation Date occur after the Scheduled
Opration Dat, Seller shal pay A vist Delay Liquidate Damages. Delay Liquidated Damages
will be calculate monthy as follows:
Delay Liquida Damages ar equa to Inti Exp Energ as prvided in Exhbit F
multiplied by the Delay Period for the month multiplied by the calenda month's Delay
Price. Accordgly, Delay Liquidate Damages shall be caculat using the followig
formula:
Delay Liquidated Damages = Initial Expected Energy * Delay Period * Delay Price
4. Delay Liquidated Damages will be caculated puruat to Section 4.3 for a
maxum of 120 days past the Scheduled Operation Date. If the Facility fails to achieve
Commercial Opration with 120 days of the Scheduled Opration Date, Seller shall pay A vist
in addition to the Delay Liquidated Damages calculated under Section 4.3, Delay Liquidated
Damages calculate as follows:
The dollar amount deemed renale by the Commission multiplied by the
Intial Caity Detrminon with the Intial Capaity Determinon Amount
being measur in kilowats.
Upon Commission approval of ths Agrment and A vist's approval of the Initial Capacity
Determination in acordance with section 3.5, Seller shal post liquid securty ("Delay
Securty") in the form of cah, lettr of cret, or other form acceptable to A vista equa to or
exceeding the doll amoun deeed renale by the Commssion multiplied by the Intial
Caity Determinon with the Intial Capity Detetion bein meaurd in kilowatt.
Failure of the Facilty to achieve Commercial Operation withn 120 days of the Scheduled
Opration Date shall constitute a material breach of ths Agreement and, therefore, A vista may,
at its sole option, terminate ths Agrment.
4.5 Seller shal pay A vist any Delay Liquidate Damages with five business days
of when Avista presents any Delay Liquidated Damages bilings to Seller or the 15th of the
month whichever is later. Seller's faiur to pay Delay Liquidate Damages with the speified
tie will be a material breach of ths Agreement.
4. The Pares agree that A vista will incur substtial daages if the Facility fails to
achieve Commercial Opration by the Scheduled Operation Date and tht the daages Avist
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would
incur due to such delay would be diffcult or impossible to prect or calculate with
certty, and th the Delay Liquida Damages ar an apprprate apxiaton of such
daages and are not a penaty.
4.7 The Pares agee tht ths Agrement is a speial contrt and, as such, the rates,
terms and conditions contaned in ths Agrement will be constred in accordace with PUR A
and other applicable law. Ths Agrment shal beme :fy effective upon the Commission's
approval of all terms and provisions herin without chage or condition and declaron th all
payments to be made to Seller hereunder shall be allowed as prudently incured expenses for
ratemakg purses.
5. MECHANICAL AVAILABILITY GUARANTEE
5.1 Seller gutees that the Facility will maita a monthy minum Availabilty
Factor of 85% ("Mechancal Availablity Guate" or "MAG"). Afr the Commerial
Option Date, Seller mus demons its complian with ths Mechaca Avaiabilty
Guate monthy durg the Term of the Agrement.
5. Liquidated Damages for MAG Shortall. If the average Availability Factor of
the tubines in any given calendar month falls below 0.85, the resulting shortall shall be
expresse in MW as the "MAG Short." In such cirumstces, the MAG Short shal be
calculate by Seller in accrdce with the followig formula:
MAG Short ((0.85 - Availability Factor) * Net Output)
Availabilty Factor
5.3 If a positive MAG Shortall occur in any given caenda month A vist in its sole
discretion, may reui Seller to pay to Avist liquidated daages equa to the greater of (l) the
product of the MAG Shortall for tht Calenda Month multiplied by (the Delay Pnce, or (2) the
product of the MAG Shortall multiplied by $1.50; provided, however, for the first Calendar
Month in which Commercial Operation occur the MAG Shortl shall be prorate on the basis
of the number of days in the period frm the Commercial Opration Date though to the end of
such Calendar Month. Each Par agrees and acknowledges that (a) the daages that Avista
would incur due to the Facility's failure to achieve the MAG would be diffcult or impossible to
predict with certnty and (b) the liquidated daages contemplated by ths provision ar a fai
and reonable calculation of such daages and ar not a penaty.
5.4 Seller shal pay A vist any liquidate daages required by Section 5.3 with five
business days of when A vista prsents any bilings for such liquidated daages to Seller or the
15th of the month, whichever is later. Seller's failur to pay Delay Liquidated Damages withn
the specified time will be a material breach of ths Agreement.
55 Upon Avista's request, Seller shall provide documentation and supportg data in
a form acceptable to A vista demonstrtig its compliance with ths Section.
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.
6. WIN ENERGY FORECASTING
6. A vi~ in its sole discretion, may pedorm wid energ forecasti ("Wind
Energ Forecastig"). In the event tht Avist chooses to pedorm Wind Energy Foreasg,
A vista may pass the cost of such Wind Energy Forecasting on to the Seller in a maner
consistnt with the Commission's policy stte in Order No. 30500 issue in Cas No. A VU-E-
07-02.
6.2 In the event tht A vista chooses to conduct Wind Energy Forectig, the Seller
shall provide Avist and/or its consultat, at Seller's sole expense, any and all data from the
Facilty necssar to pedorm such Wind Energy Fore, includig but not lite to systm
contrl and da acuisition inormation.
6.3 In the event tht A vista chooses to conduct Wind Energy Forecag, A vista shal
provide Seller with wrtten notice of its intent to conduct such Wind Energ Forecastig.
7. SCHEDULING
7.1 Seller is responsible for supplyin day(s)-ahead ener pre-schedules for each hour.
Seller sha submt ener prschedules for th next Business Day by emai, or by oth muty
ageed upon mea, to A vist no later than 5 :30 am on the Business Day imedatly prce
the day on which energy deliveries are to be made; provided, however, that for estimates of
deliveries on weekends and holidays (as defied by NERC), Seller and Avista shall follow
scheduling procedures in accordance with then curent WECC stdad scheduling practices
with regard to multiple day scheduling.
7.2 Seller shall create an electronic ta (e.g., e- Tag) tht reflects the day-ahead hourly
estate no later than 2:00 pm on the Business Day imediately precedg the day on which
energ deliveries are to be made; provided, hoever, th for estates of deliveries on weekends
and holidays (as defied by NERC), Seller and A vista shal follow scheduling procedures in
acrdce with then curnt WECC stdad schedulg praces with regard to multiple day
schedulin.
73 The day-ahead estmate shall be provided for preschedule purses and shall not
restct Seller's right to submit revised hour-ahead schedules as provided herein.
7A At leas ninety minutes prior to the st of each delivery hour durg the delivery
Business Day, Seller shal provide A vista with an updated electrnic ta that reflects the fi
schedule for that delivery hour. Seller shal pay any energy imbalance charges or penalties
impose by the Traission Entty on th delivei of the Deliverble Net Ouut to 1he Point of
Delivery.
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7.5 Email conta inormation with regard to pre-scheduling and telephone contact
inormaton with regar to generaon level changes, interrptons or outes ar speified in
Exhbit A, Communcaton and Reprt.
7.6 Should cirumstces change in the WECC or WECC sub-region, with which
A vista operas its elecc systm, dictate that schedulin protocols or tiin of schedule
notificaons nee to conform, then the Pares ag to negotiate in goo faith to a muty
agred modification of ths Section 7 as necessa.
8. PURCHASE PRICES AND PAYMENT
81 Except when either Par's pedormance is excused as provided herein for the
Term of ths Agrement, Seller shal deliver all Deliverable Net Outut from the Facility to
A vista at the Point of Delivery or, if applicable, an Alternate Point of Delivery. For all
Deliverable Net Outut delivere to A vi at the Point of Delivery or an Altern Point of
Deliver, A vist sha pay the applicable rate speified in Sections 8.2, 8.3, and 8.4 of ths
Agreement
82 Deliverable Net Output Equal to or Less Than the Initial Capacity
Determination. For all Deliverable Net Output delivered to Avist at the Point of Delivery or at
an Alternte Point of Delivery for each hour tht is not Test Energy or Excess Energy, Avista
shall pay the applicable avoided cost rate based upon the On-Peak or Off-Peak Avoided Cost
Rates For Non-Fueled Projects Smaller Th Ten Averae Megawatt - Non-Leve1iz in effect
on the Effective Dat ("Avoided Cost Rate" or "Base PUR A ra"), less the Wind Integrtion
Chage plus the Wind Integron Credit, as speified in Exhbit E ("Net Avoided Cost Rates" or
"Net PUR A rate"). The Net Avoided Cost Rates to be paid under ths section are specified on
page 4 of Exhbit E.
