20081016Petition, Complaint.pdf

BARTON L. KLINE
Lead Counsel
?,IDA~PORQD
An IDACORP Company
October 16, 2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-20
Idaho Power Company v. Glenns Ferr Cogeneration Partners, Ltd.
Dear Ms. Jewell:
Enclosed please find for filing an original and seven (7) copies of Idaho Powets
Petition for Declaratory Order and Formal Complaint for Breach of Contract in the above
matter.
It is my understanding that the Commission wil issue a Summons and complete
service of the Petition and Summons on the registered agent of Glenns Gerry
Cogeneration. For the Commission's convenience, I have enclosed a copy ofthe business
information from the Idaho Secretary of State's website which lists the current registered
agent for Glenns Ferry and the registered agent's service address.
In addition, I would appreciate it if you would return a stamped copy of this letter for
my file in the enclosed stamped, self-addressed envelope.
If you have any questions regarding the enclosed documents, please do not hesitate
to contact me.
~
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise. 10 83702
Bruce C. Jones, ISB #3177
JONES & SWARTZ PLLC
1673 W. Shoreline Dnve, Suite 200 (83702)
Post Office Box 7808
Boise, Idaho 83707-7808
Telephone: [phone]
Facsimile: [phone]
E-mail: bruce(fjonesandswarzlaw.com
RECEIVED
ilß OCT l 6 Ptl 12: 22
IDAHO PUBLIC
UTILIT1ES COMMISSION
Attorneys for Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IDAHO POWER COMPANY,
Case No. IPC-E-08-20
Complaiant,
GLENNS FERRY COGENERATION
PARTNERS, LTD., a Colorado limited
parnership,
IDAHO POWER COMPAN'S
PETITION FOR DECLARTORY
ORDER AND FORML COMPLAINT
FOR BREACH OF CONTRACT
vs.
Respondent.
COMES NOW the Petitioner/Complainant, Idaho Power Company ("Idaho Power"), by and
though its attorney, BruceC. Jones, of the firm Jones & Swarz PLLC, and pursuant to ths
Commission's Riles of Procedure, including but not limited to RP 54 and RP 101, hereby fies this
Petition for Declaratory Order and Formal Complait for Breach of Contrct agait the Respondent,
Glenns Ferr Cogeneration Parers, Ltd. ("Glenns Ferr Cogeneration").
IDAHO POWER COMPANY'S PETITION FOR DECLARATORY ORDER AND
FORML COMPLAINT FOR BREACH OF CONTRCT - i
Communications regarding this Petition for Declaratory Order and Formal Complaint for
Breach of Contract should be sent to:
Idaho Power Company
c/o Bruce C. Jones
Jones & Swartz PLLC
1673 W. Shoreline Dnve, Suite 200 (83702)
P.O. Box 7808
Boise, ID 83707-7808
Telephone: [phone]
Facsimile: [phone]
E-mail: bruce~jonesandswarzlaw.com
Copies of all pleadings, production requests, production responses, Commission orders and
other documents should also be provided to:
Bart L. Kline
Lead Counsel
Idaho Power Company
1221 W. Idaho
P.O. Box 70
Boise, ID 83707
Telephone: [phone]
Facsimile: 388-6936
E-mail: bkline~idahopower.com
FACTUAL ALLEGATIONS
1. Idaho Power is an Idaho public utility subject to the junsdiction of the Idaho Public
Utilties Commission ("Commission").
2. Glenns Ferr Cogeneration is a Colorado limited parnership.
3. On December 9, 1992, Idaho Power and Glenns Ferr Cogeneration entered into a
Firm Energy Sales Agreement ("the Agreement") under which Glenns Fer Cogeneration agree to
sell the energy generated by Glenns Ferr Cogeneration's electncal facility, a natual gas fired
turbine generator located at the Magic Valley potato processing facility in Glenns Fer, Idaho
("Glenns Ferr Project" or "Project") to Idaho Power for a term of20 "contract years". A tre and
IDAHO POWER COMPANY'S PETITION FOR DECLARTORY ORDER AN
FORMAL COMPLAI FOR BREACH OF CONTRACT - 2
correct copy of the Agreement is attached hereto as Exhibit 1 and incorporated herein by reference.
"Contract year" is defined by the Agreement as the "penod commencing each calendar year on the
same calendar date as the Operation Date and ending 364 days thereafter." The Commission
approved the Agreement on Januar 22, 1993, in Order No. 24674.
4. On Apnl 12, 1994, Idaho Power and Glenns Ferr Cogeneration entered into a First
Amendment to the Agreement. A tre and correct copy ofthe First Amendment is attached hereto as
Exhibit 2 and incorporated herein by reference. The Commission approved the First Amendment to
the Agreement on May 18, 1994, in Order No. 25505. Paragraph 2 of the First Amendment to the
Agreement changed the Scheduled Operation Date from Januar 1, 1995 to Januar 1, 1996, and the
First Energy Date was changed from December 1, 1994 to December 1, 1995.
5. On December 30, 1995, Idaho Power and Glenns Ferr Cogeneration entered into a
Second Amendment to the Agreement. Among other things, the Scheduled Operation Date was
changed to March 7, 1996, and the First Energy Date was changed to Februar 5, 1996. A tre and
correct copy of the Second Amendment to the Agreement is attached hereto as Exhibit 3 and
incorporated herein by reference. The Commission approved the Second Amendment in a Minute
Entr dated Januar 8, 1996.
6. Paragraph 3.2 of the Agreement mandates that the Project maintain "qualifyng
facilty" status:
3.2 Qualifyng Facility Status - Seller warrants that pnor to interconnection
with Idaho Power the Facility wil be a "qualifyng facility," as that ter is used and
defined in 18 CFR, §292.207. After initial qualifcation, Seller wil take such steps
as may be required to maintain the Facility's "qualifingfacility" status during the
term of this Agreement and Seller's failure to maintain qualifingfacility status wil
be a material breach of this Agreement. (Emphasis added.)
IDAHO POWER COMPAN'S PETITION FOR DECLARTORY ORDER AN
FORM COMPLAI FOR BREACH OF CONTRACT - 3
In order to maintain its status as a "qualifyng facility" under federal law, Glenns Ferr
Cogeneration is required to sell theral energy (steam) generated by the Project to a theral host, an
entity that uses the steam in its own manufactunng or production facility. Idaho Fresh-Pak, Inc.
("Idaho Fresh-Pak") was a potato processing facility that was the theral host to the facility. In
Apnl of2008, Idaho Fresh-Pak permanently shut down its operations. As a result of Glenns Fer
Cogeneration losing Idaho Fresh-Pak as a theral host, Glenns Fer Cogeneration has failed to
maintain its qualifyng facility status, as required by paragraph 3.2 of the Agreement.
JURISDICTION
7. The Commission has junsdiction over this dispute. Paragraph 7.3 ofthe Agreement
provides for the continuing junsdiction of the Commission over the Agreement:
7.3 Continuing Junsdiction of the Commission - This Agreement is a special
contract and as such, the rates, ters and conditions contained in ths Agreement wil
be constred in accordance with Idaho Power Company v. Idaho Public Utilities
Comm'n and Afton Energy, Inc., 107 Idaho 781, 693 P2d 427 (1984), Idaho Power
Company v. Idaho Public Utilities Comm'n, 107 Idaho 1122,695 P2d 1261 (Idaho
1985), Afton Energy Inc. v. Idaho Power Company, 111 Idaho 925, 729 P2d 400
(1986), Section 210 of the Public Utilities Regulatory Policies Act of 1978 and 18
CFR §292.303-308.
8. Paragraph 21.1 of the Agreement fuher provides that all disputes relating to the
Agreement wil be submitted to the Commission:
21.1 Disputes - All disputes related to or ansing under this Agreement,
including, but not limited to, the interpretation of the terms and conditions of this
Agreement, wil be submitted to the Commission for resolution.
9. A justiciable dispute has ansen between the parties and is being submitted to the
Commission for resolution.
IDAHO POWER COMPAN'S PETITION FOR DECLARTORY ORDER AN
FORMAL COMPLAINT FOR BREACH OF CONTRACT - 4
COUNT ONE
Declaratory Order To Terminate Contract
10. Idaho Power realleges and hereby incorporates by reference all of the foregoing
allegations as if fully stated herein.
11. This is an action for declaratory order brought for the purpose of deterining a
question of actual controversy between the paries as hereinafter more fully set forth.
12. This action is npe for adjudication.
13. As set forth in paragraph 3.2 of the Agreement, the failure of Glenns Ferr
Cogeneration to maintain qualifyng facility status is a matenal breach of the Agreement.
14. Paragraph 7 of the Second Amendment to the Agreement amended paragraph 21.2 of
the Agreement, the default provision, as follows:
Default - If either Par fails to perorm any of the ters or conditions of this
Agreement, (an "event of default") the nondefaulting Pary shall cause notice in
wnting to be given to the defaulting Pary, specifyng the maner in which such
default occurred. If the defaulting Pary shall fail to cure such default within the sixty
(60) days after of such notice, or if the defaultng Pary reasonably demonstrates to
the other Party that the default can be cured within a commercially reasonable time
but not within such sixty (60) day penod, and if the defaulting Pary does not
commence such cure within the sixty (60) day penod and continue to diligently
pursue such cure, then, the nondefaulting Par may pursue its legal or equitable
remedies.
15. In a May 23,2008 letter, Idaho Power notified Glenns Fer Cogeneration that it was
in default of the Agreement because Glenns Fer Cogeneration had matenally breached the
Agreement by losing its Qualifyng Facility status. A tre and correct copy of the May 23,2008
letter from Idaho Power to Glenns Ferr Cogeneration is attached hereto as Exhibit 4 and
incorporated herein by reference.
16. On June 10,2008, Glenns Ferr Management, Inc., the General Parner for Glenns
Ferr Cogeneration, responded to Idaho Power's May 23,2008 notice of default. A tre and correct
IDAHO POWER COMPAN'S PETITION FOR DECLARTORY ORDER AN
FORMAL COMPLAI FOR BREACH OF CONTRACT - 5
copy of the June 10,2008 letter from Glenns Ferr Management, Inc., to Idaho Power is attached
hereto as Exhibit 5 and incorporated herein by reference. While the response quibbled over whether
Idaho Power had provided Glenns Fer Cogeneration with a formal notice of default, Glenns Ferr
Cogeneration did not deny that Idaho Fresh-Pak had shut down its processing facilty, that Glens
Ferr Cogeneration had lost its theral host, or that the Facility was no longer generating electncity.
