HomeMy WebLinkAbout20071009Application.pdfE CE-
IDAHO~POWER~
An IDACORP Company
Lisa D. Nordstrom
Attorney II
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October 5 2007
Jean D. Jewell , Secretary
Idaho Public Utilities Commission
472 West Washington Street
, P. O. Box 83720
Boise, Idaho 83720-0074
Re:Case No. IPC-07-
In the Matter of the Application of Idaho Power for an Accounting
Authorizing the Inclusion of power Supply Expenses Associated With
the Purchase of energy from Raft River Energy I LLC in the
Company s Power Cost Adjustment
Dear Ms. Jewell:
Please find enclosed for filing an original and seven (7) copies of Idaho Power
Company s Application for the above-referenced matter.
I would appreciate it if you would return a stamped copy of this transmittal letter in
the enclosed self-addressed, stamped envelope.
Very truly yours
~LJ.1IlM~
Lisa D. Nordstro
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Enclosures
O. Box 70 (83707)
1221 W, Idaho St.
Boise. 1083702
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LISA D. NORDSTROM ISB # 5733
BARTON L. KLINE ISB # 1526
Idaho Power Company
P. O. Box 70
Boise, Idaho 83707
Telephone: (208) 388-5825
FAX Telephone: (208) 388-6936
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Attorneys for Idaho Power Company
Street Address for Express Mail
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ACCOUNTING ORDER AUTHORIZING THE
INCLUSION OF POWER SUPPLY
EXPENSES ASSOCIATED WITH THEPURCHASE OF ENERGY
FROM RAFT RIVER ENERGY I LLC
IN THE COMPANY'S POWER COST ADJUSTMENT.
CASE NO. IPC-E -07-
APPLICATION FOR AN
ACCOUNTING ORDER
COMES NOW, IDAHO POWER COMPANY ("Idaho Power" or the "Company
and , pursuant to Rule of Procedure 52, hereby applies to the Idaho Public Utilities
Commission ("IPUC" or the "Commission ) for an accounting order authorizing Idaho
Power to include the expenses associated with the purchase of energy from Raft River
Energy I LLC ("Raft River" or the "Project") in the Company s Power Cost Adjustment.
This Application is based on the following:
APPLICATION FOR AN ACCOUNTING ORDER, Page
BACKGROUND
Idaho Power identified a need for geothermal resources in the Company
2004 Integrated Resource Plan ("IRP"). Specifically, the 2004 IRP indicated that Idaho
Power would issue a Request for Proposals ("RFP") for 1 00 MW of a geothermal
resource in 2005. The Company s 2006 IRP anticipated that the 100 MW geothermal
RFP would be concluded in 2007 and that 50 MW of geothermal resource would be
online by 2009. The Company issued the geothermal RFP on June 2 , 2006 ("2006
Geothermal RFP"
On August 11 , 2006 , in response to the Company s 2006 Geothermal
RFP, the Company received nine bids from five entities. The bids ranged in size from
5 to 100 MW. The bids also differed in types of power conversion proposed. Six of
the proposals were for binary geothermal technology in which heat from the geothermal
fluids is transferred to a secondary working fluid which drives a turbine. The remaining
three proposals were for flash units in which hot geothermal fluids are converted to
steam that drives a turbine. Six of the nine bids offered long-term power purchase
options to the Company. One entity offered to develop three projects that would be sold
to Idaho Power.
During the fall of 2006 , the Evaluation Team met with each of the five RFP
respondents and reviewed the nine proposals offered by those entities.
In November 2006, Idaho Power determined that it would not pursue
ownership of a geothermal resource. The bidder who submitted ownership proposals
was invited to change its bid to power purchase options.That bidder elected to
withdraw its proposals from further consideration by the Company. In February 2007
APPLICATION FOR AN ACCOUNTING ORDER, Page 2
the Company chose to negotiate power purchase contracts with U.S. Geothermal , Inc.
a Boise-based company.
In its bid, U.S. Geothermal, Inc. proposes to offer a total of 45.5 MW of
geothermal energy to Idaho Power and to have those facilities online between October
2007 and January 2011. The parties have negotiated and executed a Power Purchase
Agreement ("PPA") for approximately 13 MW of the 45.5 MW of geothermal power from
Raft River Energy I LLC , an affiliate of U.S. Geothermal , Inc., for its facility known as
Raft River Geothermal Power Plant Unit No., located approximately 15 miles
southeast of Malta , Idaho. Agreements for the remaining 32.5 MW of power will be
submitted to the Commission separately from this filing. The PPA is enclosed as
Attachment 1 to this Application.
Currently, a Commission-approved PURPA Agreement is in place
between Raft River Energy I LLC and Idaho Power for a 10 MW facility at this identical
location.(Case No. IPC-05-, Order No. 29692) If the Commission approves the
PPA and authorizes inclusion of the power supply expenses associated with the energy
from the Raft River Geothermal Power Plant Unit No.1 in the Company s Power Cost
Adjustment, Idaho Power proposes that the Company s December 29 , 2004 Agreement
with Raft River Energy I LLC entered into pursuant to the Public Utility Regulatory
Policies Act of 1978 ("PURPA") be rescinded upon Commission approval of the new
PPA and upon satisfaction by Raft River I LLC of all requirements to attain a First
Energy Date as specified within the PPA.
APPLICATION FOR AN ACCOUNTING ORDER, Page 3
GENERAL DESCRIPTION OF THE RAFT RIVER ENERGY I LLC PPA
Raft River Energy I LLC initially guarantees an annual output of
108 186 000 kWh and a 90% capacity factor beginning with the third Contract Year.
This annual guarantee may be adjusted periodically based upon an independent
engineer s assessment of the status of the geothermal reservoir. Failure to achieve the
annual guarantees may result in financial payments to Idaho Power. In addition , the
PPA contains Delay Damage provisions that will assess a financial penalty if the Project
fails to achieve its scheduled Operation Date of February 2008. Failure to achieve the
annual guarantees may result in financial payments to Idaho Power.
The term of the PPA is 25 Contract Years (25 years from the Operation
Date). Idaho Power has an option to extend the term of the agreement for an additional
period mutually agreeable to both parties. Should Raft River Energy I LLC choose to
sell its facility, the PPA provides that Raft River first offer to sell its facility to Idaho
Power.
Under the existing PURPA Agreement for this site , the Project is restricted
to providing only 10 MW of energy to Idaho Power. Energy over 10 MW ("Inadvertent
Energy ) may be delivered to Idaho Power under the existing PURPA Agreement but no
payment is required from Idaho Power for this Inadvertent Energy. The actual
geothermal equipment and generation unit under this PPA are identical to the
equipment being constructed under the current PURPA Agreement. As part of the
negotiations for this PPA, upon approval of this PPA by the Commission , Idaho Power
has agreed to retroactively pay for Inadvertent Energy delivered under the PURPA
Agreement. The price for the Inadvertent Energy will be the lesser of either 85% of the
APPLICATION FOR AN ACCOUNTING ORDER, Page 4
weighted average of Mid C, non-firm on and off peak prices or the monthly PPA price
for the applicable months when the Inadvertent Energy was delivered to Idaho Power.
If this PPA is not approved by the Commission, the existing PURPA Agreement terms
and conditions will remain in effect which include no payments for Inadvertent Energy.
10.The Project, located southeast of Malta , Idaho , is physically connected to
the Raft River Rural Electric Cooperative ("RRREC") electrical system and will wheel its
energy across the RRREC and Bonneville Power Administration ("BPA") transmission
systems to deliver its energy to Idaho Power at the Minidoka substation. As specified in
the RFP , Idaho Power requested that all bidders provide and/or secure firm
transmission costs within their bids. Because this Project is physically located off of the
Idaho Power electrical system it was necessary for this Project to acquire firm
transmission across RRREC and BPA's system for the term of the PPA. Idaho Power
provides transmission for numerous other BPA loads in the same area. As a result, the
PPA allows and Idaho Power contemplates in the future to work with BPA to reduce the
BPA transmission costs for this Project.
11.Prices under the PPA will be seasonally adjusted consistent with the
seasonality factors currently being used in the Idaho Power PURPA agreements, with
the highest rates being paid during the Company s peak energy usage months. The
price for energy will start at an annual base rate of $52.50/MWh , escalating annually at
a rate of 2.1 % through 2020. For the remaining term, the price for energy will escalate
annually at a rate of 0.6% with the resulting energy price in 2032 being $73.92/MWh. In
addition to the energy price, a transmission cost of approximately $1.75/MWh will be
added to determine the total delivered price per MWh. As stated in item 10 above , it is
APPLICATION FOR AN ACCOUNTING ORDER, Page 5
both parties' intent to work with BPA to reduce or potentially eliminate the BPA-related
transmission costs.
12.The energy prices within this PPA compare favorably against the prices
contained within the PURPA agreement for this same location. Because this PPA has a
25-year term while PURPA agreements have only 20-year terms, a direct comparison of
prices under this PPA to PURPA Published Avoided Costs is not available. However
the current non-Ievelized PURPA Published Avoided Cost for calendar year 2007 is
$52.69 and if the 20th contract year non-Ievelized PURPA Published Avoided Cost
escalated at the same rate as previous years , an approximate PURPA price for
calendar year of 2032 would be $93.14.In addition to this cost savings, the PPA
includes other provisions that are superior to a PURPA agreement including, but not
limited to, the receipt of renewable energy credits , forecasting and security provisions
and performance assurances.
13.No payment is required by Idaho Power for energy deliveries over
maximum contract amounts. The price paid for all energy delivered includes the value
of renewable attributes ("Green Tags" or "RECs ) associated with 3 MW of geothermal
generation for the first 10 years of the agreement. For the remaining 15 years of the
PPA, Idaho Power will receive 51 % of the Green Tags associated with 13 MW of
geothermal generation.
14.The PPA requires that Raft River Energy I LLC deliver detailed hourly,
daily and weekly forecasting of Net Energy deliveries to Idaho Power Company. If the
Project fails to provide timely, reliable and useful forecasts to Idaho Power as detailed
and required by this PPA, the PPA contains provisions similar to the 90%-110% delivery
APPLICATION FOR AN ACCOUNTING ORDER, Page 6
provisions contained in the Company s current PURPA agreements that will become
effective and replace the annual performance requirements within this PPA.
15.The PPA requires the Project to post a $750 000 security deposit by the
end of the third Contract Year which will be available for Idaho Power Company to draw
upon in the event damages are assessed against the Project. The $750 000 security
deposit is required to be maintained for the full term of the agreement which includes
replenishment if any withdrawals occur during the term of the PPA.
REQUEST FOR FULL COST RECOVERY
16.At the inception of Idaho Power s Power Cost Adjustment (PCA)
mechanism , the Commission was concerned that the Company would not have the
same degree of incentive to minimize power supply costs than if some degree of cost
sharing with customers were retained. As a result, Idaho Power has recovered only
90% of changes from base level net power supply costs through the PCA with the
remaining 10% acting as an incentive for efficiency. Although Idaho Power did not have
any non-PURPA capacity contracts at the time the PCA was approved in 1993 , the
Commission found at that time that "it is appropriate to exclude any future non-CSPP
(cogeneration , small power production) firm purchases from the PCA unless the
Company has first obtained Commission approval to include them." (Order No. 24806
at 23.
17.Unlike typical wholesale power supply transactions done in day-ahead or
real-time markets, Idaho Power has gone through an extensive RFP process to identify
the geothermal PPA that will provide the best value to customers. In this docket, the
Commission and interested parties will have the opportunity to review reasonableness
APPLICATION FOR AN ACCOUNTING ORDER , Page 7
of the RFP's winning bid and the prudency of this proposed PPA's power supply
expenses prior to Idaho Power taking delivery of the power. Given the heightened
review of this PPA , Idaho Power requests that the Commission authorize 100%
recovery of its prudently incurred power expenses associated with this Power Purchase
Agreement in the Company s Power Cost Adjustment.Currently no expenses
associated with this Power Purchase Agreement are included in base rates.
18.Since the PCA was established in 1993, the Commission has allowed the
Company "100% recovery of a resource that it is forced to acquire under federal law.
(Order No. 24806 at 17.) Full recovery of the power expenses associated with 10MW of
the 13MW encompassed in this PPA are already subject to a Commission-approved
PURPA Agreement currently in place between Raft River Energy I LLC and Idaho
Power at the same facility.Commission Order No. 29692 issued in Case No. IPC-
05-1 found the PURPA agreement to be reasonable and allowed Idaho Power to
recover 100% of the associated expenses in its PCA.Under the new PPA, Idaho
Power will continue to purchase the same electrons but at a lower cost to customers.
Thus, it is reasonable to allow 100% recovery through the PCA of the proposed PPA in
its entirety.
19.In response to customer and Commission feedback, the Company has
endeavored to incorporate greater amounts of renewable energy into its Integrated
Resource Plans. The Commission has previously indicated its pleasure with Idaho
Power s strategy to further diversify and increase the amount of renewable energy
sources in its portfolio. (Order No. 29762 at 10 and Order No. 30281 at 12.) Idaho
Power believes this geothermal power purchase agreement is precisely the type cost-
APPLICATION FOR AN ACCOUNTING ORDER, Page 8
effective renewable power the Commission has encouraged the Company to procure.
, following its review the Commission agrees that it is, Idaho Power believes this
renewable resource PPA is appropriate for full cost recovery in the Power Cost
Adjustment rather than 90%.
SERVICE OF PLEADINGS
20.Service of pleadings , exhibits , orders and other documents relating to this
proceeding should be served on the following:
Lisa D. Nordstrom
Barton L. Kline
Idaho Power Company
O. Box 70
Boise , ID 83707
Ric Gale
VP - Pricing and Regulatory
Idaho Power Company
O. Box 70
Boise, ID 83707
MODIFIED PROCEDURE
21.The Company requests that this Application be processed under RP 201
et ai , allowing for consideration of issues to be processed under Modified Procedure
Le., by written submissions rather than by an evidentiary hearing, and process this
application on an expedited basis.
REQUEST FOR ORDER
22.Idaho Power respectfully requests that the Commission issue its order
finding that:
(1 )the Power Purchase Agreement with Raft River Energy I LLC is prudent
and approving inclusion of the prudently incurred power purchase expenses associated
with the Raft River Energy I LLC Power Purchase Agreement in the Company s Power
Cost Adjustment; and
APPLICATION FOR AN ACCOUNTING ORDER, Page 9
(2)the Company be authorized to recover 100% of its prudently incurred
power expenses associated with this PPA in the Company s Power Cost Adjustment
because the PPA was subject to Commission review and approval , and/or its energy is
primarily comprised of currently federally mandated power receiving full cost recovery,
and/or is a renewable resource whose development is to be encouraged; and
(3)the PURPA Firm Energy Sales Agreement between Idaho Power
Company and Raft River Energy I LLC, dated December 29, 2004 , be rescinded in its
entirety upon the satisfactory achievement of the First Energy Date of the Project as
established in the proposed Power Purchase Agreement between Raft River Energy I
LLC and Idaho Power.
DATED at Boise , Idaho, this day of October 2007.
Xw~ 4J.
LISA D. NORDST OM
Attorney for Idaho Power Company
APPLICATION FOR AN ACCOUNTING ORDER, Page 10
BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-O7- 11-
IDAHO POWER COMPANY
ATTACHMENT
POWER PURCHASE AGREEMENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
T ABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................................................................
ARTICLE 2 RULES OF CONSTRUCTION
................................................................
ARTICLE 3 CONDITIONS TO ACCEPTANCE OF ENERGY FIRST
ENERGY DATE.........................................................................................
ARTICLE 4 TERM AND OPERATION DATE ............................................................
ARTICLE 5 PRICE .........................................................................................................
ARTICLE 6 ENVIRONMENTAL ATTRIBUTES ........................................................
ARTICLE 7 DELIVERY AND SHORTFALL OBLIGATIONS...................................
ARTICLE 8 TRANSMISSION AGREEMENT.................................. ...........................
ARTICLE 9 METERING AND TELEMETRY.............................................................
ARTICLE 10 SYSTEM PROTECTION ...........................................................................
ARTICLE 11 FACILITY AND INTERCONNECTION ..................................................
ARTICLE 12 GENERAL OPERATIONS ........................................................................
ARTICLE 13 RELIABILITY MANAGEMENT SYSTEM .............................................
ARTICLE 14 BILLING, RECORDS, AUDITS ...............................................................
ARTICLE 15 INDEMNIFICATION AND INSURANCE ...............................................
ARTICLE 16 CREDIT AND COLLATERAL REQUIREMENTS .................................
ARTICLE 17 FORCE MAJEURE
.....................................................................................
ARTICLE 18 FORCED OUTAGE
...................................................................................
POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07)
ARTICLE 19 BUYER'S ACCESS RIGHTS .......................................................... ..........
ARTICLE 20 NO THIRD PARTY LIABILITY, NO DEDICATION OF FACILITY
OR SYSTEM ..............................................................................................
ARTICLE 21 SEVERAL OBLIGATIONS.......................................................................
ARTICLE 22 W AIVER.....................................................................................................
ARTICLE 23 CHOICE OF LAW.....................................................................................
ARTICLE 24 LIMITATIONS
...........................................................................................
ARTICLE 25 DISPUTES
..................................................................................................
ARTICLE 26 EVENTS OF DEFAULT, DELAY DAMAGES AND
MATERIAL BREACHES..........................................................................
ARTICLE 27 TERMINATION
.........................................................................................
ARTICLE 28 GOVERNMENTAL AUTHORIZATION
.................................................
ARTICLE 29 BOARD AND REGULATORY APPROV AL...........................................
ARTICLE 30 SUCCESSORS AND ASSIGNS ................................................................
ARTICLE 31 MODIFICATION
.......................................................................................
ARTICLE 32 TAXES........................................................................................................
ARTICLE 33 NOTICES....................................................................................................
ARTICLE 34 ADDITIONAL TERMS AND CONDITIONS ..........................................
ARTICLE 35 SEVERABILITY
........................................................................................
ARTICLE 36 CONFIDENTIAL BUSINESS INFORMATION ......................................
ARTICLE 37 REPRESENTATIONS AND WARRANTIES...........................................
ARTICLE 38 ENTIRE AGREEMENT.............................................................................
ARTICLE 39 COUNTERPARTS .....................................................................................
ARTICLE 40 CAPTIONS
.................................................................................................
POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07)
POWER PURCHASE AGREEMENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
This Power Purchase Agreement ("Agreement"), is entered into this )...4-
day of SeP1Mt~2007, by and between RAFT RIVER ENERGY I LLC a
Delaware limited liability company with a principal place of business at 1509 Tyrell
Lane, Suite B, Boise, ID 83706 ("Seller ), and IDAHO POWER COMPANY, an Idaho
corporation with a principal place of business at 1221 W. Idaho Street, Boise, ill 83702
Buyer ). Seller and Buyer may be referred to individually as "Party," or jointly as
Parties.
Recitals
A. Seller desires to develop, construct, own and operate a geothermal electric
generating facility with an estimated average annual net output of 13 MW.
B. Seller has responded to Buyer s solicitation of bids for the provision of
renewable energy, and Buyer has accepted Seller s offer in accordance with the terms and
conditions set forth in this Agreement.
C. Seller and Buyer wish to enter into this Agreement in order to set forth the
terms and conditions under which Seller will sell and Buyer will purchase energy from
the Seller s Facility.
D. Seller and Buyer, upon Commission approval and satisfaction by the
Seller of all requirements to attain a First Energy Date as specified within this
Agreement, wish to terminate the PURP A Firm Energy Sales Agreement between the
Buyer and the Seller dated December 29, 2004.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the sufficiency and adequacy of which are hereby acknowledged by each
Party, the Parties agree to the following:
PAGE 1 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
ARTICLE 1
DEFINITIONS1 "Affiliate" means any other person or entity that controls , is under the
control of, or is under common control with, the named person or entity. For purposes of
this definition, the term "control" (including the terms "controls
" "
under the control of
and "under common control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or the policies of a person or
entity, whether through ownership interest, by contract or otherwise.
1.2 Annual Capacity Factor" means 90%.3 "Annual Guaranteed Output" means the Annual Output Forecast as
defined in Section 7.5 multiplied by the Annual Capacity Factor.