83 Excess Energ. Excess Energy is Deliverable Net Output, expressed in MWh
whch Seller delivers to A vist at the Point of Deliver or at an Alternte Poin of Deliver th
exceeds 10 aMW for that Calenda Month. A vista will tae all Excess Energy, but A vist will
not pay for any Excess Energy.
8. Test Energy. Test Energy is Deliverable Net Output prouced by the Facilty
dur Sta-Up Testg and delivered to A vist at the Point of Delivery . Seller shal sell all Test
Energ prouced by the Facilty to A vist and A vist shal purhase at 50 percent of the Maret
Energy Price or 50 percent of the applicable Avoided Cost Rate specified in Exhibit E,
whichever is less, all such Test Energy tht is delivered to the Point of Delivery or an Alternate
Point of Delivery.
8.5 Payments to Seller. A vist shall prepar and submit to Seller monthy
sttements durg the Term of the Agreement based upon Deliverable Net Outut delivered to
A vist durg the previous month. Payments owed by A vist shal be paid no later than the 15th
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day of the month following the end of the monthy biling period or five days afer the receipt
of a monthy sttement, whichever is later. If the due date falls on a non-Business Day, then the
payment shall be due on the next Business Day.
8.6 Payments to A vista and Right of Set Off. If Seller is obligated to make any
payment or refud to A vista, Seller agrees that A vista may set off such payment or refud
amount against any curent or futue payments due Seller under ths Agrement. If A vista does
not elect to set off or if no curnt or fu payment is owed by A vist A vist shal submit an
invoice to Seller for such payments. Seller shall pay A vista no later than the 15th day of the
mont followig th end of the monthy bil period or five days afr the reipt of a monthy
statement, whchever is later. If the due date falls on a non-Business Day, then the payment shal
be due on the next Business Day.
8.7 Interest. In addition to the remedes set fort in Section 17 of ths Agreement,
any amounts owing afr the due date specified in Sections 8.5 and 8.6 will be subject to interest
in the amount of one and one haf percnt (1.5%) per month not to exceed the maxmum ra
allowed by the law, multiplied by the unpaid baance.
8.8 Wire Transfer. All payments shall be made by ACH or wi trfer in
accrdace with fuer agement of the Pares.
8.9 Envionmental Attributes. The avoided cost rates contaed in Exhbit E of ths
Agreement compensate Seller only for the value of the energ and capacity provided by the
facilty. The avoided cost rates do not include any compensation to Seller for any environmenta
attbutes assoiate with the facilty. Avista waives any claim to ownership of Envirnmenta
Attbutes, and waives any claim that such ownership pases to A vita puruat energy and
caacity sales made under ths Agrment. Environmenta Attbutes include, but ar not limite
to, Grn Tags, Green Certficates, Renewable Energy Creits (RCs), and Traable Renewable
Certficates ('IRCs) directly associated with the prouction of energy from the Seller's Facility.
9. SECURITY
9.1 Insurance. Prior to operating the Facilty, Seller, at its own cost, shall obtan and
maita the following inurce in force over the term of ths Agrement and shal provide
certficates of all insurce policies. All inurce policies reuid to fufill the reuiments of
ths Section 9 shal include langue requig tht any notice of cancellation or notice of chage
in policy terms be sent to Avista by the insurce carer(s) at least six days prior to any chage
or termination of the policies.
9.1.1 General Liabilty. Seller shall car commercial general liabilty
inurce for bodily injur and propert daage with a minum limit equa to
$1,000,000 for each occurnce. The deductible shal not exceed the Seller's fiancial
abilty to cover clais and sh not be grter th preai prtice for simar
operations in the State ofIdao.
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9.1.2 Propert. Seller shall car all-risk propert insurance for repair
or replacement of the Facilty. The limit of propert insurance shall be suffcient
to restore operaons in the event of reasnaly foresele losses frm na,
operaona, mechacal and hinan-cused pe1s. The deducble sha not exce the
Seller's fiancial abilty to fid the cost of losses and sha not be grter th
prevailig practices for similar operations in the State ofIdao.
9.1.3 Qualifyng Insurance. The insurance coverage required by this
Section 9 shall be obted frm an inurce company reasonably acceptble to
A vist and shall inlude an enorsent nag A vi as an additiona inur and
loss payee as applicable.
9.1.4 Notice of Loss or Lapse oflnsurance by Seller. If the insurce
coverage requied by ths Section 9 is lost or lapses for any reason, Seller will
immediately notify A vista in wrting of such loss or lapse. Such notice shall advise
A vista of (i) the reason for such loss or lapse and (ii) the steps Seller is tang to relac
or reinte coverae. Notice provided by the inurer requied by Section 9.1 shall not
satsfy the notice requiment of ths Section and Seller's failur to provide the notice
reui by ths Secon anor to prompty relac or reinte coverae wi constu a
material breach of ths Agrement.
9. Ongoing Security for Performance. For the Term of this Agreement, Seller
will provide A vist with the followig:
9.2.1 Inurace. Upon A vist's request Seller sha provide Avist evidence of
compliance with the provisions of Section 9.1. If Seller fails to comply, such failur will
be a material breach and may only be cured by Seller promptly supplying evidence tht
the requied inurance coverae ha be replaced or reintate.
9.2.2 Engineer's Certification. Every three years after the Commercial
Operation Date, Seller wil supply A vist with a Certfication of Ongoing Operations and
Maintenance from a Registered Professional Engineer licensed in the State of Idaho the
state in which the Facilty is located, which certification shall be in the fonn specified in
Exhibit B. Seller's failure to supply the certificate required by this Section 9.2.2 wil be a
matrial breach that may only be cured by Seller promptly providing the reuir
certificate.
93 Licenses and Permits. During the Term of ths Agreement, Seller shal maitan
compliance with all peits and licenses describe in Section 3.2 of ths Agreement. In addition,
Seller will obtan, and supply A vist with copies of, any new or additional permits or licenses
that may be required for Seller's operations. At least every fift year afer the Commercial
Operation Date, Seller will update the documentation described in Section 3.2. If at any tie
Seller fals to maita compliance with the permits and licenes describe in Section 3.2 or ths
Section, or to provide docinentation required by ths Section, such failure will be a material
16
breach of ths Agreement tht may only be cured by Seller submittng to A vista evidence of
compliance.
10. CURTAILMENT, INTERRUPTION OR REDUCTION OF DELIVERY
Avista may requie Seller to curl, interrpt or reduce delivery of Deliverable Net
Outut if in acrdce with Section 11.2, A vist detees th curlment, interrpton or
reducton is necss beaus of a Force Majeur event or to protet persons or prpert frm
injur or daage, or beause of emergencies, necssar systm maitenace, systm
modification or special operatig circumstaces. A vista shall use commercially reasonable
effort to keep any perod of curlment, interrptio~ or reuction to a minum. In order not
to interfer unnaly with Seller opeons, A vist sha, to the extnt prtica, give Seller
reasonable prior notice of any curlment, interrption, or reductio~ the reason for its
occurnce and its probable durtion. Seller understads and ags that A vista may not be able
to provide notice to Seller prior to interrptio~ curlment, or reduction of electrca energ
deliveries to Avista in emergency cirumstaces, real-time operations of the electrc system,
and/or unplaned events.
17
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11. OPERATION
11.1 Communications and Reporting. Avista and the Seller shall maintan
apprat opera commimcaons thug the Commimca and Repg Guidelies
speified in Exhbit A.
