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HomeMy WebLinkAbout20220811Petition.pdfjistsra Avista Corp. l4l I East Mission, P.O.Box3727 Spokane, Washington 99220-0500 Telephone 509489-0500 Toll Free 800-727-9170 rll ?.:. August 11,2022 Jan Noriyuki, Secretary Idaho Public Utilities Commission 11331 W. ChindenBlvd Building 8, Suite 201-4. Boise, ID 83714 Avu- E- 22-tQRE: Avista & Idaho County Light & Power - PPA Dear Ms. Noriyuki: Enclosed for filing with the Commission is an electonic copy of the Avista and Idaho County Light & Power Joint Petition for approval of a Power Purchase Agreement. Please direct any questions regarding this report to Michael Andrea at (509) 495-25& or myself at509-4954584. Sincerely, /slPaul Kimball Paul Kimball Manager of Compliance & Discovery Avista Utilities 509-4954584 paul.kimball@avistacom.com Enclosure For Avista Corporation Michael G. Andrea (tSB No. 8308) Senior Counsel Avista Corporation 141I East Mission, MSC-17 Spokane, WA99202 Phone: (509)495-2564 For Idaho County Light & Power Cooperative Association, lnc. Gregory M. Adams Adams (ISB No. 7454) Richardson Adams, PLLC 515 N. 27th Street Boise,Idaho 83702 Phone: (208)938-2236 IN THE MATTER OF THE JOINT PETITION OF AVISTA CORPORATION AND IDAHO COUNTY LIGHT & POWER COOPERATTVE ASSOCATION FOR APPROVAL OF POWER PURCHASE AND SALE AGREEMENT BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ) ) ) ) ) ) ) ) cAsE NO. Ayt]-E- a&- t v JOINT PETITION OF AVISTA CORPORATION AND IDAHO COI.JNTY POWER LIGHT & POWER COOPERATIVE ASSOCIATION Avista Corporation ("Avista") and Idaho County Light & Power Cooperative Association, Inc. ("ICLP") (collectively, the "Parties") hereby petition the Idaho Public Utilities Commission ("Commission") for an order approving the Power Purchase Agreement ("Agreement") between Avista and ICLP attached hereto as Attachment 1. The proposed effective date of the Agreement is October 31,2022 and the term shall be for twenty years following the effective date. 1. Names and Addresses of Petitioners Avista Corporation 1411 East Mission Avenue Spokane, WA99202 Page - I JOINT PETITION OF AVISTA CORPORATION AND IDAHO COUNTY LIGHT & POWER COOPERATTVE ASSOCTATION Idaho County Light & Power Cooperative Association 1065 Highway 13 (physical address) PO Box 300 (mailing address) Grangeville,ID 83530 2. Nature of Businesses Avista is a corporation created and organized under the laws of the State of Washington with its principal office in Spokane, \[,/ashington. Avista is an investor-owned utility engaged in, among sthsl fhings, the business of generating, transmitting, and distributing electric power to wholesale and retail customers in Idaho and Washington. Avista also provides nafural gas service to customers in Idaho, Washington, and Oregon. As such, Avista's rates, charges, services and practices are regulated, io part, by this Commission. ICLP is a non-profit corporation organized under the laws of the State of Idaho with its principal place of business in Grangeville, Idaho. ICLP is a member-owned cooperative electric utility that owns and operates a hydroelectric generating facility near Lucille, Idaho ("Facility"). The Facility's generator has a nominal rating of 1,010 kilowatts. When considering the limitations of the diameter of the penstock, ICLP estimates that the maximum net power production capacrty of the Facility under ideal conditions is approximately 900 kilowatts. The Facility is a Qualifring Facility pursuant to the Public Utility Regulatory Policies of Act of 1978 ("PURPA"). 3. Names of Representatives All communications, pleadings, and orders with respect to this proceeding should be directed to: For Avista Corporation: Kevin Holland Wholesale Marketing Manager Avista Corporation 14ll E. MissionAve., MSC-7 Michael G. Andrea Senior Counsel Avista Corporation 1411 E. MissionAve.. MSC-17 Page - 2 JOINT PETITION OF AVISTA CORPORATION AND IDAHO COUNTY LIGHT & POWER COOPERATTVE ASSOCIATION Spokane, WA99202 Phone: 509-495-2194 E-mail: kevin.holland(davistacorp.com For Idaho County Light & Power Cooperative Association: Gregory M. Adams (ISB No. 7454) Richardson Adams, PLLC 515 N. 27th Street Boise,Idaho 83702 Phone: (208)938-2236 E-mail: sree(Drichardsonadams. com Attornev for ICLP Spokane, WA99202 Phone: 509-495-2564 E-mail: michael.andrea(a)avistacorp.com Max Beach Idaho County Light & Power Cooperative Association 1065 Highway 13 (physical address) PO Box 300 (mailing address) Grangeville, ID 83530 Phone: 208-983-1610 Email: mbeach@iclp.coop General Manager of ICLP 4. Description of Agreement The Agreernent replaces a prior power purchase agreement which expires by its own terms on October 30,2022. If approved by the Commission, the term of the Agreement will commence on October 31,2022. The Terml of the Agreement shall be for twenty (20) years following the Effective Date, unless terminated earlier by terms and conditions contained therein. Avista will purchase all of the output (capacity and energy) (net of Facility Service Power and Losses) of the Facility.2 Except for any ouput that is Surplus Energy, Avista shall purchase all Net Delivered Output delivered to Avista at the applicable rate based upon the On-Peak or Off-Peak Avoided Cost Rates for Non-Fueled Projects Smaller than Ten Average Megawaffs per I Except as expressly defined in this petition, capitalized terms shall have the meaning set forth in the Agreement. 2 Under the prior power purchase agreement, Avista purchased the capacity and energy from the Facility. Accordingly, pursuant to Commission precedent, the Facility is eligible for both the avoided cost of energy and capacity in this Agreemerfi. See Order No. 32697. Page - 3 JOINT PETITION OF AVISTA CORPORATION AND IDAHO COLTNTY LIGHT & POWER COOPERATIVE AS SOCIATION montpNon-Levelized as set forth in Exhibit E to the Agreement. For all Surplus Energy, Avista will pay the current month's Market Energy Cost per megawatt-hour or the prices contained in Exhibit E, whichever is lower. 5. Conclusion Avista and ICLP jointly respectfully request that the Commission issue an order approving the Agreement with an effective date of October 31, 2022. Respectfully submitted this I lth day of August,2022. AVISTA CORPORATION /s/ Michael Andrea Michael G. Andrea Senior Counsel IDAHO COTTNTY LIGHT & POWER COOPERATIVEE ASSOCIATION Gregory M. Adams Attorney for ICLP Page - 4 JOINT PETITION OF AVISTA CORPORATION AND IDAHO COT NTY LIGHT & POWER COOPERATTVE AS SOCTATION POWER PURCIIASE AGREEMENT BETWEEN IDAHO COUNTY LIGHT & POWER COOPERATIVE ASSOCIATION,INC. ANI) AVISTA CORPORATION INDEX l. 2. 3. 4. 5. 6. 7. 8. 9. 10.ll. t2. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. DEFINITIONS................ NO RELIANCE ON AVISTA.......... WARRANTIES CONDITIONS TO ACCEPTANCE OF ENERGY TERM OF AGREEMENT................ PURCHASE AND SALE OF POWER INSURANCE CURTAILMENT, INTERRUPTION OR REDUCTION OF DELTVERY ........... OPERATION METERING PURCHASE PRICES AND METHOD OF PAYMENT FORCE MAJEURE INDEMNITY ASSIGNMENT NO I.JNSPECIFIED THIRD PARTY BENEFICIARIES DEFAULT ARBITRATION RELEASE BY PROJECT DEVELOPER GOVERNMENTAL AUTHORITY...... EQUAL OPPORTUNITY ...... SEVERAL OBLIGATIONS.......... IMPLEMENTATION... NON-WAIVER.......... AMENDMENT.......... CHOICE OF LAWS 3 6 6 7 7 8 10 l1 11 l3 t4 l5 l6 t6 t7 t7 l8 t9 l9 l9 t9 20 20 20 20 Page - I - IDAHO COLJNTY LIGHT & POWER 27.IreNI.'E I{EADINGS NOTICES H(HIBITS USE OF FACILITIES 20 20 2t 2t 2t 22 Communication md Reporting Form of Enginccfs Certification of Operations and Maintcnanoe Pohoy Interconneetion and Opo,rating Agreemcnt Description of fte Facility Ptrchase Price Plotiminary Monthly Gencration Estimatcs 28. 29. 30. 31. EJfiibitA ErhibitB ExhibitC BftibitD ExhibitE ExhibitF Page - 2 - IDAHO COLJNTY LIGI{T & POWER This Power Purchase Agreement ("Agreement") with an Effective Date as provided in Section 5.1 below is made by and between Avista Corporation, a Washington corporation ("Avista"), and Idaho County Light & Power ("Project Developer"). Avista and Project Developer are sometimes referred to herein individually as a "Part5/" and collectively as the "Parties." WTINESSETH: WIIEREAS, Project Developerplans to continue to operate a 0.9 MW hydroelectric generating unit(s) near -Lucille, Idaho, as more fully described in Exhibit D ("Facility"); and WHEREAS, Project Developer has obtained all necessary rights and authorities to own and operate the Facility; and WIIEREAS, the Facility may produce power, which Project Developer desires to sell to Avista; and WHEREAS, Project Developer and Avisk are parties to an agreement pursuant to which Avista purchases the output of the Facility, which agreement expires by its terms at 0000 hours on October 31,2022; and WHEREAS, Project Developer owns the distribution system to which the Facility is directly interconnected, and the Project Developer and Avista are parties to the Interconnection and Operating Agreement dated November 28,2005 (Avista Contract No. AV-TR05-0199); and WHEREAS, Project Developer desires to sell and Avista will purchase output from the Facility pursuant to this Agreement, subject to approval of the tdaho Public Utilities Commission; and WHEREAS, the Facility is or shall be a Qualiffing Facility within the meaning of the Public Utility Regulatory Policies Act of 1978 and the rules and regulations thereunder; and NOW, TIIEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Parties agree as follows. 1. DEFIMTIONS Whenever used in this Agreement and exhibits hereto, the following terms shall have the following meanings: 1.1 "Ag@gE!" means this Power Purchase Agreement, including all exhibits, and any written amendments. 1.2 ..al![IV" means average MW. Page - 3 - IDAHO COUNTY LIGHT & POWER "&", "higg1!@!gg',"!3ff'and "ErEb" shall have their respective meanings set forth above. "E:E[egtiv&!9" shall have the meaning provided in Section 5.1. 1.5..@'meansallcertificates,credits,benefits,emissions reductions, environmental air quality credits and emissions reduction credits, offsets and allowances, howsoever entitled, resulting from the avoidance of the emission of any gas, chemical, or other substance attributable to the Facility or the generation of energy by the Facility, and the delivery of such energy to the elecnicity grid, and include without limitation, any of the same arising out of any current or future legislation or regulation concerned with oxides of nitrogen, sulfur, or carbon, with particulate matter, soot, or mercury, or implementing the United Nations Framework Convention on Climate Change ("UNFCCC'') or the Kyoto Protocol to the LJNFCCC or crediting "early action" with a view to the UNFCCC, or laws or regulations involving or administered by the Clean Air Markets Division of the Environmental Protection Agency or successor administrator (collectively with any state or federal entity given jurisdiction over a progrcm involving transferability of Environmental Attributes, the "CAMD"), but specifically excluding investment tax credits, production tax credits, and cash grants associated with the construction or operation of the Facility and other financial incentives in the form of credits, reductions, or allowances associated with ownership of the Facility that are applicable to a state or federal income ta>l obligation, if any. Environmental Attributes also include the reporting rights or Renewable Energy Certificates ("RECs") associated with these Environmental Attributes. RECS are accumulated on a MWh basis and one REC represents the Environmental Attributes associated with one MWh of energy. Environmental Atffibutes do not include (i) any energy, capacity, reliability or other power attibutes from the Facility. 1.6 "Eeg!!![" means the electric generating facilities, including all equipment and structures necessary to generate and supply power, more particularly described at Exhibit D @escription of the Facility). l.7..@,meanstheelectricPowerusedbytheFacilityduringits operation, including, but not necessarily limited to pumping, generator excitation, cooling or otherwise related to the production of electricity by the Facility. 1.8 "trrERC" means the Federal Energy Regulatory Commission. 1.9 " " means certifications provided by a professional engineer registered in Washington or Idaho, who has no direct or indirect, legal or equitable, ownership interest in the Facility. 1.10 " " means, as applicable, the agreement between Project Developer and Avista that is providing interconnection service which governs how the Net Output is delivered to Avista's electrical system at the Point of Delivery during the Term of this Agreement and that is attached hereto as Exhibit C. 1.3 1.4 Page - 4 - IDAHO COLTNTY LIGHT & POWER 1.11-..@,meansallfacilitiesrequiredtointerconnectthe Facility for delivery of Net Delivered Output to the Avista transmission system including connection, transformation, switching, relaying and safety equipment. Interconnection Facilities shall also include all telemetry, metering, cellular telephone, and/or communication equipment required under this Agreement regardless of location. 1.12 *IElEq'means the ldaho Public Utilities Commission or its successor. f.13 *![U" means megawatt. One thousand kilowatts equals one megawafi. l.l4..@,meanseighty.fivepercent(85%)ofthePowerdex Hourly Mid-Columbia Index (*Mid-C Index"), or its successor, or as agreed to by the parties where no successor exists; provided, however, if the Mid-C Index is less than zero, the Market Energy Cost shall be one-hundred and fifteen percent (llsyo) of the Mid-C Index. 1.15..@,,meansallelectricenergygeneratedbytheFacility,net of Facility Service Power and losses and that is delivered to Avista at the Point of Delivery. 1.16..@,,meanstherateindollarspermegawatt-hour,tobe paid by Avista for all Net Delivered Output that is not Surplus Energy, subject to any limitations under this Agreement. The Net Delivered Output Cost is specified in Section I l.l. l.l7 " " means all hours other than Heavy Load Hours. 