1.4 "Bankrupt" means with respect to any entity, such entity (1) files a
petition or otherwise commences, authorizes or acquiesces in the commencement of a
proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar
law, or has any such petition filed or commenced against it, (2) makes an assignment or
any general arrangement for the benefit of creditors, (3) otherwise becomes bankrupt or
insolvent (however evidenced), (4) has a liquidator, administrator, receiver, trustee
conservator or similar official appointed with respect to it or any substantial portion of its
property or assets , or (5) is generally unable to pay its debts as they fall due. The term
Bankruptcy" shall have a corollary meaning when used herein.
1.5 BP A" means Bonneville Power Administration or its successor.
1.6 "Business Day" means any calendar day that is not a Saturday, a Sunday,
or a NERC-recognized holiday.
1.7 "Buyer s Delivery Business Unit" means that portion of Idaho Power
Company, or its successor, that is responsible for the interconnections and operations of the
Idaho Power Company distribution and transmission system as specified in the Idaho
Power Company OATT.
1.8 Commission" means the Idaho Public Utilities Commission or its
successor.
1.9 "Commission Approval" means an order issued by the Commission
approving this Agreement and finding the Contract Price to be reasonable and that all
payments to be made to Seller under this Agreement shall be allowed as prudently incurred
expenses of Buyer for ratemaking purposes , without condition(s) or modification(s) other
than condition(s) or modification(s) accepted in writing by the Party or Parties adversely
affected by such condition(s) or modification(s).
1.10 "Contract Price" means the price for all Net Energy that has been agreed
to by the Parties in this Agreement and referenced in Appendix A.
PAGE 2 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
11 "Contract Year" means the period commencing each calendar year on the
same calendar date as the Operation Date and ending one (1) year later.
1.12 "Credit Rating" means (1) with respect to any entity other than a financial
institution, the (a) current ratings issued or maintained by S&P's or Moody s with respect
to such entity s long-term senior, unsecured, unsubordinated debt obligations (not
supported by third-party credit enhancements) or (b) corporate credit rating or long-term
issuer rating issued or maintained with respect to such entity by S&P's or Moody , or
(2) if such entity is a financial institution, the ratings issued or maintained by S&P's or
Moody s with respect to such entity s long-term, unsecured, unsubordinated deposits.
1.13 "Delay Energy Quantity" means 9 000 kW less any portion of capacity
rating (kW) of the Facility that has met the Operation Date requirements specified in
Section 4.4 multiplied by the hours beginning with the 144th hour past midnight of the
Scheduled Operation Date to midnight of the day preceding the Operation Date, not to
exceed, 2 160 total hours.
1.14 "Delay Liquidated Damages" means the Delay Energy Quantity multiplied
by the Delay Price.
1.15 "Delay Price" means the applicable month's Market Energy Price less the
applicable month's Contract Price. If this calculation results in a value less than zero (0)
then the result will be zero (0).
1.16 "Designated Dispatch Facility" means Buyer s generation dispatch group
or any subsequent group designated by Buyer.
1.17 Effective Date" means the date first written above.
18 "Emergency" means an emergency condition as defined under the
Interconnection Agreement or the applicable OATT.
1.19 "Environmental Attributes" means the aggregate amount of environmental
air quality credits, off-sets, or other benefits related to the Net Energy produced by the
Facility that reduces , displaces or off-sets emissions resulting from fuel combustion at
another location pursuant to any federal, state or local legislation or regulation, and the
aggregate amount of credits, offsets or other benefits related to Buyer s current marketing
program, any successor green pricing program, or other environmental or renewable energy
credit trading program derived from the use, purchase or distribution of Net Energy from
the Facility or any similar program pursuant to any federal, state or local legislation or
regulation. The Environmental Attributes include, but are not limited to, green tags, green
certificates, renewable energy credits (REC's) and tradable renewable certificates directly
associated with the Net Energy produced at this Facility. One REC is associated with the
generation and delivery of one (1) MWh of Net Energy. Notwithstanding any other
provision of this Agreement, Environmental Attributes do not include: (1) the PTC's
(2) any investment tax credits, and any other tax credits, deductions, exemptions, or other
tax benefits associated with the Facility, and (3) any state, federal, local or private cash
payments, exemptions, refunds or grants relating in any way to the Facility, construction
PAGE 3 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
the Facility or output of the Facility, including the production of Inadvertent Energy, Test
Energy, Station Use, or Net Energy.
1.20 "Facility" means the electric generation facility commonly known as
Seller s Raft River geothermal power plant unit #1 , as described in more detail in Appendix
, which includes all of the equipment required to enable this power plant to produce and
deliver the energy as specified within this Agreement to the Buyer. This equipment shall
include but not be limited to the electrical interconnection equipment, generator, turbine
heat exchanger, and cooling tower(s). The geothermal fluid extraction wells , geothermal
fluid injection wells , geothermal fluid transportation systems from the various wells to the
generation unit are included in the Facility to the extent that they are used in the production
of energy from the Facility.
1.21
30.
Facility Assets" shall have the meaning given to that term in Section
1.22 "Facility Lender" means, collectively, any lender(s) providing any Project
Financing and any successor(s) or assigns thereto.
1.23 "Financing Documents" means the loan and credit agreements , notes
bonds, indentures, security agreements, lease financing agreements , mortgages, deeds of
trust, and other documents relating to any Project Financing for the Facility, and any and
all amendments , modifications, or supplements to the foregoing that may be entered into
from time to time at the discretion of Seller in connection with any Project Financing of the
Facility, or of the Facility in combination with other assets of the Seller.
1.24 "First Energy Date" means the day commencing at 0001 hours, Mountain
Time, following the day that the conditions in Section 3.1 have been satisfied.
25 "Forced Outage" means a Facility condition that requires a sudden or
mandatory unplanned curtailment of the Net Energy deliveries from the Facility that (1) is
due to equipment failure or unplanned shutdown which was not caused by an event of force
majeure or by neglect, disrepair or lack of adequate preventative maintenance of the
Seller s Facility or (2) is required to allow unplanned repair or maintenance to prevent
equipment failure.
1.26 "Good Utility Practice(s)" means any of the practices, methods and acts
engaged in or approved by a significant portion of the electric utility industry during the
relevant time period, or any of 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 of the lowest reasonable cost
consistent with good business practices, reliability, safety and expedition. Good Utility
Practice(s) is not intended to be limited to the optimum practice, method or act to the
exclusion of all others, but rather to be acceptable practices , methods, or acts generally
accepted in the region and consistently adhered to.
27 "Guaranty" means an instrument or agreement pursuant to which a
guarantor guarantees the performance of the obligations of an obligor, which instrument
or agreement is substantially in the form set forth as Appendix C.
PAGE 4 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
28 "Guaranty Default" means with respect to a Guaranty or the guarantor
thereunder, the occurrence of any of the following events: (1) any representation or
warranty made or deemed to be made or repeated by such guarantor in connection with
such Guaranty shall be false or misleading in any material respect when made or when
deemed made or repeated; (2) such guarantor fails to pay, when due, any amount required
pursuant to such Guaranty; (3) the failure of such guarantor to comply with or timely
perform any other material covenant or obligation set forth in such Guaranty if such
failure is not capable of remedy or shall not be remedied in accordance with the terms
and conditions of such Guaranty; (4) such Guaranty shall expire or terminate, or shall fail
or cease to be in full force and effect and enforceable in accordance with its terms against
such guarantor, prior to the satisfaction of all obligations of the obligor under this
Agreement, in any such case without replacement; (5) such guarantor shall repudiate
disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of, its
Guaranty, or (6) such guarantor becomes Bankrupt; provided, however, that no Guaranty
Default shall occur or be continuing in any event with respect to a Guaranty after the time
such Guaranty is required to be canceled or returned to a Party in accordance with the
terms of this Agreement.
29 "Inadvertent Energy" (expressed in kWh), means all of the electric energy
produced by the Facility, less Station Use, and delivered to and measured at the Metering
Point, less Losses that are incurred between the Metering Point and the Buyer s Point of
Delivery and that is (1) after an Operation Date has been established in the PURPA
Agreement and (2) energy in excess of 10 000 kW multiplied by the hours in a given
month and, (3) produced prior to the First Energy Date of this Agreement and (4)
delivered by the Seller to the Transmitting Entity and (5) delivered by the Transmitting
Entity to the Point of Delivery and (6) accepted by the Buyer at the Point of Delivery and
(7) not exceeding the Maximum Capacity.
1.30 Initial Term" has the meaning given to that term in Section 4.1.1.
1.31 "Interconnection Agreement" means the agreement between the
Interconnection Provider and the Seller that enables the Seller s energy to be delivered
and integrated into the Interconnection Provider s electrical system.
1.32 "Interconnection Facilities" means all equipment required to be installed
to interconnect and deliver energy from the Facility to the Transmitting Entity s system
including, but not limited to, connection, switching, metering, relaying, communications
and safety equipment.
1.33 "Interconnection Provider" means the electric utility which the Facility is
directly electrically interconnected to.
1.34 "Interest Rate" means (1) for purposes of identifying the Interest Rate to
be paid on cash collateral, an annual interest rate equal to the overnight federal funds
rates, or (2) for purposes of identifying the Interest Rate to be paid in an event of default
an annual interest rate equal to one hundred percent (100%) of the LIBOR three (3)
month rate plus two hundred (200) basis points. The designated Interest Rate shall be the
rate published on the date of the invoice, or other notice, in The Wall Street Journal (or, if
PAGE 5 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
The Wall Street Journal is not published on that day, the next succeeding date of
publication); provided, however that the annual interest rate used as the Interest Rate
shall not exceed the maximum rate permitted by law.
1.35 "Investor" means any investor(s) (including any transferees of such
investors) that acquire a direct or indirect interest in Seller.
36 "Losses" means the loss of electrical energy expressed in kilowatt hours
(kWh) occurring as a result of the transformation and transmission of energy between the
point where the Facility s energy is delivered to the Transmitting Entity (measured by
the Buyer s Metering Equipment) and the Point of Delivery on the Buyer s electrical
system. The loss calculation formula will be as specified in Appendix B of this
Agreement.
1.37 "Market Energy Cost" means the monthly weighted average of the daily
on-peak and off-peak Dow Jones Mid-Columbia Index (Dow Jones Mid-C Index) prices
for non-firm energy. If the Dow Jones Mid-C Index price is discontinued by the reporting
agency, both Parties will mutually agree upon a replacement index similar to the Dow
Jones Mid-C Index. The selected replacement index will be consistent with other similar
agreements and a commonly used index by the electrical industry.
1.38 "Market Energy Price" means eighty-five percent (85%) of the Market
Energy Cost.
1.39 "Material Adverse Change" means, with respect to Seller s Guarantor, the
Guarantor s non-credit enhanced unsecured debt has (a) a Credit Rating below BBB- by
S&P or below Baa3 by Moody , or (b) a Credit Rating of BBB- by S&P accompanied
by a negative watch or Baa3 by Moody s accompanied by a negative watch, or (c) both
ratings are withdrawn or terminated on a voluntary basis by the rating agencies. If S&P
changes its rating system during the Term
, "
BBB-" shall be replaced by S&P's lowest
investment grade rating under the new rating system; likewise, if Moody s changes its
rating system during the Term
, "
Baa3" shall be replaced by Moody s lowest investment
grade rating under the new rating system.
1.40 "Material Breach" means a default or Event of Default (Article 26) subject
to Section 26.3.
1.41 Maximum Capacity" shall be 15.8 MW.
1.42 "Metering and Telemetry Equipment" means all equipment specified in
the Interconnection Agreement, this Agreement, and any additional equipment specified
in Appendix B required to measure, record and telemeter power flows between the
Facility and Buyer s electrical system.
1.43 "Metering Point" means the point on the Transmitting Entity s or
Interconnection Provider s electrical system where the Seller s energy is delivered to the
Transmitting Entity and measured by the Buyer provided Metering Equipment.
1.44 Moody " means Moody s Investor Services , Inc. or its successor.
PAGE 6 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
1.45 NERC" means the North American Electric Reliability Councilor its
successor.
1.46 "Net Energy , expressed in (kWh), means all of the electric energy
produced by the Facility, less Station Use, and delivered to and measured at the Metering
Point, less Losses that are incurred between the Metering Point and the Buyer s Point of
Delivery and that is (1) after an Operation Date has been established and (2) delivered by
the Seller to the Transmitting Entity and (3) delivered by the Transmitting Entity to the
Point of Delivery and (4) accepted by the Buyer at the Point of Delivery and (5) not
exceeding the Maximum Capacity. Net Energy does not include Test Energy. At any
time during the term of this Agreement during which Appendix D is in force, Net Energy
shall not include any Surplus/Shortfall Energy as defined in Appendix D.
1.47 "Net Energy Shortfall" means as calculated in Section 7.5 and subject to
Net Energy Shortfall Damages.
1.48 "Net Energy Shortfall Price" means the price used to calculate the Net
Energy Shortfall Damages as specified in Appendix E.
1.49 "Net Energy Shortfall Damages" means any remaining Net Energy
Shortfall after the provisions of Section 7.2 have been applied, multiplied by the Net
Energy Shortfall Price applicable to the actual period when the Net Energy Shortfall
occurred.
1.50 "OA TT" means the Open Access Transmission Tariff applicable to the
Interconnection Provider s system, the Transmitting Entity s system, or the Buyer
transmission system.
51 "Operation Date" means the day commencing at 0001 hours , Mountain
Time, following the day that all conditions of Section 4.4 have been satisfied.
52 "Performance Assurance" means collateral in the form of either a
Guaranty, cash, letter(s) of credit, or other security acceptable to Buyer, as described in
Article 16.
1.53 "Point of Delivery" means the point where the Transmitting Entity
delivers the energy generated by the Facility to the Buyer s electrical system as
specifically described in Appendix B.
54 "Project Financing" means debt with respect to which the Facility
Lender(s) are granted security interests in the Facility, as well in such other of Seller
assets, and in such revenues generated therefrom, as are specified in the Financing
Documents.
1.55 "PTC'" means Production Tax Credits applicable to electricity produced
from certain renewable resources pursuant to 26 U.C. ~ 45 , or replacement or substitute
tax benefits based on energy production from the Facility.
PAGE 7 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
56 "PTC Value" means an amount equal to: (A) the PTCs to which Sellerwould have been entitled with respect to renewable energy it is unable to deliver because
of a Buyer Event of Default; plus (B) a "gross up" amount to take into account the
federal, state and local income tax to Seller on such payments in lieu of PTCs , so that the
net amount retained by Seller, after payment of federal, state and local income taxes, is
equal to the amount set forth in clause (A) of this definition. For purposes of determining
the foregoing, Seller shall deliver a certificate from an officer of Seller stating the
corporate income tax rates (federal, state or local, as applicable) that are in effect for the
Seller during the tax year in which the receipt of such PTC Value is taxed, and suchincome tax rates shall be used in the calculation of the PTC Value.
57 "PURP A Agreement" means the Firm Energy Sales Agreement between
the Buyer and the Seller dated December 29, 2004 for delivery of energy from this same
Facility to the Buyer.
1.58 RRREC" means the Raft River Rural Electric Cooperative or its
successor.
1.59 Scheduled Maintenance" means as defined in Section 12.
1.60 Scheduled Operation Date" means the date specified in Appendix B.
1.61 "Scheduled Outage" means the pre-scheduled kWh curtailment associated
with the Scheduled Maintenance.
1.62 "Seller s Guarantor" means the entity providing the Guaranty or a
successor or assignee thereof that is not experiencing a Material Adverse Change.
1.63 "Site" means the parcel of real property on which the Facility will beconstructed and located, including any easements, rights-of-way, surface use agreements
and other interests or rights in real estate reasonably necessary for the construction
operation and maintenance of the Facility.
64 "Station Use" means electric energy produced by the Facility that is used
to operate equipment that is auxiliary or otherwise related to the production of electricity
by the Facility. The Buyer shall have the option to serve certain Facility loads such as
irrigation pumps, geothermal production pumps , Site lighting and Site offices from the
Facility or as purchased power from RRREc. Power purchased from RRREC shall not be
regarded as Station Use energy.
1.65 "S&P" means Standard & Poor , a division of McGraw-Hill Companies
Inc. or its successor.
66 "Term" means the period of time during which this Agreement shall
remain in full force and effect, including the Initial Term and any extension of the Term
as provided in Article 4.
1.67 "Test Energy" (expressed in kWh), means all of the electric energy
produced by the Facility, less Station Use, and delivered to and measured at the Metering
PAGE 8 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
Point, less Losses that are incurred between the Metering Point and the Buyer s Point of
Delivery and that is (1) prior to an Operation Date being established and (2) delivered by
the Seller to the Transmitting Entity and (3) delivered by the Transmitting Entity to the
Point of Delivery and (4) accepted by the Buyer at the Point of Delivery and (5) not
exceeding the Maximum Capacity. At any time during the term of this Agreement during
which Appendix D is in force, Test Energy shall not include any Surplus/Shortfall Energy
as defined in Appendix D.
1.68 "Total Annual Facility Net Energy" means the sum of twelve (12) months
of actual Net Energy beginning with March 1 st of each calendar year.
1.69 "Transmitting Entity" means the signatory(s) (other than the Seller) to the
Transmission Agreement referred to in Article 8 and their successors and assigns.
1.70 WECC" means the Western Electricity Coordinating Council or its
successor.
ARTICLE 2
RULES OF CONSTRUCTION
General.The defined terms listed in Article 1 (as indicated by initial
capitalization) shall have the meanings set forth in Article 1 whenever the terms appear in
this Agreement and attached Appendices, whether in the singular or the plural or in the
present or past tense. Other terms used in this Agreement but not listed in Article 1 shall
have meanings as otherwise defined within this Agreement or as commonly used in the
English language and, where applicable, in Good Utility Practice(s). Words not
otherwise defined in this Agreement that have well-known and generally accepted
technical or trade meanings are used in accordance with such recognized meanings.
addition, the following rules of interpretation shall apply:
1.1 The masculine shall include the feminine and neuter.
References to "Articles
" "
Sections " or "Appendices" shall be to
articles, sections or appendices of this Agreement.
The Appendices attached to this Agreement are incorporated in
and are intended to be a part of this Agreement.
1.4 This Agreement was negotiated and prepared by both Parties with
the advice and participation of counsel. The Parties have agreed to the wording of this
Agreement, and none of the provisions of this Agreement shall be construed against one
Party on the ground that such Party is the author of this Agreement or any part of this
Agreement.
1.5 The Parties shall act reasonably and in accordance with the
principles of good faith and fair dealing in the performance of this Agreement. Unless
expressly provided otherwise in this Agreement, (i) where the Agreement requires
consent, approval, or a similar action by a Party, such consent, approval or other action
shall not be unreasonably withheld, conditioned or delayed, and (ii) where the Agreement
PAGE 9 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
gives a Party a right to determine, require, specify or take similar action with respect to a
matter, such determination, requirement, specification or similar action shall be
reasonable.
Interpretation of Interconnection Agreement, Transmission Agreement( s ),
transmission arrangements and Buyer s Delivery Business Unit documentation. The
Parties recognize that the Seller will enter into separate Interconnection, Transmission
Agreements and transmission arrangements enabling the delivery of the Facility
electrical energy not to exceed the Maximum Capacity to the Buyer. These agreements
and arrangements shall include but not be limited to an Interconnection Agreement withthe Interconnection Provider Transmission Agreement(s) with all appropriate
Transmitting Entities (e., RRREC, BPA, etc.) and documentation from the Buyer
Delivery Business Unit approving the delivery of the Facility s energy to the Point of
Delivery.
The Parties acknowledge and agree that the Interconnection
Agreement, Transmission Agreement(s), transmission arrangements and the Buyer
Delivery Business Unit documentation shall be separate and free-standing documents
agreements and arrangements, and that the terms of this Agreement are not binding
upon the Interconnection Provider, Transmission Entity, transmission arrangements or
the Buyer s Delivery Business Unit.
Notwithstanding any other provision in this Agreement, nothing in
the Interconnection Agreement, Transmission Agreement(s), transmission arrangements
or the Buyer s Delivery Business Unit documentation shall alter or modify the Buyer s or
Seller s rights, duties and obligations under this Agreement. This Agreement shall not be
construed to create any rights between the Seller and the Interconnection Provider
Transmitting Entity(s) or the Buyer s Delivery Business Unit.