11.2 Excuse From Acceptance of Delivery of Energy.
11.2.1 Avist may curl, intept reuce or suspend delivery, reipt or
acceptace of Deliverable Net Output if A vista in its sole discretion, reasnably
determines th such curent, intepton, reuction or suspension is necsa,
consistnt with Prudent Utility Pratice, and th the failure to do so may:
(a) endaer any pen or prpe, or A vi' s elecc syst or any
electrc system with which A vist's systm is interconnected;
(b) caus, or contrbut to, an imt signcat diruon of elecc
service to Avist's or another utility's customers; or
(c) inte with any conson, inaton, inpeon, test, re,
replacement, improvement, alteration, modification, operation, use or
maintenance of, or addition to, A vista' s electrc system or other propert of
Avista.
11.2.2 A vista shall promptly notify Seller of the reasons for any such curlment,
interrption, reduction or suspension provided for in Section 11.2. A vista shal use
reasonable effort to limit the durtion of any such curlment, interrption, reuction or
suspension. Any curlment, interrption, reduction or suspension provided for in
Section 11.2 shall not count agai Seller in the calculation of the MAG under Section 5
of ths Agreeent.
11.3 Scheduled Outage. On or before December 15 prior to each calenda year, Seller
shall submit a wrtten proposal of Scheduled Outages for the upcoming calenda year. Such
wrtten proposal of Scheduled Outges shall contan the percentae of hour in each calenda
month where the Facility is expete to be on Scheduled Outae. Seller may updte the anua
Scheduled Outges proposal periodically. The Seller in no intace may change Scheduled
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Outes for the curnt or followig 2 calenda month. A vist and Seller shal mutly agre
as to the acty of th prposa and any ups or chaes to the prposa. The Pares'
determon as to the acepty of Seller's tietale for Scheduled Oues sha tae into
consideration Prudent Utility Practices, Avista's system reuiments and Seller's preferrd
schedule. Neither Par shall unasonably withold actace of the propose Scheduled
Oues. The Pares shal coopera in determin mutly acptle ties for Scheduled
Outages.
11.4 Seller's Risk. Seller shall design, constct, own, operate and maintan the
Facilty at its own risk and exp in compliance with al aplicale laws, ordces, nùes,
reguatons, orders and other reuiment, now or herer in effect, of any governent
autority.
11.5 Avista's Right to Inspect. Seller shall permit Avista to inspect and audit the
Facilty, any relat pructon, deliveiy and schedulg documentaon or the opeon, us or
maintenace of the Facility at any reasonable time and upon reasonable notice. Seller shal
provide Avista reasonable advance notice of any Facilty test or inspection performed by or at
the dition of Seller.
11.6 Seller Obligations in Accordance with Prudent Utiity Practices. Seller shall
own operate and maita the Facilty and any Seller-owned Inteconnecon Facilities so as to
alow reliable generaon and delivei of Deliverle Net Ouut to Avi for the fu Ten of the
Agreement, in acrdce with Prent Utility Pratices.
12.0 INTERCONNECTION AND TRANSMISSION
12.1 If Seller is interconnectig its Facility to Avistads electrcal system, Seller shall
design constrct, intal, own, operate and maitain all Interconnection Facilties so as to allow
safe, reliable generation and delivery of electrc energy to A vista for the full term of the
Agrement. Ifapplicable, prior to the commencement of the first delivery of Deliverable Net
Output, Seller and A vista shall execute an Interconnection Agreement. If Seller is
interconnectig its Facility with a Tramittg Entity other than A vista Seller shall make all
necessai argements and pay all co to intercnnect its Facility with the electrcal systm of
such Tranmitt Entity.
12.2 If Seller is not interconnecting its Facility to A vista's electrical system, Seller
shall, arange for and pay for all costs associated with transmission, losses, and Ancilar
Seivce and sha prvide A vist with copies of al execut Tramision Agen in a form
reasonably satisfactory to A vista providig for the :f trmission of Deliverable Net Outut
from the Facilty to the Point of Delivery for the Term of ths Agreement. Seller shall not
consent to any modification of any firm Transmission Agreement without Avist's advance
wrttn approval, which approval shal not be uneasonably witheld.
12.3 In the event that Seller is requied to curl, interrpt or reduce delivery of
Deliverable Net Outut to the Point of Delivery, Seller shall arge at its own expense to deliver
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Deliver
able Net Output to a secnda point of delivery ("Alternte Point of Delivery"), and
A vist sha us renable commercial effort to acpt Deliverle Net Ouut at such
Alternate Point of Delivery .
12.5 The termintion, cancellation or expirtion of any Trasmission Agreement
reuid to deliver electrc energ to A vist under ths Agrment sha constu a matal
brach of ths Agrement, and A vist may termin the Agrment by giving Seller wrttn
notice of such terminon whch shal be effective upon wrtt notice of such tetion,
cacellation or expirtion of the applicable Traission Agrement.
12.6 Seller shall be responsible for any and all costs and expenses related to
tranmission of the Deliverable Net Outut to the Point of Delivery under ths Agrement,
includig but not liited to Ancilar Services and any costs or expenses incurd by A vista
resultig frm the Tramission Agreements including, but not limited to, any charges,
reimburable expenses or other amounts payable by A vista to any Trasmitting Entity. Seller
shall defend, indemnf) and hold han1ess, A vista from all clais, losses, han, liabilties,
daages, costs, and expenses including, but not limited to, reasonable attorneys' fees, arsing out
of any act or omission of Seller in connection with the Tramission Agreements, including, but
not limited to, any breach of or default under any of the Tramission Agrements by Seller.
13. FORCE MAJEURE
13.1 As used in ths Agrement, "Force Majeure" mean any cause beyond the control
of the Seller or Avista which, despite the exercise of due diligence, such par is unable to
prevent or overcome. Neither Par shall be liable to the other Par, or be considere to be in
breach of or defaut under ths Agrment, for delay in performance due to a cause or condition
beyond such Par's reasonable contrl which despite the exercise of reanable due dilgence,
such Par is unble to prevent or overcome ("Force Majeur"), includg but not limte to:
(a) fie, flood, earquae, volcanc activity; cour order and act of civil, milta
or governenta authority; stke, lockout and other labor dispute; riot, insurtion,
sabotae or wa; unticipate electca distubance origiatig in or trmitted thug
such Par's electrc system or any electrc systm with which such Par's system is
interconnected; serial defects in wid tubine equipment resultig in a prolonged outae
based on maitenance protocols as dircted by the manufactur; or
(b) an action taen by such Par which is, in the sole judgment of such Par,
necessar or prudent to protect the operation, performance, integrity, reliabilty or
stbilty of such Par's electrc systm or any electrc systm with which such Par's
electrc systm is interconneced whether such acons occur autmaticaly or manualy.
Notwthstdig anytng to the contr in ths Agreement, chages in weater conditions that
do not cause substtial physical daage to the Facility that prevents the operation of all or par
of the Facility, includig changes in wid speed or other wid conditions, shall not constitute
Force Majeur under ths Agreement. Also, notwthding anytg to the contr in ths
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Agrement, equipment or mechancal breakdown or failures of the Facilty shall not constue
Force Majeure, uness such equipment or mechancal bredown or failur is caused by an event
that is itself Force Majeur.
13.2 In the event of a Force Majeure event, the time for performance shall be extended
by a period of tie reonaly necessar to overcme such delay. A vist shall not be reuied to
pay for Delivemb1e Net Output which, as a result of any Force Majeure event, is not delivered.
13.3 Nothg contaed in ths Section shal reuie any Par to sette any ste,
lockout or other labr disput.
13.4 In the event of a Force Majeure event, the delayed Par shall provide the other
Par notice by telephone or email as soon as reasonably pmcticable and wrttn notice with
fouren days afr the occurnce of the Force Majeur event. Such notice shal include the
pacular of the occurnce. The suspension of performance shal be of no grater scope and no
longer duration than is required by the Force Majeure and the delayed Par shall use its best
effort to reedy its inbility to perform.
13.5 Force Majeure shall include any unoreseen electrcal distubance that prevents
any electc energ deliveries from ocurg at the Point of Deliver or Alternte Point of
Deliver.