1.18 " 'means the hours ending 0700 through2200 Pacific Prevailing time, Monday through Sunday, including NERC holidays. 1.19 "QpgE!iEg&" means each l2-month period from July I through June 30. l.20..@,meanst}relocationwheretheIdahoCountyLight&Power,s distribution system is electrically interconnected with Avista's transmission system in the Grangeville Substation. l.2l..@,meansthepractices,methods,andacts,including but not limited to practices, methods, and acts engaged in or approved by a significant portion of the electric power generation and transmission industry, in the exercise of reasonable judgment in the light of the facts known or that should have been known at the time a decision was made, that would have been expected to accomplish the desired result in a manner consistent with law, regulation, reliability, safety, environmental protection, economy, and expedition. l.22..@,meansanyoutagewhichisscheduledbytheProject Developer to remove electrical or mechanical equipment from service for repair, replacement, maintenance, safety or any other reason, and which thereby Iimits the generating capability of the Facility to less than its full tested capability. Page - 5 - TDAHO COITNTY LIGHT & POWER 1.23 "Sggplg$4gry" means: (l) Net Delivered Output produced by the Facility and delivered to the Avista electrical system during the month which exceeds ll0% of the monthly Net Delivered Output estimate for the corresponding month specified in Section 6.3; or (2) if the Net Delivered Output produced by the Facility and delivered to the Avista electical system during the month is less than90o/o of the monthly Net Delivered Output estimate for the corresponding month specified in Section 6.3, then all Net Delivered Output delivered by the Facility to the Avista electrical system for that given month. For clarification, Net Delivered Output that is Surplus Energy pursuant to this definition shall be sold to Avista at the price set forth in Section I1.2. 1.24 "@' means the rate in dollars per megawaft-hour, to be paid by Avista for all Surplus Energy, subject to any limitations under this Agreement. The Surplus Energy Cost is specified in Section 11.2 of this Agreement. 1.25 6'@' shall have the meaning provided in Section 5.5 of this Agreement. 2. NO RELIANCE ON AVISTA 2.1 Project Developer Independent Investigation. Project Developer warrants and represents to Avista that in entering into this Agreement and the undertaking by Project Developer of the obligations set forth herein, Project Developer has investigated and determined that it is capable of performing hereunder and has not relied upon the advice, experience or expertise of Avista in connection with the transactions contemplated by this Agreement. 2.2 Project Developer Experts. All professionals or experts including, but not limited to, engineers, attorneys or accountants, that Project Developer may have consulted or relied on in undertaking the transactions contemplated by this Agreement have been solely those of Project Developer. 3. WARRANTIES 3.1 No Warrantv b], Avista. Any review, acceptance or failure to review Project Developer's design, specifications, equipment or facilities shall not be an endorsement or a confirmation by Avista, and Avista makes no warranties, expressed or implied, regarding any aspect of Project Developey's design, specifications, equipment or facilities, including, but not limited to, safety, durability, reliability, strength, capacity, adequacy or economic feasibility. 3.2 Oualifrine Facilitv Status. Project Developer warrants that the Facility is a "Qualiffing Facility", as that term is used and defined in l8 C.F.R. $$ 292.101,292.207. After initial qualification, Project Developer shall take such steps as may be required to adequately maintain the Facility's Qualiffing Facility status during the term of this Agreement and Project Developer's failure to adequately maintain Quali$ing Facility status will be a material breach of this Agreement. Avista reserves the right to review the Facility's Qualiffing Facility status and associated support and compliance documents at any time during the term of this Agreement. Page - 6 - IDAHO COUNTY LIGHT & POWER 4. CONDITIONS PRIOR TO EFFECTIVE DATE Prior to the Effective Date, the following actions must have occurred: 4.1 Licenses. Permits and Approvals. Pursuant to applicable federal, state, tribal or local regulations, Project Developer shall maintain in good standing and effect all licenses, permits or approvals necessary for Project Developer's operation of the Facility including, but not limited to, compliance with Subpart B, l8 C.F.R. g 292.207 . Licenses, permits and approvals shall include but shall not be limited to tribal, state and local business licenses, environmental permits approvals for fuel storage, water rights, and other necessary easements and leases. 4.3 Insurance. Project Developer shall have complied with Section T,Insurance. 4.5 Initial Year Monthly Net Delivered Output Amounts. Project Developer shall have provided to Avista the Initial Year Monthly Net Delivered Output Estimates in accordance with Section 6.3.1. 5. TERM OF AGREEMENT 5.1 Subject to the provisions of this Section 5, this Agreement shall be effective at 0000 hours on October 31,2022, or such other date as ordered by the IPUC, ("Effective Date"). Power purchases pursuant to this Agreement shall commence upon the Effective Date. 5.2 Project Developer and Avista shall jointly petition the IPUC for an order approving the Agreement. This Agreement is conditioned upon the approval and determination by the IPUC that the prices to be paid for electric power are just and reasonable, in the public interest, and that the costs incurred by Avista for purchases of electric power from Seller are legitimate expenses. 5.3 In the event that the IPUC fails to issue a final order approving this Agreement within six months of the date the Parties file an application with the IPUC seeking such approval, neither Party shall have any further obligations to purchase or sell electric power hereunder, and this Agreement shall terminate. Provided, however, that such termination of this Agreement is not intended to waive Project Developer's rights under PURPA to enter into a successor power purchase agreement or to waive any rights Project Developer may have to payment for avoided capacity payments beginning on the effective date of a successor power purchase agreement under IPUC Order No. 32697. 5.4 In the event that this Agreement is terminated pursuant to Section 5.2 or 5.3, except as otherwise provided, the Project Developer shall refund amounts to Avista. The refund amount for each month shall be equal to the amount previously paid by Avista for electric power received by Avista from the Facility during such month, less the arithmetic product that is obtained by multiplying the number of megawatt-hours during such month for which Avista has paid, by the lesser of: (i) the Net Delivered Output Cost set forth in Section I l.l for such month, or (ii) the Market Energy Cost for such month. [n the event that Avista has not paid for electric power delivered by Project Developer before this Agreement is terminated pursuant to Section Page - 7 - IDAHO COUNTY LIGHT & POWER 5.2 or 5.3, Avista shall pay for such power at the lesser of: (i) the Net Delivered Output Cost set forth in Section I l.l for such month, or (ii) the Market Energy Cost for such month. 5.5 The Term of the Agreement shall be for twenty (20) years following the Effective Date, unless terminated earlier by terms and conditions contained herein. 6. PURCHASE AND SALE OF POWER 6.1 Project Developer shall sell and deliver to the Point of Delivery and Avista shall purchase all Net Delivered Output. 6.2 The Facility is designed, and the Project Developer shall operate the Facility in a manner such that the hourly scheduled amount of Net Delivered Output does not exceed 0.9 MW in any hour. Avista shall have the right, but not the obligation, to purchase any Net Delivered Output from the Facility in excess of 0.9 MW in any hour. The maximum annual amount of electric power that Avista is obligated to purchase hereunder shall be 4000 megawatt-hours in any Operating Year which is a non-Leap Year, or 4000 megawatt-hours in any Operating Year which is a Leap Year. 6.3 Net Delivered Outout Amounts. 6.3.1 Initial Net Delivered Output Estimates. Project Developer shall provide to Avista Net Delivered Output estimates for each of the twelve consecutive months that begin with the month containing the Effective Date, counting the month during which the Effective Date occurs as month one (Initial Year Monthly Net Delivered Output Estimates). Project Developer has provided such preliminary generation estimates in Exhibit F, which shall be used as the Initial Year Monthly Net Delivered Output Estimates unless Seller provides updated Initial Year Monthly Net Delivered Output Estimates to Avista by written notice in accordance with Section 29 no later than five (5) calendar days prior to the Effective Date. 6.3.2 Subsequent Monthly Net Delivered Output Estimates. After the Effective Date, Project Developer may revise any future Net Delivered Output estimate by providing written notice in accordance with Section 29 nolater than 5 PM Pacific Standard time on the 25th day of the month that is prior to the month to be revised. If the 25th day of the month falls on a weekend or holiday, then written notice must be received on the last business day prior to the 25th day of the month. For example, if Project Developer wants to revise the Net Delivered Output estimate for August, Project Developer must submit a revised schedule no later than July 25th or the last business day prior to July 25th. 6.3.3 Content of Net Delivered Output Estimates. All Net Delivered Output estimates shall be expressed in kilowatt-hours by month. 6.3.4 Failure to Provide Net Delivered Output Estimates. If the Project Developer fails to provide to Avista Net Delivered Output estimates when required herein Page - 8 - IDAHO COUNTY LIGHT & POWER pertaining to any month or months, Avista shall determine the Net Delivered Output estimates pertaining to such month or months, and the Net Delivered Output estimates shall be binding for purposes of the Agreement as though they were prepared by Project Developer and provided to Avista as required by the Agreement. 6.3.5 [Reserved.] 6.3,6 Avista Adjustrnent of Net Delivered Output Estimate. If Avista is excused from accepting the Project Developer's Net Delivered Output as specified in Section 9.2, or if the Project Developer declares a Suspension of Energy Deliveries as specified in Section 9.3 and the Project Developer declared Suspension of Energy Deliveries is accepted by Avista, the Net Delivered Output estimate as specified in Section 6.3.1 for the specific month in which the reduction or suspension under Section 9.2 or 9.3 occurs will be reduced in accordance with the following: Where: NDO = Current Month's Net Delivered Output estimate SGU:(a)If Avista is excused from accepting the Project Developer's Net Delivered Output as specified in Section 9.2 this value will be equal to the percentage of curtailment as specified by Avista multiplied by the TGU as defined below. (b) If the Project Developer declares a Suspension of Net Delivered Output as specified in Section 9.3 this value will be the generation unit size rating of 0.9 MW, TGU: Generation unit size rating of 0.9 MW, RSH:Actual hours the Facility's Net Delivered Output was either reduced or suspended under Sections 9.2 or 9.3. TH:Actual total hours in the current month Resultins formula beins: Adjusted Net Delivered Output =NDo ( () x( RSH ) )SGU x NDO TGU TH This Adjusted Net Delivered Output estimate will be used in applicable Surplus Energy calculations for only the specific month in which Avista was excused from accepting the Net Delivered Output or the Project Developer declared a Suspension of Energy. Page - 9 - IDAHO COUNTY LIGHT & POWER 6.4 Environmental Attributes. Ownership of Environmental Attributes shall be determined consistent with applicable State and Federal law. 7. INSTIRANCE 7.1 Business Insurance. Prior to operating the Facility, Project Developer, at its own cost, shall obtain and maintain the following insurance in force over the Term of this Agreement and shall provide certificates of all insurance policies. Avista's acceptance of the certificate of insurance is not intended to, and will not reduce, limit, affect, or modi$ the primary obligations and liabilities of Project Developer under the provisions of this Agreement. Project Developer must provide notice of cancellation or notice of change in policy terms at least sixty (60) days prior to any change or termination of the policies. 7.1.1 General Liabilitv. Project Developer shall carry and maintain comprehensive general liability insurance in a form acceptable to Avista with coverage of not less than $2,000,000 per occurrence, including coverage of bodily injury, property damage liability, and contractual liability specifically related to the indemnity provisions of this Agreement. The deductible will not exceed the Project Developer's financial ability to cover claims and will not be greater than prevailing practices for similar operations in the State of Idaho. 7.1.2 Prope4v Insurance. Project Developer shall carry and maintain property insurance for the full replacement value of the Facility in a form acceptable to Avista, a deductible not to exceed the Project Developer's financial ability, and will not be greater than prevailing practices for similar operations in the State of ldaho. 