Seller expressly recognizes that, for purposes of this Agreement
the Interconnection Provider, Transmitting Entity(s) and the Buyer s Delivery Business
Unit shall be deemed to be separate entities and separate contracting parties whether or
not any of these agreements and/or other documentation are provided by or entered into
by the Buyer or an Affiliate of the Buyer.
ARTICLE 3
CONDITIONS TO ACCEPTANCE OF ENERGY
FIRST ENERGY DATE
Conditions . As a condition of the Buyer s acceptance of deliveries of
energy from the Seller, the following conditions shall be satisfied. If any of the following
conditions to acceptance of energy have been satisfied in a different energy sales
agreement between the Buyer and the Seller that provides for the delivery of this same
Facility s energy to the Buyer, the Seller may reference this previously provided
information in their response to each requirement and if the Buyer determines the
previously provided information is acceptable, the Buyer shall not require additional
information to satisfy that specific requirement.
PAGE 10 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
1.1 The Commission shall have approved this Agreement
contemplated by Articles 28 and 29, or Buyer shall have waived such approval.
1.2 Seller shall have notified Buyer of the expected First Energy Date
no later than five (5) Business Days before the expected First Energy Date.
1.3 Seller shall have delivered to the Buyer a certificate signed by an
officer of Seller (1) certifying that to the best of the officer s knowledge all licenses
permits or approvals necessary for Seller s commencement of deliveries have been
obtained from applicable federal, state or local authorities, and (2) listing all such
licenses, permits and approvals.
1.3.Seller shall certify that either (a) the Seller s market-
based tariff applicable for sale of the Test Energy and Net Energy has attained FERC
Market-Rate authority or (b) the Facility is exempt from FERC Market-Rate authority
and such application or acceptance is not required for Seller to commence Test Energy
and Net Energy deliveries under this Agreement.
1.4 Opinion of Counsel.Seller shall have submitted to the Buyer an
opinion letter signed by a law firm that includes attorneys admitted to practice and in
good standing in the State of Idaho providing an opinion that Seller s licenses, permits
and approvals as set forth in Section 3.1.3 above are legally and validly issued, are held
in the name of the Seller and, based on a reasonable review (which may include reliance
on certificates provided by officers or other responsible personnel of Seller), the firm is
of the opinion that Seller is in substantial compliance with said permits. as of the date of
the opinion letter. The opinion letter will be in a form acceptable to Buyer and will
acknowledge that the firm rendering the opinion understands that Buyer is relying on said
opinion in connection with and for the purposes of this transaction. Buyer s acceptance
of the form will not be unreasonably withheld, conditioned or delayed. The opinion letter
will be governed by and shall be interpreted in accordance with the legal opinion accord
of the American Bar Association Section of Business Law (1991). If Buyer does not
object in writing to the proposed form of opinion letter within ten (10) Business Days
after receiving in it, it shall be deemed accepted.
1.5 Seller shall have delivered to Buyer certification that the Facility is
substantially complete, tested and capable of beginning energy deliveries to the Buyer in
a safe manner.
1.6 Engineer Certifications Submit an executed Engineer
Certification of Design & Construction Adequacy and an Engineer s Certification of
Operations and Maintenance (O&M) Policy. These certificates will be in the form
specified in Appendix F but may be modified to the extent necessary to recognize the
different engineering disciplines providing the certificates.
1.7 Insurance. Submit written proof to the Buyer of all Insurance
required in Article 15.
PAGE 11 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
1.8 Interconnection Agreement, Transmission Agreement(s),
transmission arrangements and Buyer s Delivery Business Unit documentation. Provide
the Buyer with proof that all Interconnection Agreements, Transmission Agreement(s),
transmission arrangements and Buyer s Delivery Business Unit approvals, including
proof that firm transmission capacity has been acquired that enables the Facility to
deliver Test Energy and Net Energy to the Buyer s Point of Delivery equal to the
Maximum Capacity are complete.
1.9 Written Acceptance. Request and obtain written confirmation from
the Buyer that all conditions to acceptance of Test Energy have been fulfilled. Such
written confirmation shall be provided within a commercially reasonable time following
the Seller s request and will not be unreasonably withheld by the Buyer.
The conditions set forth in this Section 3.1 are to be used solely for purposes of
detennining when the Facility has achieved its First Energy Date. They are not intended
to affect in any way when the Facility is deemed to have been "placed in service" for
purposes of PTC eligibility.
Buyer s Approval of First Energy Date; Disagreements . Seller
designation of the First Energy Date shall be subject to Buyer s approval, which Buyer
shall not unreasonably withhold, condition or delay. No later than five (5) Business Days
after Seller s notification to the Buyer of the Seller s proposed First Energy Date, as
specified in Section 3.1.9, Buyer shall send Seller a written notice, either (A) approving
the First Energy Date specified in the notice, or (B) setting forth in reasonable detail
Buyer s reasons for concluding that the First Energy Date has not been achieved or will
be achieved on a date other than the date designated in Seller s notice. If Buyer does not
respond on or before the fifth (5 ) Business Day after Seller s notice, the First Energy
Date shall be deemed to have occurred on the date designated in Seller s notice. If Buyer
reasonably disagrees that the First Energy Date has been achieved, the Parties shall
cooperate promptly and in good faith to address Buyer s concerns and agree upon the
First Energy Date. If the Parties are unable to agree to a First Energy Date within
ten (10) Business Days of Buyer s notice of disagreement, either Party may pursue
dispute resolution under Article 25 to detennine the First Energy Date.
ARTICLE 4
TERM AND OPERATION DATE
Tenn
1.1 Initial Term. This Agreement shall become effective as of the
Effective Date and shall remain in full force and effect through the last day of the month
in which the twenty-fifth (25 ) anniversary of the Operation Date occurs, subject to any
tennination provisions set forth in this Agreement (the "Initial Tenn
1.2 Buyer s Option to Extend Term. Buyer shall have the option to
extend the Tenn. Buyer may exercise this option by giving irrevocable notice of exercise
to Seller on or before the end of the twenty-third (23rd) Contract Year. If Buyer does not
timely exercise this option, the option shall automatically expire. The option set forth
PAGE 12 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
this Section shall automatically terminate upon any termination of this Agreement. If
Buyer timely exercises this option, the Parties will negotiate, in good faith, the terms and
conditions under which the Term of this Agreement would be extended; provided
however the option set forth in this Section shall terminate without liability to either
Party if the Parties fail to enter into a definitive written agreement concerning the
extension to the Term within six (6) months following the date of Buyer s notice. The
terms and conditions of any such extension shall be subject to the Parties' respective
management, Board of Directors , and any required Commission approval.
Progress Reports.On the first day of each calendar month following the
Effective Date until the Operation Date is achieved, Seller shall submit to the Buyer
progress reports on the development and construction of the Facility in a form reasonably
satisfactory to the Buyer. These Progress Reports shall include, but not be limited to, a
project development schedule including all significant activities and milestones and the
status of these items, notation and explanation of any significant delays and the Seller
planned action, and other information pertinent to Seller s progress on development and
construction of the Facility.
Monitoring of Facility. Buyer shall have the right at its sole risk and
expense to monitor the construction, start-up and testing of the Facility and the Seller
shall comply with all reasonable requests of the Buyer with respect to these monitoring
events. Seller shall cooperate in such physical inspections of the Facility as may be
reasonably requested by the Buyer during and after completion of construction. All
persons visiting the Facility on behalf of the Buyer shall comply with all of the Seller
applicable safety and health rules and requirements. Buyer s technical review and
inspection of the Facility shall not be construed as endorsing the design of the Facility
nor as any warranty of the safety, durability, or reliability of the Facility.
4.4 Operation Date. Seller will in good faith seek to achieve the Operation
Date by the Scheduled Operation Date. The Operation Date shall occur after all of the
following conditions have been satisfied. If any of the following conditions to achieve an
Operation Date have been satisfied in a different energy sales agreement between the
Buyer and the Seller that provides for the delivery of this same Facility s energy to the
Buyer, the Seller may reference this previously provided information in their response to
each requirement and if the Buyer determines the previously provided information is
acceptable, the Buyer shall not require additional information to satisfy that specific
requirement.
4.4.Seller shall notify the Buyer of the Seller s proposed Operation
Date, in written form no later than five (5) Business Days prior to the proposed Operation
Date.
4.4.Seller shall have completed and shall have maintained all
conditions to acceptance of energy as specified in Article 3.
4.4.The generator, turbines , extraction wells , injection wells and other
associated equipment enabling the Facility to deliver at least 4 000 kW of Net Energy in a
PAGE 13 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
stable, reliable, consistent and safe manner have been installed, tested and determined to
be functioning properly.
4.4.4 All Facility systems necessary for the stable, safe, reliable and
consistent operation of the installed Facility are substantially complete, any testing of the
installed Facility required pursuant to the Interconnection Agreement, Transmission
Agreements, transmission arrangements, Buyer s Delivery Business Unit documents and
equipment supplier requirements have been successfully completed, and the Facility is
available for operation in all material respects in accordance with applicable laws.
4.4.Seller shall have delivered to Buyer a "Certificate of Facility
Completion signed by an officer of Seller certifying that the requirements of
Sections 4.4.3 and 4.4.4 have been satisfied with respect to the Facility.
4.4.Seller shall have requested and obtained written confirmation from
the Buyer that all conditions to receiving an Operation Date have been fulfilled. Such
written confirmation shall be provided within a commercially reasonable time following
the Seller s request and will not be unreasonably withheld by the Buyer.
These Operation Date requirements are to be used solely for purposes of determining
when the Facility has achieved its Operation Date. They are not intended to affect in any
way when the Facility is deemed to have been "placed in service" for purposes of PTC
eligibility.
Buyer s Approval of Operation Date; Disagreements.Seller s designation
of the Operation Date shall be subject to Buyer s approval, which Buyer shall not
unreasonably withhold, condition or delay. No later than five (5) Business Days after
Seller s notification to the Buyer of the Seller s proposed Operation Date, as specified in
Section 4.4., Buyer shall send Seller a written notice, either (A) approving the Operation
Date specified in the notice, or (B) setting forth in reasonable detail Buyer s reasons for
concluding that the Operation Date has not been achieved or will be achieved on a date
other than the date designated in Seller s notice. If Buyer does not respond on or before
the fifth (5th) Business Day after Seller s notice, the Operation Date shall be deemed to
have occurred on the date designated in Seller s notice. If Buyer reasonably disagrees
that the Operation Date has been achieved, the Parties shall cooperate promptly and in
good faith to address Buyer s concerns and agree upon the Operation Date. If the Parties
are unable to agree to an Operation Date within ten (10) Business Days of Buyer s notice
of disagreement, either Party may pursue dispute resolution under Article 25 to determine
the Operation Date. Upon completion of the dispute resolution process establishing an
Operation Date and/or upon mutual agreement between the Parties of an Operation Date
the Buyer shall revise any previous Net Energy payments to reflect the applicable Net
Energy Price from the date of the agreed upon Operation Date.
Continuing: Obligations Seller shall provide Buyer with the following
during the Term of this Agreement:
At Buyer s request, Seller shall provide evidence that it is
compliance with the insurance requirements set forth in Section 15.
PAGE 14 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
Seller shall maintain compliance and remain in good standing in all
requirements of Articles 3 and 4 of this Agreement.
ARTICLE 5
PRICE
Test Energy Price. Notwithstanding any other energy pricing provisions
in the Agreement, Buyer shall pay the Seller the lesser of the current month Market
Energy Price or Contract Price for each kWh of Test Energy.
Net Energy Price. For all Net Energy delivered by the Seller to the Buyer
from the Operation Date through the end of the Initial Term, Buyer shall pay the Seller
the Contract Price.
5.3 Inadvertent Energy Price. At the time the First Energy Date is established
as specified within this Agreement, a price shall be calculated to be paid by Buyer for the
Inadvertent Energy. This price shall be the lesser of the monthly Market Energy Price or
the monthly Contract Price for the specific and individual month(s) in which actual
Inadvertent Energy was accepted by the Buyer.
5.4 Contract Price, Terms and Conditions to Remain in Effect for Tenn. The
prices, terms and conditions specified in this Agreement shall remain in effect until
expiration of the Tenn. Notwithstanding any provision in this Agreement, neither Party
shall seek, nor shall support any third party in seeking, to prospectively or retroactively
revise the prices, tenns or conditions of service of this Agreement through application or
complaint to FERC pursuant to the provisions of Section 205 , 206 or 306 of the Federal
Power Act, or any other provisions of the Federal Power Act, absent the prior written
agreement of the Parties. Further, absent the prior agreement in writing by both Parties
the standard of review for changes to the prices, tenns and conditions of service of this
Agreement proposed by a Party, a non-Party or the FERC acting sua sponte shall be the
public interest" standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas
Service Corp.350 US 332 (1956) and Federal Power Commission v. Sierra Pacific
Power Co.350 US 348 (1956).
ARTICLE 6
ENVIRONMENTAL ATTRIBUTES
Environmental Attributes.The Parties' ownership of the Environmental
Attributes shall be as specified in Appendix G of this Agreement. Title to all
Environmental Attributes that the Buyer has attained the rights to shall pass to the Buyer
within thirty-one (31) days of transfer of title of the associated Test Energy or Net Energy
to the Buyer. If after the Effective Date of this Agreement, any additional Environmental
Attributes or similar environmental attribute is created by legislation or regulation, the
Buyer shall be granted ownership of these additional items associated with the Test
Energy or the Net Energy delivered by the Seller to the Buyer in the same proportion as
the Environmental Attributes distributed to the Buyer under this Agreement at no
additional cost.
PAGE 15 OF 50 POWER PURCHASE AGREEI\1ENT - RAFr RIVER ENERGY 09120/07
Concurrent with the monthly Billing Invoice, the Seller shall deliver to the
Buyer an Environmental Attribute Attestation and Bill of Sale with respect to the
Environmental Attributes sold or transferred to the Buyer associated with energy
delivered to the Buyer in the previous month.
The Parties shall cooperate to ensure that all Environmental Attribute
certifications , rights and reporting requirements are completed by the responsible Parties.
6.3.Neither the Seller nor the Buyer shall report under Section 1605(b)
of the Energy Policy Act of 1992 or under any applicable program that anyEnvironmental Attributes are owned by any entity, other than the Party or other entity
entitled to such Environmental Attributes in accordance with the terms of thisAgreement.
6.3.Environmental Attributes owned by one Party cannot be sold
traded, assigned or otherwise transferred or claimed by the other Party.
3.3 As requested by the Buyer, the Seller shall obtain any
Environmental Attribute certifications required by the Buyer for those Environmental
Attributes delivered to the Buyer from the Seller. If the Seller incurs cost, as a result of a
Buyer s request, Seller shall invoice the Buyer for the reasonable costs of providing such
certification. If the Buyer elects to obtain its .own certifications, then Seller shall fully
cooperate with the Buyer in obtaining such certification.
ARTICLE 7
DELIVERY AND SHORTFALL OBLIGATIONS
Delivery and Acceptance of Test Energy Except when either Party
performance is excused as provided herein, the Buyer will purchase and Seller will sell
the Test Energy produced by the Facility.
Delivery and Acceptance of Net Energy. Except when either Party
performance is excused as provided herein, the Buyer will purchase and Seller will sell
the Net Energy produced by the Facility.
7.3 No Deliveries In Excess of the Maximum Capacity Under nocircumstances will the Transmitting Entity deliver Net Energy and/or Test Energy on
behalf of the Seller s Facility to the Point of Delivery in an amount that (1) exceeds 16.
MW at any moment in time or (2) that exceeds the Maximum Capacity by any amount
for more than five (5) consecutive minutes. Delivery of Net Energy and/or Test Energy
by the Transmitting Entity to the Point of Delivery that exceeds either item 1 or 2 of this
section shall be a Material Breach of this Agreement.
7.4 Forecasting. At its expense, Seller shall provide to Buyer for the Term
forecasting information provided via electronic format acceptable to the Buyer or any
other format that the Buyer and Seller mutually agree is acceptable. The Seller shall be
responsible for all costs associated with creating and transmitting the forecastinginformation to the Buyer. Each forecast will take into account any Scheduled Outages
any known Forced Outages, known curtailments or known capacity deratings affecting
PAGE 16 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
the Facility. The Buyer and Seller shall mutually develop and approve the electronic
format and process of transmitting the data no later than thirty (30) days prior to the
Operation Date. The forecasting information shall be provided as follows:
(1) No later than 1:00 pm each Business Day, the Seller shall provide an
hourly forecast that starts at 5:00 am Pacific Time of the next day and runs
for a minimum of 168 hours (7 days).
(2) Any deviations exceeding or equal to plus or minus 10% of the
previously provided forecast will be communicated to the Buyer in
a prompt and timely manner. In the case of a planned event the
Seller shall notify the Buyer by 5:00 pm Pacific Time of the
preceding day of any Net Energy forecasting deviation of the
previously provided forecast. In the case of an unplanned event
the Seller shall notify the Buyer promptly after the occurrence of
the unplanned event. In both cases, the Buyer will include with
this notification the expected duration and quantity of the energy
delivery reductions that will occur at the Point of Delivery.
7.4.Basis of Forecasts The forecasts called for by this
Agreement shall be consistent with any specific requirements of this Agreement
geothermal industry standards and Good Utility Practice(s).
7.4.Provision of Forecasting The provision of the forecasting
information described in Section 7.4 in accordance with Good Utility Practice(s) is an
integral component of this Agreement. Accordingly, Seller shall act in a manner
consistent with Good Utility Practice(s) with the goal of providing timely, useful, quality
forecasts to the Buyer under Section 7.4. If Seller fails in any material respect to act in
conformity with the preceding sentence, Buyer may provide notice to Seller stating in
reasonable detail the basis for Buyer s belief that Seller is defaulting in its obligations
under this Article 7. Seller shall have ten (10) Business Days in which to cure the alleged
default, to commence the cure of the alleged default if it cannot reasonably be cured
within the ten (10) Business Day period (and thereafter diligently pursue such cure to
completion), or to submit the matter to dispute resolution under Article 25. With respect
to any Facility Lender or Investor, the ten (10) Business Day periods set forth in the
preceding sentence shall be extended to thirty (30) days from date of Buyer s notice to
Seller under this Section 7.4. As long as Seller is pursuing dispute resolution under
Article 25 in good faith, Seller shall not be in default of this Section and shall have
sixty (60) days from any final resolution of the dispute in which to implement any
agreed-upon or required cure ("Forecast Cure Period"). If Seller fails to cure the default
within the Forecast Cure Period, the provisions contained in Appendix D shall govern in
lieu of Section 7.4 effective as of the first day of the next calendar month following the
end of the Forecast Cure Period.
PAGE 17 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
Output Guarantee
1 By December 1st of each calendar year, the Seller shall submit in
writing to the Buyer the identity of a licensed professional independent engineer or
licensed professional independent engineering firm (not required to be licensed in the
State of Idaho) and the independent engineer or engineering firm s qualifications that the
Seller intends to contract with to complete the annual certification as required in this
Section. The Seller shall be responsible for all costs of retaining this engineer and the cost
of completing the certification as required within this Section. No later than ten (10)
Business Days after Seller notification to the Buyer of the Seller s proposed
independent engineer or independent engineering firm, Buyer shall send Seller a written
notice, either (A) approving the independent engineer or independent engineering firm
specified in the notice, or (B) setting forth in reasonable detail Buyer s reasons for
concluding that the independent engineer or independent engineering firm selected by the
Seller is not acceptable. If Buyer does not respond on or before the end of the tenth (lO
Business Day after Seller s notice, the independent engineer or the independent
engineering firm selected by the Seller shall be deemed to be acceptable. If Buyer
reasonably disagrees that the Seller selected independent engineer or independent
engineering firm is acceptable, the Parties shall cooperate promptly and in good faith to
address Buyer s concerns and agree upon an independent engineer or independent
engineering firm. If the Parties are unable to agree to an independent engineer or
independent engineering firm within ten (l0) Business Days of Buyer s notice of
disagreement, either Party may pursue dispute resolution under Article 25 to determine
an independent engineer.