14. INDEMNITY
14.1 Each Par shall defend, indemnify and hold harless, the other Par, its
dirctors, offcers, employees, and agents (as the "Indemntee") from and agait all claims,
demands, causes of action, judgents, liabilities and associat cost and expnses (includig
reasnable attrney' s fees) to the extnt arsin frm or attbutble to the performance or non-
performance of that Par's (as the "Indemnitor") obligations under ths Agreement, includin
but not lite to, daage to table prpe and boy injin or dea sufere by any pen
(including employees of Seller or A vist or the public), provided that:
(a) No Indemntee shall be indemfied for any loss, liabilty, injin, or daage resutig
from its sole negligence, gross negligence, frud or willfu misconduct; and
(b) The Indemntor shal be entitlec at its option, to assmne and contrl the defene and
any settlement of such suit.
Each indemnty set fort in ths Section is a contiuing obligation, separte and independent of
the other obligations of each Par and shal surive the expirtion or termintion of ths
Agreement.
14.2 SELLER AN A VISTA SPECIFCALLY WARRT THAT THE TERMS
AN CONDITIONS OF THE FOREGOING INEMNY PROVISIONS AR THE
SUBCT OF MUTUAL NEGOTIATION BY THE PARTIES, AN AR
- 22-
SPECIFICALLY AN EXPRESSLY AGREED TO IN CONSIDERATION OF THE
MUTUAL BENEFITS DERID UNER THE TERMS OF TH AGREEMENT.
14.3 EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY
SHAL BE LIALE UNER AN PROVISION OF TIDS AGREEMENT FOR AN
SPECIA, INIRCT, INCIDENTAL, CONSEQUENT, OR PUN DAMGES,
INCLUDING BUT NOT LIMED TO LOSS OF PROFIT, SAVIGS OR REVENU,
LOSS OF THE USE OF EQUIPMENT, COST OF CAPITAL, OR COST OF
TEMPORAY EQUIMENT OR SERVICES, WHTHR BASED IN WHOLE OR IN
PART IN CONTRCT, IN TORT, INCLUDING NEGLIGENCE, STRICT LIAILIT,
OR AN OTHER THEORY OF LIAILITY.
15. ASSIGNMENT
15.1 Seller shall not assign its rights or delegate its duties under this Agreement
without the prior wrttn consent of A vist which consent shal not be unasonably witheld.
Subject to the foregoing restctions on assignents, ths Agrement sha be fuly bindig upon,
inur to the beefit of and be enforcble by the Pares and their respeve sucessors, heir and
assign.
15.2 Seller shall have the right, subjec to the obligaton to provide seurty specified in
Secon 9, without A vi's consen but with a th days pror wrtt notice to A vist to make
collatera assignents of its rights under ths Agrment to satisfy the reuiments of any
development, constrction, or other reasonable long term fiancing. A collateral assignent
shal not constu a delegation of Seller's obligatons under ths Agrment, and ths Agrment
sha not bind the collatera assignee. Any collatera assignee succdi to any porton of the
ownership interest of Seller shall be considere Seller's successor in interest and shal thereafr
be bound by ths Agrment.
16. NO UNSPECIFIED TH PARTY BENEFICIAS
There are no thd par beneficiares of ths Agreement. Noth contaed in ths
Agrment is intede to confer any right or in on anyone other th the Pares, an thir
respective successors, heirs and assign permittd under Section 15.
17. DEFAULT AN TERMATION
17.1 In addition to any other breach or failure to perform under this Agreement,
includig without limitaon faiure to deliver Deliverale Net Outut when scheduled or in the
amounts required by ths Agrment that is not otherwe excused under ths Agrement, eah of
the followig events shall constitute a Default:
(a) Seller abandons the Facility;
(b)The Facility ceases to be a Qualifying Facility;
-23-
(c) A Par bemes inlven (e.g., is tmle to mee it obligaons as they
become due or its liabilties exceed its assets);
(d) Seller makes a genera assignent of substtially all of its asse for the
benefit of its credtors, files a petion for baptcy or rerganon or seeks other
relief under any applicable inolvency laws;
(e) Seller has filed agai it a petition for banptcy, reorgantion or other
relief under any applicable inlvency laws and such peon is not dismised or styed
with six days afr it is filed;
(f) Seller is in default under any Agreement related to ths Agreement; or
(g) Tenon, cacellaton or expon of any Trassion Agent
requied for Seller to deliver electrc energy to A vista under ths Agrement.
17.2 Notice and Opportnity to Cure. In the event ofa Default, the non-Defaulting
Par sha give wrtt notice to the Defaultig Par of a Defaut in acrdce with Section 30.
Except as provided in Section 17.1(e), if the Defaultig Par ha not cured the breach withn
th days aftr receipt of such wrttn notice, the non-Defaulting Par may, at its option,
terminate ths Agreement and/or purue any remedy available to it in law or equity; provided
that, if a Default occur under Sections 4.4,4.5, 12.5, 17. 1 (a), and/or 17.1(g), Avist may
immediatly ter ths Agrement without opportty to cur, and such terminon shal
become effective upon wrtten notice of Default.
17.3 Additional Rights and Remedies. Any right or remedy aforded to either Par
under ths Agrement on account of a Default by the other Par is in addition to, and not in lieu
of, all other rights or remedies available to such Par under any other provisions of ths
Agrment, by law or otherwse on acount of the Default.
17.4 Damages. If ths Agreeent is terminat as a result of Seller's Default afer the
Commercial Opon Dat, Seller sha pay A vist in adtion to other daages, the positive
dierece, if any, be the purha prce spifed in Section 8.2 and the cost to relac the
Deliverle Net Ouut for twelve month begi on the da of the origi Default, plus al
associatd trmission costs to A vist to acquie such replacement Deliverable Net Ou1put.
18. DISPUTE RESOLUTION
Each Par shall strve to resolve any and all differences durng the term of the
Agreement through meetings and discussions. If a dispute canot be resolved within a
reonable tie, not to exceed thrt days, eah Par shall escalate the unsolved dispute to a
senior offcer designted by each Par. If the senior offcers are not able to resolve the disput
with ten Business Days of escalation then either Par may either age to mediate or arbitrte
the dispute or request a hearg before the Commission.
- 24-
19. RELEASE BY SELLER
Seller releaes Avist frm any and all clais, losses, ha, liabilties, daages, cost
and expenses to the extnt resultig from any:
19.1 Electrc distbance or fluctuon that migrtes, directly or indiy, from
Avista's electrc system to the Facility;
19.2 Interrption, suspension or curlment of electrc service to the Facilty or any
other premises owned, possessed, contrlled or served by Seller, which interrption, suspension
or curlment is caused or contrbuted to by the Facilty or the interconnection of the Facility
with any electrc systm;
19.3 Disconnection, interrption, suspension or curlment by A vist puruat to
terms of ths Agrement or the Interconnection Agrement; or
19.4 Disconnection, interrption, suspension or curilment of transmission service
by a Tranmittg Entity or any unoreseen cost or increase in costs to Seller imposed by a
Tramittg Entity.
20. GOVERNNTAL AUTHORITY
11s Agrment is subjec to the rues, reguatons, ord and other reuiments, now or
hereafr in effect, of all governenta authorities having jursdiction over the Facilty, ths
Agreement, the Paries or either of them. All laws, ordinances, rules, regulations, orders and
other reuients, now or here in effec of governenta autorties th ar reui to be
incorprated in agements of ths charter are by ths reference incorprated in ths Agrment.
21. SEVERA OBLIGATIONS
The dutes, obligations and liabilties of the Pares under ths Agrment ar intended to
be several not joint or collective. Ths Agreement shal not be interpreted or constred to create
an assoiation, joint ventue or parership between the Pares. Each Par shal be individualy
and severay liable for its own obligations under this Agrement. Furer, neither Par shall
have any rights, power or autority to enter into any agreement or undertg for or on behalf
of, to act as to be an agent or representative of, or to otherwse bind the other Par.
22. IMPLEMENTATION
Eah Par sha prmpty tae such action (includg, but not liite to, the executon,
acknowledgement and deliveiy of documents) as may be reasonably reuested by the other Par
for the implementaon or contiuig performance of ths Agreement.