The June 10, 2008 letter failed to address how Glenns Ferr Cogeneration intended to cure the
default within 60 days or to demonstrate to Idaho Power that the default could be cured within a
commercially reasonable time but not within the 60-day penod.
17. On August 7, 2008, Idaho Power again wrote to Glenns Ferr Cogeneration and
reiterated that "the sixty-day cure penod specified in paragraph 21.2 ofthe (Agreement) commenced
on May 23,2008, and expired on July 22,2008." A tre and correct copy of the August 7,2008
letter from Idaho Power to Glenns Ferr Cogeneration is attached hereto as Exhibit 6 and
incorporated herein by reference.
18. On August 28, 2008, Glenns Ferr Cogeneration responded to Idaho Power's
August 7,2008 letter. A true and correct copy of the August 28,2008 letter from Glenns Ferr
Management, Inc., to Idaho Power is attached hereto as Exhibit 7 and incorporated herein by
reference. In the August 28, 2008 letter, Glenns Ferr Cogeneration admitted that Idaho Fresh-Pak
had shut down its processing facilty, but denied that Glenns Ferr Cogeneration has lost its
qualifyng facility status or that there has been a permanent curtailment under the terms of the
Agreement.
19. As of the date ofthis Complaint, Glenns Fer Cogeneration has permanently lost its
thermal host and the delivery of energy has been peranently curailed. Glenns Ferr Cogeneration
has not delivered electncity pursuant to the Agreement since October 24, 2007. Glenns Ferr
IDAHO POWER COMPAN'S PETITION FOR DECLARTORY ORDER AN
FORMAL COMPLAINT FOR BREACH OF CONTRACT - 6
Cogeneration has neither cured the default nor made any effort to demonstrate to Idaho Power that
the default can be cured within a commercially reasonable time. Thus, Glenns Fer Cogeneration
has permanently curailed its delivery of energy to Idaho Power and matenally breached the
Agreement. The Commission should issue an order finding that the Agreement is terminated.
COUNT TWO
Formal Complaint for Breach of Contract
20. Idaho Power realleges and hereby incorporates by reference all of the foregoing
allegations as if fully stated herein.
21. Glenns Ferr Cogeneration has breached the Agreement by losing qualifyng facilty
status and failng to cure its default.
22. Paragraph 21.3 of the Agreement provides that Glenns Fer Cogeneration shall pay
liquidated damages in the event that there is a permanent curtailment of its energy delivenes to Idaho
Power:
21.3 Seller Permanent Curtailment - If, at any time pnor to the end of the
term of the Agreement, Seller permanently curtails in whole or in par its delivenes
ofthe Annual Net Firm Energy amount specified in paragraph 6.3, Seller shall pay to
Idaho Power, as reasonable liquidated damages ansing out of this permanent
curailment of Anual Net Firm Energy delivenes, the appropnate lump sum
repayment amount specified in Appendix C, multiplied by the difference in
megawatt-hours between the Annual Net Firm Energy amount specified in paragraph
6.3 and the reduced Anual Net Firm Energy amount after the peranent curailment.
The lump sum repayment amount wil bear interest from sixty (60) days after Idaho
Power gives or receives notice of Seller's peranent reduction of the Anual Net
Firm Energy amount, until paid, at a rate equal to interest rates specified in Idaho
Code §28-22-104(2) or its successor Idaho Code provision in effect dunng each
month of that penod. For purposes of this paragraph, Idaho Power's voluntar
termination in accordance with paragraph 5.2.2 shall not be considered a permanent
curailment. The Parties fuher agree that ths paragraph does not constitute a waiver
by Idaho Power of its nght to pursue its remedies under paragraph 21.6 or by either
Pary of their nght to an award of pre and post judgement interest, costs and attorneys
fees as permitted by law in any litigation ansing out of this Agreement.
IDAHO POWER COMPANY'S PETITION FOR DECLARTORY ORDER AN
FORMAL COMPLAI FOR BREACH OF CONTRACT - 7
23. Pursuant to the Agreement and paragraph 12 of the Second Amendment to the
Agreement, Glenns Ferr Cogeneration owes Idaho Power the sum of $11,151,480. The
mathematical calculation of the liquidated damages is attached hereto as Exhbit 8 and incorporated
herein by reference.
WHEREFORE, Idaho Power respectfully requests thatthe Commission award the following
relief:
1. Entry of a declaratory order that Glenns Fer Cogeneration has defaulted under the
Agreement, that there has been a permanent curtailment of energy delivenes, and that the Agreement
is terminated;
2. Entr of a declaratory order stating that, pursuant to paragraph 21.3 of the Agreement,
Idaho Power is entitled to an award ofliquidated damages and interest; and
3. Any further relief to which Idaho Power is entitled.
DATED this 13th day of October, 2008.
JONES & SWARTZ PLLC
ß-- (:7-
BRUCE C. JONES
:zBy
IDAHO POWER COMPAN'S PETITION FOR DECLARTORY ORDER AN
FORMAL COMPLAI FOR BREACH OF CONTRACT - 8
EXHIBIT 1
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IDAHO POWER COMPANY
FIRM ENERGY SALES AGREEMENT
BETWEEN
IDAHO POWER COMPANY
AND
GLENNS FERRY COGENERATION PARTNERS, LTD.
A COLORADO LIMITED PARTNERSHIP
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FIRM ENERGY SALES AGREEMENT
BETEEN
IDAHO POWER COMPANY
AND
GLENNS FERRY COGENERATION PARTNERS, LTD.
A COLORADO LIMITED PARTNERSHIP
TABLE OF CONTENTS
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
NO RELIANCE ON IDAHO POWER ............................... 3
WARRANTIES ............................................ . 4
CONDITIONS TO INTERCONNECTION ............................ 4
TERM, EARLY TERMINATION AND OPERATION DATE . . . . . . . . . . . . . . .. 10
SALE OF NET FIRM ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11
PURCHASE PRICE AND METHOD OF PAYMENT;
ADJUSTMENT OF PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . . .. 13
FACILITY AND INTERCONNECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 14
DISCONNECTION EQUIPMENT ................................ 14
METERING .............................................. 16
RECORDS.. . . .. . . .. . .. . ., . . . . . . . . . . . .. . .. . . ., . . . . . . . . . .. 17
PROTECTION ............................................ 17
OPERATIONS ............................................ 18
INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
LAND RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. 22
FORCE MAJEURE ......................................... 24
LIABILITY; DEDICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24
SEVERAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 25
WAiVER................................................ 25
CHOICE OF LAWS... . . . . . ., . .. . .. . . . . . .. ... . . .. . . . . . . . . .,. 25
DISPUTES AND DEFAULT. ................................... 25
GOVERNMENTAL AUTHORIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .. 32
COMMISSION ORDER ...................................... 32
SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 32
MODIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 33
TAXES. . . . . . . . . . .. . . . . . .. . .. . .. . .. . . . . ... . . .. . . . . . . . . .. 33
NOTiCE................................................ 33
ADDitiONAL TERMS AND CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . .. 34
ENTIRE AGREEMENT ~ SIGNATURES ............................ 35APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 37
APPENDIX B ............................................. 43
APPENDIX C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 47
APPENDIX D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 48
APPENDIX E ............................................. 50
APPENDIX F ............................................. 58
APPENDIX G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 59
APPENDIX H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 60
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F. tv No: 21765151
Project: Magic West
Less Than 10 MW
FIRM ENERGY SALES AGREEMENT
THIS AGREEMENT, entered into on this 9th day of December, 1992, is between
GLENNS FERRY COGENERATION PARTNERS, LTD., a Colorado limited partnership (hereinafter referred
to as "Seller"), and IDAHO POWER COMPANY, an Idaho corporation (hereinafter referred to as "Idaho
Power"). Seller and Idaho Power are hereinafter sometimes referred to collectively as "Parties" or
individually as "Part."
WIT N E SSE T H:
WHEREAS, Seller plans to construct, own and operate a cogeneration facilty; and
WHEREAS, Seller wishes to sell, and Idaho Power is legally obligated to purchase firm
electric energy generated by Sellet s cogeneration faciltY.
NOW THEREFORE, In consideration ofthe mutual covenants and agreements hereinafter,
set fort and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement and the appendices attached hereto. the following terms
shalt have the following meanings:
1 .1 "Annual Net Firm Energy" - The amount of Net Firm Energy Seller estimates it
wil deliver to Idaho Power at the Point of Delivery during each Contract Year.
1.2 "Commission" - The Idaho Public Utilities Commission.
1.3 "Contract Year" - The period commencing each calendar year on the same
calendar date as the Operation Date and ending 364 days thereafter.
1.4 "Designated Dispatch Facilty" - Idaho Power's Boise Bench System Dispatch
Center.
1.5 "Disconnection Equipment" - Any device or combination of devices by which
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Idaho Power can manually and/or automatically interrupt the flow of energy from the Seller to Idahq
Power's system, including enclosures or other equipment as may be required to ensure that only Idaho
Power wil have access to the devices.
1.6 "Facility". That cogeneration facilty described in Appendix B of this
Agreement.
1 .7 "First Energv Date" . The date when the Seller begins delivering energy to Idaho
Power's system.
1.8 "Interconnection Facilties" - All facilties which are reasonably required by
Prudent Electrical Practices and the National Electric Safety Code to interconnect and to allow the
delivery of energy from the Seller's electric generation plant to Idaho Power's system including, but
not limited to, Special Facilties, Disconnection Equipment and Metering Equipment.
1.9 "Losses" . The loss of energy occurring as a result of the transformation and
transmission of energy between the Facilty and the Point of Delivery.
1.10 "Metering Equipment" - Equipment required to measure, record or telemeter
power flows between the Seller's electric generation plant and Idaho Power's system.
1.11 "Net Rrm Energy" - Electric energy produced by the FaciltY, less Station Use
and less Losses, expressed in kilowatt hours ("Kwh"), which Seller commits to deliver to Idaho Power
at the Point of Delivery for the full term of the Agreement.
1.12 .Operation Date" . The day commencing at 0001 hours Mountain Time,
following the day on which the Facilty demonstrates that it has been completed and reached a degree
of reliabilty such that it is capable of delivering Net Firm Energy continuously into Idaho Power's
system.
1 .13 "Point of Delivery" - The location specified in Appendix B, where Idaho Power's
and Seller's electrical facilties are interconnected.
1.14 "Prudent Electrical Practices" - Those practices, methods and equipment that
are commonly and ordinarily used in electrical engineering and operations to operate electric equipment
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lawfully and with safety, dependabilty, effciency and economy.
1.15 "Scheduled Operation Date" - The date specified in Appendix B when Seller
anticipates achieving the Operation Date.