2 No later than February 1st of each calendar year, the Seller will
provide the Buyer with a report and an energy forecast, stamped and approved by the
professional independent engineer or the independent engineering firm specified above
containing at the minimum, certification of the following:
a) Current status of the geothermal resource in comparison to the
previous status of the resource. This information will include a
detailed description of any geothermal resource degradation
the apparent cause of such degradation, assessment of future
status of the resource and its ability to sustain its current level
of output in consideration of the requirements of Section 7.
b) Estimated lost Net Energy (measured in kWh) production
associated with Scheduled Outages as specified in Section 1.
that are planned to occur for the next twenty-four (24) months
beginning with March 1 st of the current year.
c) Estimated energy (measured in kWh) that the Facility will be
able to deliver to the Point of Delivery for each of the next
twenty-four (24) months beginning with March of the current
year.
d) The assumptions used by the engineer.
PAGE 18 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
3 No later than ten (10) Business Days after Seller provides a written
copy of the certification as specified above to the Buyer, the Buyer shall send Seller a
written notice, either (A) approving the certification, or (B) setting forth in reasonable
detail Buyer s reasons for concluding that the certification is not acceptable. If Buyer
does not respond on or before the end of the tenth (1oth) Business Day after Seller
notice, the certification provided by the Seller shall be deemed to be acceptable. If Buyer
reasonably disagrees that the Seller certification is acceptable, the Parties shall
cooperate promptly and in good faith to address Buyer s concerns and agree upon a
certification. If the Parties are unable to agree on the certification as being acceptable
within ten (10) Business Days of Buyer s notice of disagreement, either Party may pursue
dispute resolution under Article 25 to determine an acceptable certification.
5.4 The "Annual Output Forecast" (measured in kWh) shall be the sum
of the monthly estimated energy established in Section 7.2 c) for the first twelve (12)
months of the information provided or 108 186 000 kWh whichever is lower. The last
Annual Output Forecast of the Initial Term of this Agreement shall be based upon the
actual months available for the project to deliver Net Energy from March 1st to the last
day of the Initial Term of this Agreement, which mayor may not be a full twelve (12)
months.
5.4.For the period of March 1, 2008 through February 28
2010 an Annual Output Forecast shall be provided for information
purposes only and no Net Energy Shortfall will be calculated for this
period.
5.4.2 Upon conclusion of an event that causes energy deliveries
to the Buyer to be reduced, the Seller shall calculate the quantity of energy
delivery reductions they believe occurred due to the event. These eventsshall include Forced Outages force majeure actual Scheduled
Maintenance outages, curtailments required by the Buyer, curtailments
required by the Buyer s Delivery Business Unit or the Transmitting
Entity(s). Upon mutual agreement as to the quantity of energy delivery
reduction, the Annual Guaranteed Output shall be adjusted accordingly.
Energy Delivery Guarantee, Reconciliation, and Net
Energy Shortfall Determination. Seller guarantees that the Total Annual Facility
Net Energy shall equal or exceed the Annual Guaranteed Output for each period
during the Initial Term of this Agreement beginning with March 1, 2010. The
determination of whether Seller has met its Annual Guaranteed Output
requirement shall be made on an annual basis beginning on March 1 , 2011 by
comparing the amount of the previous twelve (12) month's Total Annual Facility
Net Energy to the Annual Guaranteed Output as provided for in this Section.
1 If the Total Annual Facility Net Energy is equal to
or greater than the Annual Guaranteed Output in the applicable
period, Seller shall be deemed to have met its Annual Guaranteed
Output obligation for that period, and Seller shall have
obligation to pay Net Energy Shortfall Damages or to true-up
PAGE 19 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY 09120/07
energy delivery obligations with respect to that period. Any Net
Energy delivered during this period exceeding the Annual
Guaranteed Output may be used to make up the previous period
Net Energy Shortfall if one exists.
If the Total Annual Facility Net Energy is less
than the Annual Guaranteed Output for a specified period, then a
Net Energy Shortfall exists and is equal to the Annual Guaranteed
Output minus the Total Annual Facility Net Energy. The Net
Energy Shortfall may be made up in the subsequent twelve (12)
month period beginning at March 1. Net Energy delivered during
the immediately following twelve (12) month period in excess of
the Annual Guaranteed Output for that period may be used to make
up the previous period's Net Energy Shortfall. At the end of the
subsequent twelve (12) month period, if the Net Energy Shortfall
has not been made up, then any remaining Net Energy Shortfall
Damages will be calculated based upon any remaining balance of
the Net Energy Shortfall and a billing will be presented to the
Seller which the Seller will be required to pay the Buyer within
fifteen (15) days of the date of the billing notice.
Any remaining Net Energy Shortfall at the end of the Initial Tenn
of this Agreement will be payable to the Buyer within fifteen (15)
days of the date of the billing notice being provided to the Seller.
Effect of A?pendix D on Net Energy Shortfalls and Net Energy
Shortfall Damages . At the time Appendix D is implemented, the current year
Net Energy deliveries shall be compared to the Annual Guaranteed Output on a
pro-rata basis for the current Annual Guarantee Output period. If there is a Net
Energy Shortfall, then Net Energy Shortfall Damages shall be calculated. If there
have been Net Energy deliveries in excess of the pro-rated Annual Guaranteed
Output, then the excess Net Energy may be applied to any Net Energy Shortfall
from the previous Annual Guarantee Output period. Any Net Energy Shortfall
Damages due shall be billed by Buyer to Seller and shall be due within fifteen
(15) days of the presentation of the billing. Upon implementation of Appendix
, all Net Energy Shortfall calculations will be suspended until such time as this
Agreement is terminated or application of Appendix D rescinded.
Seller s Reversion Rights. At any time after Appendix D takes
effect, Seller may from time to time propose to Buyer forecasting information
and/or processes that are in accord with Good Utility Practice(s). The proposed
forecasting process shall be subject to Buyer s approval , which Buyer shall not
unreasonably withhold, condition or delay. If the proposed forecasting process is
approved by Buyer, Appendix D shall cease to be effective as of the first day of
the calendar month following such approval (or as otherwise agreed by the
Parties). If Appendix D ceases to be effective pursuant to this Section 7.7 all
Sections of this agreement previously suspended due to Appendix D becoming
effective shall become operative again (including the right to invoke
PAGE 20 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
Appendix D), with Total Annual Facility Net Energy to be tested against Annual
Guaranteed Output prorated for the months remaining in the current AnnualGuaranteed Output period and for all full Annual Guaranteed Output periods
thereafter.
Buyer Adjustment of the Annual Guaranteed Output
The Buyer shall be excused from accepting and paying for Net
Energy and Test Energy produced by the Facility and delivered by the TransmittingEntity to the Point of Delivery if it is prevented from doing so by an event of Force
Majeure, or if the Buyer determines that curtailment, interruption or reduction of Net
Energy or Test Energy deliveries is necessary because of line construction or
maintenance requirements, emergencies , electrical system operating conditions on its
system or as otherwise required by Good Utility Practice(s) provided that during such
curtailment, interruption or reduction the Buyer, the Transmitting Entity and the Seller
shall within reasonable limits attempt to coordinate, schedule and deliver Net Energy to
the Buyer s electrical system at other points of delivery if the Buyer is capable of
accepting the Net Energy deliveries at other points of delivery at no additional cost to the
Buyer. The Buyer shall not curtail Net Energy or Test Energy deliveries from the
Seller s Facility due to economic dispatch. If the Buyer requires a curtailment of the
Facility s Net Energy or Test Energy deliveries to the Point of Delivery, any such
curtailment shall not exceed the Facility s pro-rata contribution to the event causing the
curtailment. For example - if 500 MW of generation resources are making use of the
same firm transmission path and a 50 MW curtailment is required on this transmission
path, the Facility will be required to curtail no more then 10% (50 MW /500 MW) of its
actual energy production at the time the curtailment event occurs.
1.1 If, for reasons other than an event of Force Majeure, the
Buyer requires curtailment, interruptions or reductions of Net Energy
deliveries for a period that exceeds twenty (20) days , beginning with the
twenty-first (21st) day of such interruption, curtailment or reduction, Sellerwill be deemed to be delivering Net Energy at a rate equivalent to the
daily average of the Net Energy deliveries that were occurring during the
immediately proceeding twenty-four (24) hour period prior to the
curtailment. Buyer will notify Seller when the interruption, curtailment or
reduction is terminated.
If the Buyer is excused from accepting and paying for Net Energy
as allowed within this Agreement or the Seller is prevented from delivering Net Energy
to the Buyer as provided for in this Agreement, the Seller may attempt to sell all or a
portion of the Net Energy to another party.
3 If the Buyer is required to reduce Net Energy deliveries to the
Buyer from the Seller s Facility as described in Section 7., the Annual Guaranteed
Output for the impacted Annual Guaranteed Output period( s) will be revised to reflect the
reduction of Net Energy deliveries that were a direct result of the Buyer s need to reduce
Net Energy deliveries.
PAGE 21 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
Requirements for the Addition of New Geothermal Energy Uses
Seller may add additional uses of geothermal energy controlled by Seller or available for
Seller s use, subject to the terms of this Section 7.
Certification of Geothermal Energy Sufficiency.Prior to allowing
each new geothermal use(s) to be built and delivery of geothermal energy to commence
to the new geothermal use(s), an independent licensed geothermal reservoir engineer
shall certify that for the remaining Term of this Agreement and in the professional
judgment of this engineer, the geothermal energy production capability of the geothermal
resource controlled by Seller or available for Seller s use is sufficient to supply at least
one hundred percent (100%) of the geothermal energy requirements of (1) the Facility,
(2) the existing other use(s) of geothermal energy, and (3) the proposed new use(s) of the
geothermal energy.
The independent engineer shall be selected by Seller and
shall be reasonably acceptable to Buyer. The Seller shall be responsible
for all costs of retaining this engineer and the cost of completing the
certification as required within this Section.
1.2 Seller shall provide Buyer with a copy of the independent
engineer s certification prior to adding any additional geothermal uses.
Allocation of Geothermal Energy Shortfalls.If during the Term of
this Agreement, the geothermal energy controlled by Seller, or available for Seller s use
is unable to provide the Facility and the additional geothermal use(s) installed per the
requirements of Section 7.1 with adequate geothermal energy to maintain operations of
all of the geothermal use(s) at full design capacity, then Seller shall allocate the
geothermal energy between the Facility and the additional geothermal use(s) installed per
the requirements of Section 7.1. The allocation shall be pro-rata between the Facility
and the other use(s), based on the percentage of their particular design geothermal energy
usage rates compared to the total design geothermal energy usage rate of the group.
Geothermal energy use(s) that utilize waste heat from the Facility or from other user(s)
shall be excluded from the above pro-rata allocations. A pro-ration of the geothermal
resource shall not be required if so doing requires capital investment by the Seller with a
negative net present value.
10 Title and Risk of Loss. As between the Parties , Seller shall be deemed tobe in control of the energy output from the Facility up to and until delivery and
acceptance at the Point of Delivery by the Buyer. Title and risk of loss related to the
energy shall transfer from Seller to Buyer at the Point of Delivery.
11 Station Energy. This Agreement does not require Buyer to supply any
electric service to the Seller or to the Facility. Seller shall enter into separate
arrangements for the supply of electric services to the Facility. Seller is responsible for
causing these electric services to be available before the First Energy Date. Seller will
specifically design the Facility to ensure that no energy purchased for supply of electric
PAGE 22 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY 09120/07
energy to the Facility is delivered to the Buyer by the Transmitting Entity as Net Energy
or Test Energy.
12 Buyer s Failure to Take Energy Except as expressly provided by
Section 7., if the Buyer fails to accept all or part of the energy that the Facility is able
to generate and the Transmitting Entity is able to deliver to the Point of Delivery after the
Operation Date that is less than the Maximum Capacity, and such failure is not excused
under the terms of this Agreement then (1) For energy from the Facility that is sold to
another party, Buyer shall pay Seller an amount equal to the positive difference, if any,
obtained by subtracting the sales price obtained by the Seller from selling the energy to
another party, from the Contract Price for such energy, or (2) For any amount of energy
which the Seller is capable of generating but is unable to sell to either the Buyer or
another party, Buyer shall pay Seller the Contract Price plus the applicable PTC Value
plus the value of the Environmental Attributes that would have gone to the Seller with
respect to all energy not received. Each payment under this Section shall be due for the
month in which the failure occurred or within fifteen (15) Business Days after Buyer
receipt of an invoice. The invoice for such amount shall include a written statement
explaining in reasonable detail Seller s calculation of the energy that would have been
delivered to Buyer but for Buyer s failure to receive it and the amount due.
ARTICLE 8
TRANSMISSION AGREEMENT
Transmission Agreement.The Seller will arrange and pay for the delivery
of Test Energy and/or Net Energy over the facilities of the Transmitting Entities (BP
and the RRREC) to the Point of Delivery. The delivery of Net Energy and Test Energy
from the Facility to the Point of Delivery shall be in accordance with the terms and
conditions of a Transmission Agreement(s) and/or transmission arrangement(s) between
the Seller and the Transmitting Entities and must make use of firm transmission capacity
over the Transmitting Entities facilities for delivery of all Net Energy to the Point of
Delivery.
1.1 As specified in the Transmission Agreement(s) or transmission
arrangement(s) (that are in compliance with all applicable transmission tariffs) the
monthly transmission cost allocated to this Facility shall be the monthly calculated
amount to provide firm transmission capacity that enables the Seller to deliver energy up
to the Maximum Capacity to the Buyer. Failure of the Seller to provide firm transmission
for all of the actual Net Energy deliveries prior to the actual delivery of the Net Energy to
the Buyer will be a Material Breach of this Agreement.
The Seller shall act in a reasonable and prudent manner to secure
the required firm transmission capacity at the least cost available. The monthly
transmission cost will be included and itemized individually on the monthly Net Energy
invoice from the Seller beginning with delivery of Net Energy to the Buyer. The Buyer
shall only be responsible to reimburse the Seller for actual transmission costs incurred by
the Seller. If during the term of this Agreement the Seller or Buyer is able to reduce the
Seller s transmission cost of providing firm transmission for the delivery of Net Energy
PAGE 23 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09/20107
from this Facility to the Point of Delivery, the monthly transmission cost included on the
monthly Net Energy invoice will be reduced accordingly for all applicable months.
Acce tance
arrangements
Transmission Agreement( s)and transmission
The Seller has provided the Buyer with copies of Transmission
Agreement(s) for twelve (12) MW of firm transmission capacity. The Buyer has
reviewed these agreements and finds them to be acceptable contingent upon the Sellerexecuting all required roll-over and activation requirements in order to activate and
maintain these Transmission Agreement( s) for the full term of this Agreement.
At the minimum, ten (10) Business Days prior to any deliveries of
Net Energy and/or Test Energy to the Point of Delivery that exceeds twelve (12) MW, theSeller shall submit to the Buyer Transmission Agreement(s) or transmissionarrangement(s) that will ensure that all Net Energy and/or Test Energy deliveries to the
Point of Delivery shall make use of firm transmission capacity across any and all
Transmitting Entities facilities. These agreements and/or arrangements shall bereviewed and either accepted or rejected by the Buyer. Until such time as the Buyer has
accepted the provided agreements and/or arrangements the Seller shall not deliver any
Net Energy or Test Energy that exceeds twelve (12) MW. Such acceptance will not be
unreasonably withheld.
2.3 A material default by Seller under any of the Transmission
Agreement(s) or transmission arrangement(s) which result in the Seller not being able to
deliver the Net Energy to the Buyer as specified in this Article 8 will be a MaterialBreach under this Agreement.
Losses. The Buyer will only purchase the Net Energy and Test Energy
that is delivered by the Transmitting Entity to the Point of Delivery. Losses between the
Metering Point and the Point of Delivery may be calculated as provided in Appendix B or
may be purchased or replaced by the Seller.
ARTICLE 9
METERING AND TELEMETRY
Metering and Telemetry.The Buyer shall provide, install, and maintainMetering and Telemetry Equipment to be located at the Metering Point to accuratelycalculate the actual energy deliveries from the Seller to the Transmitting Entity at the
Metering Point and provide continuous telemetry information from the Facility to the
Buyer. The Metering and Telemetry Equipment shall be of the type required to
accurately measure, record and report the energy to provide the Buyer adequate NetEnergy and Test Energy measurement data to administer this Agreement and to integrate
the Facility s energy into the Buyer s electrical system. The Seller shall be responsiblefor all costs of the actual Metering and Telemetry Equipment, installation, inspections
maintenance and testing costs.
Seller will arrange for and make available at Seller s cost a communication
circuit acceptable to the Buyer, dedicated to Buyer s use to be used for load profiling and
PAGE 24 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
another communications circuit dedicated to Buyer s communication equipment for
continuous telemetering of the Facility s energy deliveries to the Transmitting Entity to
Buyer s Designated Dispatch Facility. Buyer-provided equipment will be owned and
maintained by Buyer, with total cost of purchase, installation, operation, andmaintenance, including administrative cost to be reimbursed to Buyer by the Seller.
All meters used to determine the billing hereunder shall be sealed and the
seals shall be broken only by the Buyer when the meters are to be inspected, tested or
adjusted.
9.4 Meter Inspection. The Buyer shall inspect the Metering and Telemetry
installations regularly and test meters on the applicable periodic test schedule relevant to
the Metering and Telemetry Equipment installed. If requested by the Seller, the Buyer
shall make a special inspection or test of a meter and the Seller shall pay the reasonable
costs of such special inspection. The Seller shall be notified at least two (2) BusinessDays prior to the time when any inspection or test shall take place, and the Seller may
have representatives present at the test or inspection. If a meter is found to be inaccurate
or defective, it shall be adjusted, repaired or replaced, at the Seller s expense, in order to
provide accurate metering. If a meter fails to register, or if the measurement made by a
meter during a test varies by more than two percent (2%) from the measurement made by
the standard meter used in the test, adjustment (either upward or downward) to the
payments Seller has received shall be made to correct those payments affected by the
inaccurate meter for the actual period during which inaccurate measurements were made.
If the actual period cannot be determined, corrections to the payments shall be based on
the shorter of (1) a period equal to one-half (1/2) the time from the date of the last
previous test of the meter to the date of the test which established the inaccuracy of the
meter; or (2) six (6) months. Seller shall state such adjustment as a credit or additional
charge, as appropriate, on its next invoice.
Additional Telemetry If the Buyer requests telemetry equipment
information or services of any nature beyond that expressly required by the
Interconnection Provider, Transmitting Entity or the Buyer s Delivery Business Unit, theSeller and Buyer shall mutually cooperate to make efficient use of Seller s and Buyer
telemetry equipment to provide the additional information requested by Buyer in the most
cost-effective manner. The Buyer shall be responsible for any cost associated with
additional telemetry equipment, information, services or requirements that are beyond
those expressly required by the Interconnection Provider, Transmitting Entity or the
Buyer s Delivery Business Unit.
ARTICLE 10
SYSTEM PROTECTION
10.Operation and Maintenance of Seller s Facilities . Seller shall construct
operate and maintain the Facility and Seller s side of the Interconnection Facilities in
accordance with the Interconnection Providers ' requirements , Good Utility Practice(s),
the National Electrical Code, the National Electrical Safety Code, and any other
applicable local , state and federal codes.
PAGE 25 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
ARTICLE 11
FACILITY AND INTERCONNECTION
11.1 Design of Facility. Seller will design, construct, install, own, operate and
maintain the Facility and any Seller-owned Interconnection Facilities so as to allow safe
and reliable generation and delivery of energy to the Transmitting Entity for the full Term
of the Agreement.
11.Interconnection Facilities . Seller will construct, install, own and maintain
all Interconnection Facilities other than those owned, installed or maintained by the
Transmitting Entity or the Interconnection Provider. Seller will pay all costs of
interconnecting with the Transmitting Entity and Interconnection Provider.
ARTICLE 12
GENERAL OPERATIONS
12.Communications . Seller, Transmitting Entity and Buyer shall maintain
appropriate operating communications through the Designated Dispatch Facility in
accordance with Appendix H.