23. NON- WAIVER
- 25-
The failure of either Par to inist upn or enforc stct performance by the other Par
of any provision of ths Agrent or to exercise any right under ths Agrent shal not be
constred as a waiver or relinquishment of such Par's right to assert or rely upon any such
provision or right in th or any subseuent ince; raer, the same sha be and reain in ful
force and effect.
24. AMENDMENT
No chae, amendment or modcation of any prviion of th Agrent sha be vald
uness set fort in a wrttn amendment to ths Agreement signed by both Paries and
subseuently approved by the Commssion.
25. CHOICE OF LAWS AN VENU
Ths Agreement shall be consted and interpreted in accordace with the laws of the
State of Idao without reference to its choice of law provisions. Venue for any litigation arsing
out of or related to ths Agrement shal lie in the Distrct Cour of the Four Judicial Distct of
Idao in and for the County of Ada
26. HEADINGS
The Secon hea in th Agren ar for convenence only an sha not be
considered par of or used in the interpretation of ths Agrement.
27. SEVERABILITY
The invalidity or inenforcilty of any provision of ths Agren sha not afec the
validity or enforcility of any other prvision of ths Agrent and th Agrment shal be
constred in all respects as if the invalid or unenforceable provision were omitt.
28. COUNTERPARTS
Ths Agrment may be execut in two or more counte, eah of whch shal be
deemed as an origina, and together shall constute one and the sae document.
29. TAXES
Seller shal pay before deliquency al taes and other governenta chaes which, if
failed to be paid when due, could result in a lien upon the Facility or the Interconnection
Facilities.
30. NOTICES
- 26-
Unless otherwse speified, al wrtt notices or other communcaons requied by or
provided under ths Agreement shall be mailed or delivere to the followig addrsses, and shall
be considered delivered when deposited in the US Mail, postage prepaid, by certfied or
registered mail or delivere in person:
loAvi
To Seller:
Director, Power Supply
A vista Corpration
P.O. Box 3727
Spokae, W A 99220
EricOrem
Orem Family Wind, LLC
PO Box 202
lone, OR 97843
Either Par may chae its deign reresetative 10 reive notice and/or addrss
specified above by giving the other Par wrtten notice of such change.
31. SURVIVAL
Rights and obligatons which, by their natu, should surve termination or expiron of
ths Agrment, will remai in effect unti satisfied, includg without limtaon, all outdig
fiancial obligations, and the prvisions of Section 14 (Indemnty) and Section 18 (Dispute
Resoluton).
32. ENTIR AGREEMENT
Ths Agrent, includi the followi exhbits whch ar atthed an incorpra by
reference herein constitutes the entie agement of the Pares and supersedes all prior and
contemporaneous oral or wrtten agreements between the Pares with respect to the subject
mattr hereof
Exhbit A
ExhbitB
ExhbitC
ExhbitD
ExhbitE
ExhbitF
ExhbitG
ExhbitH
Exhbit i
Communcaons and Report
Independent Engieerig Certfications for Constrction Adequacy for a
Quaifyin Facility and Oprations and Maitenace Policy
Facilty and Point of Delivery
Traission Agrement
Rates
Initial Expeted Energy
Project Description
Sample Availabilty Factor Calculaton
Intial Capacity Determation Documentation
- 27-
IN WI WBF, 1h Paes hav caed 1ls Agen to be e. by
thei du aur: retaves as oftb da se fo below.
SEER AVlTA CORPORATION
By .8j1l By:
Prtr Name: Eric Orern .Printed.. Narre:
Ttte: Generl ManagerlMenbe Tite:
Da PDf) /' ( Zoo J 0 Dat:
-28-
Exhibit A
Communication and Reportng
(1) Email communcations beeen Seller and A vist shal be submittd to:
A vist: kim.materrmavistacorp.com; or
dale.hubbarrmavistcorp.com
Seller: eboremfaiíßotml.com
Altete:
(2) Al ora communcaons relatg to elecc ener scheduling, generaon level chages,
inptions or outes beeen Seller and A vist wil be communcad on a reorded lie as
follows:
W Pre-Schedule (5:30 am to 12:00 noon on Business Days):
AviPrScheduler: [phone]
Alternate Phone: [phone]
Seller: 541-422-7402
Alternte Phone: [phone]
il Real-Time Schedule (available 24 hour a day)
A vi Rea-Time Scheduler: [phone]
Seller: 541-422-7402
Alternte Phone: 54 i -256-0246
(3) Either Par may change its contat inormation upon wrttn notice to the other Par.
- 29-
Exhibit B
Independent Engineering Certfication for
Construction Adequacy for a Qualifyng Facilty
1. I, am a licensed professional engineer registered to
pratice and in good stading in the Sta of . I have substtial expenence in the design,
constrction and operation of electric power plants of the same tye as
(Title of QF) sited at
County, State of
II
(the "Facilty").
2. I have reviewed and/or supervised the review of the constction in progress and
of the completed Facility and it is my professional opinion that said Facility has been designed
and built according to appropnate plans and specifications bearg the words "CERTIFIED FOR
IDAHO P.U.C. SECURITY ACCEPTANCE" and with the stp of the certifying licensed
professional engineer of the design, and that the Facilty was built to commercially acceptable
standards for this tye of facilty.
3. I have no economic relationship to the designer or owner of said Facility and have
made my analysis of the plans and specifications independently.
4. I hereby CERTIY that the above statements are complete, tre, and accurate to
the best of my knowledge and I therefore set my hand and seal below.
Signed and Sealed
DATE:
SIGNATURE:
PRINTED NAME:
-30-
Independent Engineering Certfication for
Operations and Maintenance Policy for a Qualifying Facilty
1. I, am a licensed professional engineer registered to practice
and in good stading in the State of . I have substatial experience in the design,
constrction and operation of electric power plants of the same tye as
(Title of QF) sited atin County, State of (the "Facility").
2. I have reviewed and/or supeised the review of the Policy for Operation and
Maintenance ("O&M Policy") for the Facility and it is my professional opinion that, provided
said Facilty has been designed and built to appropriate stadads, adherence to said O&M Policy
wil result in the Facility's producing at or near the design electrical output, efficiency, and
capacity factor for twenty years, baring unforeseeable Force Majeure.
3. I have no economic relationship to the designer or owner of said Facilty and have
made my analysis of the plans and specifications independently.
4. I have supplied the owner of the Plant with at lea one copy of sad O&M Policy
bearing my Stap and the words "CERTIFIED FOR IDAHO P.D.C. SECURTY
ACCEPTANCE" on each sheet thereof.
5. I hereby CERTIFY that the above statements are complete, tre, and acurate to
the best of my knowledge and I therefore set my hand and seal below.
Signed and Sealed
DATE:
SIGNATURE:
PRINTED NAME:
- 31 -
Exhibit C
Facilty and Point of Delivery
Description of the Facilty:
As a wind generatig facilty utilizing a renewable fuel source, the facilty wil be a qualifYing facilty
as defined in 18 C.F.R. § 292.203(a) and (c).
Seller's Facility is described as Orem Family Wind, LLC and consists of 4 ClipperC105 2.5MW
wind tubines. These are varable speed tubines with synchronous pennanent magnet generators. The
total nameplate capacity is 10 MW. The station service requirements wil be minimal, consisting of
the substation housing and equipment, and lighting. The total expected station and line losses are
6.35% (approx. 3% station losses, and 3.35% line losses frm Orm Family Wind to Lewiston). Thus, the
net amount of power to be delivered to the Company's electric system wil not exceed 9.365 MWat
any given moment.
The project wil interconnect to a 69 kilovolt line on Columbia Basin Electrc Cooperative's system
at the project site, and then wil be delivered to Bonnevile Power Administrtion's (BP A's) system
at lone Substation. BPA wil provide transmission from lone to Lewiston via Boardman.
Seller and Avista may mutually agree to substitution, any time prior to the Commercial
Operation Date, a different manufactuer and/or model wind tubine provided that the aggregate
nameplate rating of the Facility does not exceed 10 MW.
If the Seller wishes to substitute different wind turbines, the Seller shall provide detailed
specifications of the proposed substitute wind turbines to A vista. A vista wil then review this
detailed infonnation and either accept or reject the Seller's proposed substitute wind tubines.