1.16 "Schedule 72" . Idaho Power's Tariff No 101, Schedule 72 or its successor
schedule(s) as approved by the Commission.
1.17 "Season" . The three time periods identified in Article Vi.
1.18 "Seasonal Net Firm Energy" . The amount of Net Firm Energy Seller estimates
it wil deliver to Idaho Power at the Point of Delivery during each Season.
1.19 "Special Facilties" - Additions or alterations of transmission and/or distribution
lines and transformers to safely interconnect the Seller's electric generation plant to the Idaho Power's
system.
1.20 "Station Use" - Electc energy which is used solely to operate the Facilty's
equipment which is auxilary or directly related to the production of electricity and which, but for the
generation of electricity, would not be consumed by Seller.
1.21 "Surplus Energy" - Electric energy which is produced by the Facility and is
delivered and accepted prior to the Operation Date or which exceeds the amounts specified in
paragraph 6.1.
1.22 "Thermal Energy Metering Equipment" - Equipment required to measure and
record the volume and heat content of fuel delivered to and consumed by the Faclity and the amounts
of thermal energy produced by the Facilty and delivered to the thermal host.
ARTICLE II: NO RELIANCE ON IDAHO POWER
2.1 Seller Independent Investigation - Except for the Disconnection Equipment and
any other facilties exclusively within the control of Idaho Power, Seller warrants and represents to
Idaho Power that in entering into this Agreement and the undertaking by Seller of the obligation set
forth herein, Seller has investigated and determined that it is capable of performing hereunder and has
not relied upon the advice, experience or expertise of Idaho Power in connection with the transactions
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contemplated by this Agreement.
2.2 Seller Independent Experts. Except for the Disconnection Equipment and any
other facilties within the exclusive control of Idaho Power, all professionals or experts including, bUt
not limited to, engineers, attorneys or accountants, that Seller may have consulted or relied on in
undertaking the transactions contemplated by this Agreement, have been solely those of Seller.
ARTICLE II: WARRANTIES
3.1 No Warranty by Idaho Power - Any review, acceptance or failure to review
Seller's design, specifications, equipment or facilties shall not be an endorsement or a confirmation
by Idaho Power, and Idaho Power makes no warranties, expressed or implied, regarding any aspect
of Seller's design, specifications, equipment or facilities, including but not limited to safety, durabilty,
reliabilty, strength, capacity, adequacy or economic feasibilty.
3.2 Qualifying Facilty Status ~ Seller warrants that prior to interconnection with
Idaho Power the Facilty wil be a "qualifying facility," as that term is used and defined in 18 CFR,
§292.207. After initial qualification, Seller wil take such steps as may be required to maintain the
Facilty's "qualifying facilty" status during the term of this Agreement and Seller's failure to maintain
qualifying facilty status wil be a material breach of this Agreement.
ARTICLE iv: CONDITIONS TO INTERCONNECTION
4.1 Prior to the First Energy Date and as a condition of interconnecton with Idaho
Power, Seller shall provide the following:
4.1 .1 Licenses and Permits . Submit proof to Idaho Power that all licenses,
permits or approvals necessary for Seller's operations have been obtained from applicable
federal, state or local authorities, including but not limited to, evidence of compliance with
Subpart B of 18 CFR §292.207.
4.1.2 Opinion of Counsel. Submit to Idaho Power an Opinion Letter signed by
an attorney admitted to practice and in good standing in the State of Idaho providing an
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opinion that Seller's licenses, permits and approvals as set forth in paragraph 4.1.1 above are
legally and validly issued, are held in the name of the Seller, provide the rights set fort therein,
and are enforceable in accordance with their terms. The Opinion wil be in a form acceptable
to Idaho Power and will acknowledge that the attorney rendering the opinion understands that
Idaho Power is relying on said opinion. Idaho Power's acceptance of the form wil not be
unreasonably withheld. The Opinion Letter wil be governed by and shall be interpreted in
accordance with the legal opinion accord of the American Bar Association Section of Business
law (1991).
4.1.3 Schedule 72 Payments - Make payment to Idaho Power for all costs of
Disconnection Equipment, Metering Equipment and Special Facilties as provided for in
Schedule 72 and Appendix B of this Agreement;
4.1 .4 Written Acceptance - Obtain written acceptance from Idaho Power as
provided in paragraph 8.3;
4.1.5 Insurance - Submit written proof to Idaho Power of all insurance
required in Article XiV;
4.1.6 Demonstration of Safe Operation - Demonstrate to Idaho Power's
reasonable satisfaction that Seller's Facilty has been completed, and is capable of operating
safely to commence deliveries of electric energy into Idaho Power's system;
4.1.7 Maintenance Escrow Account ~ Demonstrate to Idaho Power's
satisfacton that the Seller has established a maintenance escrow account in a form and with
an escrow manager which complies with Commission Order Nos 21690 and 21800. Said
maintenance escrow account shall be structured and funded as follows:
4.1 .7.1 The escrow instructions establishing the maintenance escrow
account will provide that the funds in the maintenance escrow account wil be pru-
dently invested and that all costs of implementing and operating the maintenance
escrow account shall be paid by the Seller. All interest earned on the funds of deposit
wil be retained in the maintenance escrow account. At the end of the term of this
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Agreement, any balance remaining in the maintenance escrow account shall be the
property of the Seller;
4.1 .7.2 Within sixt (601 days after the completion of each Contract
Year, the Seller wil:
a) provide both the escrow manager and Idaho Power with a report
prepared by an independent accounting firm showing the prior Contract Year's
actual maintenance expenses, identified by appropriate FERC maintenance
account number; and
bl provide an estimate of the Facilty's gross income from Net Firm
Energy Sales for the ensuing Contract Year, together with documentation
supporting that estimate; and
c) deposit cash in the maintenance escrow account in an amount equal
to five percent (5%) of the Facilty's estimated gross income from Net Firm
Energy sales for the ensuing Contract Year, less an amount equal to the
Facilty's actual maintenance, repair and replacement expense (maintenance
expenses) incurred during the prior Contract Year; and
d) provide Idaho Power with evidence of compliance with the
maintenance escrow account deposit requirements. This evidence of
compliance wil be provided in a manner and form acceptable to Idaho Power.
The maintenance escrow fund wil be subject to the lien rights described in
paragraph 4.1.8 below.
4.1 .7.3 If Seller determines that the maintenance expense for a
Contract Year wil exceed five percent (5%) of the Facilty's estimated gross income
for that Contract Year, the Seller may request that the escrow manager release funds
from the maintenance escrow account in an amount suffcient to pay the anticipated
additional maintenance expenses. The request must include documentation supporting
the Seller's projection of excess maintenance expense, identified by appropriate FERC
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maintenance account number, and such documentation shall be submitted to both the
escrow manager and Idaho Power. Following receipt of the request and
documentation, the escrow manager, shall, within five working days, release the
requested funds to Seller.
4.1.8 Security Interests - Provide Idaho Power with acceptable security for
Seller's default under this Agreement. Acceptable security wil conform to Commission Order
Nos 21690 and 21800, and may include, but wil not be limited to, security interests in real
propert, equipment, fixtures, contracts, permits, easements, rights-of-way, prepurchased fuel
supplies, fuel supply contracts, thermal energy sales contracts, and fuel supply transportation
contracts associated with the Facility. Seller wil provide title insurance and other reasonable
security arrangements consistent with the Facilty's financing and ownership arrangements.
Idaho Powets security interests wil be superior and senior to all liens other than the first
mortgage lien, leasehold, financing statement, security agreement and other security interests
permitted in accordance with paragraph 4.1.8.1.
4.1 .8.1 If Seller desires to enter into a lease and/or incur a first
mortgage lien and other security interests that wil be superior to Idaho Power's
security interests in the Facilty, at least twenty-one (21l days prior to their execution
Seller wil provide Idaho Power with draft copies of the lease and/or deeds of trust,
mortgages and other security agreements that wil be used to secure such first lien.
Upon their execution, Seller wil provide Idaho Power with copies of the executed first
lien documents. In no event wil the amount of any lease and/or first mortgage lien
exceed $15,000,000.00 without Idaho Power's prior written consent which consent
shall not be unreasonably withheld or delayed. The executed first lien documents shall
not be assigned, amended, modified, or extended, and no replacement or refinancing
of any nature shall be undertaken, without Idaho Power's prior written consent which
consent shall not be unreasonably withheld or delayed. The amount of any refinanced
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or replaced first liens shall not exceed the unpaid principal balance of the lien they
replace.
4.1.8.2 Other than the first mortgage lienS permitted herein or
temporary mechanics, statutory or similar liens incurred in the ordinary course of
business in an amount not to exceed in aggregate ten thousand dollars ($10,000.00),
Seller will not permit any liens or encumbrances of any nature whatsoever to be
placed on the Facilty without Idaho Power's prior written consent, which consent wil
not be unreasonably withheld. If any unpennitted lien or encumbrance is placed on the
Faciltv, Seller wil provide Idaho Power with a bond, insurance or other securitY
acceptable to Idaho Power in an amount sufficient to secure the full discharge of such
unpermitted lien or encumbrance.
4.1.8.3 If, after the initial first lien has been established, Seller desires
to assign this Agreement or assign, replace or refinance said first lien, Seller wil
reimburse Idaho Power for the reasonable out-of-pocket costs Idaho Power incurs for
document review and revision including any consents to assignment or subordination
agreements that Seller requests from Idaho Power. Idaho Power's out-of-pocket costs
wil include but not be limited to filing fees, title insurance premiums, and fees of legal
counsel.
4.1.9 Debt Service Reserve Account. Demonstrate to Idaho Power's
satisfacton that Seller has established and funded a debt service reserve account in a form and
with a fund holder which complies with paragraph 21.4.2.
4.1 .10 Fuel Supply and Transportation Contracts - Seller wil demonstrate to
Idaho Power's reasonable satisfaction that Seller has entered into fuel supply and fuel
transportation contracts which wil provide a firm supply of fuel and fuel transporttion in
amounts sufficient to allow the Facilty to generate the Annual Net Firm Energy amount each
Contract Year for the full term of this Agreement. The respective firm fuel supply and fuel
transporttion agreements wil include provisions that recognize that: (1) Idaho Power is an
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intended third part beneficiary of the fuel supply and fuel transportation agreements; and (2)
that Seller and the fuel supplier and fuel transporter wil be jointly and severally liable to Idaho
Power under their respective agreements for payment to Idaho Power of damages arising out
of Seller's permanent curtailment as described in paragraph 21.3 herein if such permanent
curtailment by Seller arises out of an uncured breach of the fuel and/or fuel transporttion
agreements by the fuel supplier or fuel transporter resulting in a curtilment or termination of
the fuel supply or fuel transportation. The contract provisions to be included in the fuel supply
and trnsporttion agreements to comply with the requirements of subparagraphs (1) and (2)
wil be substantially similar to Appendix F.