7.1.3 Oualifting Insurance. The insurance coverage required by this Section 7.1.1 must be obtained from an insurance carrier licensed to conduct business in the state in which the Services are to be performed, must be acceptable to Avista, such acceptance not to be unreasonably withheld, but in no event have less than an A.M. Best Rating of A-, Class VIII. The policies required under this Agreement must include (i) provisions or endorsements naming Avista and its directors, officers and employees as additional insureds, (ii) Avista as a loss payee as applicable, (iii) a cross-liability and severability of interest clause, and (iv) provisions such that the policy is primary insurance with respect to the interests of Avista and that any other insurance maintained by Avista is excess and not contributory. 7.2 Ensineering Certifications. At Avista's reasonable written request, Project Developer shall provide to Avista an Independent Engineering Certification, substantially in the form of Exhibit B, as to the adequacy of the Operation and Maintenance Policy for the Facility within sixty (60) days after such request. Failure to provide such documentation shall be deemed to be a default under Section 16.1. Page - 10 - IDAHO COUNTY LIGHT & POWER 8. CURTAILMENT,INTERRT]PTION OR REDUCTION OF DELIVERY Avista may require Project Developer to curtail, intemrpt or reduce delivery of Net Delivered Output if, in accordance with Section 9.2, Avista determines that curtailment, intemrption or reduction is necessary because of force majeure or to protect persons and property from injury or damage, or because of emergencies, necessary system maintenance, system modification or special operating circumstances. Avista shall use its reasonable efforts to keep any period of curtailment, intemrption, or reduction to a minimum. In order not to interfere unreasonably with Project Developer operations, Avista shall give Project Developer reasonable prior notice of any curtailment, intemrption, or reduction, the reason for its occurrence and its probable duration. 9. OPERATION 9.1 Communications and Reporting. Avista and the Project Developer shall maintain appropriate operating communications through Avista's Designated Dispatch Facility in accordance with Exhibit A of this Agreement. 9.2 Excuse From Acceptance of Delivery of Power. 9.2.1 Avista may intemrpt, suspend or curtail delivery, receipt or acceptance of delivery of power if Avista reasonably determines consistent with Prudent Utility Practice that the failure to do so: 9.2.1.1 May endanger any person or property, or Avista's electric system, or any electric system with which Avista's system is interconnected; 9.2.1.2 May cause, or contribute to, an imminent significant disruption of electric service to Avista's or another utility's customers; 9.2.1.3 May interfere with any construction, installation, inspection, testing, repair, replacement, improvement, alteration, modification, operation, use or maintenance of or addition to, Avista's electric system or other property of Avista. 9.2.2 Avista shall promptly notiff Project Developer of the reasons for any such intemrption, suspension or curtailment provided for in Section9.2.l, above. Avista shall use reasonable efforts to limit the duration of any such disconnection, intemrption, suspension or curtailment. 9.3 Project Developer Declared Suspension of Enere.v Deliveries. 9.3.1 tf the Facility experiences a forced outage due to equipment failure which is not caused by neglect, disrepair or lack of adequate preventative maintenance of the Facility, or if an event of Force Majeure as specified in Section 12 precludes delivery of Net Delivered Output, Project Developer may, after giving notice as provided in Page - I I - IDAHO COLJNTY LIGHT & POWER Section 9.3.2 below, temporarily suspend all deliveries of Net Delivered Output to Avista from the Facility from individual generation unit(s) within the Facility impacted by the forced outage or Force Majeure for a period of not less than 48 hours to correct the forced outage or Force Majeure condition ("Declared Suspension of Energy Deliveries"). The Declared Suspension of Energy Deliveries will begin at the start of the next full hour following the Project Developer's telephone notification to Avista as specified in Section 9.3.2 and will continue for the time as specified (not less than 48 hours) in the written notification provided by the Project Developer. In the month(s) in which the Declared Suspension of Energy occurred, the Net Delivered Output Amount will be adjusted as specified in Section 6.3.5. 9.3.2 If Facility experiences a forced outage or Force Majeure that curtails generation or deliveries for any duration, the Project Developer shall promptly notifr the Designated Dispatch Facility by telephone, and may subsequently claim a Declared Suspension of Energy Deliveries if the Project Developer believes the outage meets the requirements of a forced outage or Force Majeure that lasted at least 48 hours as provided in Section 9.3.1. Start of Curtailment. If the forced outage or Force Majeure has lasted or is expected to last at least 48 continuous hours and the Project Developer wants to claim a Declared Suspension of Energy Deliveries, the Project Developer will provide Avista a written notice in accordance with Section 29 on or before the next business day following the 48 hours of continuous curtailment, identiffing (a) the start time and date of the partial or total reduction of the Facility's capacity to produce and/or deliver Net Delivered Output, (b) the amount of the hourly electric capacity reduction (in kW), (c) the cause (or if not known, Project Developer's best estimate thereof), and (d) Project Developer's best estimate of the time and date that the partial or total reduction will end. Conclusion of the Curtailment - After the conclusion of the outage of any duration, the Project Developer will notiff Avista's Designated Dispatch Facility by telephone. If the Project Developer has claimed or will be claiming a Declared Suspension of Deliveries, the Project Developer will notifr Avista in accordance with Section 29 that the curtailment has concluded and report the day and time that the curtailment ended. The beginning hour of the Declared Suspension of Energy Deliveries will be at the earliest the next full hour after initially making telephone contact with Avista at the start of the curtailment. The ending hour of the Declared Suspension of Energy Deliveries will be at the earliest next full hour after making telephone contact with Avista identi$ing the conclusion of the curtailment. The Project Developer shall, within 7 days after the initial telephone contact at the start of the curtailment, provide Avista a written notice in accordance with Section 29 that will contain: (i) the Project Developer's proposed beginning hour and date and ending hour and date of the Declared Suspension of Energy Deliveries, (ii) a description of the conditions that qualiff the outage as a forced outage or event of Force Majeure, and (iii) the reduced level ftW) of energy deliveries the Facility notified Avista were the maximum energy deliveries to Avista during the outage. Avista shall review the documentation provided by the Project Developer to determine Avista's acceptance of the described forced outage or Force Page - 12 - IDAHO COUNTY LIGHT & POWER Majeure as qualifying for a Declared Suspension of Energy Deliveries as specified in Section 9.3.1. Avista's acceptance of the Project Developer's forced outage or Force Majeure as an acceptable forced outage or Force Majeure will be based upon the clear documentation provided by the Project Developer that the forced outage is not caused by neglect, disrepair or lack of adequate preventative maintenance of the Project Developey's Facility. Avista's acceptance of the Project Developer's claims of a Declared Suspension of Energy Deliveries will not be unreasonable withheld as long as the Project Developer has provided reasonable documentation and explanation to Avista that the Declared Suspension of Energy Deliveries meets all the criteria described in Section 9.3. Avista will provide written communication to the Project Developer of its acceptance of the Declared Suspension of Energy Deliveries or an explanation of the reason Avista denies the Declared Suspension of Energy Deliveries. 9.4 Scheduled Maintenance. On or before January 31 of each calendar year, Project Developer shall submit a written proposed maintenance schedule of significant Facility maintenance for that calendar year and Avista and Project Developer shall mutually agree as to the acceptability of the proposed schedule. The Parties determination as to the acceptability of the Project Developer's timetable for scheduled maintenance shall take into consideration Prudent Utility Practices, Avista system requirements and the Project Developer's preferred schedule. Neither Party shall unreasonably withhold acceptance of the proposed maintenance schedule. The Parties shall cooperate in determining mutually acceptable Facility down times or maintenance shutdowns. 9.5 Compliance with Permits. Licenses. Authorizations and Other Rishts. Project Developer shall obtain and comply with all permits, licenses, authorizations and other rights required to own, operate, use and maintain the Facility, as they may change from time to time. Project Developer shall furnish to Avista on request, copies of all documents granting, evidencing or otherwise related to such permits, licenses, authorizations and rights. 9.6 Project DevelopeCs Risk. Project Developer shall own, operate, use and maintain the Facility at its own risk and expense in compliance with all applicable laws, ordinances, rules, regulations, orders and other requirements, now or hereafter in effect, of any govemmental authority. 9.7 Modifications to the Facilitv/Avista Right to Insoect. Any modifications to the Facility from the as-built description of the Facility in Exhibit D shall not be valid unless set forth in a written amendment to this Agreement signed by both Parties and subsequently approved by the Commission. Project Developer shall permit Avista to inspect the Facility or the operation, use or maintenance of the Facility. Project Developer shall provide Avista reasonable advance notice ofany such test or inspection by or at the direction ofProject Developer. 9.8 Proiect Developer Oblieations in Accordance with Prudent Utilitv Practices. Project Developer shall own, operate and maintain the Facility and any Project Developer-owned Interconnection Facilities so as to allow reliable generation and delivery of electic energy to Avista for the full term of the AgreemenL in accordance with Prudent Utility Practices. Page - 13 - IDAHO COLJNTY LIGHT & POWER 9.9 lnterconnection and Transmission. Project Developer shall make all necessary arrangements and pay all costs to interconnect its Facility with the Idaho County Light & Power electrical system. Attached as Exhibit C is the Interconnection and Operating Agreement. Project Developer shall be responsible for any and all costs and expenses related to the transmission of Net Delivered Output to the Point of Delivery under this Agreement, including but not limited to metering, parallel operations, ancillary services and any costs or expenses incurred by Avista resulting from enabling and establishing Avista's ability to accept Net Delivered Output at the Point of Delivery. IO. METERING 10.1 A power meter referred to as Bonneville Power Adminisfation meter number 1595 currently located on high side of the transformer at the Facility at Project Developer's expense will register the Net Delivered Output generated and delivered to Avista on an hourly basis as set forth in this section. The Parties agree to deduct as transmission losses two percent from the amount registered by Bonneville Power Administration meter number 1595 to calculate the Net Delivered Output delivered to the Point of Delivery. 10.2 The power meter will record power, which flows from the Facility to Avista. Avista and Project Developer both shall have the right to read and receive readings from the power meter. Avista shall read the meter at least once a month to determine the amount of Net Delivered Output in each calendar month. Power deliveries in any month shall be calculated based on information from meter readings with the date adjustment made by prorating metered amounts to the number of days in such month. Actual monthly Net Delivered Output shall be determined from the record developed. Ownership and maintenance of all meters used to determine the billing hereunder shall be in accordance with the Interconnection and Operating Agreement. Such meter(s) shall be tested and inspected in accordance with Avista's meter testing program as filed with the Idaho Public Utilities Commission. If requested by Project Developer, Avista shall provide copies of applicable test and calibration records and calculations. Avista shall permit a representative of Project Developer to be present at all times the meters are being tested. Additionally, Avista shall test any or all of such meters as may be reasonably be required by Project Developer. Project Developer shall pay reasonable costs for such requested test unless any of the meters is found to be inaccurate in which case Avista shall pay for such test. 10.3 Adjustments shall be made in meter readings and billings for errors in a meter reading or billing discovered within twelve (12) months of the error. Avista shall notifr Project Developer of any errors arising from meter calibration, reading or billing. Avista shall permit representatives of Project Developer to inspect all of Avista's records relating to the delivery of electrical energy to and purchase of electrical energy by Avista hereunder. 