Avista acceptance of the substitute wind turbines wil be required by both confinnations that the
interconnection is able to accommodate the substitute wind tubines and that the substitute wind
tubines are acceptable under this Agreement. Only after Avista's acceptance of the substitute
wind tubines shall the Seller be allowed to install the substitute wind turbines, which acceptace
shall not be unreasonably withheld.
-32-
The technical description of the project is below:
Energy source: Wind.
Number of rotating generators: 4.
Number and nameplate rating of static conversion devices: O.
Total nameplate rating: 10 MW.
Type of turbine: Clipper Libert 2.5MW Wind Turbine.
Turbine auxiliar consumption depends to tubine state and outside ambient temp. For example libert
machine wil consume kw of as low as 11.3kW when offine and the ambient is above 30C. The same
machine could consume kw of as high as 27.5kw when offine at with ambient temperature being
below -5C. The kvar consumption is around 17kvar per tubine which depends to turbine state and
ambient temp as mentioned above. Contact Clipper to get furter information on the turbine auxilar
consumption at various turbine states and ambient conditions.
Generator Data, Synchronous Machines.
Clipper Libert Wind Turbine is a tye 4 wind turbine. Clipper Libert series wind turbine is an
inverter based wind turbine with 4 permanent synchronous AC generators. The generators are fully
decoupled from the grid through power electronic inverters. The output voltage ofthe inverters is at
690V AC three phase, connected though a power distribution panel and breaker to a pad mount
transformer (2750kVA). The 690VAC connection ofthe pad mount transformer is Y solidly
grounded.
The libert turbines can be set to operate at fixed power factor values (0.95 leading to 0.95 lagging).
Below is the reactive capability curve of the machine.
33
Q
0.40
0.30
0.20
0.10
0.00
-0.1(9.
-0.20
-0.30
-0.40
Clipper Windpower 2.5 MW Liberty Series WTG
Reactive Capabilty Curve
. Complex power, kV A: 2SOOkV A
. Active power, kW: 2500 kW
· Terminal voltage, kV: 0.69kV
-Vterm = 0.900 pu
- Vterm = 0.925 pu
-0.95" Vterm" 1.10
p
Notes:
. P and Q in pu em 2.5 MVA ba.
. Opeon reticted 10 any fixed
power factor trajecl wrlin the
inIcated limits.
Clipper turbine is a type 4 with full power conversions in which the generators are decoupled from
the grid. The individual generator parameters do not affect the turbine interaction with the grid. It
is mainly the GCUs (Generator control units or power electronic inverters) govern the turbine
interaction with the grid. For the transient stabilty analysis and short circuit studies that requires
generator parameters as inputs to the model, Clipper recommends using the following values for
Clipper's generator parameters.
Voltage 690
34
V
No of Poles N/A
Sub-00
transient
reactance
(saturated),
X"d
Ratio of 1.0
reactance to
resistance
(X/R)
Natural 00
Impedance
(X and R) if
any
resistance
limiting
neutral is
used
Transient 00
reactance,
X'd
Synchronous 00
reactance,
Xd
Sub-00
transient
time
constant,
T"d
DC time 00
constant,
Tdc
Positive sub-00
35
transient
reactance,
Xl
Negative 00
sub-transient
reactance,
X2
Zero-00
sequence
sub-transient
reactance,
XO
Location:
Seller's Facilty is located:
Five miles NE of Lexington, Oregon - Morrow County
Between Baseline Lane and Beach Lane
Legal Description:
A parcel ofland located in Township 1 Nort, Range 26, East of the Wilamette Meridian, in the
County of Morrow and State of Oregon.
Section 28: The West Half of the Southwest Quarer.
Section 29: The Southeast Quarer
Section 33: The Nortwest Quarer of the Northeast Quarer, the North Half of the Northwest
Quarer, the Southwest Quarer of the Nortwest Quarter.
36
Point of Delivery:
The Point of Delivery between the Transmitting Entity and Avista's system wil be:
Hatwai Substation, Lewison, il
37
Exhibit D
Trasmision Agrement
Orem Famly Wind LLC has initiated the steps necessar secure tranmission from the
lone Substation to Hatwai via Boardman. Orem Famly Wind LLC has rights to a place
in the transmission queue and wil provide A vista with the Transmission and
Interconnection Agreements prior to commercial operation in accordance with sections
3.7 and 3.8 of the PPA.
-38-
Exhibit E, Page 1
Rates
Seller Has Selected the Non-
Levelized Avoided Cost Rates For Non-Fueled Projects Smaller Than Ten Average Megawatts
Payments according to the rate schedule set fort below will be adjusted to account for heavy and
light load hours of the day and for monthly seaonality price adjustments according to orders
approved by the Commission and in effect for A vista on the date of execution of this Agreement.
AVISTA
AVOIDED COST RATES FOR NON-FUELED PROJECTS
SMALLER THAN TEN MEGAWATTS
Marcb 15, 2010
SIMWh
LEVELIZE NON.LEVELIZED0
CONTCT ON-LIN YEAR
LENGTH CONTCT NON-LEVEEZ
(YEARS)2010 2011 2012 2013 2014 2015 YEAR RATES
1 56.94 60.32 64.06 67.60 7141 75.50 2010 56.94
2 58.56 62.11 65.76 69.43 73.37 76.53 2011 60.32
3 60.25 63.80 67.49 71.29 74.74 77,71 2012 64.06
4 61.87 65.47 69.25 72.73 75.94 78.80 2013 67.60
5 63.47 67.16 70.70 73.98 7707 79.87 2014 71.41
6 65.09 68.60 71.97 75.15 78.16 80.93 2015 75.50
7 66.50 69.87 73.15 76.26 79.21 82.01 2016 77.85
8 67.76 71.05 74.26 17.31 80.27 83.10 2017 80.16
9 68.92 72.16 75.31 78.36 81.4 84.20 2018 82.68
10 70.02 73.20 76.35 79.40 82.40 85.30 2019 85.15
II 71.05 74.22 77.37 80.4 83.46 86.40 2020 87.1
12 7205 75.23 78.38 81.47 84.51 87.5 2021 90.73
13 73.03 76.21 79.37 82.48 85.52 88.47 2022 93.88
14 73.99 7718 80.36 83.46 86.50 89.46 2023 97.15
15 74.93 78.13 81.0 84.40 87.45 90.2 2024 100.55
16 75.84 79.04 82.21 85.31 88.37 91.5 2025 104.08
17 76.72 79.92 83.09 86.20 89.26 92.29 2026 107.09
18 7757 80.76 83.94 87.05 90.16 93.21 2027 110.18
19 78.39 81.8 84.76 87.91 91.04 94.11 2028 113.37
20 79.17 82.37 85.58 88.75 91.89 94.99 2029 116.67
2030 120.06
2031 124.62
2032 128.62
2033 132.76
2034 137.04
2035 141.48
-39-
Exhibit F
Initial Expected Energ
Orem Family Wind LLC expects the following to be the schedule of monthy power
deliveries in a the first year following Commercial Operation
Januar
Februar
March
April
May
June
July
August
September
October
November
December
Total
620.41 MWh
408.89MWh
556.64MWh
557.lOMWh
514.17 MWh
550.92MWh
482.82MWh
502.16MWh
425.05 MWh
384.74MWh
584.52MWh
529.98MWh
6,117.40 MWh
Orem Famly Wind LLC estimates that the minimum anual delivery will be 4,282.18
MWh and the maximum will be 7,035.01 MWh.
A 12 X 24 table showing predicted generation (MW and Capacity factor) is attched.
-40-
Exhibit G
Project Desription
Reference Exhbit B
- 41 -
Exhibit H
Sample Availabilty Factor Calculation
To be provided by Avista.