4.1.11 Thermal Host Contract - Seller wil demonstrate to Idaho Power's
reasonable satisfaction that Seller has entered into a firm contract for the sale of an amount
of thermal energy from the Facility sufficient to ensure that the Facilty wil comply with
paragraph 3.2 (Qualifying Facilty Status) for the full term of this Agreement. The thermal
energy purchaser wil execute an agreement with Idaho Power and Seller providing, among
other things, that: (1) Idaho Power is an intended third part beneficiary of the thermal energy
sales agreement; and (2) that Seller and the thermal energy purchaser wil be jointly and
severally liable to Idaho Power for payment to Idaho Power of any damages arising out of
Seller's permanent curtailment as described in paragraph 21.3 herein, if such permanent
curtilment arises out of an uncured breach of the Thermal Energy Sales Agreement by the
thermal host which results in a loss of Seller's qualifying facilty status. The contract provision
to be executed by the thermal energy purchaser to comply. with the requirements of
subparagraphs (1) and (2) wil be substantially similar to Appendix G.
4.1.12 Obtain written confirmation from Idaho Power that all conditions to
interconnection have been fulfiled. Such written confirmation shall not be unreasonably
withheld by Idaho Power.
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ARTICLE v: TERM, EARLY TERMINATION, AND OPERATION DATE
5.1 Term. Except as otherwise provided, this Agreement shall become effective
on the date first above written, and shall continue in full force and effect for a period of Twenty (20)
Contract Years.
5.2 Early Termination - Either Part may terminate this Agreement at the end of the
fifteenth Contract Years by giving the other Part written notice of termination a minimum of one year
prior to the beginning of the fifteenth Contract Years provided, however. that neither part shall be
allowed to terminate until at least five (5) years after the date of expiration of the initial lease and/or
the initial permanent first lien financing for the Project.
5.2.1 Liquidated Administrative Costs - If either Part exercises its
option to terminate, in addition to any payments due under paragraph 5.2.3, the Party
initiating termination wil pay the other Part liquidated administrative costs which wil
be determined according to the following formula:
(kWh) x (RateIkWh) x (Percent) = liquidated administrative costs
Where:
"kWh" is the Annual Net Firm Energy amount shown in paragraph 6.3; and
"RateIkWh" is the sum of the base payment shown in paragraph 7.1.1 plus the
adjustable payment as set on the July 1 st immediately prior to the notification of
intention to terminate; and
"Percent" is a multiplier based on the following schedule:
4 Year's prior notice of termination: 1.5%
3 Yeats prior notice of termination: 2.0%
2 Year's prior notice of termination: 2.5%
1 Yeats prior notice of termination: 3.0%
5.2.2 Idaho Power - Early termination under this paragraph by Idaho Power is
not a default by the Seller and wil not constitute a permanent curtilment under
paragraph 21.3.
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5.2.3 fu - Early termination under this paragraph by the Seller wil
constitute a permanent curtailment under paragraph 21.3.
5.3 Ooeration Date - The Operation Date may occur only after Seller has achieved
the First Energy Date, and the necessary degree of completion and reliabilty has been demonstrted
to idaho Power's reasonable satisfaction, and Idaho Power has confirmed such reasonable satisfaction
in writing. The procedure for establishing and confirming eligibilty for an Operation Date is set out in
Appendix H. Seller shall have the duty to obtain that confirmation and it wil not be unreasonably
withheld by Idaho Power. Prior to the Operation Date, Seller must provide the following:
(1) As-builtdrawings ofthe Seller-furnished interconnection equipment, and
(21 Executed Certification of Design Engineer, Engineer's Certification of
Design & Construction Adequacy, and Engineer's Certification of Operations and Maintenance Policy
as described in Commission Order No 21690. These certificates wil be in the form specified in
Appendix E, but may be modified to the extent necessary to recognize the different engineering
disciplines providing the certficates.
(3) Written verification by the Design Engineer that the Thermal Energy
Metering Equipment has been installed, tested and is operating satisfactorily.
ARTICLE VI: SALE OF NET FIRM ENERGY
6.1 Delivery and Acceptance of Net Rrm Energy - Except when prevented by evets
of force majeure (Article XVII or otherwise excused as provided herein, Idaho Power wil purchase up
to 10,000 kWh per hour of Net Firm Energy produced by the Facility and delivered by Seller to the
Point of Delivery. All energy produced and delivered by Seller in excess of 10,000 kWh per hour wil
be purchased as Surplus Energy.
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6.2 Seasonal Net Firm Energy Amounts- Based on expected site specific equipment
performance and average energy producton estimates based thereon, Seller estimates that it can
deliver Net Firm Energy in the following seasonal amounts:
Season 1
March
April
May
20,976,000 kWh's Total
Season 2
June
July
August
September
27,816,000 kWh's Total
Season 3
October
November
December
January
February
34,428,000 kWh's Total
6.3 Annual Net Firm Energy Amount - The Annual Net Firm Energy amount shall be
83,220,000 kWh and shall be the sum of the three Seasonal Net Firm Energy amounts Seller specified
above. After a reasonable period of operating experience but not later than the end of the fifth (5th)
Contract Year, the Parties wil review the actual Annual Net Firm Energy production of the Facilty.
If the Parties determine that there is a material difference between the actal Annual Net Firm Energy
production of the Facilty and the Annual Net Firm Energy amount specified above, the Annual Net Firm
Energy amount and the resulting Appendix C lump sum repayment amount wil be amended to
recognize actual operating experience.
6.4 Subsequent Determination that Facility Capacity Exceeds Ten Megawatts
Cogeneration and small power production facilities with generating capacit larger than 10 megawatts
("MW") are not legally entitled to the rates terms and conditions contained in this Agreement. The
rates, terms and conditions contained in this Agreement are premised on Seller's representation that
the c~pacit of the Facilty is not larger than 10 MW. If, at any time, Idaho Power determines that the
Facilty's capacitY consistently exceeds 10 MW, Idaho Power wil notify Seller and the Commission.
If the Commission determines that the Facilty's capacitY exceeds 10 MW, then this
Agreement may be modified by the Commission.
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ARTICLE VII: PURCHASE PRICE AND METHOD OF PAYMENT;
ADJUSTMENT OF PURCHASE PRICE
7.1 Net firm Energy Purchase Price - The price to be paid to Seller for Net Firm Energy
wil be the sum of the following payments:
7.1 .1 Base Payment -
Season 1 35.63 Mils/kWh
Season 2 58.16 Mils/kWh
Season 3 48.47 Mils/kWh
7.1.2 Adjustable Payment - In addition to the base payment specified in paragraph
7.1 .1, Idaho Power shall pay to Seller an adjustable payment which shall be established by the
Commission and subject to change pursuant to Commission Order effective on July 1 of each
year during the term of this Agreement. While the Parties do not know what the adjustable
payment amount wil be as of the Operation Date under this Agreement, the Parties
acknowledge that the adjustable payments as of the date of the signing of this Agreement are
as follows:
Season 1 7.00 Mils/kWh
Season 2 11 .42 Mils/kWh
Season 3 9.52 Mils/kWh
7.2 Surplus Energy Purchase Price - Surplus Energy wil be purchased at the non.firm
rate computed in accordance with option B in Idaho Power's Tariff 101, Schedule 86 or with its
successor schedule(s) as approved by the Commission.
7.3 Continuing Jurisdiction of the Commission. This Agreement is a special contract
and as such, the rates, terms ari conditions contained in this Agreement wil be constred in
accordance with Idaho Power Company v. Idaho Public Utilities Comm'n and Af Energy, Inc, 107
Idaho 781 r 693 P2d 427 (1984). Idaho Power Company v. Idaho Public Utilties Comm'n, 107 Idaho
1122, 695 P2d 1261 (Idaho 1985), Af Energy, Inc,)b Idaho Power Company, 111 Idaho 925, 729
P2d 400 (1986), Section 210 of the Public Utilties Regulatory Policies Act of 1978 and 18 CFR
§292.303.308.
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ARTICLE VII: FACILITY AND INTERCONNECTION
8.1 Design of Facilty - Seller shall design, construct, install, own, operate and maintain
the Facilty and any Seller-owned interconnection facilities so as to allow safe, reliable delivery of
electric energy to Idaho Powet s system for the full term of the Agreement.
8.2 Interconnection Facilties - Except as specifically provided for in this Agreement,
interconnection of the Facility wil be in accordance with Schedule 72. Seller wil pay all costs of
interconnecting the Facility with Idaho Power.
8.3 Idaho Power Review. To assure the Facilty and Seller-furnished Interconnection
Facilties are of suitable size and are compatible with Idaho Power's system, Seller shall submit the
designs, plans, specifications and performance data for the Facility and Seller-furnished Interconnection
Facilties to Idaho Power for review. Idaho Power shall, in writing and in conformance with
paragraph 4.1.4, notify Seller of its acceptance and confirmation of system compatibilty or conversely,
notify Seller, in writing, of any changes which, consistent with Prudent Electrical Practices, Idaho
Power determines are reasonable and necessary to assure the safe delivery of electric energy from the
FaciltY to Idaho Power's system.
ARTICLE IX: DISCONNECTION EQUIPMENT
9.1 Disconnect Equipment - Idaho Power will, at Seller's expense, provide, own,
operate, and maintain all Disconnection Equipment. At Seller's request, Idaho Power wil provide Seller
with the general specifications and an itemization by category of the costs of such Disconnection
Equipment. Idaho Power wil establish the settings of Disconnection Equipment to disconnect auto-
matically from the Facility for the protection of Idaho Power's system and personnel consistent with
Prudent Electncal Practices. Upon Sellet s request, Idaho Power wil notify Seller as to the original
setting and any adjustments thereof. Except as otherwise required by Prudent Electrical Practices, Dis-
connection Equipment wil be designed so that the closure of any breaker or other disconnectng device
which connects the Facilty to Idaho Power's system shall be controlled by equipment which wil
perform the following:
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(1) Automatically monitor the status of the electical system on Idaho Power's side
of the disconnecting device as to voltage and frequency; and
(2) Prohibit closure or reconnection until voltage and frequency have been within
approved limits for a continuous period of not less than five (5) minutes; and
(3) Operate so that if Idaho Powets system is de-energized within sixt (60)
seconds after closure of the disconnecting device, the disconnecting device wil immediately open and
not close again until it has been manually reset and/or Idaho Power can safely reclose the
Disconnecting Equipment.