12.Scheduled Maintenance. On or before March 1st of each calendar year
Seller shall submit a written proposed maintenance schedule of significant Facility
maintenance for the next twelve (12) months, beginning with March 1st of the current
year, and Buyer and Seller shall mutually agree as to the acceptability of the proposed
schedule. The Parties determination as to the acceptability of Seller s timetable for
scheduled maintenance will take into consideration the need to perform maintenance and
perform other work as required to maintain the Facility s reliable operations , Good
Utility Practice(s), Buyer s system requirements, and Seller s preferred schedule. Neither
Party shall unreasonably withhold acceptance of the proposed maintenance schedule.
Upon mutual agreement between the Parties, or otherwise if required by Good Utility
Practices, the previously approved Scheduled Maintenance may be revised during
Contract Year.
12.Maintenance Coordination.Seller shall, to the extent practical, coordinateits line and Facility maintenance schedules with the Interconnection Provider
maintenance schedules , Transmitting Entity s maintenance schedules and the Buyer
maintenance schedules such that they occur simultaneously.
12.4 Contact Prior to Curtailment.The Buyer will make a reasonable attempt to
contact Seller and/or the Transmitting Entity prior to exercising its rights to curtail
interrupt or reduce deliveries from the Transmitting Entity from the Seller s Facility.
Seller understands that in the case of emergency circumstances, real time operations of
the electrical system, and/or unplanned events, the Buyer may not be able to provide
notice to the Seller or the Transmitting Entity prior to interruption, curtailment, or
reduction of electrical energy deliveries to the Buyer.
PAGE 26 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
ARTICLE 13
RELIABILITY MANAGEMENT SYSTEM
13.Purpose. In order to maintain the reliable operation of the transmission
grid, the WECC Reliability Criteria Agreement sets forth reliability criteria adopted by
the WECC to which Seller and Buyer shall be required to comply. Seller acknowledges
receipt of and understanding of the WECC Reliability Criteria Agreement and how it
pertains to the Seller s Facility.
13.Compliance Seller shall comply with the requirements of the WECC
Reliability Criteria Agreement, including the applicable WECC reliability criteria set
forth in Section IV of Annex A thereof, and, in the event of failure to comply, Seller
agrees to be subject to the sanctions applicable to such failure. Such sanctions shall be
assessed pursuant to the procedures contained in the WECC Reliability Criteria
Agreement. Each and all of the provisions of the WECC Reliability Criteria Agreement
are hereby incorporated by reference into this Article 13 as though set forth fully herein
and Seller shall for all purposes be considered a Participant, and shall be entitled to all of
the rights and privileges and be subject to all of the obligations of a Participant, as
defined in the WECC Reliability Criteria Agreement, under and in connection with the
WECC Reliability Criteria Agreement, including, but not limited to the rights, privileges
and obligations set forth in Sections 5, 6 and 10 of the WECC Reliability Criteria
Agreement.
13.Payment of Sanctions . Seller shall be responsible for reimbursing Buyer
for any monetary sanctions assessed against Buyer due to the action or inaction of the
Seller by WECC pursuant to the WECC Reliability Criteria Agreement. Seller also shall
be responsible for payment of any monetary sanction assessed against the Seller by
WECC pursuant to the WECC Reliability Criteria Agreement. Any such payment shall
be made pursuant to the procedures specified in the WECC Reliability Criteria
Agreement.
13.4 Transfer of Control or Sale of Generation Facilities.In any sale or transfer
of control of any generation facilities subject to this Agreement, Seller shall, as a
condition of such sale or transfer, require the acquiring party or transferee with respect to
the transferred facilities either to assume the obligations of the Seller with respect to this
Agreement or to enter into an agreement with Buyer imposing on the acquiring party or
transferee the same obligations applicable to the Seller pursuant to this Article 13.
13.Publication. Seller consents to the release by the WECC of information
related to the Seller s compliance with this Agreement only in accordance with the
WECC Reliability Criteria Agreement.
13.Third Parties Except for the rights and obligations between the WECC
and the Seller specified in this Article 13 , this Agreement creates contractual rights and
obligations solely between the Parties. Nothing in this Agreement shall create, as
between the Parties or with respect to the WECC: (1) any obligation or liability
whatsoever (other than as expressly provided in this Agreement), or (2) any duty or
standard of care whatsoever. In addition, nothing in this Agreement shall create any
PAGE 27 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
duty, liability or standard of care whatsoever as to any other party. Except for .the rights
as a third-party beneficiary under this Article 13, of the WECC against the Seller for the
Seller, no third-party shall have any rights whatsoever with respect to enforcement of any
provision of this Agreement. Buyer and the Seller expressly intend that the WECC is a
third-party beneficiary to this Article 13, and the WECC shall have the right to seek to
enforce against the Seller any provision of this Article 13 , provided that specific
performance shall be the sole remedy available to the WECC pursuant to Article 13 of
this Agreement, and the Seller shall not be liable to the WECC pursuant to this
Agreement for damages of any kind whatsoever (other than the payment of sanctions to
the WECC, if so construed), whether direct, compensatory, special, indirect
consequential, or punitive.
13.Reserved Rights. Nothing in this Article 13 of this Agreement or the
WECC Reliability Criteria Agreement shall affect the right of Buyer, subject to any
necessary regulatory approval , to take such other measures to maintain reliability,
including disconnection that Buyer may otherwise be entitled to take.
13.Termination of Article 13 . Seller may terminate its obligations pursuant to
this Article 13:
13.1 If after the effective date of this Article 13, the requirements of the
WECC Reliability Criteria Agreement applicable to the Seller are amended so as to
adversely affect the Seller, provided that the Seller gives fifteen (15) days notice of such
termination to Buyer and WECC within forty-five (45) days of the date of issuance of a
Commission order accepting such amendment for filing, provided further that the forty-
five (45) day period within which notice of termination is required may be extended by
the Seller for an additional forty-five (45) days if the Seller gives written notice to Buyer
of such requested extension within the initial forty-five (45) day period; or
WECc.
13.2 For any reason on one (1) year s written notice to Buyer and the
ARTICLE 14
BILLING, RECORDS, AUDITS
14.Billing Invoices . The monthly billing period shall be the calendar month.
No later than three (3) Business Days after the end of each calendar month, Seller shall
provide to Buyer, bye-mail or fax and confirmed by first-class mail, an invoice for the
amount due Seller by Buyer for the previous calendar month billing period. Seller
invoice shall show all billing parameters, rates and factors, and any other data reasonably
pertinent to the calculation of monthly payments due to the Seller. Each such monthly
invoice shall calculate the amount that Buyer owes to the Seller for Test Energy, Net
Energy, transmission costs and any offsets for Net Energy Shortfall Damages. Upon
receipt of this invoice, Buyer shall review and confirm all calculations and contact the
Seller with any identified discrepancies.
14.1.1 Inadvertent Energy Billing. Within fifteen (15) Business Days
after the First Energy Date is established as provided for within this Agreement, the
PAGE 28 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09/20107
Seller shall submit an Inadvertent Energy billing to the Buyer. This billing shall include
detail of all month(s) actual Inadvertent Energy deliveries to the Buyer and the
Inadvertent Energy Price applicable to each month(s) Inadvertent Energy deliveries. This
billing shall not include any transmission costs.
14.Payments Unless otherwise specified in this Agreement, undisputed
payments due under this Agreement shall be due and payable by electronic funds transfer
on or before the twenty-fifth (25th) day of the invoicing month or fifteen (15) days after
receipt of the billing statement from the Seller by the Buyer, whichever is later. If the due
date occurs on a day that is not a Business Day, payment will be due on the next Business
Day. If the undisputed amount due is not paid on or before the due date, a late payment
charge shall be applied to the unpaid balance and shall be added to the next billing
statement. Such late payment charge shall be calculated based on the Interest Rate.
14.Maintenance of Records. Seller shall maintain at the Facility or such other
location mutually acceptable to the Parties adequate total generation, net generation, and
maximum generation (kW) records in a form and content consistent with Good Utility
Practice(s ).
14.4 Right to Audit; Refunds; Billing Disputes
14.4.Audit Rights. Each Party shall have the right, upon reasonable
notice to the other Party and during the other Party s regular business hours and without
unduly interfering with the conduct of that Party s business, to access all of that Party
records pertaining to invoices under this Agreement and to audit reports, data
calculations, invoices , Net Energy, and maximum generation records pertaining to the
Facility. The auditing Party shall bear its own costs of performing such audit; provided
however that the other Party shall cooperate with the audit and shall not charge the
auditing Party for any reasonable costs (including without limitation the cost of
photocopies) that the other Party may incur as a result of such audit. A Party shall have
twenty- four (24) months from the date on which an invoice or notice is received to audit
and to challenge that invoice or notice.
14.4.Refunds of Overpayments and UndeqJavments If an audit
discovers a billing error or errors that resulted in an overpayment by the Buyer, Seller
shall refund to the Buyer the amount of the overpayment plus interest calculated at the
Interest Rate thereon from the date such overpayment was made by the Buyer to (but not
including) the date the Buyer actually receives the refund from the Seller. If the audit
discovers a billing error or errors that resulted in an underpayment by the Buyer, the
Buyer shall pay to the Seller the amount of the underpayment plus interest calculated at
the Interest Rate thereon from the due date thereof to (but not including) the date the
Seller actually receives the payment thereof from the Buyer. The Interest Rate used in
this Section shall be the Interest Rate applicable to cash collateral.
14.4.3 Billing Disputes. Either Party may dispute invoiced amounts, but
shall pay to the other Party at least the undisputed portion of invoiced amounts on or
before the invoice due date. To resolve any billing dispute, the Parties shall use the
procedures set forth in Article 25. When the billing dispute is resolved, the Party owing
PAGE 29 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
shall pay the amount owed within five (5) Business Days of the date of such resolution
with interest charges calculated on the amount owed in accordance with the provisions of
Section 14.4.2. Buyer at any time may offset against any and all amounts that may be
due and owed to Seller under this Agreement, any and all undisputed amounts, including
damages and other payments , that are owed by Seller to Buyer pursuant to this
Agreement. Likewise, Seller at any time may offset against any and all amounts that may
be due and owed to Buyer under this Agreement, any and all undisputed amounts
including damages and other payments, that are owed by Buyer to Seller pursuant to this
Agreement. Undisputed and non-offset portions of amounts invoiced under this
Agreement shall be paid on or before the due date or shall be subject to the interest
charges set forth in Section 14.4.
ARTICLE 15
INDEMNIFICATION AND INSURANCE
15.Indemnification.Each Party shall agree to hold harmless and to indemnify
the other Party, its officers , agents, affiliates, subsidiaries, parent company and
employees against all loss, damage, expense and liability to third persons for injury to or
death of person or injury to property, proximately caused by the indemnifying Party
construction, ownership, operation or maintenance of, or by failure of, any of such
Party s works or facilities used in connection with this Agreement. The indemnifying
Party shall, on the other Party s request, defend any suit asserting a claim covered by this
indemnity. The indemnifying Party shall pay all costs , including reasonable attorney
fees, that may be incurred by the other Party in enforcing this indemnity.
15.Insurance. During the Term of this Agreement, Seller shall secure and
continuously carry the following insurance coverage:
15.2.Worker s Com?ensation Insurance. Seller shall, during the Initial
Term of this Agreement and any extensions thereof, provide and maintain Worker
Compensation Insurance for all its employees engaged in work under this Agreement in
accordance with statutory requirements. Seller shall obtain a Waiver of Subrogation
Endorsement in favor of Buyer in reference to Worker s Compensation Insurance.
If any direct claim for Worker s Compensation benefits is asserted against
Seller by any of Seller s employees or, in the event of the death of a Seller
employee, by such employee s personal representatives, then, upon timely written
notice from Buyer, Seller shall undertake to defend Buyer against such claim(s)
and shall indemnify and hold Buyer harmless from and against any such claim(s)
to the extent of all benefits awarded.
15.Comprehensive General Liability Insurance (including coverage
for bodily injury and death, property damage, independent contractors , products and
completed operations) with limits equal to $1 000 000 , each occurrence, combined single
limit. The deductible for such insurance shall be consistent with current Insurance
Industry Utility practices for similar property. Seller to obtain a Waiver of Subrogation
Endorsement in favor of Buyer in reference to comprehensive general liability insurance.
PAGE 30 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
15.3 ExcesslUmbrella Liability Insurance with limits not less
than $5 000 000.
15.2.4 If the Seller, in its sole discretion, elects to obtain Boiler
and Machinery Insurance, Property Insurance or Business Interruption Insurance
the coverages and deductible shall be additionally declared on the annual
insurance certification as required in section 15.
15.5 All of the above insurance coverages shall be placed with
insurance companies with an AM. Best rating of A- or better and shall include:
a) A Waiver of Subrogation Endorsement in favor of the Buyer.
b) With respect to Comprehensive General Liability Insurance
and ExcesslUmbrella Liability Insurance, an endorsement
naming Buyer as an additional insured, and loss payee.
c) The policy shall include a provision stating that such policy
shall not be canceled or the limits of liability reduced without
sixty (60) days ' prior written notice to Seller. Seller shall
notify Buyer within five (5) Business Days after Seller receives
any such notice.
15.Seller to Provide Certificate of Insurance. As required in Section 3.1.7 of
this Agreement and annually thereafter, Seller shall furnish Buyer a certificate of
insurance evidencing the coverage and required endorsements as set forth above.
15.4 Seller to Notify Buyer of Loss of Coverage. If the insurance coverage
required by Section 15.2 shall lapse for any reason, Seller will immediately notify the
Buyer in writing. The notice will advise the Buyer of the specific reason for the lapse
and the steps the Seller is taking to reinstate the coverage.
15.5 Seller s Failure to Maintain Required Insurance - Seller s failure to
maintain the insurance as required in this Article 15 shall be a Material Breach of this
Agreement.
ARTICLE 16
CREDIT AND COLLATERAL REQUIREMENTS
16.Financial Information.
16.1.1 The Buyer shall make available electronically to the Seller
(i) within one hundred-twenty (120) days following the end of a Buyer s fiscal year, a
copy of that Buyer s audited consolidated financial statements for its fiscal year, and
(ii) within sixty (60) days after the end of each of its first three (3) fiscal quarters of each
fiscal year, a copy of the Buyer s unaudited consolidated financial statements for such
fiscal quarter. In all cases , the statements shall be for the most recent accounting period
and prepared in accordance with generally accepted accounting principles , consistently
applied; provided, however that should any such statements not be available on a timely
PAGE 31 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
basis due to a delay in preparation or certification, such delay shall not be an Event of
Default so long as the Buyer diligently pursues the preparation of the statements.
16.1.2 The Seller shall make available electronically to the Buyer
(i) within one hundred-twenty (120) days following the end of U.S. Geothermal's fiscal
year, a copy of U.S. Geothermal's audited consolidated financial statements for its fiscal
year, and (ii) within sixty (60) days after the end of each of its first three (3) fiscal
quarters of each fiscal year, a copy of U.S. Geothermal's unaudited consolidated financial
statements for such fiscal quarter. In all cases , the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles, consistently applied; provided, however that should any such statements not
be available on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as the Seller diligently pursues the preparation
certification and delivery of the statements.
16.1.3 If during the Term of this Agreement any of the financial
statements required in sections 16.1.1 or 16.1.2 are not publicly available, the Parties
shall mutually agree to confidentially agreements to allow exchange of confidential
information and/or alternative reporting that is acceptable documentation in lieu of the
documents required in sections 16.1.1 and 16.1.2.
16.Seller s Performance Assurance.The Seller shall deliver to the Buyer
prior to the end of the third (3rd) Contract Year a Performance Assurance in the amount
no less than seven hundred and fifty thousand dollars ($750 000) in a form that is
reasonably acceptable to the Buyer. This seven hundred and fifty thousand dollars
($750 000) Performance Assurance shall then be maintained for the remaining Term of
this Agreement. If at any time during the Term of this Agreement the Buyer draws funds
from this Performance Assurance the Seller shall reestablish the seven hundred and fifty
thousand dollars ($750 000) Performance Assurance to the Buyer at the rate of three
hundred seventy five thousand dollars ($375 000) per Contract Year or the actual amount
required to reestablish the seven hundred fifty thousand dollars ($750 000), whichever is
less, with the deposits beginning no later than the end of the next Contract Year. To
secure the obligations of the Seller to the Buyer under this Agreement, Seller shall
provide one or a combination of the following as its "Performance Assurance
16.1 Cause Seller s Guarantor to execute and deliver to the Buyer a
Guaranty which is substantially in the form set forth as Appendix C (or, at Seller
discretion, cause another guarantor that is not experiencing a Material Adverse Change
to execute and deliver to the Buyer a Guaranty which is substantially in the form set
forth as Appendix C or in another form acceptable to the Buyer); or
16.2 Establish and maintain at the Seller s expense an escrow account
for the benefit of the Buyer in a form reasonably acceptable to the Buyer; or
16.2.3 Provide a cash deposit to the Buyer; or
16.2.4 Provide a letter of credit in a form reasonably acceptable to the
Buyer.
PAGE 32 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
16.Grant of Security Interest in Certain Collateral and Security. To secure its
obligations under this Agreement, Seller hereby grants to Buyer, a present and continuing
security interest in, and lien on (and right of setoff against), and assignment of, all cash
collateral and cash equivalent collateral and any and all proceeds resulting therefrom or
the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit
, the secured Party. Seller shall take such action as Buyer reasonably requires in order
to perfect Buyer s first-priority security interest in, and lien on (and right of setoff
against), such collateral and any and all proceeds resulting therefrom or from the
liquidation thereof.
16.4 Realization Upon Performance Assurance. Upon or at any time after the
occurrence and during the continuation of an Event of Default or an Early Termination
Date affecting Seller, the Buyer may do anyone or more of the following: (i) exercise
any of the rights and remedies of a secured party with respect to all Performance
Assurance, including any such rights and remedies under law then in effect; (ii) exercise
its rights of setoff against any and all property of the Seller in the possession of the Buyer
or its agent; (iii) draw on any outstanding letter of credit issued for the Buyer s benefit;
and (iv) liquidate all Performance Assurance then held by or for the benefit of the Buyer
free from any claim or right of any nature whatsoever of the Seller, including any equity
or right of purchase or redemption by the Seller. The Buyer shall apply the proceeds of
the collateral realized upon the exercise of any such rights or remedies to reduce the
Seller s obligations under this Agreement, subject to the Buyer s obligation to return any
surplus proceeds remaining after such obligations are satisfied in full.
16.Interest Rate on Cash Collateral.Performance Assurance in the form of
cash shall bear interest at the Interest Rate and shall be paid to Seller on the third (3rd
Business Day of each calendar month.
ARTICLE 17
FORCE MAJEURE
17.Force Ma;eure
17.General.As used in this Agreement force majeure or "an event
of force majeure means any cause beyond the reasonable control of the Party claiming
force majeure which, despite the exercise of due diligence, such Party is unable to
prevent or overcome. Force majeure includes, but is not limited to, acts of God, fire
flood, storms, wars, hostilities, civil strife, strikes and other labor disturbances (even if
such strikes or disturbances could be resolved by conceding to the demands of a labor
group), earthquakes, fires, lightning, epidemics, sabotage, severe weather, or changes in
law or regulation or governmental orders occurring after the Effective Date, to the extent
that by the exercise of reasonable foresight such Party could not reasonably have been
expected to avoid and by the exercise of due diligence it shall be unable to overcome
suchforce majeure event.
17.1.2 Events That Are Not Force Ma;eure Notwithstanding
Section 17.1.1 , the term force majeure does not include: (a) Seller s ability to sell, or
Buyer ability to purchase, Net Energy or Environmental Attributes at a more
PAGE 33 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
advantageous price than is provided under this Agreement; (b) governmental or
regulatory action occurring after receipt of the Commission approval contemplated by
Article 28 and Article 29 that impairs Buyer s ability to recover the Contract Price in its
rates or that otherwise affects the value of this Agreement to Buyer or (c) the inability for
any reason to make payments hereunder when due.
17.1.3 Requirements Upon Occurrence of Force Majeure If either Partyis rendered wholly or in part unable to perform its obligations under this Agreement
because of an event of force majeure both Parties shall be excused from whatever
performance is affected by the event of force majeure provided that:
17.The Party claiming force majeure shall, as soon as
is reasonably possible after the occurrence of the force majeure give the
other Party written notice describing the particulars of the occurrence.
17.1.3.The suspension of performance shall be of
greater scope and of no longer duration than is required by the event of
force majeure.