-42-
Exhibit I
Initial Capacity Determination Documentation
-43-
lljJ(C~JS..--í &L0J~'Y PU£
ATTORNEYS AT LAW
Peter Richardson
Tel: [phone] Fax: [phone]
pete rli ric h a rdso n andoleary. co m
P.O. Box 7218 Boise.1D 83707 - 515 N. 27th St. Boise. ID 83702
November 22,2010
Via Certifed U.S. Mail and Electronic Mail
Michael G. Andrea
A vista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
michael.andrea(iavistacorp.com
Re: Orem Family Wind LLC Request for PURP A Power Purchase Agreement
Dear Mr. Andrea:
I wrte on behalf of my client, Orem Famly Wind LLC, regardig its request for a power purchase
agreement (PP A) for its off-system wind energy facility which is a quaifyg facility (QF) under
the Public Utilities Reguatory Policy Act of 1978 (pUR A). The facility will generate under 10
average monthy megawatts (aMW) for delivery to Avist's system in its Idao servce terrtory,
and is therefore entitled to a long term PP A contag the published avoided cost rates and the
applicable terms approved by the Idaho Public Utilities Commssion (Commssion). This project is
located on propert neighbonng the 10 MW Marah Wind LLC project, about which I wrote to you
las week. The projects are separately owned and therefore will enter into separate PP As, but Orem
Famy Wind Project seeks identical PP A terms to those in the Marah Wind PP A.
The project's owners, mangers, and consultats have taen substatial steps in the development of
ths project, includig intiating or completing many of the necessar interconnection, transmission,
and local permttng processes. The project is matue and ready to obligate itself to a PP A.
Accordingly, Orem Family Wind hereby formally request that A vista enter into the enclosed
contract of duration of twenty (20) years at the non-Ievelizd rates in the avoided cost rate schedule
on file with the Commission (errata to Idaho Public Utilities Commission Order No. 30125), as set
fort in Avista's Schedule 62.
Orem Famly Wind has completed the draft A vista PP A provided to Marah Wind LLC, with al
requied project specifics. Orem Famly Wind will forward a signed original of the PP A to Avista,
and I have enclosed a copy herein. Orem Famly Wind is agreeable to the terms of the draf PPA
provided by Mr. Silwort to Marah Wind LLC, with the few notable exceptions where A vista's
draf PP A was inconsistent with applicable legal requiements and Commssion orders, as discussed
below. We have inerted the terms acceptable to Orem Famly Wind in the enclosed PPA. Other
than the terms discussed below, the enclosed PP A contas the same term as those in the draf PP A
Mr. Michael Andrea
November 22,2010
Page 2
provided by Mr. Silort. By signng and submittg the enclosed PP A, Orem Famly Wind
intends to obligate itself to the enclosed PP A on ths date.
Environmental Attributes
Orem Famly Wind insertd a clause in section 8.9, whereby Avista waives any clai to ownership
of the environmenta attbutes (including RECs) associated with ths project. As you are aware, no
provision of Idao law provides investor-owned utilities in Idao with RECs associated with
PUR A projects, and the Commssion has never held that it has authonty or jursdiction to render a
decision that the RECs pass to the purchasing utility under a PUR A PPA in Idao. The Federal
Energy Reguatory Commssion has repeatedly held that RECs do not pass to the purchasing utiity
pursuat to a PUR A PP A, uness a provision of state law provides otherwse. See American Ref
Fuel Co., et aI., 105 FERC ~ 61,004, ~~ 21-22 (2003), order aff'd on reh'g, 107 FERC ~ 61,016,
~~ 14-15 (2004) ("The avoided cost rates, in short, are not intended to compensate the QF for
more than capacity and energy."); see also California Public Utilties Commission, 133 FERC ~
61,059 (Oct. 21, 2010) (order on rehearing) (stating that Californa could requie utilities to pay a
higher avoided cost rate to QFs providing not only energy and capacity, but also an
environmental attibute that helped the utilty avoid the cost of environmental compliance.).
Simply put, the avoided cost rates A vist will pay Orem Famly Wind under the curent gas SAR
methodology compensate Orem Famly Wind only for the value of the energy and capacity from the
project, not for any environmenta attibutes associated with the project. A vista would obta a
wid fal by payig only for energy and capacity, but also obtag the RECs for no additional
payment.
Indeed, Idao Power's Commission-approved PUR A PP As for projects under 10 average MWs
recognze these legal pnnciples by expressly disavowig ownership of the RECs. Section 8.9
inserted into the enclosed PP A contas languge simlar to that in Idaho Power PUR A PP As that
have been approved by the Idao Commssion.
Delay Default Liquidated Damages Security
Section 4.4 ofthe draf PPA provided by Mr. Silkwort contaned a delay default liquidated
damages provision requirig a minimum damage amount of $45 per kilowatt (kw) of nameplate
capacity for a l20-day delay in bringing the project online. This is over and above any
difference in the contract price and the market price durng that delay period. A vista's draf PP A
also required the QF to post that $45/kw amount at the time of execution of the PP A. This
provision would be puntive and unenforceable.
In Order No. 30608, the Commssion stated that a delay default liquidated damages security must
be a "fair and reasonable offset of a regulated utilty's estimated increase in power supply costs
attibutable to the PURPA supplier's failure to meet its contractually scheduled operation date."
The Commission's statement is consistent with Idaho law, which clearly prohibits use of
liquidated damages provisions when damages are easily estimated, or when such provisions are
puntive or designed to deter a breach of the contract. See Magic Valley Truck Brokers, Inc. v.
Mr. Michael Andrea
November 22, 2010
Page 3
Meyer, 133 Idaho no, 117,982 P.2d 945,952 (Ct. App. 1999); LC. § 28-2-718(1). Avista's
actul daages caused by a QF's delay in achieving its online date would not be diffcult to
calculate, and the amount of $45/k is far in excess of the costs of replacement power or
adminstrative expenses A vista may incur. A $45/k liquidated damages clause is simply not
legal in Idaho and would be rejected by Idaho cours. And requiring a QF to post an
uneasonably high delay default securty frstates PURPA's mandatory purchase provisions.
Accordingly, Orem Famly Wind will not agree to a $45/k delay securty, uness the
Commission orders that amount is reasonable. Orem Famly Wind intends to obligate itself at
this time only to a PP A requiring it to post an amount deemed reasonable by the Commission.
The languge addressing the amount and timing of the posting of a securty in the enclosed PP A
reflects Orem Famly Wind's intent.
Mechanical Availabilty Guarantee (MG)
Section 5.3 of Avista's draf PPA contained a minimum liquidated daages amount for a MAG
shortfall of$15/MWh, but this amount is ten times as high as the minimum amount in Idaho
Power's wind QF PPAs, which require 15 mills/kh. I assume this was a tyo in the draf PPA,
and we have changed the amount in the enclosed PPA to $1.50/MWh. Additionally, the draft
PP A did not conta a sample MAG calculation in Exhbit H, and you can append that
attachment to the signed PP A.
Insurance
Section 9.1.1 of the draft PPA would have required Orem Famly Wind to mainta general
liability insurance with a minium amount of $2,000,000. I assume ths too was a typo because
Idaho Power's PURPA PPAs only require a minimum insurance amount of $1,000,000, which is
consistent with Commission orders. The enclosed PPA contans the $1,000,000 amount.
Rates and Wind Integration Charge
Exhbit E of the draf PPA did not include the adjusted avoided cost rates to account for
seasonality and daily load shape adjustments, or describe the wind integration charge applicable
to ths agreement. Orem Famly Wind has included the avoided cost rate schedule approved in
Commission Order No. 31025, and intends to obligate itself to that rate schedule with the
appropriate adjustments for seasonality and daily load shape approved by the Commission for
Avista. However, Orem Famly Wind wil purchae balancing services from BPA and deliver a
firm product to A vista. Therefore, because A vista will need to perform no wind balancing
services, A vista should not reduce the avoided cost rates in Exhibit E for any wid integration
charges.
Conclusion
As you know, on Friday, November 5,2010, Avista filed a joint petition and joint motion
requesting that the Commission immediately reduce the eligibility cap for published avoided cost
~. ~ichael Andrea
November 22, 2010
Page 4
rates from 10 aMW to 100 kw. The Commission took no action on Idaho Power's joint motion
and joint petition at its Decision Meeting on November 9. It now appears the Commssion may
not act on the joint motion and joint petition at least until its next reguarly schedule Decision
Meeting on November 22, 2010. Therefore, as you know, Avista remains bound by the existing
PURP A rules, reguations and IPUC implementing orders, includig its obligation to enter into
PURP A PP As containing the avoided cost rates published in Order No. 31 025 .~y hope is that
A vista will counter sign the enclosed PP A and file it for Commission approval prior to the time
that the Commission may rue on the joint motion to reduce the eligibility cap.