1I. PURCIIASE PRICES AI\[D METHOD OF PAYMENT 11.f Net Delivered Outout Cost. For all Net Delivered Output received by Avista for each hour that is not Surplus Energy Avista shall pay the applicable rate based upon the Page - 14 - IDAHO COT NTY LIGHT & POWER following Avoided Cost Rates For Non-Fueled Projects Smaller Than Ten Average Megawatts per month - Non-Levelized. The applicable rates for such Net Delivered Output is shown in Exhibit E. . ll.2 Sumlus Enere.y Cost. For all Surplus Energy, Avista shall pay to the Project Developer the Surplus Energy Cost, which shall be the lessor of (i) cunent month's Market Energy Cost per megawatt-hour., or (ii) the Net Delivered Output Cost specified in Section I l.l 11.3 Payments to Project Developer. For each month during the term of this Agreement, so long as there are energy deliveries made and/or payments due hereunder, Avista shall prepare a statement based upon Net Delivered Output and Surplus Energy delivered to Avista. Payments by Avista for amounts billed shall be paid no later than thel5ft day of the month following the prior calendar month billing period. If the due date falls on a non-business day of either Party, then the payment shall be due on the next following business day. ll.4 Payments to Avista. If Project Developer is obligated to make any payment or refund to Avista, Avista shall bill Project Developer for such payments. Project Developer shall pay Avista on or before the l5th day of the month following the prior calendar month billing period or ten (10) days after receipt of the bill, whichever is later. 11.5 Interest. Any payments by Avista to Project Developer or by Project Developer to Avista, if not paid in full within the limitations set forth in Sections I1.3 and I1.4 above, shall be late. In addition to the remedies for such an event of default pursuant to Section 16, the late- paying Parly shall be assessed a charge for late payment equal to the lesser of one and one half percent (1.5%) per month, or the maximum rate allowed by the laws of the State of Idaho, multiplied by the overdue amount. ll.6 Set-Off. Project Developer agrees that Avista may set off any and all amounts owed by Project Developer to Avista against any current or future payments due Project Developer under this Agreement. ll.7 Wire Transfer. All payments shall be made by ACH or wire transfer in accordance with further agreement of the Parties. 12. FORCE MAJEURE l2.l Neither Party shall be liable to the other Party for, or be considered to be in breach of or default under this Agreement, on account of any delay in performance due to any of the following events or any delay or failure to produce Net Delivered Output, or to, receive or accept Net Delivered Output due to any of the following events: l2.l.l Any cause or condition beyond such Party's reasonable control which such Party is unable to overcome by the exercise of reasonable diligence (including but not limited to: fire, flood, earthquake, volcanic activity, wind, drought, pandemic or epidemic and other acts of the elements; court order and act of civil, military or governmental authority; strike lockout and other labor dispute; riot, insurrection, sabotage or war; Page - 15 - IDAHO COLJNTY LIGHT & POWER breakdown of or damage to facilities or equipment; electrical disturbance originating in or transmitted through such Party's electric system or any electric system with which such Party's system is interconnected; and, act or omission of any person or entity other than such Party, and Party's contractors or suppliers of any tier or anyone acting on behalf of such Parly); or 12.1.2 Any action taken by such Party which is, in the sole judgment of such Pu.ty, necessary or prudent to protect the operation, performance, integrity, reliability or stability of such Party's electric system or any electric system with which such Party's electric system is interconnected, whether such actions occur automatically or manually. 12.2 In the event of any Force Majeure occurrence, the time for performance thereby delayed shall be extended by a period of time reasonably necessary to compensate for such delay. Avista shall not be required to pay for Available Output which, as a result of any force majeure event, is not delivered. Nothing contained in this Section shall require any Party to settle any strike, lockout or other labor dispute. In the event of a force majeure occurrence which will affect performance under this Agreement, the nonperforming Party shall provide the other Party written notice within fourteen (14) days after the occurrence of the force majeure event. Such notice shall include the particulars ofthe occurrence, assurances that suspension of performance is of no greater scope and of no longer duration than is required by the force majeure, and that best efforts are being used to remedy its inability to perform. 12.3 Force Majeure shall include an electrical disturbance that prevents any electric deliveries from occurring at the Point of Delivery. 13. INDEMNITY 13.1 Project Developer shall indemniff, defend and hold harmless Avista, its directors, offtcers, employees, agents, and representatives, against and from any and all losses, expenses, liabilities, claims or actions (hereafter "Loss"), based upon or arising out of bodily injuries or damages to persons, including without limitation death resulting therefrom, or physical damages to or losses of property caused by, arising out of or sustained in connection with the construction, operation or maintenance of the Facility. Subject to Section 18 of this Agreement, Avista shall indemni$, defend and hold harmless Project Developer, its directors, officers, employees, agents, and representatives, against and from any Loss, caused by, arising out ofor sustained in connection with the construction, operation or maintenance of its electrical system. In the event that any such Loss is caused by the negligence of both Project Developer and Avista, including their employees, agentso suppliers and subconfractors, the Loss shall be borne by Project Developer and Avista in the proportion that their respective negligence bears to the total negligence causing the Loss. I3.2 TO THE EXTENT PERMITTED BY APPLICABLE LAW, PROJECT DEVELOPER AND AVISTA EACH WAIVE ANY IMMUNITY I.]NDER EXISTING WORKER'S COMPENSATION LAW APPLICABLE TO THE ruRISDICTION WHERE TTM FACILITY IS TO BE LOCATED AS NECESSARY TO INDEMNIFY AND HOLD Page - l6 - IDAHO COLJNTY LIGHT & POWER HARMLESS TTM OTTIER FROM SUCH LOSS, TO THE EXTENT SET FORTH IN SECTION I3.I, ABOVE. I3.3 PROJECT DEVELOPER AND AVISTA SPECIFICALLY WARRANT THAT TIfi TERMS AND CONDITIONS OF TTIE FOREGOING INDEMNITY PROVISIONS ARE TI{E SI.]BJECT OF MUTUAL NEGOTIATION BY TI{E PARTIES, AND ARE SPECIFICALLY AND EXPRESSLY AGREED TO IN CONSIDERATION OF THE MUTUAL BENEFITS DERIVED T.JNDER THE TERMS OF THE AGREEMENT. 13.4 Other than as expressly provided for in this Agreement, neither Party shall be liable under any provision of this Agreement for any losses, damages, costs or expenses for any special, indirect, incidental, consequential, or punitive damages, including but not limited to loss of profit or revenue, loss of the use of equipment, cost of capital, cost of temporary equipment or services, whether based in whole or in part in contract, in tort, including negligence, strict liability, or any other theory of liability; provided, however, that damages for which a Party may be liable to the other ParU under another agreement will not be considered to be special, indirect, incidental, or consequential damages hereunder. 14. ASSIGNMENT l4.l Project Developer shall not voluntarily assign its righm or delegate its duties under this Agreement, or any part of such rights or duties without the written consent of Avista. Such consent shall not unreasonably be withheld. Further, no assignment by Project Developer shall relieve or release it to the extent of any of its obligations hereunder. Subject to the foregoing restrictions on assignments, this Agreement shall be fully binding upon, inure to the benefit ofand be enforceable by the Parties and their respective successors, heirs and assigns. 14.2 Project Developer shall have the right, subject to the obligation to provide security hereunder, without the other Party's consent, but with a thirty (30) days prior written notice to the other Party, to make collateral assignments of its rights under this Agreement to satisff the requirements of any development, construction, or other long term financing. A collateral assignment shall not constitute a delegation of Project Developer's obligations under this Agreement, and this Agreement shall not bind the collateral assignee. Any collateral assignee succeeding to any portion of the ownership interest of Project Developer shall be considered Project Developer's successor in interest and shall thereafter be bound by this Agreement. 15. NO UNSPECIFIED THIRD PARTY BEhTEFICHRIES Except as specifically provided in this Agreement, there are no third party beneficiaries of this Agreement. Nothing contained in this Agreement is intended to confer any right or interest on anyone other than the Parties, and their respective successors, heirs and assigns permitted under Section 14. Page - 17 - IDAHO COLJNTY LIGHT & POWER 16. DEFATJLT 16.l tn the event that either Party fails to perform the terms and conditions set forth in this Agreement (a breach of or default under this Agreement), including without limitation the failure to provide Net Delivered Output, when available and deliverable to Avista, at the times or in the amounts required by this Agreement, the following shall apply: f6.1.1 The non-defaulting Party shall give written notice to the defaulting Party of the breach of or default under this Agreement. 16.1.2 Where default is for failure to pay sums which are due and payable under this Agreement, then the defaulting Party shall have thirty (30) days following receipt of written notice to cure the default, after which period the non-defaulting Party may unilaterally terminate this Agreement. 16.1.3 Except as provided in Sections L6.1.2 and 16.1.4, in all other cases of breach or default, then the defaulting Party must begin to cure the breach or default within thirty (30) days and shall complete such cure within ninety (90) days of receipt of written notice, or else the non-defaulting Party may unilaterally terminate this Agreement. 16.1.4 lfabreachordefaultoccursunderSections 16.2.1,16.3.1, 16.3.2,16.3.3, l6.3.4,then the non-defaulting party may terminate this Agreement after the respective cure period(s) as expressly provided for in such Sections. 16.2 Notwithstanding any claim of Force Majeure, Project Developer shall be in default, and Avista may immediately terminate this Agreement, if: 16.2.1 Project Developer has abandoned the Facility; or 16.2.2 There have been no energy deliveries to Avista from the Facility for a period of twelve (12) consecutive months; or 16.2.3 Facility ceases to be a Qualiffing Facility. 16.3 For purposes of this Agreement, and without limiting the generality of section 16.1, a Parly shall also be in default if it: 16.3.1 Becomes insolvent (e.g., is unable to meet its obligations as they become due or its liabilities exceed its assets); or 16.3.2 Makes a general assignment of substantially all of its assets for the benefit of its creditors, files a petition for bankruptcy or reorganization or seeks other relief under any applicable insolvency laws; or Page - 18 - IDAHO COUNTY LIGHT & POWER 16.3.3 Has filed against it a petition for bankruptcy, reorganizationor other relief under any applicable insolvency laws and such petition is not dismissed or stayed within sixty (60) days after it is filed. 16.4 Any right or remedy afforded to either Party under any provision of this Agreement on account of the breach of or default under this Agreement by the other Parly is in addition to, and not in lieu of, all other rights or remedies afforded to such Party under any other provisions of this Agreement, by law or otherwise on account of the breach or default. 17. ARBITRATION Each Party shall strive to resolve any and all differences during the term of the Agreement. If a dispute cannot be resolved, each Paty shall use arbitration before requesting a hearing before the IPUC. The arbitration shall be conducted pursuant to the Washington Uniform Arbitration Act RCW Chapter 7.04A. The Parties agree that the IPUC shall have continuing jurisdiction over this Agreement. 18. RELEASE BY PROJECT DEVELOPER Project Developer releases Avista from any and all claims, Losses, harm, liabilities, damages, costs and expenses to the extent resulting from any: 18.1 Electic disturbance or fluctuation that migrates, directly or indirectly, from Avista's electric system to the Facility; 18.2 Intemrption, suspension or curtailment of electric service to the Facility or any other premises owned, possessed, controlled or served by Project Developer, which intemrption, suspension or curtailment is caused or contributed to by the Facility or the interconnection of the Facility with any electric system; or 18.3 Disconnection, intemrption, suspension or curtailment by Avista pursuant to terms of this Agreement or the Interconnection and Operating Agreement. 18.4 Disconnection, intemrption, suspension or curtailment of transmission service by a transmitting entity or any unforeseen cost or increase in costs to Project Developer imposed by a transmitting entity. 19. GOVER}TMENTALAUTIIORITY This Agreement is subject to the rules, regulations, orders and other requirements, now or hereafter in effect, of all governmental authorities having jurisdiction over the Facility, this Agreement, the Parties or either of them. All laws, ordinances, rules, regulations, orders and other requirements, now or hereafter in effect, of governmental authorities that are required to be incorporated in agreements of this character are by this reference incorporated in this Agreement. Page - 19 - IDAHO COLJNTY LIGHT & POWER 20. EOUAL OPPORTUNITY Project Developer shall comply with all applicable equal opportunity laws, ordinances, orders, rules and regulations. 