9.2 Securit of Disconnect Equipment - The Disconnection Equipment wil be located
in an enclosure secured by a lock or otherwise secured in a manner designed to ensure that only Idaho
Power's authorized personnel wil have access to the disconnecting devices.
9.3 Remote Disconnection - Other Disconnection Equipment, includingequipmentwhich
wil provide Idaho Power's operating personnel with the abilty to remotely control and monitor the
status of the breaker or other disconnecting device by radio or hard-wire circuit between the Facilty
and the Designated Dispatch Facility may be specified by Idaho Power when, in Idaho Power's
reasonable judgment, such equipment is required by Prudent Electrical Practices. Seller recognizes that
such remote control equipment may not initially be required by Idaho Power, but at such time as
operating conditions on Idaho Power's system dictte, Idaho Power wil install this remote control
equipment at Seller's expense. If Seller disputes Idaho Power's determination that the installation of
such remote Disconnection Equipment is required, such dispute shall be submitted to the Commission
for resolution.
9.4 Interference with Disconnection Equipment - If Seller attempts to modify, adjust or
otherwise interfere with the Disconnecton Equipment or its enclosure such action shall constitute an
event of default pursuant to Article XXi and a material breach of this Agreement.
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ARTICLE X: METERING
10.1 Metering and Telemetrv - Idaho Power shall, for the account of Seller, provide,
install, and maintain required Metering Equipment to be located at a mutually agreed upon location to
record and measure power flows to Idaho Power in accordance with the standards set fort in
Appendix A of this Agreement. If required by Idaho Power, metering will also include measurement
of kilovar-hours in a manner agreed to by both Partes. All Meter Equipment and installation costs shall
be borne by Seller, including costs incurred by Idaho Power for inspecting and testing such equipment
at reasonable intervals at Idaho Power's actual cost of providing this Metering Equipment and services.
The point of metering shall be at the location described in Appendix B of this Agreement. All meters
used to determine the biling hereunder shall be sealed and the seals shall be broken only by Idaho
Power when the meters are to be inspected, tested or adjusted.
10.2 Meter Inspection - Idaho Power shall inspect and test all meters upon their
installation and at least once every four (4) years thereafter. If requested by Seller, Idaho Power shall
make a special inspection or test of a meter and Seller shall pay the reasonable costs of such special
inspection. Both Parties shall be notified of the time when any inspection or test shall take place, and
each Part 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 Idaho Power'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 wil be based on the shorter of (1) a period equal to one-half 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.
10.3 Telemetry - Consistent with Appendix A of this Agreement, Idaho Power shall in-
stall, operate and maintain. at Sellet s expense, metering, communications and telemetry Metering
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Equipment which wil be capable of providing Idaho Power with continuous instantaneous telemetry
of Seller's net generation to Idaho Power's Designated Dispatch Facility.
10.4 Thermal Energy Meterng Equipment - During the term of this Agreement, Seller wil
install, operate and maintain or cause to be installed, operated and maintained the Thermal Energy
Metenng Equipment.
ARTICLE XI: RECORDS
11 .1 Maintenance and Retention of Records - Seller shall maintain at the Facilty or such
other location mutually acceptable to the Parties, adequate electric metering and related power
production records, thermal energy metering records and fuel delivery and consumption records
suficient to permit corroboration, by Idaho Power, that the FaciltY continues to meet the operating
and efficiency standards required to maintain qualifying cogeneration facility status in compliance with
18 CFR 292.205(a). Seller will maintain these records in a form approved by Idaho Power and wil
retain them for a period of not less than three (3) years after the date the records are generated.
11.2 Inspection - Idaho Power, after reasonable notice to Seller, shall have the right,
during normal business hours, to inspect and audit any or all of the above referenced records.
ARTICLE XII: PROTECTION
12.1 Seller shall construct, operate and maintain the Facility and Seller-furnished
Interconnection Facilties in accordance with Appendix A, Prudent Electrical Practices, the National
Electrical Code, the National Electrical Safety Code and any other applicable local, state, and federal
codes. If, in the reasonable opinion of Idaho Power, Seller's operation of the Facilty or Interconnection
Facilties is unsafe or may otherwise adversely affect Idaho Power's equipment, personnel, or service
to its customers, Idaho Power may physically interrupt the flow of energy from the Facility or take such
other reasonable steps as Idaho Power deems appropnate under the circumstances. Except in the case
of an emergency, Idaho Power wil attempt to notify Seller of such interruption prior to its occurrence
as provided in paragraph 13.8. Seller shall provide and maintain adequate protective equipment suff-
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cient to prevent damage to the Facilty and Seller-furnished Interconnection Facilties. In some cases,
some of Seller's protective relays will provide back-up protection for Idaho Power's facilties. In that
event, Idaho Power wil test such relays annually and Seller will pay the actal cost of such annual
testing.
ARTICLE XI\: OPERATIONS
13.1 Emergency Conditions - Seller agrees that in the event of and during a period of
a shortage of power on Idaho Power's system as declared by Idaho Power in its reasonable discretion,
Seller shall, at Idaho Power's request and within the limits of reasonable safety requirements as
determined by Seller, use its best efforts to provide the requested energy, and shall, if necessary, delay
any scheduled shutdown of the Facility.
13.2 Communications - Idaho Power and Seller shall maintain appropriate operating
communications through Idaho Power's Designated Dispatch Facilty, and Seller shall report to Idaho
Power at the times and in the manner set forth in Appendix A of this Agreement.
13.3 Energv Acceptance - Idaho Power shall be excused from accepting and paying for
Net Rrm Energy delivered by Seller to the Point of Delivery under the following circumstances:
13.3.1 If it is prevented from doing so by an event of force majeure.
13.3.2 If Idaho Power determines that curtailment, interruption or reduction of Net
Firm Energy deliveries is necessary because of line constructon or maintenance requirements,
emergencies, operating conditions on its system, or as otherwise required by Prudent Electrical
Practices. If, for reasons other than an event of force majeure, Idaho Power requires such a
curtailment, interruption or reduction of Net Firm Energy deliveries for a period that exceeds
twenty (20) consecutive days, beginning with the twenty-first day of such interruption,
curtailment or reduction, Seller wil be deemed to be delivering Net Firm Energy at a rate
determined by dividing the seasonal Net Firm Energy amount specified in paragraph 6.2 for the
season in which the interruption or curtailment occurs by the number of hours in that season.
Idaho Power wil notify Seller when the interruption, curtailment or reduction is terminated.
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13.4 Voltage Levels - Seller shall use its best efforts to minimize voltage fluctuations and
to maintain voltage levels acceptable to Idaho Power. Idaho Power may, upon one hundred eighty
(180) days' notice to Seller, change its nominal operating voltage level by more than ten percent (10%)
at the Point of Delivery, in which case Seller shall modif, at Idaho Powets expense, Sellets
equipment as necessary to accommodate the modified nominal operating voltage level.
13.5 Generator Ramping - Idaho Power shall have the right to limit the rate that
generation is changed at startup, during normal operation or following reconnection to Idaho Powets
system. Generation ramping may be required to permit Idaho Power's voltage regulation equipment
time to respond to changes in power flow.
13.6 Scheduled Maintenance - On or before January 1 of each year, Seller shall submit
a proposed maintenance schedule for that year and Idaho Power and Seller shall mutually agree as to
the acceptabilty or unacceptability of the proposed date(s). The Parties' determination as to the
acceptabilty of Seller's timetable for scheduled maintenance wil take into consideration Prudent
Electrical Practices and neither Part shall unreasonably withhold its acceptance of the proposed date
for scheduled maintenance.
13.7 Maintenance Coordination - The Parties shall, to the extent practical, coordinate
their respective line and Facility maintenance schedules such that they occur simultaneously.
13.8 Contact Priqr to Curtailment -Idaho Power wil contact Seller prior to exercising its
rights to curtail, interrupt or reduce deliveries from Seiter. Seller understands that in the case of
emergency circumstances, no notice wil be given to Seller prior to interruption, curtailment, or
reduction.
ARTICLE XIV: INDEMNIFICATION AND INSURANCE
14.1 Indemnification - Each Part shall agree to hold harmless and to indemnify the other
Part, its officers, agents, and employees against all loss, damage, expense and liabilty to third
persons for iniury to or death of person or injury to propert, proximately caused by the indemnifying
Part's construction, ownership, operation or maintenance of, or by failure of, any of such Part's
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works or facilities used in connection with this Agreement. The indemnifying Part shall, on the other
Part's request, defend any suit asserting a claim covered by this indemnity. The indemnifying Part
shall pay all costs that may be incurrèd by the other Part in enforcing this indemnity.
14.2 Insurance - During the term of this Agreement, Seller shall secure and continuously
carry the following insurance coverages:
14.2.1 Comprehensive General liabilty Insurance for both bodily injury and
property damage with limits equal to fifeen percent (15%t of the total cost of the Facilty, m:
$1,000,000, whichever is greater, each occurrence, combined single limit. The deductible for
such insurance shall not exceed one-half of one percent (0.5%) of the total cost of the Facilty.
14.2.2 Propert Insurance for catastrophic perils with minimum limits not less than
sixt percent (60%) of the total cost of the Facilit. The Propert Insurance coverage wil be
written on a replacement cost basis and wil include:
(a) Standard fire policy.
(b) Extended coverage endorsement.
(c) Vandalism and malicious mischief endorsement.
(d) Earthquake and flood insurance.
(e) The deductible for the above propert insurance coverage shall not exceed
one percent (1 %) of the total cost of the Facilty.
14.2.3 Boiler and machinery insurance with minimum limits not less than ninety
percent (90%) of the total cost of the equipment covered in (a) below:
(a) All boiler and machinery coverage must be written on a "comprehensive
form" basis to provide coverage against the sudden and accidental breakdown of all boilers,
machinery and electrical equipment, turbines, generators, and switchgear.
(b) Coverage under this insurance must be written on a "Replacement Cost"
basis.
(c) The deductible for this insurance shall not exceed two percent (2%) of the
total cost of the equipment covered in (at above.
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14.2.4 Business Interruption (loss of Income) Insurance with minimum daily limits
not less than seventy-five percent (75 %) of the Facilty's estimated gross daily electical revenue
and total policy limits not less than twenty percent (20%) of the Facilit's estimated gross
annual revenue from the sale of electrical energy:
(a) Coverage wil include Sener's loss of earnings when business operations are
curtailed or suspended because of a loss due to an insured peril. Coverage may be written on
an actual loss sustained basis.