17.1.3.No obligations of either Party which arose before
the occurrence causing the suspension of performance and which could
and should have been fully performed before such occurrence shall be
excused as a result of such occurrence.
17.1.3.4 The Party claiming force majeure shall proceed
with reasonable diligence to remedy its inability to perform and shall
provide weekly progress reports to the other Party describing actions taken
to end the force majeure.
17.1.3.The Party claiming force majeure is able to resume
performance of its obligations under this Agreement, that Party shall give
the other Party written notice to that effect.
Failure of a Party to comply with provisions of 17.1.3.17.1.3.17.1.3.4
and 17.1.3.5 shall create liability of such Party only to the extent the other
Party is damaged by such failure.
17.Extension of Scheduled Operation Date and the Term.The Scheduled
Operation Date shall be extended on a day-for-day basis in the event offorce majeure.
no event will any delay or failure of performance caused by any conditions or events of
force majeure extend this Agreement beyond its stated Term.
17.Termination for Extended Force Majeure If a delay or failure of
performance caused by the event of force majeure results in a 30% or more decrease in
the delivery or receipt of Net Energy at the Point of Delivery of the Facility whensimilarly compared to the delivery and receipt of Net Energy in a twelve (12) month
period immediately preceding the event of
force majeure and continues for an
uninterrupted period of three hundred sixty-five (365) days from the event's occurrence
or inception, the Party not claiming force majeure may, at any time following the end of
PAGE 34 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
such three hundred sixty-five (365) day period, and prior to the event of force majeure
being cured, terminate this Agreement upon written notice to the party claiming force
majeure without further obligation by either Party except as to costs and balances
incurred before the effective date of such termination. The Party not claiming force
majeure may, but shall not be obligated to, extend such three hundred sixty-five (365)
day period, for such additional time as it, at its sole discretion, deems appropriate.
ARTICLE 18
FORCED OUT AGE
18.Seller to Notify Buyer.Promptly upon the occurrence of an event at the
Facility that the Seller deems to be a Forced Outage the Seller shall notify the Buyer of
the declared Forced Outage and adjust the forecast if required as specified in Section 7.
18.Seller to Submit Explanation. Within two (2) Business Days of the Forced
Outage event the Seller shall submit to the Buyer a detailed explanation of the Forced
Outage event including but not limited to details of the equipment failure, apparent cause
of the failure, equipment affected by and taken out of service, estimated lost energy
production, schedule and plan for making the necessary repairs.
18.Buyer Shall Respond to Seller.Upon receipt of the detailed explanation of
the Forced Outage event, the Buyer shall within two (2) Business Days respond to the
Seller accepting, rejecting or requesting additional information in regards to the declared
Forced Outage event. If the Buyer does not respond to the Seller s initial submittal
within two (2) Business Days, the declared Forced Outage event shall be deemed to be
accepted.
18.4 Adjustment to Seller s Annual Guaranteed Output.Only after the
declared Forced Outage event has been accepted by the Buyer and the actual Net Energy
reduction of the specific Forced Outage event has been determined to be equal to or
greater than 24 000 kWh shall the Seller s Annual Guaranteed Output obligation be
adjusted to reflect the Net Energy curtailment that was a result of the Forced Outage.
it is determined that the actual Net Energy reduction associated with the specific Forced
Outage event is less that 24 000 kWh, no adjustment of the Seller s Annual Guaranteed
Output shall be made.
ARTICLE 19
BUYER'S ACCESS RIGHTS
19.Seller to Provide Access . To the extent necessary, Seller hereby grants to
the Buyer for the Term of this Agreement all necessary rights-of-way and easements to
install, operate, maintain, replace, and remove the Buyer s Metering and Telemetry
Equipment, and other equipment and facilities necessary or useful to this Agreement
including adequate and continuing access rights on property of the Seller.
19.Indemnity If the Buyer exercises any right under this Agreement to
access or enter upon the Seller s property, such access or entry shall be at the Buyer
sole risk and expense. Buyer shall hold the Seller harmless from, and indemnify the
Seller against, any and all liability for any loss , damage or injury to property or persons
PAGE 35 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
arising from the Buyer s access to or entry upon to the Seller s property, except to the
extent that such loss, damage or injury is cause by the Seller s negligence or willful
misconduct.
ARTICLE 20
NO THIRD PARTY LIABILITY
NO DEDICATION OF FACILITY OR SYSTEM
20.No Third Party Liability. Nothing in this Agreement shall be construed to
create any duty to, any standard of care with reference to, or any liability to any person
not a Party to this Agreement. There are no third party beneficiaries of this Agreement.
20.No Dedication. No undertaking by one Party to the other under any
provision of this Agreement shall constitute the dedication of that Party s system or
facility or any portion thereof to the other Party or to the public or affect the status of the
Buyer as an independent public utility corporation or the Seller as an independent entity.
ARTICLE 21
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 and not joint or
collective. Nothing contained in this Agreement shall ever be construed to create an
association, trust, partnership or joint venture, or impose a trust or partnership duty,
obligation or liability on or with regard to either Party. Each Party shall be individually
and severally liable for its own obligations under this Agreement.
ARTICLE 22
WAIVER
Any waiver at any time by either Party of its rights with respect to a default under
this Agreement or with respect to any other matters arising in connection with this
Agreement shall not be deemed a waiver with respect to any subsequent default or other
matter.
ARTICLE 23
CHOICE OF LAW
This Agreement shall be construed and interpreted in accordance with the laws of
the State of Idaho without reference to its choice of law provisions.
ARTICLE 24
LIMIT ATIONS
24.Remedies Satisfy Essential Pul1'oses THE PARTIES CONFIRM THAT
THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS
AGREEMENT SATISFY THE ESSENTIAL PURPOSES OF THIS AGREEMENT.
PAGE 36 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
24.Sole and Exclusive Remedies. FOR ANY PROVISION FOR WHICH
AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY. THE OBLIGOR'S LIABILITY SHALL BE LIMITED AS
SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES
AT LAW OR IN EQUITY ARE WAIVED.
24.3 No Punitive, Consequential or Incidental Damages. IF NO REMEDY OR
MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR'
LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH
DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY
AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL
BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR
INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION
DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY
PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS IMPOSED IN THIS AGREEMENT ON REMEDIES AND THE
MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES
RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY
WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT
ACTIVE OR PASSIVE.
24.4 Liquidated Damages.TO THE EXTENT ANY DAMAGES REQUIRED
TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE
THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND
THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE
APPROXIMATION OF THE HARM OR LOSS.
ARTICLE 25
DISPUTES
25.Disputes. If a dispute arises under this Agreement (a "Dispute ), within
ten (10) days following the delivered date of a written request by either Party (a "Dispute
Notice ), (1) each Party shall appoint a representative, and (2) the Parties ' representatives
shall meet, negotiate and attempt in good faith to resolve the Dispute quickly, informally
and inexpensively. If the Parties' representatives cannot resolve the Dispute within
thirty (30) days after commencement of negotiations, then within ten (10) Business Days
following any request by either Party at any time thereafter, each Party representative
(3) shall independently prepare a written summary of the Dispute describing the issues
and claims , (4) shall exchange its summary with the summary of the Dispute prepared by
the other Party representative, and (5) shall submit a copy of both summaries to a senior
officer of the representative s Party with authority to irrevocably bind the Party to a
resolution of the Dispute. Within ten (10) Business Days after receipt of the Dispute
summaries, the senior officers for both Parties shall negotiate in good faith to resolve the
Dispute. If the Parties are unable to resolve the Dispute within fourteen (14) Business
PAGE 37 OF 50 POWER PURCHASE AGREEMENT RAFT RIVER ENERGY 09120/07
Days following receipt of the Dispute summaries by the senior offices , either Party may
seek available remedies.
25.Venue. Venue for any litigation arising out of or related to this Agreement
shall lie in the District Court of the Fourth Judicial District of Idaho in and for the County
of Ada.
ARTICLE 26
EVENTS OF DEFAULT, DELAY DAMAGES AND MATERIAL BREACHES
26.Events of Default.The following shall be deemed to be Events of Default:
26.1 A Party s dissolution or liquidation;
26.1.2 A Party s assignment of this Agreement or any of its rights under
this Agreement for the benefit of creditors (except for an assignment to the Facility
Lender as security under the Financing Documents as permitted by this Agreement).
26.1.3 A Party s filing of a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or under
any insolvency act of any state, or a Party voluntarily taking advantage of any such law
or act by answer or otherwise.
26.1.4 The filing of a case in bankruptcy or any proceeding under any
other insolvency law against a Party that could materially impact Buyer s ability to
perform its obligations under this Agreement if the affected Party does not obtain a stay
or dismissal of the filing within sixty (60) days after the Party receives a notice of default.
26.5 A Party s assignment of this Agreement, except as permitted by
this Agreement.
26.1.6 Any representation or warranty made by a Party in this Agreement
proves to have been false or misleading in any material respect when made or ceases to
remain true during the Term if such inaccuracy or cessation would reasonably be
expected to result in a significant adverse impact on the other Party and such default is
not cured within thirty (30) days after the Party s receipt of a notice of default.
26.1.7 Seller s failure to establish and maintain Performance Assurance as
required by this Agreement if the failure is not cured within thirty (30) days of Seller
receipt of a notice of default.
26.1.8 A Guaranty Default affecting a Guaranty delivered in support of
this Agreement if the Guaranty Default is not cured within the time permitted by the
Guaranty and the Seller does not provide substitute Performance Assurance to replace the
Guaranty within fifteen (15) Business Days after the Seller s receipt of a notice of the
Guaranty Default.
PAGE 38 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
26.1.9 Seller s unexcused failure to deliver energy from the Facility to
Buyer as required under this Agreement if the failure is not cured within fifteen (15)
Business Days of Seller s receipt of a notice of default.
26.1.10 Buyer s unexcused failure to receive and accept energy from the
Facility as required under this Agreement if the failure is not cured within fifteen (15)
days of Buyer s receipt of a notice of default.
26.1.11 Seller s failure to attain an actual Operation Date within 2 904
hours (4 months) of the Scheduled Operation Date.
26.1.12 A Party s failure to make a payment to the other Party when due
under this Agreement, if the failure is not cured within ten (10) Business Days of the
Party s receipt of a notice of default.
26.1.13 A Party s failure to comply with any material obligation under this
Agreement, if the failure would result in a significant adverse impact on the other Party
(other than a default already specifically enumerated in this Article) and the failure is not
cured within thirty (30) days of the Party s receipt of a notice of default; provided
however if such default cannot be cured within thirty (30) days despite Seller s diligent
efforts but Seller commences the cure within the thirty (30) day period and thereafter
diligently pursues the cure, the thirty (30) day period shall be extended for as long as is
reasonably required to cure the default (but in no event more than a total of one hundred
twenty (120) days.
26.Notice of Default.If either Party defaults in its performance of this
Agreement as provided in Section 26., the non-defaulting Party may give notice of the
default in writing to the defaulting Party, specifying in reasonable detail the nature of the
default. If the defaulting Party fails to cure the default within any cure period allowed for
the default in Section 26., the non-defaulting Party may, at its option, terminate this
Agreement and/or pursue its legal or equitable remedies, subject to any limitation on
remedies and damages set forth in this Agreement.
26.Material Breaches. The notice and cure provisions in Article 26 do not
apply to defaults identified in this Agreement as Material Breaches. Material Breaches
must be cured as expeditiously as possible following occurrence of the breach.
26.4 Facility Lender s Right to Cure Default of Seller.Seller shall provide
Buyer with a notice identifying the Facility Lender and providing appropriate contact
information for the Facility Lender. Following receipt of such notice, Buyer shall
provide notice of any Event of Default or Material Breach of Seller to the Facility Lender
within ten (10) Business Days of the Event of Default or the Material Breach, and Buyer
will accept a cure to an Event of Default or Material Breach of Seller performed by the
Facility Lender, so long as the cure is accomplished within the applicable cure period set
forth in this Agreement plus an additional sixty (60) Days.
26.Delay Damages. If Seller fails to achieve the Operation Date within thirty
(30) days after the Scheduled Operation Date and such failure is not excused by force
majeure or Forced Outage by the Seller or by default or delay of Buyer, Delay Liquidated
PAGE 39 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
Damages will be calculated as defined in Section 1.14 of this agreement. Buyer shall
calculate and invoice the Seller and the Seller shall pay Buyer for any Delay Liquidated
Damages accrued during a given calendar month within fifteen (15) days of the receipt of
the Buyer s invoice. The calculation and payment of Delay Damages to the Buyer from
the Seller shall not exceed $500 000.
26.Limitations on Seller s Damages. The following limits shall apply to
Seller s liability for damages: (a) Seller s aggregate financial liability to Buyer for Delay
Damages shall not exceed the amount specified in Section 26., (b) Seller s aggregate
financial liability for Net Energy Shortfall Damages for any single Contract Year shall
not exceed the values as specified in Appendix E. The limitations on damages set forth
in this Section 26.6 shall not apply to damages arising out of either of the following
events:
26.1 Willful breach of this Agreement by Seller.
26.2 Any claim for indemnification under Article 15.
26.Duty to Mitigate Damages . Each Party agrees that it has a duty to mitigate
damages and covenants that it will use commercially reasonable efforts to minimize any
damages it may incur as a result of the other Party s performance or non-performance of
the Agreement.
ARTICLE 27
TERMINATION
27.Termination Upon execution, this Agreement shall continue in full force
and effect for the Term unless terminated in accordance with this Article.
27.Mutual Agreement.The Parties can mutually terminate this Agreement by
a writing signed by both Parties.
27.Event of Default.A non-defaulting Party may terminate this Agreement
in accordance with Section 26.
27.4 Prolonged Force Ma;eure A Party not claiming force majeure may
terminate this Agreement in accordance with Section 17.3.
27.Right to Terminate
27.1 If the Commission issues a final order either disapproving this
Agreement or approving it with condition(s) or modification(s) unacceptable to the
Party or Parties adversely affected by such modification(s) or condition(s), either Party
has the right to terminate this Agreement by written notice to the other Party either
within ten (10) Business Days after the Commission denies any Petition(s) for
Reconsideration or, if the Commission grants reconsideration, within ten (10) Business
Days after the Commission renders a decision on reconsideration if said decision either
disapproves the Agreement or approves it with condition(s) or modification(s)
PAGE 40 OF 50 POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY -09/20/07
unacceptable to either Party. Any such termination under this Section shall be effective
ten (10) Business Days after such notice is given.
27.2 If a Party does not give the other Party a notice of termination in
accordance with this Section 27.5 on or before the applicable date specified above, the
affected termination right under this Section 27.5 shall be deemed waived and this
Agreement shall remain in full force and effect in accordance with its terms regardless
of any subsequent Commission order.
27.3 Neither Party shall have any liability to the other Party for any
termination under this Section 27.
27.5.4 Any termination under this Section shall be effective ten (10)
Business Days after such notice is given.
ARTICLE 28
GOVERNMENTAL AUTHORIZATION
This Agreement is subject to the jurisdiction of those governmental agencies
having control over either Party of this Agreement, including, but not limited to, the
Commission.
ARTICLE 29
BOARD AND REGULATORY APPROVAL
29.Within ten (10) Business Days after the Effective Date Buyer shall file this
Agreement with the Commission, seeking Commission Approval.
29.
Directors.
Buyer has received approval of this Agreement by the Buyer s Board of
29.Upon Commission Approval of this Agreement, the existing PURPA
Agreement for this Facility shall be tenninated on the First Energy Date as established by
this Agreement. All rights of a Party to payment under the existing PURPA Agreement
prior to its termination, shall remain in effect.
ARTICLE 30
SUCCESSORS AND ASSIGNS
30.Binding Agreement.This Agreement and all of the tenus and provisions
of this Agreement shall be binding upon and inure to the benefit of the respective
permitted successors and assigns of the Parties.
30.Assignment without Consent.Except as pennitted in this Article, neither
Party shall assign this Agreement or any portion of this Agreement, without the prior
written consent of the other Party, which consent shall not be unreasonably withheld
conditioned or delayed.
30.Seller s Consent Not Required. Seller s consent shall not be required for
Buyer to assign this Agreement to an Affiliate of the Buyer, provided that (1) the
PAGE 41 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
assignee has the same or better credit rating from Moody s and S&P as the Buyer and (2)
the assignee s non-credit enhanced unsecured debt (a) has a rating by at least one of the
two rating agencies, and (b) does not have a Credit Rating below BBB- by S&P or below
Baa3 by Moody , or does not have a Credit Rating of BBB- by S&P accompanied by a
negative watch or Baa3 by Moody s accompanied by a negative watch. If S&P changes
its rating system during the Term
, "
BBB-" shall be replaced by S&P's lowest investment
grade rating under the new rating system; likewise, if Moody s changes its rating system
during the Term
, "
Baa3" shall be replaced by Moody s lowest investment grade rating
under the new rating system.
30.4 Buyer s Consent Not Required. Buyer s consent shall not be required:
30.4.1 For Seller to assign this Agreement for collateral purposes to the
Facility Lender; or
30.4.2 For Seller to assign this Agreement to any Affiliate of the Seller
provided that the assignee provide the Performance Assurance of the Agreement; or
30.4.3 For Seller to Assign this Agreement to any third party or parties in
connection with a sale of the Facility to such third party or parties, provided that such
third party or parties shall either: (1) have at least three (3) years experience in operating
geothermal electric generating facilities with an installed nameplate capacity of ten (10)
MWor greater; or (2) enter into an operating agreement with another person (who may
be the Seller or an Affiliate of the Seller) who has at least three year s experience in
operating geothermal electric generating facilities with an installed nameplate capacity of
ten (10) MW or greater; and (3) the third party or parties shall provide the Performance
Assurance of the Agreement.
30.Accommodation of Facility Lender or Investor.To facilitate the Seller
obtaining of Project Financing or to facilitate investments in the Seller, Buyer shall use
commercially reasonable efforts to provide such consents to assignments, certifications
representations, information, opinions or other documents as may be reasonably
requested by the Seller, the Facility Lender or the Investor in connection with the
financing of or investment in the Facility; provided that in responding to any such
request, the Buyer shall have no obligation to provide any consent, or enter into any
agreement that significantly adversely affects any of the Buyer s rights, benefits , risks
and/or obligations under this Agreement. Seller shall reimburse, or shall cause the
Facility Lender or the Investor to reimburse, the Buyer for the incremental direct
expenses (including, without limitation, the reasonable fees and expenses of counsel)
incurred by the Buyer in the preparation, negotiation, execution and/or delivery of any
documents requested by the Seller, Facility Lender or Investor, and provided by the
Buyer, pursuant to this Article. The rights of the Facility Lender or Investor will be set
forth in a collateral assignment, estoppel agreement, consent agreement or similar
instrument delivered at the closing of any Facility financing or any investment and will
include the following provisions:
30.Right to Cure Defaults. Facility Lender or Investor shall have the
right, but not the obligation, to perform any act required to be performed by the Seller
PAGE 42 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
under this Agreement to prevent or cure a default by the Seller, and such act performed
by Facility Lender or Investor shall be as effective to prevent or cure a default as if done
by the Seller. Seller shall provide the Buyer with a notice identifying the agent or trustee
of any Facility Lender or any Investor and providing appropriate contact information for
any Facility Lender or Investor. Following receipt of such notice, Buyer shall provide
notice of the occurrence of any default or Event of Default described in this Agreement to
the agent or trustee of any Facility Lender or Investor, and the Buyer will accept a cure
performed by the agent or trustee of any Facility Lender or Investor and will negotiate in
good faith with the agent or trustee of any Facility Lender and Investor as to the cure
period(s) that will be allowed for any Facility Lender or Investor to cure any the Seller
default or Event of Default hereunder and the Buyer will accept a cure performed by any
Facility Lender or Investor, so long as the cure is accomplished within the applicable cure
period so agreed to by the Buyer and any Facility Lender or Investor.
30.Right to Assume Agreement.If the Seller defaults under any
financing or investment documents, any Facility Lender or Investor may (but shall not be
obligated to) assume, or cause its designee to assume, all of the interests, rights, and
obligations of the Seller thereafter arising under this Agreement. Notwithstanding any
such assumption, the Seller shall not be released or discharged from and shall remain
liable for any and all obligations to the Buyer arising or accruing under this Agreement.