2I. SEVERAL OBLIGATIONS Except where specifically stated in this Agreement to be otherwise, the duties, obligations and liabilities of the Parties are intended to be several not joint or collective. This Agreement shall not be interpreted or constued to create an association, joint venture or partnership between the Parties or to impose any partnership obligations or liability upon either Party. Each Party shall be individually and severally liable for its own obligations under this Agreement. Further, neither Party shall have any rights, power or authority to enter into any agreement or undertaking for or on behalf of, to act as to be an agent or representative oi or to otherwise bind the other ParE. 22. IMPLEMENTATION Each Party shall promptly take such action (including, but not limited to, the execution, acknowledgement and delivery of documents) as may be reasonably requested by the other Party for the implementation or continuing performance of this Agreement. 23. NON-WAIVER The failure of either Party to insist upon or enforce strict performance by the other Parly of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such Party's right to assert or rely upon any such provision or right in that or any other instance; rather, the same shall be and remain in full force and effect. 24. AMENDMENT No change, amendment or modification of any provision of this Agreement shall be valid unless set forth in a written amendment to this Agreement signed by both Parties and subsequently approved by the Commission. 25. CHOICE OF LAWS This Agreement shall be construed and interpreted in accordance with the laws of the State of Idaho. 26. COMPLIANCE WITH LAWS Both Parties shall comply with all applicable laws and regulations of governmental agencies having jurisdiction over the Project and the operations of the Parties. Page - 20 - IDAHO COUNTY LIGHT & POWER 27, VENTIE Any action at Iaw or in equity to enforce the terms and conditions of this Agreement shall be brought in ldatro. 28. IIEADINGS The section headings in this Agreement are for convenience only and shall not be considered part of or used in the interpretation of this Agreement. 29. NOTICES All written notices required by this Power Purchase Agreement shall be mailed or delivered as follows: to Avista:Director, Power Supply Avista Corporation P.O.Box3727 Spokane, WA 99220 to Project Developer:Idaho County Light & Power Box 300 Grangeville,ID 83530 Either Party may change its address specified above by giving the other Party notice of such change in accordance with this Section. All notices, requests, authorizations, directions or other communications by a Party shall be deemed delivered when mailed as provided in this Section or personally delivered to the other Party. Any verbal notice required hereby which affects the payments to be made hereunder shall be confirmed in writing (certified mail) as promptly as practicable after the verbal notice is given. Page - 21 - IDAHO COLTNTY LIGHT & POWER 30. EXIIIBITS This Power Purchase Agreement includes the following exhibits wtrich are anached and incorporated by reference herein: Exhibit A Exhibit B Exhibit C Exhibit D Exhibit E Communications and Reporting Form of Engineeds Certification of Operations and Maintenance Policy Interponnection and Operating Agrwment Description of the Facil ity Purchase Prices IN WITNESS WHEREOF, ttre Panies hereto have caused this Agrecment to be executed by their duly authorized representatives as of the first date herein above set for$. IDAHO COI.JNTY LIGHT & POWER AVISTA CORPORATION By: Printed Name: Title: Date:q-g-22 Title: Date: Page - 22 - IDAHO COLTNTY LIGHT & POWER Exhibit A Communicstion and Renortins (a) During normal business hours, all verbal communications relating to intemrptions and outages: Avista System Operator (509) 4954105 Alternate Phone Number: (509) 4954934 Project Developer 208-983-1610 Alternate Phone Number: 208-507-8753 O) Outside of normal business hours (nights, weekends, and holidays), all verbal communications relating to intemrptions and outages shall take place between the following personnel: Avista System Operator (509) 4954105 Alternate Phone Number: (509) 4954934 Project Developer 208-983-1610 Alternate Phone Number: 208-507-8753 ExhibitA IDAHO COI.JNTY LIGHT & POWER Exhibit B Form of Ensineerfs Certilication of Onerations and Maintenance Policv am a Professional Engineer (Name ofEngineer) registered to practice in the State of ldaho. I have substantial experience in the design, construction and operation of electric power plants of the same type as (plant), l. [, (Title of QF) sited at in (Description of Project Site) County, State of . 2. I have reviewed and/or supervised the review of the Policy for Operation and Maintenance (O&M Policy) for the plant and it is my professional opinion that, provided said plant has been designed and built to appropriate standards, adherence to said O&M Policy will result in the plant's producing at or near the design electrical output, efficiency, and plant factor for years (length of the proposed Power Sales Contract), barring unforeseeable Force Majeure. 3. I have no economic relationship to the Designer of said plant and have made my analysis of the Plans and Specifications independently. 4. I have supplied the owner of the plant with at least one copy of said O&M Policy bearing my Stamp and the words "CERTIFIED FOR IDAHO P.U.C. SECURITY ACCEPTANCE" on each sheet thereof. 5. I hereby CERTIFY that the above statements are complete, tue, and accurate to the best of my knowledge and I therefore set my hand and seal below. Signed and Sealed DATE: SIGNATURE: Exhibit B IDAHO COUNTY LIGHT & POWER Exhibit C Interconnection and Ooeratinq Asreement Exhibit C IDAHO COUNTY LIGHT & POWER Avbta contract No. AV-TR05"0188 INTERCONNECTION AND OPERATING AGREEMENT between AVISTA CORPORATION and IDAHO COUNTY LIGHT & POWER COOPERANVE ASSOCIATION, INC. This INTERCONNEC,TION AND OPERATING AGBEEMENT ('Agreemenf) is made and entered inilnis9#flaay of November, 2005, by and between AVTSTA CORPORATION ('Avista') and IDAHO COUNTY LIGHT & POWER COOPERATIVE ASSOCIATION, lNC. flCL&P'), wh'rch hereinafter may be relerred to individually as 'Partt' or collectively as 'Parties'. RECITALS WHEREAS, Avista and ICL&P currently operate interconnected electric systems; and WHEREAS, the terms and conditiolls goveming the operation and maintenance of the interconnected electric systems of Avista and ICL&P have historically been pursuant to a power sales agreement between ICL&P and the Bonneville Power Administration ("Bonneville") and a General Transfer Agreement between Avista and Bonneville (Bonneville Contract No. DE- MS79-868P91970) (collectivety the "Historical Power and Transfer Agreements'); and WHEREAS, ICL&P and Bonneville have executed new power sales and network transmission service agreements effective October 1, 2001 (cotlectively the uPower and Transmission Agreements"); and WHEREAS, upon the expiration of the General Transfer Agreement between Avista and Bonneville alZ4OO hours on December 31, 2005, the Historical Power and Transfer Agreements no longer provide for terms and conditions governing the operation and maintenance of the inlerconnected electric systems of Avista and ICL&P; and WHEREAS, in order to facilitate the continued delivery of electric power from Bonneville to ICL&P, Avista and Bonneville lntend to execute a service agreement under Avista's Open Access Transmission Taritf - FERC Electric Taritf Volume No. 8 ('Taritf) pursuant to which Avista will provide network integration transmission service to Bonneville for such deliveries to ICL&P;and WHEREAS, at some future point in time ICL&P may elect to execute a service agreement under Avista's Taritf, replacing the aforementioned agreement between Avista and Bonneville, to facilitate the delivery of electric power to ICL&P; and WHEREAS, Avista and ICL&P desire to provide for the terms and conditions for the operation and maintenance of their interconnected electric systems; and WHEREAS, Avista and ICL&P intend for this Agreement to supersede and replace the lnterc.onnection and Operating Agreement between the Parties (Avista Contract No. WP-TR96- 0001) dated September 30, 1996. NOW, THEREFORE, the Parties agree as follows: 1.1 1.2 1.3 Section 1 - Definitions Ancillary Services - Those services that are necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation of Avista's transmission system in accordance with Good Utility Practice. Commission - The Federal Energy Regulatory Commission, or its regulatory su@essor. Direct Assionment Facilities - Facilities or portions of facilities that are constructed by Avista for the sole use or benefit of ICL&P. 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 Generatinq Proiect - Any electric generating facility, whether owned by ICL&P or a third party, located in an area served by ICL&P that is electrically connected to Avista through the Points of Delivery. Good Utilitv Practice - The practices, methods and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliabllity, safety, and expedition. Good Utility Practice is not lntended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to be a range of acceptable practices, methods or acts. Native Load Customers - The wholesale and retail power customers of either Party on whose behalf that Party, by statute, franchise, regulatory requirement, or contract, undertakes an obligation to construct and operate that Party's system to meet the reliable electric needs of such customers. NERC - The North American Electric Reliability Council, or its successor. NWPP - The Northwest Power Pool, or its successor. Point(s) of Peliverv - Those points of interconnection as specified in Exhibit A of this Agreement. Service Commencement Date - The date whereupon Avista first commences providing network integration transmission service to ICL&P or to Bonneville pursuant to a service agreement under the Tariff for the delivery of electric power to ICL&P. Tariff - Avista's Open Access Transmission Tariff - FERC Electric Tariff Volume No. B, as such may be amended or replaced. 1.12 Transmission Service - Network integration transmission service, including transfer service over substation facilities, distribution facilities, or Direct Assignment Facilities, provided pursuant to the Tariff or any other agreement between the Parties. 1.13 WECC - The Western Electricity Coordinating Council, or its successor. 2.'.| 2.2 2.3 Section 2 - Term of Aoreement Effective Date - The effective date of this Agreement shall be the later of: (a) the date of this Agreement; or (b) the date this Agreement is accepted for filing by the Commission, without any change or condition by the Commission which is unacceptable to either Avista or ICL&P, provided, however, that by executing this Agreement ICL&P does not consent to any jurisdiction by the Gommission that the Commission does not already have over ICL&P. Term - The term of this Agreement shall commence on the etfective date and shall continue for ten (10) years from the Service Commencement Date, except as provided in Section 2.3 below. Continuation of Term - The term of this Agreement shall continue beyond ten (10) years from the Service Commencement Date unless affirmatively terminated in writing upon two (2) years'written notice by either Party to the other Party. Section 3 - Exhlbits The following Exhibits are attached and incorporated by reference herein: Exhibit A - Points of Delivery Exhibit B - Meter Reading and Meter Test Procedures Exhibit C - Substation Construction and Ownership Guidelines 4.1 4-2 5.1 5.2 Sectlo[ 4 - Se(vlces Prcvlded bv Avlsta or Other Parties Transmission Service - ICL&P, or Bonneville on behalf of !CL&P, requires Transmission Service to the Points of Delivery in order to serve IGL&P's Native Load Customers. Transmission Service is not provided for under this Agreement, but shall be provided for pursuant to the Taritf or other agreement between the Parties or between Avista and Bonneville. Ancillarv Services - ICL&P, or Bonneville on behalf of ICL&P, requires Ancillary Services in order to serve !CL&P's Native Load Customers via the Points of Delivery. Ancillary Services are not provided for under this Agreement, but shall be provided for pursuant to the Taritf or another agreement between the Parties or between Avista and Bonneville. Sectlon 5 - Points of Dellverv and Facllltles Additional Points of Deliverv - During the term of this Agreement, ICL&P may, in accordance with Good Utility Practice and, when applicable, upon Avista's approva!, add new Points of Delivery such as to facilitate Transmission SeMce under the Taritf. Subject to the foregoing, the Parties shall add any such new Point of Delivery concurrent with the commencement of Transmission Service under the Tariff to such new Point of Delivery. Ownership of Facilities (a) Except as otherwlse expressly provlded, ownership of any and allequipment and all salvable facilities installed or previously lnstalled by either Party on the property of the other Party shall be and remain with the owning Party. (b) Each Party shall identify all movable equipment and, to the extent agreed upon by the Parties, all other salvable facilities that are installed by such Party on the property of the other, by permanently atfixing thereto suitable markers plainly identifying the owner of tho oquipment. Within a reasonable time euboequent to 5.3 5.4 initial installation, and subsequent to any modification of such installation, representatives of the Parties shall jointly prepare an itemized list of said movable equipment and salvable facilities so installed. (c) Each Party shall be responsible for the cost of compliance with the requirements of all applicable Federal, State, and local environmental laws for its own facilities, even when such facilities are located on the property of the other Party. (d) Construction and ownership of facilities inside an Avista substation shall be subject to the Substation Gonstruction and Ownership Guidelines outlined in Exhibit C, attiached hereto. Addition of Facilities - Any incremental costs of additions or modifications to Avista's equipment and facilities in order to provide Transmission Service or Ancillary Services at the Points of Delivery shall be provided for pursuant to the Tariff or another agreement between the Parties. Permits (a) lf any equipment or facilities associated with any Point of Delivery and belonging to a Party are, or are planned to be, located on the property of the other Party, a permit to install, test, maintain, inspect, replace, repair, and operate during the term of this Agreement and to remove such equipment and facilities at the expiration of the Term, together with the right of entry to said property at all reasonable times, is hereby granted by the other Party, provided, however, that permits to perform ground excavation are exempted from this Section 5.4(a)- (b) Each Party shall have the right at all reasonable times to enter the properly of the other Party for the purpose of reading any and all meters mentioned in this Agreement that are installed on such property, provided, however, that such right shall be consistent with and subject to any applicable national security requirements. 