(bl This insurance coverage must be endorsed to the Propert Insurance Policy
and the Boiler and Machinery Insurance Policy.
(c) The deductible for this insurance coverage shall not exceed ten (10) days
gross daily revenues from the sale of electrical energy.
(d) Estimated gross daily revenue and estimated gross annual revenue shall be
computed on the basis of the kWh production estimates contained in paragraph 6.2.
14.2.5 All of the above insurance coverages shall be covered with insurance
companies with an A.M. Best rating of A- or better and shall include:
(a) An endorsement naming Idaho Power as an additional insured and loss payee
as applicable;
(b) A provision stating that such policies shall not be canceled or their limits of
liabilty reduced without sixt (60) days' prior written notice to Idaho Power.
lc) In the case of the insurance coverages described in subparagraphs 14.2.1,
14.2.2 and 14.2.3 above, the total cost of the Facility wil include any Seller-furnished
Disconnection Equipment and/or Interconnection Facilities. The total cost of the Facilty and
total cost of equipment wil be adjusted either upward or downward to reflect the current
replacement cost of the Facilty or equipment. This adjustment wil be based on either (11 an
appraisal made by, or for, the Seller's insurance company, or (21 the Handy-Whitman Index
.. Cost Trends of Bectric Utility Construction -- Plateau Region n other production plant-gas turbo
generators as published by Whitman, Requardt & Associates, 2315 Saint Paul St, Baltimore, MD
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21218. Such adjustment shall be made, at a minimum, every fift Contract Year during the
term of this Agreement. A copy of these computations and/or appraisals wil be submitted to
Idaho Power for Idaho Power's review and approval.
14.3 Seller to Provide Certificates of Insurance - As required in paragraph 4.1.5 herein
and annually thereafter, Seller shall furnish Idaho Power certificates of insurance, together with the
endorsements required therein, evidencing the coverages as set forth above.
14.4 Seller to Provide Copies of Policies of Insurance - Within one hundred twenty (120)
days after the Operation Date, and within ninety (90) days of the effective date of any modifications
to the policy, Seller wil furnish to Idaho Power a certified copy of the original of each insurance policy
and all endorsements for each of the insurance coverages described above. In the case of policy
renewals, Seller may provide a certificate from the insurance carrier that there have been no changes
to the policy in lieu of providing the required certified copy of the policy.
14.5 Seller to Notify Idaho Power Qf Lapse of Coverage - If any of the insurance
coverages required by paragraph 14.2 shall lapse for any reason, Seller wil immediately notify Idaho
Power in writing. The notice wil advise Idaho Power of the specific reason for the lapse and the steps
Seller is taking to reinstate the coverage.
ARTICLE XV: LAND RIGHTS
15.1 Seller to Provide Access - Seller hereby grants to Idaho Power for the term of this
Agreement all necessary rights-of-way and easements to install. operate, maintain, replace, and remove
Idaho Power's Metering Equipment, Disconnection Equipment and other Special Facilties necessary
or useful to this Agreement, including adequate and continuing access rights on propert of Seller.
Seller warrants that it has procured sufficient easements and rights-of-way from third parties so as to
provide Idaho Power with the access described above. All documents granting such easements or
rights-of-way shall be subject to Idaho Power's approval and in recordable form.
15.2 Use of Public Rights-at-Way - The Parties agree that it is necessary to avoid the
adverse environmental and operating impacts that would occur as a result of duplicate electric lines
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being constructed in close proximity. Therefore, subject to Idaho Power's compliance with paragraph
15.4, Seller agrees that should Seller seek and receive from any local, state or federal governmental
body the right to erect, construct and maintain Seller-furnished Interconnection Facilties upon, along
and over any and all public roads, streets and highways, then the use by Seller of such public right-of-
way shall be subordinate to any future use by Idaho Power of such public right-of-way for constructon
andlor maintenance of electric distribution and trnsmission facilities and Idaho Power may claim use
of such public right-of-way for such purposes at any time. Except as required by paragraph 15.4,
Idaho Power shall not be required to compensate Seller for exercising its rights under this paragraph
15.2.
15.3 Joint Use of Facilties - Subject to Idaho Power's compliance with paragraph 15.4,
Idaho Power may use and attach its distribution and/or transmission facilties to Seller's Interconnection
Facilties, may reconstruct Seller's Interconnection Facilties to accommodate Idaho Power's usage or
Idaho Power may construct its own distribution or transmission facilities along, over and above any
public right-of-way acquired from Seller pursuant to paragraph 15.2, attaching Seller's Interconnection
Facilties to such newly constructed facilities. Except as required by paragraph 15.4, Idaho Power shall
not be required to compensate Seller for exercising its rights under this paragraph 15.3.
15.4 Conditions of Use - It is the intention of the Parties that the Seller be left in
substantially the same condition, both financially and electrcally, as Seller existed prior to Idaho
Power's exercising its rights under this Artcle XV. Therefore, the Partes agree that the exercise by
Idaho Power of any of the rights enumerated in paragraphs 15.2 and 15.3 shall: (1) comply with all
applicable laws, codes and Prudent Electrical Practices, (2) equitably share the costs of installng,
owning and operating jointly used facilties and rights-ot-way. If the Parties are unable to agree on the
method of apportioning these costs, the dispute wil be submitted to the Commission for resolution and
the decision ot the Commission wil be binding on the Parties, and (3) shall provide Seller with an
interconnection to Idaho Power's system of equal capacity and durabilty as existed prior to Idaho
Power exercising its rights under this Article XV.
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ARTICLE XVI: FORCE MAJEURE
As used in this Agreement, -force majeure- or -an event of force majeure- means any
cause beyond the control of the Seller or of Idaho Power which, despite the exercise of due dilgence,
such Part is unable to prevent or overcome. Force Majeure includes but is not limited to acts of God,
fire, flood, storms, wars, hostilties, civil strife, strikes and other labor disturbances, earthquakes, fires,
lightning, epidemics, sabotage, restraint by court order or other delay or failure in the performance as
a result of any action or inaction on behalf of a public authority, which by the exercise of reasonable
foresight such part could not reasonably have been expected to avoid and by the exercise of due
dilgence, it shall be unable to overcome. If either Part is 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:
(1) The non-performing Part shall, as soon as is reasonably possible after the
occurrence of the event of force majeure, give the other Part written notice describing the particulars
of the occurrence.
(2) The suspension of performance shall be of no greater scope and of no longer
duration than is required by the event of force majeure.
(3) No obligations of either Part which arose before the occurrence causing the
suspension of performance and which could and should have been fully perormed before such
occurrence shall be excused as a result of such occurrence.
(4) Seller's obligation to pay liquidated damages as provided in paragraph 21.3
wil not be excused by an evènt of force majeure.
ARTICLE XVII: LIABILITY; DEDICATION
Nothing in this Agreement shall be construed to create any duty to, any stndard of care
with reference to, or any, liabilty to any person not a Part to this Agreement. No undertaking by one
Part to the other under any provision of this Agreement shall constitute the dedication of that Part's
system or any portion thereof to the other Part or to the public, nor affect the status of Idaho Power
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as an independent public utilty corporation, or Seller as an independent individual or entity.
ARTICLE XVII: SEVERAL OBLIGATIONS
Except where specifically stated in this Agreement to be otherwise, the duties, obligations
and liabilties of the Parties are intended to be several and not joint or collectve. Nothing contained
in this Agreement shall ever be construed to create an association, trust, partership, or joint venture
or impose a trust or partnership duty, obligation or liabilty on or with regard to either Party. Each Part
shall be individually and severally liable for its own obligations under this Agreement.
ARTICLE XIX: WAIVER
Any waiver at any time by either Part 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 XX: CHOICE OF LAWS
This Agreement shall be construed and interpreted in accordance with the laws of the
State of Idaho.
ARTICLE XXI: DISPUTES AND DEFAULT
21.1 Disputes. All disputes related to or arising under this Agreement, including, but not
limited to, the interpretation of the terms and conditions of this Agreement, wil be submitted to the
Commission for resolution.
21.2 Default - If either Part fails to perform any of the terms or conditions of this
Agreement, (an "event of default") the nondefaulting Part shall cause notice in writing to be given
to the defaulting Part, specifying the manner in which such default occurred. If the defaulting Part
shall fail to cure such default within the sixt (60) days after service of such notice, then, and only
then, may the nondefaulting Part pursue its legal or equitable remedies.
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21.3 Seller Permanent Curtilment - If, at any time prior to the end of the term of the
Agreement, Seller permanently curtails in whole or in part its deliveries of the Annual Net Firm Energy
amount specified in paragraph 6.3, Séller shall pay to Idaho Power, as reasonable liquidated damages
arising out of this permanent curtilment of Annual Net Firm Energy deliveries, the appropriate lump
sum repayment amount specified in Appendix C, multiplied by the difference in megawatt-hours
between the Annual Net Firm Energy amount specified in paragraph 6.3 and the reduced Annual Net
Firm Energy amount after the permanent curtailment. The lump sum repayment amount will bear
interest from sixt (60) days after Idaho Power gives or receives notice of Seller's permanent reduction
of the Annual Net Firm Energy amount, until paid, at a rate equal to interest rates specified in Idaho
Code §28-22-104(21 or its successor Idaho Code provision in effect during each month of that period.
For purposes of this paragraph, Idaho Power's voluntary termination in accordance with paragraph
5.2.2 shall not be considered a permanent curtailment. The Parties further agree that this paragraph
does not constitute a waiver by Idaho Power of its right to pursue its remedies under paragraph 21 .6
or by either Part of their right to an award of pre and post judgement interest, costs and attorneys
fees as permitted by law in any litigation arising out of this Agreement.
21.4 Security for Repayment Obligation - During the full term of this Agreement, Seller
wil provide Idaho Power with adequate assurance that seller wil be able to repay the amounts owing
Idaho Power if Seller defaults under this Agreement. In accordance with Commission Order
Nos 21690, 21800 and Declaratory Order No. 23949 and subject to the provisions of paragraph 21.2
above, this assurance wil be provided as follows:
21 .4.1 Insurance. Seller shall complv with the provisions of paragraph 14.2. If
Seller fails to comply, such failure wil be an event of default.
la) In the case of the liabilty insurance coverage, (paragraph 14.2.11, a default
wil be a material breach and may only be cured by Seller supplying evidence that the
liabilty insurance coverage has been replaced or reinstated.
(bl For all other insurance coverages described in paragraph 14.2, the default
may be cured by replacement or reinstatement of the insurance, or by Seller posting liquid
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security in accordance with paragraph 21.5 in an amount equal to one hundred percent
(100%) of the accumulated overpayment liabilty specified for that year in Appendix C.