30.No Obligation to Perform.Buyer agrees that no Facility Lender or
Investor shall be obligated to perform any obligation or be deemed to incur any liability
or obligation provided in this Agreement on the part of the Seller or shall have any
obligation or liability to the Buyer with respect to this Agreement except to the extent any
Facility Lender or Investor has assumed the obligations of the Seller under this
Agreement pursuant to this Article; provided that the Buyer shall nevertheless be entitled
to exercise all of its rights under this Agreement against the Seller in the event that the
Seller, Facility Lender or Investor fails to perform the Seller s obligations under this
Agreement.
30.5.4 Notice of Facility Lender or Investor Action Within ten (10)
Business Days following the Seller s receipt of each written notice from a Facility Lender
or an Investor of a default, or of Facility Lender s or Investor s intent to exercise any
remedies, under the Financing Documents or any investment agreement, Seller shall
deliver a copy of such notice to the Buyer.
30.Subcontracting
Agreement without the prior
subcontract shall relieve the
Agreement.
Seller may subcontract its duties or obligations under this
written consent of the Buyer, provided, that no such
Seller of any of its duties or obligations under this
30.Right of First Offer upon Sale of Facility Assets
30.Facility Assets . If, at any time during the Term, Seller intends to
sell the assets comprising all or substantially all of the Facility (the "Facility Assets ) to a
person or entity that is not an Affiliate of Seller, Seller shall first offer the Facility Assets
to Buyer. Seller s offer to the Buyer shall set forth, in writing and in reasonable detail
PAGE 43 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
substantially similar terms and conditions of the offer being proposed by the Seller to the
other person or entity. Seller shall promptly answer any questions that Buyer may have
concerning the offered terms and conditions and shall meet with Buyer to discuss the
offer.
30.Buyer s Rejection of Offer; Revival of Offer.If Buyer does not
provide notice of its intent to accept the offered terms and conditions within thirty (30)
days after receiving each of the Seller s offers made under 30., Seller may in its sole
discretion enter into an agreement to sell the Facility Assets to a third party in compliance
with the requirements of this Article 30 and on terms and conditions satisfactory to Seller
in its sole discretion. Seller may elect not to proceed with the sale of the Facility Assets.
30.Buyer s Acceptance of Offer.If Buyer provides notice of its intent
to accept the offer made by Seller under this Section, the Parties shall negotiate in good
faith to enter into a definitive sales agreement that incorporates the tenns and conditions
of Seller s offer. The definitive agreement shall be subject to each Party s management
and regulatory approvals. If within thirty (30) days of Buyer s acceptance of the offer, a
written term sheet setting forth the major terms of the definitive sales agreement
including a timeline to complete negotiations of the definitive sales agreement, has not
been executed by an officer of the Buyer and Seller, then either Party may terminate the
negotiations without further obligation to the other Party.
30.7.4 Limit on Right of First Offer.The right of first offer set forth in
this Section shall apply only if Seller sells all or substantially all of the assets comprising
the Facility in an asset sale to a third party. It shall not apply to changes in the
membership of Seller or any other reorganization, change of control or other transaction
directly or indirectly affecting Seller or an Affiliate of Seller.
ARTICLE 31
MODIFICATION
No modification to this Agreement shall be valid unless it is in writing and signed
by both Parties and subsequently approved by the Commission.
ARTICLE 32
TAXES
Each Party shall pay before delinquency all taxes and other governmental charges
which, if failed to be paid when due, could result in a lien upon the Facility or the
Interconnection Facilities.
ARTICLE 33
NOTICES
All written notices under this Agreement shall be directed as follows and shall be
considered delivered when faxed, e-mailed and confirmed with deposit in the u.S. Mail
first-class, postage prepaid, as follows:
PAGE 44 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
To Seller:
with a copy to:
Facility Lender:
To Buyer:
with a copy to:
Raft River Energy I LLC.
Attn: CEO, u.S. Geothermal Inc.
1509 Tyrell Lane, Suite B
Boise, ill 83706
Phone: 208-424-1027
Fax: 208-424-1030
Email: dkunz I!y us geothermal. com
Raft River Energy I LLc.
Attn: CFO , u.s. Geothermal Inc.
1509 Tyrell Lane, Suite B
Boise, ill 83706
Phone: 208-424-1027
Fax: 208-424-1030
Email: khawkleyl!Yusgeothermal.com
To be identified by the Seller when applicable.
Idaho Power Company
Attn: Senior Vice President, Power Supply
O. Box 70
Boise, ill 83707
Fax: 208-388-6936
Email: jimmillerI!Yidahopower.com
Idaho Power Company
Attn: Legal Department
O. Box 70
Boise, ill 83707
Fax: 208-388-6936
Email: BklineI!Yidahopower.com
By giving notice to the other Party, either Party may from time to time change the
address( es) to which notices or copies are to be sent to it under this Agreement.
ARTICLE 34
ADDITIONAL TERMS AND CONDITIONS
This Agreement includes the following appendices , which are attached hereto and
included by reference:
Appendix A
Appendix B
Appendix C
Appendix D
Contract Prices
Facility and Point of Delivery
Sample Form of Seller Guaranty
90% - 110% Performance Requirements
PAGE 45 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
Appendix E
Appendix F
Appendix G
Net Energy Shortfall Price and Annual Cap
Engineering Certificates
Environmental Attributes Ownership and
Pricing
CommunicationsAppendix H
ARTICLE 35
SEVERABILITY
The invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of any other terms or provisions and this
Agreement shall be construed in all other respects as if the invalid or unenforceable term
or provision were omitted, unless the deletion of such provision or provisions would
result in such a material change so as to cause completion of the transactions
contemplated herein to be unreasonable.
ARTICLE 36
CONFIDENTIAL BUSINESS INFORMATION
36.Definition The following constitutes "Confidential Business
Information " whether oral or written: (1) Parties' proposals and negotiations before the
Effective Date concerning this Agreement, and (2) information that a Party stamps or
otherwise identifies as "confidential" or "proprietary" before disclosing it to the other
Party. Notwithstanding the foregoing, "Confidential Business Information" does not
include (A) information that was publicly available at the time of the disclosure thereof
by one Party to the other, other than as a result of a disclosure by the receiving Party in
breach of this Article; (B) information that becomes publicly available through no fault of
the receiving Party after the time of the disclosure by the disclosing Party to the receiving
Party; (C) information that was rightfully in the possession of the receiving Party
(without confidential or proprietary restriction) at the time of disclosure or that becomes
available to the receiving Party from a source not subject to any restriction against
disclosing such information to the receiving Party; and (D) information that the receiving
Party independently developed without a violation of this Agreement. The Confidential
Business Information specified in item (1) above shall be considered the Confidential
Business Information of both Seller and Buyer and, therefore, exceptions (C) and (D)
above shall not apply to such information.
36.Duty to Maintain Confidentiality. Each Party agrees not to disclose
Confidential Business Information of the other Party to any other person (other than its
Affiliates , counsel, consultants , lenders, prospective lenders , purchasers , investors
contractors constructing or providing services to the Facility (including but not limited to
turbine suppliers), employees , officers and directors who agree to be bound by the
provisions of this Article), without the prior written consent of the other Party, provided
that either Party may disclose Confidential Business Information if and to the extent such
disclosure is required (1) by any Requirements of Law, (2) in order for the Buyer to
receive regulatory recovery of expenses related to the Agreement, (3) pursuant to an
order of a court or regulatory agency or (4) in order to enforce this Agreement or to seek
approval of this Agreement. In addition, Seller may include information concerning the
PAGE 46 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY 09120/07
terms or conditions of this Agreement in financial statements to the extent that such
information is required to be included in financial statements prepared with respect to the
Facility, Seller or any Affiliate of the Seller in accordance with generally accepted
accounting principles consistently applied. In the event a Party is required by
Requirements of Law or by a court or regulatory agency to disclose Confidential
Business Information, such Party shall to the extent possible notify the other Party at least
three (3) Business Days in advance of such disclosure and the other Party may seek an
appropriate protective order or waive compliance with the confidentiality terms of this
Agreement. In that event, the Party required by Requirements of Law or by a court or
regulatory agency to disclose Confidential Business Information will cooperate fully with
the other Party in seeking a protective order or other assurance that confidential treatment
will be accorded to the Confidential Business Information.
36.Irreparable Injury; Remedies. Each Party agrees that violation of the
terms of this Article constitutes irreparable harm to the other, and that the harmed Party
may seek any and all remedies available to it at law or in equity, including but not limited
to injunctive relief.
ARTICLE 37
REPRESENTATIONS AND WARRANTIES
37.Seller Representations. Warranties and Covenants
represents and warrants as follows:
Seller hereby
37.1.1 Seller is a limited liability company, organized and existing under
the laws of the State of Delaware, with a principal place of business at 1509 Tyrell Lane
Suite B, Boise, ill 83706. Seller is qualified to do business in each other jurisdiction
where the failure to so qualify would have a material adverse effect on the business or
financial condition of the Seller; and the Seller has all requisite power and authority to
conduct its business, to own its properties, and to execute, deliver, and perform its
obligations under this Agreement.
37.1.2 The execution, delivery, and performance of its obligations under
this Agreement by the Seller have been duly authorized by all necessary corporate action
and do not and will not:
37.1.2.require any consent or approval by any governing body
of the Seller, other than that which has been obtained and is in full force
and effect (evidence of which shall be delivered to the Buyer upon its
request);
37.1.2.violate any provision of law, rule, regulation, order, writ
judgment, injunction, decree, determination, or award currently in effect
having applicability to the Seller or violate any provision in any formation
documents of the Seller, the violation of which could have a material
adverse effect on the ability of the Seller to perform its obligations under
this Agreement;
PAGE 47 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
37.1.2.result in a breach or constitute a default under the
Seller s formation documents or bylaws, or under any agreement relating
to the management or affairs of the Seller or any indenture or loan or
credit agreement, or any other agreement, lease, or instrument to which the
Seller is a party or by which the Seller or its properties or assets may be
bound or affected, the breach or default of which could reasonably be
expected to have a material adverse effect on the ability of the Seller to
perform its obligations under this Agreement; or
37.1.2.4 result in, or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance of any nature (other than as may be contemplated by this
Agreement) upon or with respect to any of the assets or properties of the
Seller now owned or hereafter acquired, the creation or imposition of
which could reasonably be expected to have a material adverse effect on
the ability of the Seller to perform its obligations under this Agreement.
37.1.3 This Agreement is a valid and binding obligation of the Seller.
37.1.4 The execution and performance of this Agreement will not conflict
with or constitute a breach or default under any contract or agreement of any kind to
which the Seller is a party or any judgment, order, statute, or regulation that is applicable
to the Seller or the Facility.
37.2 Seller Disclaimer of Certain Representations and Warranties
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT
37.1 SELLER DISCLAIMS ALL WARRANTIES
MERCHANT ABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE SALE OF NET ENERGY AND ENVIRONMENTAL AND
RENEWABLE ENERGY CREDITS.
37.2 SELLER MAKES NO REPRESENTATION OR WARRANTY
EITHER EXPRESS OR IMPLIED REGARDING THE CURRENT OR FUTURE
EXISTENCE OF ANY ENVIRONMENTAL AND RENEWABLE ENERGY CREDITS
UNDER THIS AGREEMENT OR OTHERWISE OR THEIR CHARACTERIZATION
OR TREATMENT UNDER APPLICABLE LAW OR OTHERWISE.
37.3 Buyer s Representations. Warranties and Covenants
represents and warrants as follows:
Buyer hereby
37.1 Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Idaho and is qualified in each other jurisdiction
where the failure to so qualify would have a material adverse effect upon the business or
financial condition of the Buyer; and the Buyer has all requisite power and authority to
conduct its business , to own its properties, and to execute, deliver, and perform its
obligations under this Agreement.
PAGE 48 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
37.2 Upon the execution, delivery, and performance of its obligations
under this Agreement by the Buyer will have been duly authorized by all necessary
corporate action, and do not and will not:
37.require any consent or approval of the Buyer s Board of
Directors , or shareholders , other than that which has been obtained and is
in full force and effect (evidence of which shall be delivered to the Seller
upon its request);
37.violate any provision of law, rule, regulation, order, writ
judgment, injunction, decree, detennination, or award currently in effect
having applicability to the Buyer or violate any provision in any corporate
documents of the Buyer, the violation of which could have a material
adverse effect on the ability of the Buyer to perfonn its obligations under
this Agreement;
37.result in a breach or constitute a default under the
Buyer s corporate charter or bylaws, or under any agreement relating to
the management or affairs of the Buyer, or any indenture or loan or credit
agreement, or any other agreement, lease, or instrument to which the
Buyer is a party or by which the Buyer or its properties or assets may be
bound or affected, the breach or default of which could reasonably be
expected to have a material adverse effect on the ability of the Buyer to
perfonn its obligations under this Agreement; or
37.3.2.4 result in, or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance of any nature (other than as may be contemplated by this
Agreement) upon or with respect to any of the assets or properties of the
Buyer now owned or hereafter acquired, the creation or imposition of
which could reasonably be expected to have a material adverse effect on
the ability of the Buyer to perform its obligations under this Agreement.
37.3 This Agreement is a valid and binding obligation of the Buyer.
37.3.4 The execution and performance of this Agreement will not conflict
with or constitute a breach or default under any contract or agreement of any kind to
which the Buyer is a party or any judgment, order, statute, or regulation that is applicable
to the Buyer.
37.3.5 To the best knowledge of the Buyer, all approvals, authorizations
consents, or other action required by any Governmental Authority to authorize the
Buyer s execution, delivery and perfonnance of this Agreement have been duly obtained
and are in full force and effect.
PAGE 49 OF 50 POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY -09/20/07
ARTICLE 38
ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the Parties concerning the
subject matter of this Agreement and supersedes all prior or contemporaneous oral or
written agreements between the Parties concerning the subject matter of this Agreement.
No oral or written representation, warranty, course of dealing or trade usage not
contained or referenced herein shall be binding on either Party.
ARTICLE 39
COUNTERPARTS
This Agreement may be executed by the Parties in two or more separate
counterparts (including by facsimile transmission), each of which shall be deemed an
original, and all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
ARTICLE 40
CAPTIONS
The captions for Articles and Sections contained in this Agreement are for
convenience and reference only and in no way define, describe, extend or limit the scope
of this Agreement or the intent of any provision contained herein.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their respective names on the dates set forth below:
RAFT RIVER ENERGY I LLC IDAHO POWER COMPANY
cN;jL
James C. MillerDNJJeL K-uNZ-
Printed Name Printed Name
CEO of u.S. Geothermal, Inc the Managing
Member, Raft River Energy I LLC
Senior Vice President, Power Supply
5C/J/ t:111 e&r..
~~~
Date
"2-~ '2--"e:."C
Date
APPROVID AI TO FORM:
. ~~~~
--.::::J1l
PAGE 50 OF 50 POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY -09/20/07
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APPENDIX B
POWER PURCHASE AGREEl\1ENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
FACILITY AND POINT OF DELIVERY
DESCRIPTION OF FACILITY
The Facility is the Raft River Geothermal Power Plant, Unit #1 (RRGPP-l). The
RRGPP-l is an Ormat OECTM water-cooled, closed-loop, Rankine cycle geothermal
power plant using pentane as the working fluid, and auxiliary equipment. The Facility
includes two Ormat turbines (one HP (high pressure) and one LP (low pressure) turbine)
coupled to a single generator with a gross nameplate rating of 18 MW, and a generator
voltage of 12.47 kV. Power will be delivered to the Transmitting Entity on the high side
of the 34.5kV step-up transformer through the Idaho Power Metering. Each turbine
discharges to a 2-shell condenser and is fed by a 2-shell vaporizer with a 2-shell pre-
heater and two feed pumps using geothermal fluid as the heat source. The HP turbine has
a desuperheater/economizer between the turbine and the condenser. Cooling water will
be supplied by two circulating water pumps in the basin of a four-cell counterflow
cooling tower. The Facility is protected by a fire water system comprising fire water
pumps, pipes , monitors, and so on. Geothermal fluid will be delivered to the Facility
from four or more geothermal production wells. Residual geothermal fluid will be
reinjected via two or more injection wells.
LOCATION OF FACILITY
The Facility is located at: Section 23, Township 15 South, Range 26 East, Cassia
County, Idaho. Approximately 15 miles SE of Malta, ill. The area is commonly known
as the Raft River Geothermal Resource Area and is the site of a former 5 MW DOE
binary geothermal power plant test site.
SCHEDULED FIRST ENERGY AND OPERATION DATE
Seller has selected November 15 2007 as the estimated First Energy Date.
Seller has selected February 1 , 2008, or 60 days after Commission Approval, whichever
is later, as the estimated Scheduled Operation Date.
In making these selections, Seller recognizes that adequate testing of the Facility and
completion of all requirements in Articles 3 and 4 of this Agreement must be completed
PAGE 1 OF 2 - APPENDIX B TO POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY I/IPC
prior to the project being granted a First Energy Date and then an Operation Date.
POINT OF DELIVERY
Point of Delivery" means, unless otherwise agreed by both Parties , the point of
interconnection between the Buyer s electrical system and the Transmitting Entity at the
Minidoka dam substation.
LOSSES
An energy loss calculation may be required for energy losses associated with
transformation and transmission of the Facility s generated energy, measured in kWh
occurring from the Metering Point to the Point of Delivery. The Losses will be a
summation of the calculated, agreed to, or measured Losses of the following
components. The Losses calculation shall be set at 5% of the energy measured at the
Metering Point for each of the two components identified below until such time as the
Seller has provided the Buyer with details of other Losses calculations and the Buyer has
agreed to the Losses calculations as provided by the Seller.
a. Metering Point to the Bridge Substation -
Any Losses calculations or arrangements must be in compliance with any and all
Transmission Agreement(s) and/or transmission arrangements. If the Seller elects
to purchase the Losses, the Losses associated with this component will be zero (0).
If Losses are not purchased by the Seller, then the Seller will provide the Buyer with
the Losses calculation.
b. Bridge Substation to the Point of Delivery -
Any Losses calculations or arrangements must be in compliance with any and all
Transmission Agreement(s) and/or transmission arrangements. If the Seller elects
to purchase the Losses, the Losses associated with this component will be zero (0).
If Losses are not purchased by the Seller, then the Seller will provide the Buyer with
the Losses calculation.
PAGE 2 OF 2 - APPENDIX B TO POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY IJIPC
APPENDIX C
POWER PURCHASE AGREE:MENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
SAMPLE FORM OF SELLER GUARANTY
($750,000)
, 200
Idaho Power Company
PO Box 70
Boise, Idaho 83707
Fax:
Ladies and Gentlemen:The (the "Guarantor ), a corporation duly organized under the
laws of the State of is the of Raft River Energy I LLC, a limited
liability company duly organized under the laws of the State of (the "Company
Guarantor understands and acknowledges that Idaho Power Company, an Idaho corporation
Buyer ), has entered into that certain Power Purchase Agreement between the Company and
Buyer dated as of the effective date hereof (the "Power Purchase Agreement"). For value
received, and under the provisions of the Power Purchase Agreement, Guarantor hereby
unconditionally and, subject to the provisions of the fifth and sixth paragraphs hereof
irrevocably guarantees the prompt and complete payment as and when due, whether by
acceleration or otherwise, of the payment obligations, whether now in existence or hereafter
arising, under the Power Purchase Agreement (which guaranty, along with the other terms and
conditions set forth herein, is hereafter referred to as the "Guaranty ). This Guaranty is one of
payment and not of collection. Capitalized terms used but not defined in this Guaranty have the
meaning given to them in the Power Purchase Agreement.
The maximum aggregate liability of the Guarantor in respect of amounts claimed by
Buyer under or pursuant to this Guaranty shall at no time exceed an amount equal to seven
PAGE 1 OF 3 - ApPENDIX C TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY I/IPC
hundred fifty thousand Dollars ($750 000); provided, however, that Guarantor also guaranties
payment in full (that is , without limitation as to amount) of any reasonable out-of-pocket legal
fees, costs and/or expenses , whether at trial, on appeal or in any arbitration, by Buyer in
connection with prevailing in enforcing the terms of this Guaranty.