5.5 6.1 (c) lf either Party is required or permitted to install, test, maintain, inspect, replace, repair, remove, or operate equipment on the property of the other, the owner of such property shall furnish the other Party with accurate drawings and wiring diagrams of associated equipment and facilities, or, if such drawings or diagrams are not available, shall furnish accurate information regarding such equipment or facilities. The owner of such property shall notify the other Party of any subsequent modification that may atfect the duties of the other Pafi in regard to such equipment, and fumish the other Pafty with accurate revised drawings, if possible. lnsoection of Facilities - Either Party may inspect the other Party's electric installation for any reasonable purpose at any reasonable time upon reasonable notice to the other Party. Such inspection, or failure to inspect, shall not render such Party, its officers, agents, or employees, liable or responsible for any injury, loss, damage, or accident resulting from defects in such electric installation, or for violation of this Agreement. The inspecting Party shall observe written instructions and rules posted in facilities and such other necessary instructions or standards for inspection as the Parties may agree upon. Only Generating Projects and those electric installations used in complying with the terms of this Agreement shall be subject to inspection. Section 6 - Meterino Meters and Meter Readino - As of the Effective Dale, meters at the Points of Delivery are provided for under the Power and Transmission Agreements. Unless provided by Bonneville pursuant to the Power and Transmission Agreements or any subsequent agreement between Bonneville and ICL&P, Avista and/or ICL&P shall own and maintain all meters used to determine any billing associated with this Agreement, a service agreement under the Taritf providing for the delivery of electric power to the Poln(s) of Delivery, or any other agreement between the Parties. Meters at the Point(s) of Delivery shall be read pursuant to the Meter Reading and Meter Test Procedures outlined in Exhibit B, attached hereto. 6.2 Tests of Meterinq lnstallations - Each Party shall, at its exponse, test its measuring installations associated with this Agreement, a service agreement under the Tariff providing for the delivery of electric power to the Point(s) of Delivery, or any other agreement between the Parties, in accordance with the Meter Reading and Meter Test Procedures outlined in Exhibit B, attached hereto. The Parties may mutually agree to use a single set of meters. ln the event that a single set of meters are utilized, tests of such meters shall be conducted jointly by the Parties in accordance with Exhibit B and shall be witnessed and agreed to by representatives of each Party. 6.3 Meterlno and Communications Required for Ancillarv Services - To the extent not provided by BonneMlle pursuant to its agreements with ICL&P, ICL&P shall be responsible for all costs associated with the installation, operation, and maintenance of any metering and communications equipment necessary for the provision of Ancillary Services either by Avista, !CL&P, or by a third party. All such metering installations shall be installed, operated, and maintained pursuant to applicable NERC, WECC, and NWPP criteria and Good Utilip Practice. 6.4 Measurements and lnstiallation of Avista Meters - Notwithstanding any other provision in this Section 6, Avista may at any tlme install meters or metering equipment to make any measurements for any Point of Delivery required for any computation or determination mentioned in this Agreement, a service agreement under the Taritf providlng for the delivery of electric power to the Point(s) of Elelivery, or any other agreement betwen the Parties, and if such meters or metering equipment are so installed, such measurements shall be used thereafter in such computation or determinatlon. 6.5 7.1 7.2 Real-Time Data Acuuisition - For the purpose of enabling Avista to monitor the loads on its transmission system, Avista may require the acquisition of real-time load data (megawatts and megavars) at Points of Delivery at or above 69kV. The Parties shall facilitate such data acquisition pursuant to the Substation Construction and Ownership Guidelines outlined in Exhibit C. Section 7 - Operation and Malntenance Operation and Maintenance of lnterconnected Facilities - Avista and ICL&P shall maintain the facilities enabling the Point(s) of Delivery described in Exhibit A in good working order and shall operate and maintain their respective interconnected facilities pursuant to any applicable NERC and WECC criteria and Good Utility Practice. The Parties shall adhere to the Substation Construction and Ownership Guidelines outlined in Erhibit C. Qoeration of ICL&P's Points of Deliverv - Avista shall have primary operating responsibility in all Avista substations. This responsibility specifically includes the distribution feeder protective device at each Point of Delivery in Avista substations, and all switching operations in such substations. Operation of apparatus owned by ICL&P in Avista's substations shall be the responsibility of ICL&P, subject to switching orders received from Avista system operations personnel. ICL&P personnel shall adhere to the Avista requirement that anyone entering an Avista substation notify Avista system operations of their presence and their operational intentions. Operation of ICL&P equipment at each Point of Delivery not located in an Avista substation shall be coordinated with Avista system operations personnel to the extent practicable pursuant to Good Utility Practice. Ooerator's Qualifications - ICL&P's personnel who perform operations in Avista's substations or on line facilities at a Point of Delivery are required to meet the applicable 7.3 7.4 operating requirements of ICL&P. Such personnel shall be familiar with the operation of all substation or line facilities and equipment that concerns his or her position and be fully aware of the hazards connected therewith, or have passed a journeyman's examination for the partlcular branch of the electricaltrades with which he or she may be connected. Power Qualitv - The interconnection of Avista and ICL&P facilities requires mutual responsibilities with respect to quality of service to both Parties'customers. (a) Character of Seryice - Unless otherwise provided in this Agreement, Avista will make electric power available to ICL&P in the form of three-phase alternating current at a nominalfrequency of sixty (60) hertz. (b) Abnormal Voltaoe Maqnitudes - Both Parties shall operate and maintain their facitities such that the other Party's steady-state voltage levels at the Points of Delivery are manageable to within x,1O"h of the steady-state operating voltage specified for each Point of Delivery. Both Parties shall also design, @nstruct, operate and maintain its electric facilities in accordance with Good Utility Practice to reduce to acceptable levels any momentary voltage fluctuations that atfect the other Party's facilities. (c) Frequencv Control - Both Parties shall operate and maintain their systems to enable the Avista control area to maintain its frequency control obligations to applicable regional operating criteria. (d) Harmonic Control - Each Party shall design, construct, operate, maintain and use its electric facilities in accordance with the IEEE 519 standard and Good Utility Practice to reduce to acceptable levels the harmonic currents and voltages which pass into the other Party's facilities. Harmonic reductions shall be accomplished with equipment that is specifically designed and permanently 7.5 7.6 7.7 7.8 operated and maintained as an integral part of the facllities of the Party that owns the system on which harmonics are generated. Reactive Power - The Parties shall iointly plan and operate their interconnected electrical facilities pursuant to Good Utility Practice in order to minimize the reactive power requirements placed upon the other Party. Pursuant to such joint planning and operation, Avista may require ICL&P to install necessary equipment or implement necessary operating practices on ICL&P's system to assure that deliveries at the Points of Delivery, pursuant to any transmission service agreernent, are at a power lastor no less than 0.95leading or lagging. Balanclno Phase Demands - lf requlred by Avista at any time during the term of this Agreement and pursuant to Good Utllity Practice, ICL&P shall make such changes as are necessary on its system to balance the phase curents at any Point of Delivery such that the curent of any one phase not deviate by more than five (5) percent from the average of the cunents on all three phases, unless othenrvise agreed upon by the Parties. Remedia! Actions - Avista rnay require ICL&P to participate in or carry ICUIP's pro rata share of any remedial action scheme that may be required to support the reliability of AMsta's system or the regional or sub-reglonal transmission syatems. ln such case, Avista and IGL&P shall jointly plan and coordinate the implementation of the required remedial action scheme pursuant to Good Utility Practice. Automatic Under-frequencv Load Sheddino Protection - Avista may require ICL&P to participate up to its pro rata share in an automatic under-frequency load shedding Program required to support the reliability of Avista's system or the regional or sub- regional transmission systems. Such pro+ata share shall be determined by the proportion of the total load of ICL&P's Native Load Gustomers to the sum of the tota! loads of Avista's Native Load Customers, ICL&P's Native Load Customers and the native load customers of other parties served directly by Avista's Transmission System. Avista and ICL&P shalljointly plan and coordinate the implementation of such protection pursuant to Good Utility Practice, provided, however, that ICL&P shall have the right to specify which of its loads are to apply to meet its pro rata obligation for automatlc under- frequency load shedding. ll such loads are served via a Point of Delivery where ICL&P owns the distribution feeder protection device, Avista may require ICL&P to provide, install, operate and maintain the necessary relay equipment on ICL&P's distribution system, at ICL&P's cost. 7.9 Generatino Proiects - ICL&P shall require that any Generating Project shall agree by contract to plan and interconnect the Generatlng ProJect consistent with Good Utility Practice and the standards, criteria, and requirements of NERC, WECC, and NWPP. 7.10 Maintenance Resoonsibilitv - The owner of any equipment shall retain maintenance responsibility for such equipment, except for any required earth excavation inside a substation as provided below. (a) Excavation lnside an Avista Substation - Any earth excavation inside an Avista substation shall be performed by Avista or Avista's authorized agents and shall be the responsibility of Avista. To the extent that excavation is performed on behalf of ICL&P, for ICL&P's sole or joint benefit, ICL&P shall reimburse Avista for an appropriate share of the costs associated with such excavation. (b) Excavation lnslde a ICL&P Substation - Any earth excavation inside a ICL&P substation shall be performed by ICL&P or ICL&P's authorized agents and shall be the responsibility of ICL&P. To the extent that excavation is perform€d on behalf of Avista, for Avista's sole or joint benefh, Avista shall reimburse ICL&P for an appropriate share of the costs associated with such excavation. 