Very try yours,Rßf-~
Peter 1. Richardson
Attorney for Orem Famly Wind LLC
cc: Eric Orem, Orem Famly Wind LLC
Enclosure:
Orem Family Wind PUR A PPA
AYist Corp.
1411 East Mission PO Box 37
Spokane. Washingt 993727
Telephone 5005
Toll Fre 800.m.9170
~iIJV'S"'A
Corp.
December 1, 2010
Via Email and Regular Mail
Peter Richardson
Richardson & O'Leary, PLLC
515 N. 27th St.
Boise, ID 83702
Email: peter(¡richardsonandolear.com
Re: Orem Family Wind, LLC
Avista Corporation's Response to November 22, 2010 Letter
Dear Mr. Richardson:
On November 24, 2010, I received your letter dated November 22, 2010 ("November 22
Letter"), in which you indicated that your client, Orem Family Wind LLC ("Orem"), had signed
and retured to A vista Corporation ("A vista") a certai power purchase agreement ("Orem
PPA"). A copy of the Orem PPA which appear to have been executed by Orem was enclosed. l
A vista understands, though your letter and the Orem PP A, that Orem proposes a wind
generation project that wil be a Quaifying Facilty under the Public Utility Regulatory Policies
Act of 1978 ("PURPA"). The proposed project would interconnect to a third-pary transmission
provider, but the output from that project would be delivered to Avista's electrcal system at a
point of delivery in Idaho.
Prior to my receipt of your letter and the copy of the Orem PP A, Orem had not contacted
Avista to request a power purchase agreement for its project. Rather, it appears that Orem's
information has been simply inserted into a draft power purchase agreement that A vista provided
to one of your other clients ("Draft PPA").
In order to allow A vista to provide for a level of administrative consistency between
PURPA requests, please advise your client to contact Mr. Steve Silkwort at [phone] to
i Although you indicated in your November 22 Letter that such letter and PPA was sent to me
both by certified mail and via email, I did not receive any electronic copies of the November 22
Letter or the PPA. On November 24,2010, both Mr. Silkwort and I did receive certain
correspondence from your client.
Peter Richardson
December I, 20 I 0
Page 2
request a power purchase agreement? Mr. Silkworth wil request certn information and, upon
receipt of such information, provide the appropriate draf power purchase agreement. Although
most of the terms of Avista's draft power purchase agreements are standardized, some
negotiation is generally required to finalize such power purchase agreements. After your client
receives the draft power purchasc agrcement, A vista will negotiate in good faith to finalize the
power purchase agreement. If you have any questions about Avista's process for developing
PURP A power purchase agreements, please do not hesitatc to call me. I wil be happy to answer,
or find the answer to, any questions you may have.
Orem has unilaterally modified material terms of the Draft PPA. Neither Orcm, nor you
on behalf of Orem, has discussed any of those changes with A vista nor has A vista consented to
such modifications. Finally Orem has taen the liberty of removing the Draft Stap from the
Draft PPA and-executing the resulting Orem PP A,3 At ths time, however, Avista is not able to
accept the changes unilaterally made by Orem.
'Ibe following includes a brief response to some of the issues that you raised in your
November 22 Letter.
i. Environmental Attributes.
In your November 22 Letter, you noted tht Orem inserted a provision under which
A vista waives any claim to ownership of environmental attbutes ac:sociated with the subject
project. No such provision was included in the Draft PP A.
It is Avista's position that the issue of ownership of environmental attributes associated
with PURPA Qualifying Facilties is curently unsettled in Idaho. As you know, the Idaho
Public Utility Commission recently opened a generic docket in which A vista anticipates that the
issue of environmental attributes, as wcll as other PURP A issues, wil be addressed. However,
because the issue is not yet settled, A vista canot waive any claim to ownership to environmental
attributes.
2 To the extent that you have any questions or need to contact Avista, your inquiries and
communications should be directed to me.
3 1be header of each page of the Avista's Draft PPA was clearly marked with a Draft Stamp as
follows:
Draft
Off-System Wind PURP A
Not Approved by Any Part
Peter Richardson
December I, 2010
Page 3
II. Delay Liquidated Damages
Orem unilaterally subståJtially modified section 4.4 of the Draf PPA regarding delay
liquidated damages. In your November 22 Letter, you suggest that the liquidated damages
provision in the Draft PPA was punitive and unenforceable. Avista disagrees and believes that
the proposed delay liquidated damages provisions in the Draft PP A are fair and reasonable.
A delay in the commercial operation of a proposed Qualifying Facilty causes substantial
monetary damages to the utility. For example, a proposed Qualifying Facility is included in the
utility's long-term load and resource plan. If the Qualifying Facility does not achieve
commercial operation when expected or does not achieve commcrcial operation at all, the utility
may well be required to take stcps, at substatial cost, to replace the contract and the output the
project was expected to provide. Such damages can be substatial and diffcult to quantify or
calculate and, therefore, liquidated damages are appropriate. The liquidated damages provisions
in the Draft PP A are not punitive.
III. Mechanical Availability Guarantee
A vista does not understand your objection with regard to the Mechancal Availabilty
Guarantee. You state: "Scction 5.3 of Avista's draft PPA contaned a minimum liquidated
damages amount for a MAG shortfall of $15/MWh, but this amount is ten times a~ high as thc
minimum amount in Idao Power's wind QF PPAs, which require 15 milslkwh." The
$15/MWh included in Avista's Draf PPA is equivalent to 15 mils/Wh QF PPAs. It is not at all
clcar what thc basis is for your claim that Avista's MAG is tcn times as high as Idao Power's.
IV. Insurance
With regard to insurance, Avista does require that QFs maintain general liability
insurance with a minimum of $2,000,000. While Idaho Power's insurance requirements may bc
instructive, they do not necessarily establish any stadard or policy. Several factors, such as risk
policy and self-insured limits may account for the difference in the insurance requirements.
V. Rates and Wind Integration Charge
First, you notc that Avista's Draft PPA did not include the avoided cost rates. That is
because the avoided cost rates that will apply will be such rates as are in effect at the time that
the paries reach a mutually agreed upon power purchase agreement and such agreement is
executed by the paries. The appropriate avoided cost rates will be included in any final power
purchase agreement reached by the paries.
With regard to wind integration charges, A vista recognizes that Orem wil deliver, at
Orem's cost, energy on a firm hourly basis to Avista's electrcal system. Under such
circumstances, A vista believes that a discount to the normal wind integration charge may be
appropriate. Avista does not, however, agree that the wind integration charge should be
eliminated. A vista is prepared to engage in discussions to negotiate an appropriate wind
integration charge.
Peter Richardson
December i, 20 i 0
Page 4
VI. Conclusion
A vista stands ready to engage in the necessar discussions to negotiate in good faith a
mutually acceptable power purchase agreement with Orem. Avista is not, however, prepared to
accept Orem's unilateral changes to the Draft PPA. The staring point for any such discussions
wil be Avista's Draft PPA. Please feel free to contact me to discuss.
Sincerely, ~~,7' .,--'''. /I ../. " ., l . .. \ /.. -" .~'.. ;' / . /.f ~, /,i/ ~ f~~f.
Michael G. Andrea
cc: Bob Lafferty
Steve Silkwort
Scott Woodbury
CERTICATE OF SERVICE
I hereby certy that on ths 4th day of Januar 2011, tre and corrt copies of
the foregoing Answer were delivered to the following persons via E-mai and postage
prepaid regular or overnght maiL.
Jea Jewell
Idaho Public Utities Commssion
472 W. Washington St.
Boise, ID 83702
Emal: jea.jewell (gpuc.idao.gov
Peter Richardson
Gregory M. Adam
Richarson & O'Le
515 N. 27th St.
PO Box 7218
Boise, ID 83702
Email: peter(grichardsonandolea.com
greg cs richardsonandolear .com
~
Michael G. Andrea
Page l-CERTICATE OF SERVICE