The Guarantor hereby waives notice of acceptance of this Guaranty and notice of any
obligation or liability to which it may apply, and waives presentment, demand for payment
protest, notice of dishonor or non-payment of any such obligation or liability, suit or the taking
of other action by Buyer against, and any other notice to, the Company, the Guarantor or others.
Buyer may at any time and from time to time without notice to or consent of the
Guarantor and without impairing or releasing the obligations of the Guarantor hereunder: (1)
agree with the Company to make any change in the terms of any obligation or liability of the
Company to Buyer, including any modification or amendment to the Power Purchase Sales
Agreement, (2) take or fail to take any action of any kind in respect of any security for any
obligation or liability of the Company to Buyer, (3) exercise or refrain from exercising any rights
against the Company or others, (4) fail to first take action against the Company for amounts due
under the Power Purchase Agreement, and/or (5) compromise or subordinate any obligation or
liability of the Company to Buyer including any security therefore. Any other suretyship
defenses are hereby waived by the Guarantor.
This Guaranty shall terminate on the earlier to occur of (i) the substitution of an alternate
form of Seller Performance Assurance in accordance with the Power Purchase Agreement; and
(ii) the later of (A) the termination or expiration of the Power Purchase Agreement and (B) the
satisfaction of all obligations of the Company under the Power Purchase Agreement.
Notwithstanding the foregoing, the Guarantor further agrees that if at any time payment, or any
part thereof, of any of the obligations guaranteed hereunder, is rescinded, is demanded to be
returned and/or must otherwise be restored or returned by Buyer in connection with the
bankruptcy, insolvency, dissolution, reorganization or similar proceeding of the Company, this
Guaranty shall continue to be effective or be reinstated as the case may be; provided that this
Guaranty may not be reinstated for any reason after its termination under clause (i) of this
paragraph.
Guarantor may not assign its rights nor delegate its obligations under this Guaranty, in
whole or in part, without prior written consent of Buyer, and any purported assignment or
delegation absent such consent is void, except for an assignment and delegation of all of the
Guarantor s rights and obligations hereunder in whatever form the Guarantor determines may be
appropriate to a partnership, corporation, trust or other organization in whatever form that
succeeds to all or substantially all of the Guarantor s assets and business and that assumes such
obligations by contract, operation of law or otherwise. Upon any such delegation and
assumption of obligations, the Guarantor shall be relieved of and fully discharged from all
obligations hereunder, whether such obligations arose before or after such delegation and
assumption.
In the event any payment owing to Buyer under the Power Purchase Agreement or under
this Guaranty is not promptly and completely paid as and when due, any indebtedness of
Company to Guarantor and any payment or distribution right held by Guarantor against the
Company shall be subordinated to the due and unpaid indebtedness to Buyer until paid in full.
PAGE 2 OF 3 - ApPENDIX C TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY I/IPC
Guarantor shall have no right of subrogation until the Company s due and unpaid indebtedness to
Buyer is paid in full.
This Guaranty constitutes the entire agreement and supersedes all prior agreements and
understandings , both written and oral , between Guarantor and Buyer with respect to the subject
matter hereof. This Guaranty may not be modified except pursuant to a written instrument
signed by Buyer and Guarantor. The execution, delivery and performance of this Guaranty have
been duly authorized by all requisite corporate action on the part of the Guarantor. The
provisions of this Guaranty are severable, and if any clause or provision shall be held invalid or
unenforceable in whole or in part, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, and shall not affect the validity or enforceability of any other
clause or provision.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. GUARANTOR AGREES TO
THE EXCLUSIVE JURISDICTION OF COURTS LOCATED IN THE STATE OF
UNITED STATES OF AMERICA OVER ANY DISPUTES ARISING UNDER OR
RELATING TO THIS GUARANTY.
Very truly yours
By:
Authorized Officer
PAGE 3 OF 3 - APPENDIX C TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY I/IPC
APPENDIX D
POWER PURCHASE AGREEMENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
90%-110% PERFORMANCE REQUIREMENTS
1. Determination of Surplus Enerev Price. The Buyer shall pay the Contract
Price for Net Energy that is not detennined to be Surplus Energy as defined below from the
Seller s Facility in accordance with the Agreement. For Surplus/Shortfall Energy only, the
Buyer shall pay the Surplus Energy Price, which shall be calculated in accordance with this
Appendix and used in lieu of the Contract Price solely with respect to the Surplus/Shortfall
Energy as defined in this Appendix.
2. Definitions. The following defined terms (as indicated by initial capitalization)
shall have the meaning given to them in this Appendix.
Surplus Energy Price" - For all Surplus/Shortfall Energy, Buyer shall pay to the Seller
the current month's Market Energy Price or the Contract Price specified in Appendix A of this
Agreement, whichever is lower.
Surplus/Shortfall Energy" is defined as either (1) Net Energy produced by the Seller
Facility and delivered to Buyer pursuant to this Agreement during the calendar month to the
extent such Net Energy exceeds one hundred ten percent (110%) of the monthly Net Energy
Target for the corresponding calendar month specified pursuant to this Appendix, or (2) if the
Net Energy produced by the Seller s Facility and delivered to Buyer pursuant to this Agreement
during the calendar month is less than ninety percent (90%) of the monthly Net Energy Target
for the corresponding calendar month specified pursuant to this Appendix, then all Net Energy
delivered by the Facility to the Buyer s electrical system for that given month.
Initial Date" - is defined as the first day of the calendar month following the date on
which the Seller fails to timely cure a default as detennined under Section 7.4.2 and the terms
and conditions within this Appendix are therefore implemented in lieu of Sections 7.4 and 7.5 of
the Agreement.
Initial Year" - is defined as twelve (12) calendar months starting with the Initial Date.
PAGE 1 OF 2 - APPENDIX D TO POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY I/IPC
Net Energy Target" is defined as the monthly Net Energy that the Seller intends to
produce and deliver to the Point of Delivery as specified pursuant to this Appendix.
Initial Year Monthly Net Energy Targets - This term shall have the meaning given to it
in Section 3 below.
3. Monthly Net Enerey Tareets Seller shall provide the Buyer with the monthly
Net Energy Targets for the Initial Year within thirty (30) days after the Initial Date (the "Initial
Year Monthly Net Energy Targets ). If the Seller does not provide the Initial Year Monthly Net
Energy Targets as specified, ninety percent (90%) of the Facility s nameplate rating multiplied
by the hours for each month will be used to establish each month's Net Energy Target for the
Initial Year (subject to adjustment under Section 5 of this Appendix).
4. Oneoine Monthly Net Enerey Tareets - Beginning at the end of the ninth (9th
month following the Initial Date and every three (3) months thereafter, the Seller shall provide
Buyer with a minimum of three additional calendar months of Net Energy Targets. This
infonnation will be provided to Buyer by written notice in accordance with Article 33 , no later
than the fifth (5th) day following the end of the previous month. If the Seller does not provide
the Ongoing Monthly Net Energy Targets in a timely manner, Buyer will use the monthly
production (actual or, if actual numbers are not available, calculated as contemplated in
Section 9.3) for the same three (3) months period in the preceding year.
5. Seller s Adjustment of Net Enerey Tareet(s)- Except as provided herein
beginning with the end of the third (3f ) month after the Initial Date and at the end of every
third(3fd) month thereafter, the Seller may not revise the immediate next three (3) months of
previously provided Net Energy Targets. Notwithstanding the foregoing, by written notice given
to Buyer in accordance with Article 33, no later than 5:00 pm of the fifth (5th) day following the
end of the previous month, the Seller may revise all other previously-provided Net Energy
Targets
6. Credits to Net Enerey Tareet - Buyer shall adjust the applicable month's Net
Energy Target to reflect the same reduction as has occurred in the actual Net Energy deliveries if
Net Energy deliveries by the Seller to the Buyer are reduced as a result of:
(a) Force majeure affecting the Seller, Buyer Interconnection
Provider or Transmitting Entity.
(b) Curtailment of the Seller s Net Energy deliveries other than for
Seller s default; or
(c)Buyer s default under this Agreement.
PAGE 2 OF 2 - ApPENDIX D TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY I/IPC
APPEND IX E
POWER PURCHASE AGREEMENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
NET ENERGY SHORTFALL PRICE AND ANNUAL CAP
Net Enen~Y Shortfall Price The Net Energy Shortfall Price shall be (1) the mathematical
average of the individual twelve (12) monthly Market Energy Cost values of the applicable
Annual Guaranteed Output period or (2) one hundred fifty percent (150%) of the Annual Rate
specified in Appendix A for the Calendar Year which corresponds to that of the first month of
the Annual Guaranteed Output period, whichever is less , minus the Annual Rate as specified in
Appendix A for the Calendar Year which corresponds to that of the first month of the Annual
Guaranteed Output period. If this Net Energy Shortfall Price calculation results in a value less
than zero (0) then the result will be zero (0).
Example 1
A Net Energy Shortfall occurs for the year of March 1 2009 through February 28 2010
Annual Rate 54.73 millslkWh
Mathematical average of the 12 monthly Market Energy Cost values for the
period of March 1 2009 through February 28 2010
40.00 millslkWh
150% of the Annual Rate 54.73 * 150% = 82.10 millslkWh
Net Energy Shortfall Price calculation
The average Market Energy Cost (40.00) is less than 150% of the Annual
Rate (82.10). Therefore the Net Energy Shortfall Price calculation is
equal to:
Market Energy Cost (40.00) minus Annual Rate (54.73) = -14.
As the calculation results in a value less than 0
, (-
14.73) the Net Energy
Shortfall price is O.
PAGE 1 OF 3 - ApPENDIX E TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY I/IPC
Example 2
A Net Energy Shortfall occurs for the year of March 2009 through February 28 , 2010
Annual Rate 54.73 millslkWh
Mathematical average of the 12 monthly Market Energy Cost values for the
period of March 1 , 2009 through February 28, 2010
75.00 millslkWh
150% of the Annual Rate 54.73 * 150% = 82.10 millslkWh
Net Energy Shortfall Price calculation
The average Market Energy Cost (75.00) is less than 150% of the Annual
Rate (82.10). Therefore the Net Energy Shortfall Price calculation is
equal to:
Market Energy Cost (75.00) minus Annual Rate (54.73) = 20.
20.27 is the Net Energy Shortfall Price
Example 3
A Net Energy Shortfall occurs for the year of March 1 2009 through February 28, 2010
Annual Rate 54.73 millslkWh
Mathematical average of the 12 monthly Market Energy Cost values for the
period of March 2009 through February 28 2010
98.00 millslkWh
150% of the Annual Rate 54.73 * 150% = 82.10 millslkWh
Net Energy Shortfall Price calculation
The average Market Energy Cost (98.00) is greater than 150% of the
AnnualRate (82.10). Therefore the Net Energy Shortfall Price calculation
is equal to:
150% of Annual Rate (82.10) minus Annual Rate (54.73) = 27.
27.37 is the Net Energy Shortfall Price
PAGE 2 OF 3 - APPENDIX E TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY UIPC
Net Enerey Shortfall Damaees Cap
Contract Net Energy Contract Net Energy
Year Shortfall Year Shortfall
Damages Cap Damages Cap
$0.$415,270
$0.$427 728
$300,000 $440,560
$309,000 $453,777
$318,270 $467 390
$327 818 $481,412
$337 653 $495,854
$347 782 $500,000
$358,216 $500,000
$368,962 $500,000
$380,031 $500,000
$391 ,432 See Note 1
$403,175
Note 1 - The Net Energy Shortfall Damages Cap in the final year shall be $500,000 prorated to
the number of months in the Annual Output Forecast.
PAGE 3 OF 3 - ApPENDIX E TO POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY IJIPC
APPENDIX F
POWER PURCHASE AGREEMENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
ENGINEERING CERTIFICATIONS
Continued on next page
PAGE 1 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY IIIPC
ENGINEER'S CERTIFICATION
OPERATIONS & MAINTENANCE POLICY
The undersigned , on behalf of himself and
hereinafter
Engineer " hereby states and certifies to the Seller as follows:
collectively referred
That Engineer is a Licensed Professional Engineer in good standing.
That Engineer has reviewed the Power Purchase Agreement, hereinafter
Agreement " between Idaho Power as Buyer, and Raft River Energy I LLC as Seller, dated
3. That the geothermal power production Facility which is the subject of the
Agreement and this statement is identified as the Raft River Geothermal Generation Unit #1 and
is hereinafter referred to as the "Facility.
That the Facility is located in Section Township , Range
Boise Meridian County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Facility to furnish
electrical energy to Idaho Power for a twenty five (25) year period.
That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Facility.
The Engineer will identify any material economic relationship to the Design
Engineer of this Facility.
PAGE 2 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY IIIPC
That Engineer has reviewed and/or supervised the reVIew of the Policy for
Operation and Maintenance ("O&M") for this Facility and it is his professional opinion that
provided said Facility has been designed and built to appropriate standards , adherence to said
O&M Policy will result in the Facility s producing at or near the design electrical output
efficiency and plant factor for a twenty five (25) year period.
That Engineer recognizes that Idaho Power, in accordance with Article 3 and 4 of
the Agreement, is relying on Engineer s representations and opinions contained in this Statement.
10.That Engineer certifies that the above statements are complete, true and accurate
to the best of his knowledge and therefore sets his hand and seal below.
(P.E. Stamp)
Date
PAGE 3 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY r/IPC
ENGINEER'S CERTIFICATION
ONGOING OPERATIONS AND MAINTENANCE
The undersigned , on behalf of himself
and hereinafter collectively referred
Engineer " hereby states and certifies to the Seller as follows:
That Engineer is a Licensed Professional Engineer in good standing.
That Engineer has reviewed the Power Purchase Agreement, hereinafter
Agreement " between Idaho Power as Buyer, and Raft River Energy I LLC as Seller, dated
3. That the geothermal power production Facility which is the subject of the
Agreement and this statement is identified as the Raft River Geothermal Generation Unit #1 and
is hereinafter referred to as the "Facility.
That the Facility is located in Section Township , Range
Boise Meridian County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Facility to furnish
electrical energy to Idaho Power for a twenty five (25) year period.
That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Facility.
The Engineer shall identify any material economic relationship to the Design
Engineer of this Facility.
That Engineer has made a physical inspection of said Facility, its operations and
maintenance records since the last previous certified inspection. It is Engineer s professional
opinion, based on the Facility s appearance, that its ongoing O&M has been substantially in
PAGE 4 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY IIIPC
accordance with said O&M Policy; that it is in reasonably good operating condition; and that if
adherence to said O&M Policy continues , the Facility will continue producing at or near its
design electrical output, efficiency and plant factor, within the limits of the geothermal reservoir
capability of the Facility for the remaining years of the Agreement.
That Engineer recognizes that Idaho Power, in accordance with Article 3 and 4 of
the Agreement, is relying on Engineer s representations and opinions contained in this
Statement.
10.That Engineer certifies that the above statements are complete, true and accurate
to the best of his knowledge and therefore sets his hand and seal below.
(P.E. Stamp)
Date
PAGE 5 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFT' RIVER ENERGY IIIPC
ENGINEER'S CERTIFICATION
DESIGN & CONSTRUCTION ADEQUACY
The undersigned , on behalf of himself and
hereinafter collectively
Engineer , hereby states and certifies to Idaho Power as follows:
referred
That Engineer is a Licensed Professional Engineer in good standing.
That Engineer has reviewed the Power Purchase Agreement, hereinafter
Agreement " between Idaho Power as Buyer, and Raft River Energy I LLC as Seller, dated
3. That the geothermal power production Facility which is the subject of the
Agreement and this statement is identified as the Raft River Geothermal Generation Unit #1 and
is hereinafter referred to as the "Facility.
4. That the Facility is located in Section Township
Boise Meridian County, Idaho.
, Range
5. That Engineer recognizes that the Agreement provides for the Facility to furnish
electrical energy to Idaho Power for a twenty five (25) year period.
That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Facility.
7. The Engineer shall identify any material economic relationship to the Design
Engineer of this Facility and has made the analysis of the plans and specifications independently.
That Engineer has reviewed the engmeenng design and construction of the
Facility, including the civil work, electrical work, generating equipment, prIme mover
PAGE 6 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY IIIPC
conveyance system, Seller furnished Interconnection Facilities and other Facility facilities and
equipment.
That the Facility has been constructed in accordance with said plans and
specifications , all applicable codes and consistent with Prudent Electrical Practices as that term is
described in the Agreement.
10. That the design and construction of the Facility is such that with reasonable and
prudent operation and maintenance practices by Seller, the Facility is capable of performing in
accordance with the terms of the Agreement and with Prudent Electrical Practices for a
) year period.
11.That Engineer recognizes that Idaho Power, in accordance with Article 3 and 4 of
the Agreement, in interconnecting the Facility with its system, is relying on Engineer
representations and opinions contained in this Statement.
12. That Engineer certifies that the above statements are complete, true and accurate
to the best of his knowledge and therefore sets his hand and seal below.
(P.E. Stamp)
Date
PAGE 7 OF 7 - APPENDIX F TO POWER PURCHASE AGREEMENT - RAFT RIVER ENERGY IIIPC
APPENDIX G
POWER PURCHASE AGREEMlliNT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
ENVIRONMlliNTAL ATTRIBUTES OWNERSHIP AND PRICING
Durin2 the Initial Term of this a2reement:
For Calendar Year 2007 - The Buyer will not have any ownership rights to any Environmental
Attributes produced in 2007.
For calendar years of 2008 throu2h 2017 - The Buyer will not have any ownership rights to
(1) the first 7 300 Environmental Attributes produced each month and (2) 25% of all monthly
Environmental Attributes exceeding the 7 300 specified above in item 1. However, the Buyer
will have all rights to any and all Environmental Attributes exceeding 87 600 during any
calendar year.
At the end of each month, the Buyer will be granted all ownership rights to the remaining
Environmental Attributes associated with the previous month's actual Net Energy.
For calendar years of 2018 throu2h the end of the Initial Term of this A2reement expires
At the end of each month, Idaho Power will be granted all ownership rights to 51 percent of the
total Environmental Attributes associated with the previous month's actual Net Energy.
PAGE 1 OF 1 - APPENDIX G TO POWER PURCHASE AGREEMENT - RAN RIVER ENERGY IIIPC
APPENDIX H
POWER PURCHASE AGREEMENT
BETWEEN
RAFT RIVER ENERGY I LLC
AND
IDAHO POWER COMPANY
COMMUNICATIONS
Buyer Contact Information
Idaho Power Company
1221 West Idaho Street
Boise, ill 83702
Telephone: (208) 388-2200
Mr. Karl Bokenkamp
General Manager Power Supply Operations & Planning
Telephone: (208) 388-2482Email: KBokenkamp(g)ldahoPower.com
Mr. Mel Chick
Supervisor Generation Dispatch
Telephone: (208) 388-6476Email: MChick
(g)
IdahoPower.com
Mr. David Churchman
Manager Power Operations
Telephone: (208) 388-5626Email: DChurchman
(g)
IdahoPower .com
Mr. Travis Prairie
Leader, Transaction Specialist
Telephone: (208) 388-2988Email: TPrairie(g) IdahoPower.com
PAGE 1 OF 2 ApPENDIX H TO POWER PURCHASE AGREEMENT - RAFf RIVER ENERGY IIIPC
Seller Contact Information
Raft River Energy I LLC
1509 Tyrell Lane, Suite B
Boise, ill 83706
Phone: (208) 424-1024
Fax: (208) 424-1030
For Contract Matters:
CEO, u.S. Geothermal Inc.
Attn: Daniel J. Kunz
Phone: (208) 424-1027
E-mail: dkunz(g)usgeothermal.com
24-Hour Project Operational Contact
Name: Facility Operator
Telephone Number: (208) 645-2600
Cell Phone:
Mail:
Fax: (208) 645-2341
Project On-site Contact Information
President U.S. Geothermal Services LLC
Attn: Chris Harriman
Telephone Number: (208) 645-2600
Cell Phone: (208) 431-1081
E- Mail: charriman (g) us geothermal. com
PAGE 2 OF 2 APPENDIX H TO POWER PURCHASE AGREEMENT - RAFr RIVER ENERGY IIIPC