21.4.2 Debt Service Reserve Account - (a) During the period of time in which the
Facilty acts as security for a first mortgage lien which is senior to Idaho Power's security
interest in the Facilitv as described in paragraph 4.1.8 above. Seller shall maintain a debt
service reserve account containing cash in an amount equal to twenty percent (20%) of
the Facility's estimated gross revenue from Net Firm Energy sales for the first Contract
Year rounded to the nearest $1,000. With Idaho Power's consent, this debt service
reserve account may be coordinated with any debt service reserve account required by
Seller's first mortgage lender to avoid duplication of accounts.
(b) Upon full satisfaction of the above-referenced first mortgage lien and when
Idaho Power's security interest becomes the senior security interest in the Facility, the
escrow manager wil pay to Seller the amount in the debt service reserve account which
exceeds five percent (5%) of the Facilty's estimated gross revenue for the next Contract
Year rounded to the nearest $1.000.
(c) The amount to be retained in the debt service reserve account wil be
recalculated every five (5) Contract Years to reflect any increases or decreases in the
Adjustable Payment amount under paragraph 7.1.2 of the Agreement.
(d) During the period when the Facilty is security for a first mortgage lien that
is senior to Idaho Power's lien, the escrow manager of the debt service reserve account
wil be instructed to only release funds from the debt service reserve account to the
holder of the first mortgage lien. Funds from said account shall be released only when,
and only to the extent that Seller certifies to the escrow manager that after payment of
all operating costs, the Facility's revenues are insufficient to make full debt service and/or
lease payments on the Facility.
(e) During the period when Idaho Power's securit interest is the senior security
interest in the Faciltv, the escrow manager wil be instructed to only release funds from
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the debt service reserve account to pay operating costs for the Facility.
(f) For purposes of the debt service reserve account, operating costs are limited
to those costs necessary for the operation of the Facilty such as taxes, insurance
expenses, lease payments and other ordinary and necessary operating expenses.
Operating costs shall not include any disbursements other than lease payments which
would constitute a profit or return on investment.
(g) After any release of funds by the escrow manager, Seller shall be obligated
to restore the debt service reserve account to the amounts provided for in paragraphs
21.4.2(a) and (b), whichever is applicable, prior to Seller disbursing funds which would
constitute a profit or return on investment. Until the debt service reserve debt account
is tully restored, Seller wil, within sixty (60) days of the completion of each Contrct
Year, provide the escrow manager and Idaho Power with a report prepared by Seller's
independent outside accountants showing that Seller has not breached its obligations
under this paragraph 21.4.2(g).
(h) Any breach of paragraph 21.4.2(g) by Seller wil be an event of default and
wil require posting liquid security in accordance with paragraph 21.5 in an amount equal
to one hundred percent (100%) of the accumulated overpayment amount specified for
that year in Appendix C.
21 .4.3 In lieu of establishing and funding the above-described debt service reserve
account, with Idaho Power's prior written consent Seller may substitute irrevocable
standby letter(s) of credit, book entr certificate(s) of deposit or other security
instrument(s) acceptable to Idaho Power. During the period when the Facilty is security
tor a first mortgage lien that is senior to Idaho Power's lien, Idaho Power and the first
mortgage lender wil be joint beneficiaries of the security instrument(s). When Idaho
Power's security interest is the senior security interest in the Facilty, Idaho Power wil
be the sale beneficiary of the securitY instrument(s).
21.4.4 Engineer's Certification - Every three (3) years for the first twelve (12)
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years after the Operation Date, and øvery two (2) years thereafter during the full term of
this Agreement, Seller wil supply Idaho Power with an Engineet s Certification of Ongoing
Operations and Maintenance from a Registered Professional Engineer licensed in the State
of Idaho, which ongoing 0 & M Certificate shall be in the form specified in Appendix E.
Seller's failure to supply the required certificate wil be an event of default. Such a
default may be cured by Seller providing the required certificate or by posting liquid
security in accordance with paragraph 21.5 in an amount equal to twenty percent (20%)
of the accumulated overpayment liability specified for that year in Appendix C.
21.4.5 Maintenance Escrow - During the full term of this Agreement, Seller shall
maintain and fund the maintenance escrow account described in paragraph 4.1.7 and
Commission Order No 21690. If at any time Seller fails to maintain or fully fund that
maintenance escrow account, such a failure wil be an event of default. Such default
may be cured by reinstating the required escrow account or by Seller posting liquid
security in accordance with paragraph 21.5 in an amount equal to twenty percent (20%)
of the accumulated overpayment liabilty specified for that year in Appendix C.
21.4.6 Security Interests - During the full term of this Agreement, Seller shall
maintain compliance with all of the requirements of Idaho Power's security interests
described in paragraph 4.1.8 of this Agreement and Commission Order No 21690.
Seller's failure to comply with those requirements, wil be an event of default and in
addition to any other remedies available under this Agreement, Commission Order
No 21690, and the security interests, Seller will be required by Idaho Power to post liquid
security in accordance with paragraph 21.5 in an amount equal to thirt-five percent
(35%) of the accumulated overpayment liability specified for that year in Appendix C.
Seller recognizes that in accordance with Commission Order No 21690, an event of
default under either or both of paragraphs 21.4.3 or 21.4.4 constitutes an event of
default under paragraph 21.4.5 and in that event the obligation to post liquid security
under paragraphs 21.4.3 through 21 .4.5 is cumulative.
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21.4.7 Licenses and Permits - During the full term of this Agreement, Seller shall
maintain compliance with all permits and licenses described in paragraph 4.1 .1 of the
Agreement. In addition, Seller wil supply Idaho Power with copies of any new or
additional permits or licenses Seller is required to obtain during the term of this
Agreement. At least every fifth Contract Year, Seller wil update the documentation
described in Paragraph 4.1 .1. If at any time Seller fails to maintain compliance with the
permits and licenses described in paragraph 4.1 .1 or to provide the documentation
required by this paragraph, such failure wil be a default.
(a) In the case of non-compliance with the required governmental permits, an
event of default wil be a material breach and may only be cured by Seller submittng to
Idaho Power evidence of compliance from the permitting agency.
21.4.8 "K" Factor and Estoppel Certificates -In reliance upon Seller's compliance
with paragraphs 4.1.10 and 4.1.11, upon execution of this Agreement by Idaho Power,
and approval of this Agreement by the Commission, application of the "K" factor as
described in Commission Order No. 21690 is suspended. Every three (3) years during the
term of this Agreement, commencing with the third anniversary of the Operation Date,
Selle,. shall deliver to Idaho Power estoppel certificates from Seller and Seller's fuel
supplier, fuel transporter and thermal energy purchaser certifying that the contracts
described in paragraphs 4.1 .10 and 4.1 .11 are unmodified and in full force and effect and
that there are no uncured defaults by either part.
If Seller fails to provide the required estoppel certificates and the Parties are
unable to agree on alternative security, the Partes agree to submit to the jurisdiction of
the Commission for a determination of whether the "K" factor and the obligation to post
liquid security, as described in this Agreement and Commission Order No. 21690, should
be applied to the Facility.
21.5 Liquid Security - If, pursuant to this Agreement or Commission Order No 21690,
Seller becomes obligated to post liquid security, such obligation may be satisfied by Seller's (1)
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depositing cash in an escrow to be held and managed by a bank or savings & loan association located
and in good standing in the State of Idaho; or (2) providing an irrevocable standby letter of credit
acceptable to Idaho Power. The esCrow holder and the escrow instrctions for the cash deposit wil
be acceptable to both Idaho Power and Seller. Payment of all taxes on the amounts deposited in the
escrow wil be the obligation of the Seller. The liquid security escrow account wil be maintained
separately from the maintenance reserve account described in paragraph 4.1.7. Failure to maintain
and provide the liquid security required by this Agreement and Commission Order Nos 21690
and 21800 shall be an event of default.
21.6 Equitable Remedies - If as described in paragraph 21.3, Seller permanently curtails
all or part of its deliveries of Net Firm Energy to Idaho Power and (1) within three (3) years after said
curtailment Seller or its successors or assigns sells or delivers or attempts to sell or deliver said
curtailed capacity or energy to any entity other than Idaho Power without Idaho Power's prior written
consent, such sale or delivery or attempted sale or delivery shall be a breach of this Agreement; or (2)
if, within three (3) years after such permanent curtailment Seller or its successors or assigns attempts
to require Idaho Power to purchase said permanently curtailed Net Firm Energy at a rate that exceeds
the rates contained in this Agreement, such attempt wil be a breach of this Agreement. The remedy
at law for the above described breaches shall be inadequate and Idaho Power shall be entitled to
injunctive relief and specific performance of this Agreement. The provisions of this paragraph 21.6
shall survive any termination of this Agreement (other than an optional termination under paragraph
5.2) for the periods provided for in this paragraph.
21.7 Refund of Lump Sum Repayment - If Seller has made a lump sum repayment as
required by paragraph 21.3 and;
(1) Within three (3) years of said payment Seller becomes capable of resuming
production of the curtiled Net Firm Energy and offers to resume sales to
Idaho Power at the rates, terms and conditions contained in this Agreement
for the number of Contract Years that were remaining under this Agreement
at the time of the permanent curtailment; then
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(2) Idaho Power will resume its purchases from the FaciltY and wil refund a
portion of the lump sum repayment amount as follows:
(a) If sales resume within one year of the payment of the lump sum repayment
amount, Idaho Power wil refund 90% of the lump sum repayment amount;
(b) If sales resume within two years of the payment of the lump sum repayment
amount, Idaho Power wil refund 85% of the lump sum repayment amount;
(c) If sales resume within three years of the payment of the lump sum
repayment amount, Idaho Power wUl refund 85% of the lump sum
repayment amount.
ARTICLE XXII: GOVERNMENTAL AUTHORIZATION
This Agreement is subject to the jurisdiction of those governmental agencies having
control over either Party or this Agreement.
ARTICLE XXII: COMMISSION ORDER
This Agreement shall become finally effective upon the Commission's approval of all terms
and provisions hereof without change or condition and declaration that all payments to be made to
Seller hereunder shall be allowed as prudently incurred expenses for ratemaking purposes.
ARTICLE XXIV: SUCCESSORS AND ASSIGNS
This Agreement and all of the ters and provisions hereof shall be binding upon and inure
to the benefit of the respective successors and assigns of the Parties hereto, except that no transfer
of Sellet s rights or obligations under this Agreement by merger or otherwise nor any assignment
hereof by Seller shall become effective without the written consent of Idaho Power being first
obtained. Such consent shall not be unreasonably withheld. This article shall not prevent a financing
entity with recorded or secured rights from exercising all rights and remeies available to it under law
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or contract. Idaho Power shall have the right to be notified by the financing entity that it is exercising
such rights or remedies.