7.11 Maintenance Schedulino and Continuitv of Seruice - The Parties shal! coordinate thelr respective equipment maintenanoe schedules so as to minimlze any etfects upon either 8.1 Party due to temporary interruptions associated with such maintenance. Avista may temporarily interrupt or curtail seruice at the Points of delivery: (a) upon reasonable notice to ICL&P in order to instrall equipment in, make repairs, replacements, investigations, and inspections of or perform other maintenance work on Avista's system; provided, however, that Avista shall give ICL&P prior notice thereof, the reason therefore, and the probable duration thereof; and (b) without prior notice of such interruption or curtailment as may be necessary because of uncontrollable forces as provided in Section 8. Avista shall use reasonable efforts to avoid interference with the operations of ICL&P and to repair the cause of any such interruption or curtiailment. The Parties shall use reasonable efforts to provide for effective communication protocols between their respective operating personnel for the purpose of communicating any apparent cause and expected duration of any such interruption'or curtailment of an extended nature. Section 8 - Uncontrollable Forces and Liabilitv Uncontrollable Forces - Neither Party to this Agreement shall be considered to be in default in performance of any obligation hereunder if failure of performance shall be due to uncontrollable forces. The term "uncontrollable forceso means any cause beyond the control of the Party affected, including, but not limited to, failure or loss of facilities, flood, earthquake, storm, fire, lightning, epidemic, war, riot, civil disturtance, labor disturbance, sabotage, and restraint by court order or public authority, which by exercise of due foresight, such Party could not reasonably have been expected to avoid, and which by exercise of due diligence it shall be unable to overcome. A Parg shall not, however, be relieved of liability for failure of performance if such failure is due to causes arising out of its own negligence or to removable or remediable causes which it fails to remove or 8.2 8.3 remedy with reasonable dispatch. Nothing contained herein, however, shall be construed to require a Party to prevent or settle a strike against its will. Damage to the elearical system of either ICL&P or Avista caused by or arising out ol an electrical disturbance shall be governed under Section 8.2 and not under the provislons ol this Section 8.1. Electric Disturbances (a) For the purposes of this section, an elestric disturbance is any sudden, unexpected, changed, or abnormal electric condition occurring in or on an electric system that causes automatic operation or darnage. (b) Eact Party shall design, construct, operate, maintain and use its electric system in conformance with Good Utility Practice: (i) to minimize electric disturbances such as, but not limited to, the abnormal flow of power which may damage or interfere with the electric system of the other Party or any electric system connected with such other Partt's electric system; and (ii) to minimize the etfect on its electric system and on its customers of electric disturbances originating on its own or another electric system. Release and Limitation of Liabilitv - lf both ICL&P and Avistra are parties to the Western lnterconnected Systems Agreement Limiting Liability, that agreement shall continue in full force and effect as between the Parties to the extent that such provisions may apply under this Agreement. lf either ICL&P or Avista is not a party to the Western lnterconnected Systems Agreement Limiting Liability, then the following provisions shall apply: (a) Release bv Avista - Avista hereby releases each of ICL&P and the directors, employees, agents and legal representatives of ICL&P lrom any and all claims, losses, harm, liabilities, damages, costs and expenses to the extent resulting from any: (i) operation of !CL&P's electric system in parallel with Avista's electric system; (ii) electric disturbance or fluctuation that migrates, directly or indirectly, from ICL&P's electric system to Avistia's electric system; (iii) interruption, suspension or reduction of delivery of power from ICL&P's electric system to Avista's electric system, regardless of whether such interruption, suspension or reduction is caused or contributed to by Avista's electric system or the interconnectlon of Avista's electric system with ICL&P's electric system;or (iv) disconnection, interruption, suspension or curtailment, through manual operation, automatic operation or otherwise, by ICL&P in the event that ICL&P, in the exercise of its sole discretion, determines or has determined that an emergency condition exists or may exist that is contrary to Good Utility Practice, and failure to do so: (A) may cause imminent harm to any person or property, or (B) may cause the disruption of reliable operation of ICL&P's or Avista's electric system (including, but not limited to, any transmission or distribution line thereof) or any electric system with which ICL&P is interconnected. The foregoing release shall not be effective to the extent any claims, losses, harm, liabilities, darnages, costs, and expenses are the result of the ICL&P's willful misconduct. Release bv ICL&P - ICL&P hereby releases each of Avista and the directors, employees, agents and legal representatives of Avista from any and all claims, losses, harm, liabilities, damages, oosts and expenses to the extent reoulting (b) from any: (i) operation of Avista's electric system in parallel with ICL&P's electric system; (ii) electric disturbance or fluctuation that migrates, directly or indirectly, from Avista's electric system to ICL&P's electric system; (iii) interruption, suspension or reduction of delivery of power from Avista's electric system to ICL&P's electric system, regardless of whether such interruption, suspension or reduction is caused or contributed to by ICL&P's electric system or the interconnection of ICL&P's electric system with Avista's electric system; or (iv) disconnection, interruption, suspension or curtailment, through manual operation, automatic operation or otherwise, by Avista in the event that Avista, in the exercise of its sole discretion, determines or has determined that an emergency condition exists or may exist that is contrary to Good Utility Practice, and failure to do so: (A) may cause imminent harm to any person or property, or (B) may cause the disruption of reliable operation of Avista's or ICL&P's electric system (including, but not limited to, any transmission or distribution line thereof) or any electric system with which Avista is interconnected. The foregoing release shall not be effective to the extent any olaims, losses, harm, Iiabilities, damages, oosts, and expenses are the result of Avista's willful misconduct. Mutual Neootiation - ICL&P and Avista specifically warrant that the terms and conditions of the foregoing release provisions are the subject of mutual negotiation by the Parties, 8.4 8.5 9.1 and are specifically and expressly agreed to in consideration of the mutual benefits derived under the terms of this Agreement. lnsurance (a) ICL&P and Avista shall obtain and maintain commercial liability insurance with a single limit of coverage of not less than $5,000,000 for each occurrence. A certificate of such insurance shall be provided to either Party upon request by the other Party. Each Party shall promptly notify the other Party of any changes in its commercial liability insurance policies. (b) Upon the request by either Party, the minimum coverage limits for commercial liability insurance shall be reviewed by the Parties and adjusted according to Good Utility Practice. Section 9 - Mlscellaneous Notices - Any notice to be served, given or made in connection with this Agreement, shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by United States mail, properly addressed and stamped with the required postage, as follows: lf to Avista: Attention: Manager, Transmission Services Avista Corporation 1411 East Mission Avenue Spokane, WA 99202-2600-or- P.O.Box3727 Spokane, WA 99220-3727 lf to ICL&P:Attention: General Manager ldaho County Light & Power P. O. Box 300 Grangeville, lD 83530-0300 Either Party may change its address speclfied in this sec'tion by giving the other Party notice of such change in accordance with this section. 9.2 Notices of an Ooeratino Nature - Any notice associated with day-today electric utili$ operations, such as for outage coordination or the need to enter a jointly-owned substation, may be provided by telephone, electronic mail or facsimile between appropriate operations personnel representing both Parties. 9.3 Amendment - No change, modification or amendment of this Agreement shall be valid unless set foilh in a written lnstrument signed by both Parties. 9.4 Assionment - Neither Party shall assign this Agreement without the prior written consent of the other Party. Subject to the foregoing restriction on assignment, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their successive successors and assigns; provided, however, that each Pafi hereby consents to assignment of this Agreement to a successor where a Party sells or transfers all or substantially all of its electric utility operating plant to a third party. 9.5 No Third-Partv Beneficiarv - There are no third-party beneficiaries ol ttris Agreement. This Agreement shall not confer any right or remedy upon any person or entity other than the Parties and their respective successors and assigns permitted under Section 9.4. 'No ac'tion may be commenced or prosecuted against any Party by any third party 'claiming to be a third-party beneficiary of this Agreement or the transactions contemplated hereby. This Agreement shall not release or discharge any obligation or liability of any third party to any party or give any third party any right of subrogation or action over or against any Party. 9.6 lmplementation - Avlsta shall timely file this Agreement with the Commission. Each Party shall take such additional action as may be reasonably required for the implementation and performance of this Agreement in accordance with its terms. 9.7 Arbitration - Whenever Avista and ICL&P are both members of a Regional Transmission Association, Regional Transmission Organization, or lndependent Transmission Provider, the determination of any disputed matter between the Parties arising out of or relating to this Agreement, except an obligation arising out of Section 8.3, shall be resolved in a manner provided in the dispute resolution procedures contained in the governing agreement for that organization. The determination ol any other disputed matter between the Parties afising out of or relating to this Agreement, except an obligation arising out of Section 8.3, shall be subject to binding arbitration in accordance with subsections 9.7(a),9.7(b) and 9.7(c) below. (a) lnitiation and Selection of Arbitrators - The Pafi calling for arbitration shall serve notice in writing upon the other Party, setting forth in detail the question or questions to be arbitrated, the relief sought, and the arbitrator appointed by such Party. The other Party shall, within twenty-five (25) business days after the receipt of such notice, appoint the second arbitrator by notice in writing to the Party calling for arbitration, and the two so appointed shall choose and appoint a third (if the Parties have not agreed upon and appointed a third). lf such other Party fails to appoint the second arbitrator within said twentyJive (25) business days, or if a third arbitrator has not been appointed by agreement between the Parties within twenty-five (25) buslness days after receipt of notice of appointment of the second arbitrator (or, in the absence of such agreement, by the two arlcltrators who have been appolnted), either Party, upon five (5) business days' written notice delivered to the other Party, fiBy apply to the Federal District Court for the District of ldaho for appointment of the gecond or third arbitrator, as the case may be. Neither Party may dlscuss any matter to be arbltrated with any arbltrator after such arbitrator is appointed but prior to the arbitrators' determination, without providing notice to the other Party and reasonable opportunity to participate. The Parties intend that every arbitrator be an unbiased person with experience in the subject matter to be arbitrated. (b) Procedure - The rules of procedure for the conduct of the arbitration shall be determined by a majority of the arbitrators. Such rules of procedure shall direct the expeditious evaluation of the merits of the matter and renderlng of decision @nsistent with the complexity of the matter being arbitrated. ln any such arbitration, each Party thereto shall have: (i) full access to the records of the other Party that pertain to the subject matter or the controversy; (ii) the povver to call for testimony of any director, officer, employee, agent, or representative ol the other Parly having knowledge relevant to the controversy, and (iii) all other rights of discovery afforded to Parties in civil actions under the then applicable Federal Rules of Civil Procedure (or rules or laws applicable to the Federal District Court for the District of ldaho). Disputes regarding the extent ol discovery shall be resolved by the arbitrators. Unless otherwise agreed upon by the Parties, the Parties hereby instruct the arbitrators that they should render a determination of the matters submitted and the relief awarded within thirty (30) calendar days of the completion of the arbitration proceeding. ln determining matters submitted for arbitration, no arbitrator shall be required to adhere to or advance the position of any particular Party. The. determination of the matters submitted for arbitration shall be made by a majority of the arbitrators, and shall be binding as between the Parties. The determination shall be writing and shal! atfirm or deny each contention of the Parties and shall set forth the reasons therefore. The determination of the arbitrators shall be final and binding and shall be enforceable by a court of competent jurisdiction at the request of either Party. (c) Costs - Each Party shall pay for the seMces and expenses of the arbitrator appointed by or for it, and for all of its own costs including its own attorney fees, and compensation for its witnesses and consultants. The costs for the services and expenses of the third arbitrator and all administrative costs of the arbitration shall be paid equally by the Parties. Section 10 - Default ln the event that either ICL&P or Avista commits a material breach of or delault under this Agreement (the "Defaulting Party''), the following shall apply: (a) The other Party (the 'Non-Defaulting Party") may give written notice to the Defaulting Party of the material breach or default. (b) lf after thirty (30) days following receipt of such notice, the Defautting Party has not taken the steps necessary to cure such breach or default, the Non-Defaulting Party may, at its option, terminate this Agreement; provided, however, that if the Defaulting Party within such 30-day period commences and thereafter proceeds with all due diligence to cure such default, such 3&day period shall be extended up to six (6) months after written notice to the Defaulting Party, as may be necessary to cure the material breach or default with atl due diligence. Whether or not the Non-Defaulting Party elects to terminate this Agreement, it may, in addition to other remedies provided for herein, pursue such remedies as are available at law or in equity. (c) The Non-Defaulting Pafi may, at its option, cure (or cause to be cured) any material breach or default hereunder within the appropriate time period, without waiver of any remedy at law or in equity including the right of reimbursement. The right of the Non- Defaulting Party to cure any breach or default by the Defaulting Party shall not be construed or interpreted as obligating such Non-Defaulting Party to make any such cure. (d) A Defaulting Party shall be liable to the Party claiming default for all costs, including costs of collection and reasonable attorney fees incurred by such Party claiming default. The proceeds paid by any Defaulting Party to remedy any such default shall be distributed to the Party claiming default equal to the additlonal cost actually paid by the Party claiming default as a result of the default. Section 11 - Walver A waiver at anytime by a Party of its rights with respect to a default by another Party under this Agreement, or with respect to any other matter arising in connection with this Agreement, shall not be deemed a waiver with respect to any subsequent default or matter. No delay, short of the statutory period of limitations, in asserting or enforcing any right hereunder shall be deemed a waiver of such right. Sectlon 12 - Relationship of Parties '12.1 Nothing contalned herein shall be construed to create an association, joint venture, trust, or partnership, or impose a trust or partnership covenant, obligation, or liability on or with regard to any one or more of the Parties. Each Party shall be indiMdually responsible for its own covenants, obligations, and liabilities under this Agreement. 12.2 All rights of the Parties are several, not joint. No Party shall be under the control or shall be deemed to control another Party. Except as expressly provided in this Agreement, no Party shall have a right or power to bind another Party without its express written consent. Section 13 - No Dedicatlon of Facilities Any undertaking by one Party to another Party under any provision of this Agreement shall not constitute the dedication of the electric system or any portion thereof of the undertaking Party to the public or to the other Party, and it is understood and agreed that any such undertaking under any provision of this Agreement by a Party shall cease upon the terrnination of such Party's obligations under this Agreement. Sectlon 14 - Governinq Law This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of ldaho or the law of the United States of America, whichever is appticable, as if executed and to be performed wholly within the State of ldaho. lN WITNESS WHEREOF, the Parties hereto have caused this lnterconnection Agreement to be executed in their respective names by their duly authorized representatives as of the date lirst noted above. AVISTA CORPORATION By:&Jll o. a,,J RandallO. Cloward Director, System Operations and Engineering Signed ttris /8 rA day of November, 2005. IDAHO COUNTY LIGHT & PO\A/ER N, INC. By: G. General Manager, signed nisdaay of November, 2005. EXHIB]T A POINTS OF DELIVERY 1) Cottonwood Point of llelivery Location: The point, approximately three miles north of Cottonwood, ldaho, where the 24.9RV distribution facilities of Avista and ICL&P are connec'ted Voltaqe: 24.9kV Meterino: At or near the Point of Delivery, in the 24.9 kV circuit over which electric power and energy flows 2) East Grangevllle Polnt of Dellvery Location: The point where Avistra's East Grangeville 115 kV Tap of the Grangeville-Nez Perce No. 2 115 kV Transmission Line is connected to the Bonneville Power Administration's East Grangeville Substation 115 kV Tap Vgltaoe: 115 kV Meterlnq: NOTE: ln the Bonneville Power Administration's East Grangeville Substation, in the distribution circuit(s) over which electric power and energy flows The lnterconnected facilitles associated with this Point of Delivery are between Avista and the Bonneville Power Administration, and between ICL&P and the Bonneville Power Administration. The Parties intend for the terms and conditions of this Agreement to apply to their respective facilities associated with this Point of Delivery. The terms and conditions of this Agreement do not apply to the facilities owned by the Bonneville Power Administration and are not intended to amend any agreements between either of the Parties and the Bonneville Power Administration. 3) Kamlah Polnt of Dellvery Location: The point, approximately 2.2 miles southeast of lGmiah, ldaho, where the 13.2 kV distribution facilities of Avista and ICL&P are connected ]Ie.!!egc: 13.2 kV Meterino: At or nearthe Point of Delivery, in the 13.2 kV circuit over which electric povver and energy florys E*ribit A- Points ol Delivery A-1 4) Koo*la Polnt of Ddlvory ldjEl: The point ln Avlsta's Koo8lda 13/34.5 kV Sr.Ostatlon rfierc tho 30.5 kV hdll$€s cf Avieb and ICL&P are oonnected Volhgg: 34.5 kV It efierlno: !n AvigEe Ksookla SuMton, h the 13 kV drwlt dths 19134.5 kV Uanslonner mr whidi obdric pouer ard energy flovs E 0bit A- Pohb o, Defirnry ,\-2 EXHIBIT B METER READING AND METER TEST PROCEDURES B1.Meter Readinqs Meter readings associated with the delivery of electric power to the Polnt(s) of Delivery shall be the responsibility of the Party owning such meters. ln the event such meters are owned by Bonneville pursuant to the Power and Transmission Agreements, ICL&P shall request that Bonneville provide such meter reading information directly to Avista. Alternatively, ICL&P shall, upon request by Avista, provide to Avista any such meter reading information made available to ICL&P by Bonnevllle. Electric power deliveries in any month shall be calculated on information based on metor readings, with any necessary date adjustments made by pro-rating metered amounts to the number of days in such month. ln the event a recording metering deMce is installed, actual monthly energy deliveries shall be determined from the record developed. Bl2, Meter Testino Unless provided by Bonneville pursuant to its agreements with ICL&P, Avista and/or ICL&P shall own and maintiain all meters used to determine any billing associated with the delivery of electric power to the Poin(s) of Delivery. Avista meters shall be tested and inspected in accordance with Avista's meter testing program ('Avista Program') as filed with the Washington Utilities and Transportation Commission and/orthe ldaho Public Utilities Commission. lf requested by ICL&P, Avista shall provide copies of applicable test and calibraUon records and calculations. Avista shall permit representatives of ICL&P, and/or Bonneville to be present at all times the meters are being tested. Additionally, Avistia shall test any or all such meters as may reasonably be requested by IGL&P. Reasonable costs for such requested test shall be paid by ICL&P unless any of the meters are found to be inaccurate, as defined in the Avista Program, in which case Avistia shall pay for the test. ICULP's meters shal! be tested and inspected in accordance with the ICL&P meter testing program flCL&P Program'). lf requested by Avista, ICL&P shall provide copiesof applicable test and calibration records and calculations. ICL&P shal! permit a representiative of Avista to be present at all times the meters are being tested. Additionally, ICL&P shall test any or all such meters as may reasonably be requested by Avista. Reasonable costs for such requested test shall be paid by Avista unless any of the meters are found to be inaccurate, as defined in the ICL&P Program, ln which case ICL&P shall pay for the test. For meters owned by BonneMlle, Avista and !CL&P consent to the testing and lnspec-tionof such meters in accordance with Bonneville's applicable meter testing program ('Bonneville Program"). lf requested by Avista, ICL&P shall provide copies of applicable test and calibration records and calculations made available to ICL&P by BonneMlle. ICL&P shall permit a representative of Avista to be present at alltimes such meters are being tested. Additionally, ICL&P shall request a test of any or all such meters as may reasonably be requested by Avista. Reasonable costs for such requested test shall be paid by Avista unless any ol the meters are found to be inaccurate, as defined in the Bonneville Program, in which case Avista shall not be required to pay for the test. Bdtiblt B - lieter Reading and Meter Test Procedures B-1 &1.AdhrstnenE Adiuetrnents shall be rnade in meter rcadinge and billings for enors ln a metor rcading or bllllrU dlscovercd uuihln twetue (12) months ol the eror. Eadt Party shall permit repreeontative of the other Party to inEpeot all of tre recorde, lndrdrg any records made avalhHe by Bonnevllle to lClSP or Avlsta, relathg to tho dellvery d electrb poruer to ICL&P, and the transnhdon of elsctfu povuer by Avbta b the Pointe of Defrrsry. E filHt B- ir6r Roadhg and lrlebrTod Prpoodurco b2 EXHIBIT C SUESTATION CONSTRUCTION AI{D OWNERSHIP GUIDELIN ES FOR SUBSTATIONS OWNED BY AVISTA (Points of Delivery under 69kV): 1. Avista shall be responsible to provide reclosers or other protection apparatus to proFct Avista's power transformers. 2. Avista shall provide all equipment and materials (including vot'tage regulator by-pess switches) to construc't a feeder position, except as noted below. This will ensgre compatibility with spare parts for installed equipment. 3. Voltage regulators shallbe provided by ICUIP, but shallbe lnstalled byAMsA. Regulators are classified as a failure mode change-out item and as such are not regularly maintained by Avista. ICL&P shall maintain its regulators at its discretion. (a) 4. 5. 6. 7. (b) ICL&P's regulator settings shallbe calculated and set by ICL&P. (c) Regulators provided by ICL&P shall be complete with connectors for the appropriate conductor, as specified by Avista. lnsulation coordinated surge arresters shall be provided by ICL&P to protect its voltage regulators or underground cables. Metering CTs shall be supplied by Avista. Metering PTs shall be supplied by Avista and may be shared with ICL&P. ICUIP shall provide the hardware and conductor to connect to the souroe at the Point(s) of Delivery, including, but not limited to, the following: (a) Hardware for overhead line pull-offs/getaways (Avista will provide eye bolts pn distribution strrctures). (b) Potheads and brackets for underground take-offVgetaways. Underground conduits and vaults adjacent to a substation shall be provided or approved by Avista. 8. Exhibit C - Substatlon Cmstrudion and Ornerchh Guklelinee c1 1 FOR SUBSTATIONS OWNED BY !CL&P (Points of Delivery at 69kV or above): For the purpose of enabling Avistra to monitor the loads on its transmission sptem in realtime, ICL&P shall provide either of the following to Avista: Megawatt and megavar indications for total substration load from ICL&P's supervlsory control and data acquisition (SCADA) system, if existing, in a format agreed upon by the Parties, 2. or The following: (a) (b) (c) Metering CTs, (d)Voltage and cunent lrdlcations from ICL&P's CTs and PTs to the Avista Equipment, and (e)Space for any conduit needed by Avista for its oommunications out of the substation. Metering PTs, Space in ICL&P's substation control house for an Avista remote terminal unit or such other equipment that performs a comparable function fAvista Equipment'), to be supplied by Avista, E)fiibit C - Substation Cmstruction and Ornership Guldelines c-2 Exhibit D Description Of The Facilitv The John Day Creek Hydropower Facility consists of: (l) a concrete intake structure placed at natural pool in the John Day Creek at approximate elevation 2,880 feet; (2) an l8-inch diameter, steel penstock approximately 18,500 feet long from the intake to the powerhouse; and (3) a powerhouse containing a 1368 BIIP Gilkes Turbine and Siemens- Allis Induction Generator with a nominal rating of 1,010 kilowatts. When considering the limitations of the diameter of the penstock, Idaho County Light and Power estimates that the maximum net power production capacrty of the Facility under ideal conditions is approximately 900 kilowatts. Exhibit D IDAHO COI.JNTY LIGHT & POWER Exhibit E Purchase Prices Avoided Cost Rates for Non-Fueled Projects Smaller Than Ten Average megawatts per month - Non-Levelized Year 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Season I Pricing (108%) (Applied to July - February) Light LoadFlat Heavy Load Hour ($/MWttl Hour ($/ItIWh) ($/tvtWnl 63.57 6s.38 59.98 62.9s 64.75 59.3561.31 63.12 57.72 61.16 62.97 57.5762.89 64.70 59.30 65.45 67.25 61.8568.s2 70.32 64.92 71.27 73.07 67.67 73.s3 7s.33 69.93 75.53 77.33 71.9377.78 79.58 74.18 79.96 81.77 76.378r.6s 83.46 78.06 82.95 84.76 79.36 84.63 86.43 81.03 86.21 88.01 82.61 88.08 89.88 84.4889.94 91.74 86.34 92.15 93.9s 88.ss 94.20 96.01 90.61 9s.94 97.74 92.3498.03 99.83 94.43100.31 102.11 96.71 102.51 104.32 98.92 104.81 106.61 l0l.2r 107.14 108.95 103.55 Season 2 Pricing (84%) (Applied to March - June) Heavy LoadFlat Hour ($/Iuwtt; ($A,Iwh) 49.44 50.85 48.96 s0.3647.69 49.09 47.57 48.9748.92 50.32 50.90 52.3t 53.29 s4.69 55.43 56.83 s7.t9 58.59 58.75 60.1560.49 61.9062.19 63.60 63.51 64.9164.52 65.92 65.82 67.2367.05 68.45 68.s1 69.9169.95 71.35 7t.67 73.0873.27 74.67 74.62 76.0276.24 77.6578.02 79.42 79.73 81.1481.52 82.92 83.33 84.74 Light Load Hour ($/TvIWh) 46.65 46.16 44.89 44.77 46.12 48.1I 50.49 52.63 54.39 55.95 57.70 59.40 60.71 61.72 63.03 64.25 6s.71 67.15 68.88 70.47 71.82 73.45 7s.22 76.94 78.72 80.54 Exhibit E TDAHO COUNTY LIGHT & POWER Exhibit F Preliminary Generation Estimates Month Amounts in kWhs January 175,000 February 175.000 March 200.000 April 250,000 Mav 300.000 June 200,000 July 175.000 Auzust 150.000 September 125,000 October 150.000 November 200.000 December 200,000 Exhibit F IDAHO COUNTY LIGHT & POWER