ARTICLE XXV: 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 XXVI: 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 facilty or Interconnection Facilities.
ARTICLE XXVII: NOTICES
All written notices under this Agreement shall be directed as follows, and shall be
considered delivered when deposited in the U S Mail, first-class postage prepaid, as follows:
To Seller: Glenns Ferry Cogeneration Parters, Ltd.
Attn: Alan K Forbes
12150 E Briarwood, Suite 145
Englewood, Colorado 80112
To Idaho Power Vice President, Power Supply
Idaho Power Company
POBox 70
Boise, Idaho 83707
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ARTICLE XXVII: ADDITONAL TERMS AND CONDITIONS
This Agreement includes the following appendices, which are attached hereto and
included by reference:
Appendix A
Appendix B
Standards for Interconnecton and Metering
Special Facilities, Point of Delivery,
Metering, and Operation Date
Lump Sum Refund Payment
Operating Instructions
Engineer's Certifications
Appendix C
Appendix D
Appendix E
Appendix F
AppendixG
Appendix H Determination of Eligibility for Operation Date
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ARTICLE XXiX. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the Parties concerning the subject
matter hereof and supersedes all prior or contemporaneous oral or written agreements between the
Parties concerning the subject matter hereof.
IN WITNESS WHEREOF, The Parties hereto have caused this Agreement to be executed
in their respective names on the dates set forth below:
IDAHO POWER COMPANY, an Idaho corporation
By
Date: ßC 2j /r'z.
"Seller"
By
i COGENER
JlG eral Partner d
ll: ct iC1Cf2-Date:
1.H FWright -:w 5.J M Collngwood ~2.B L Kline ~'f~6.L R Gunnoe
3.R W Stahman 7.J W Marshall
4.W AMott aa
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STATE OF IDAHO l
l ssCounty of Ada )
On thiS.ê day of .. e.- bA ,1992, before me, the undersigned,
a Notary Public, personally appeared Jan B Packwood, personally known, who being duly sworn, did
say that he is the Vice President, Power Supply of the corporation that executed the within instrument,
and acknowledged to me that such corpration executed the same as the free act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal,
the day and year in this certificate first above written.
.(NOtARIAL SEAL)_/,. . '/Notary Public for Idah
Residing at Boise, Ida 0..._. ..... .'
. My Comi:issKm Expires:
"r~ öZ't ,1'7
STATE OF COLORADO )
) ss
lCounty of Ar o.CAjrVtlJ
On this C\ ti day of D.Q£Qm t:;Q,C , 1992, before me, the undersigned,
a Notary Public, personally appeared Alan K Forbes, personally known, who being duly sworn, did say
that he is the General Partner of Glenns Ferry Cogeneration Parters, Ltd. that executed the within
instrument, and acknowledged to me that he executed the same as the free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and year
in thiscertificate first above written.
,'. '.
(NOTARI~L SEAL)
--/. ..: .'~: .. i .
My Corò~ission Expires:cs- 'Vi p - QLp
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APPENDIX A
STANDARDS FOR INTERCONNECTION AND METERING
A-l GENERAL PROVISIONS
A-l .1 It is the policy of Idaho Power to permit Seller to operate its Facilty in parallel with Idaho
Power's electric system, whenever this can be done without adverse effect to Idaho Power's
equipment, personnel or other customers.
A-l.2 These guidelines contain the minimum metering, interconnection, protection, operation, and
communications requirements for the safe and effective parallel operation of Seller's Facility with Idaho
Power's system. Although these guidelines are established to provide a uniform approach for
evaluating Seller's generation projects, each interconnection must be examined by Idaho Power indivi-
dually. Idaho Power and the Seller wil be guided by this document, which is a part of the Rrm Energy
Sales Agreement, in planning an interconnection between Idaho Power's system and the Seller.
A-l .3 Idaho Power may provide limited technical assistance for Seller, but wil not perform any
engineering, construction or repair work on power production equipment.
A-2 GENERAL DESIGN CONSIDERATIONS
A-2.1 All Seller generators larger than twenty (20) kVA shall be three-phase generators connected
to three-phase circuits. Generators twenty (20) kVA and smaller may be either three-phase or single-
phase, as approved by Idaho Power.
Due to physical limitations within Idaho Power's transmission and distribution systems,
induction machine sizes wil be limited to confine voltage flicker within acceptable limits. Each
generation site is unique and Idaho Power wil determine the appropriateness of any proposed machine
type for the site and interconnection.
A-2.2 Except in certain instances to be determined by Idaho Power, Seller's generator(s) shall be
isolated from Idaho Power's system by a transformer. Transformer type and connecton wil be
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specified by Idaho Power. The Seller may be required to limit the fault current contribution to Idaho
Power's system by generator and/or transformer impedence, neutral grounding, transformer
connections or other means.
A-2.3 Idaho Power wil not assume any responsibilty for protection of the Seller's generator or of any
other portion of the Seller's electrical equipment. The Seller is fully responsible for protecting its
equipment from faults or disturbances on Idaho Power's system. For example, most transmission and
distribution line circuit breakers on Idaho Power's system will reclose automatically after they have
attempted to clear a fault. The reclose time delays and system impedances are available from Idaho
Power and should be considered very carefully by the Seller to determine if damage to the Seller's
facility is possible. Dead line and synchronism check systems can be installed, at Seller's expense,
that wil minimize the possibilty of a line reclosing into a generator while it is still connected to the
system. In some cases, Idaho Power will require these dead line and synchronism check systems.
A.2.4 Seller is hereby notified that certain conditions on Idaho Power's system may cause negative
sequence currents to flow in the Seller's generator. It is the sole responsibility of the Seller to protect
its equipment from excessive negative sequence currents, reverse power flow, and single phasing.
A.3 METERING AND TELEMETRY REQUIREMENTS
A-3.1 Unless otherwise agreed by the Partes, metering wil be provided for recording net output of
the Facilty and wil be separate from any metering of Seller's load. Metering required wil be
determined by Idaho Power on a case-by-case basis, but wil generally follow the guidelines below:
A.3.1.1 Capacity Under 750 kW - Two kWh/demand meters; one measuring power flow into
Seller's facilties and one measuring power flow into Idaho Power's system;
A-3.1.2 Capacity of 750 kW to 4999 kW - A bi-directional, electronic meter installation with
load profiling and communication port capability wil be installed, and connected to the project
voice communications circuit supplied by the developer with a first priority given to Idaho
Power's use of said communication circuit. An electro-mechanical kWh backup meter wil also
be insalled, Additionally, if a project is interconnected with Idaho Power's transmission
system, all necessary telemetr and communication equipment and a dedicated voice quality
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unconditioned data line may be installed to provide continuous instantaneous telemetering of
net generation to Idaho Power's Designated Dispatch Facilty:
A-3.1.3 Capacity of 5000 kW and Above - A bi-directional. electronic meter installation with
load profiling and communication port capability wil be installed and connected to a voice
communications circuit supplied by the developer with a first pri~rity given to Idaho Powet s
use of said communication circuit. An electo-mechanical kWh backup meter wil also be
installed. In addition. all necessary telemetry and communication equipment and a dedicated
voice quality unconditioned data line wil be installed to provide continuous instantaneous
telemeterin9 of net generation to Idaho Power's Designated Dispatch Facilty.
A-4 FACILITY PROTECTION
A-4.l The Seller has full responsibilty for the maintenance of its generating equipment and the
equipment protectng the Facilty. If, in the opinion of Idaho Power, the Seller has failed to provide
proper maintenance of the Facilty or its protection equipment and this failure could adversely impact
Idaho Power or other Idaho Power customers, Idaho Power can require the Seller to cease parallel
operation.
A-5 SYNCHRONOUS GENERATORS
A-5.l All synchronous machines five (5) MVA or larger shall be equipped with a speed governor
operated with a speed droop characteristic of five percent (5%).
A-5.2 A check interlock for synchronizing of the Seller's generator(s) is required.
A-5.3 Synchronous generators shall be capable of operating continuously at maximum power output
within five percent 15%) of rated voltage and anywhere within a power factor range of from ninety
percent (90%) lagging to ninety-five percent (95%) leading.
Synchronous generators shall be equipped with an excitation system and a voltage regulator
which are capable of automatically controllng voltage at the generator terminals or a point farter into
the system through the use of compensation.
The excitation system shall be equipped with over and under excitation limiters or equivalent
systems which wil permit the voltage regulator to utilze the full reactive capabilty of the machine.
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In some cases, because of specific system requirements in the area of the interconnection, this general
rule may be modified by Idaho Power to include:
1 ) power factor or reactve control of the voltage regulator;
2) use of a programmable controller to vary the reactive output of the machine based
upon a preset time schedule or other control criteria; or
3) Idaho Power may provide a remote signal which wil be used to adjust the voltage or
power factor regulator setting.
Facilities used to control reactive output including both local and remote equipment wil be at
the Seller's expense as specified in B-11 of Appendix B.
Idaho Power may also require the use of a power system stabilizer (PSS) on machines with high
speed excitation systems.
Idaho Power wil provide the required operating criteria (voltage, power factor, schedules, etc.)
and/or settngs. Idaho Power may change these criteria from time to time as system requirements
change. If after notification of operational deficiencies the Facilty is not operated as specified, or if
the Seller does not make necessary corrections within a reasonable time, a default wil be declared
pursuant to Article XXi.
A-5.4 Due to the abilty of large synchronous generators to influence Idaho Power's system,
protective and control relaying, in addition to the usual voltage frequency and fault relaying, may be
required by Idaho Power. If required, this wil consist of generator relaying for phase-to-phase and
three-phase fault detection. Idaho Power wil specify the relay type and determine settings. This
relaying wil be tested annually by Idaho Power and the actual cost of this testing wil be paid by the
Seller.
A-6 INDUCTION GENERATORS
A-6.1 Overvoltage can become a serious problem when an induction generator and a portion of the
transmission or distribution facilties are isolated from the system. Overvoltage relaying shall be
provided that wil open the generator breaker in the event that the voltage reaches predetermined limits
consistent with the overvoltage capability of the generator and the system. Undervoltage protection
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may also be required. On larger units, underfrequency and overfrequency relaying may both be
required.
A-6.2 Inducton generators require reactive support to operate. The supplemental reactive required
is that amount required to correct the Facilty to unity power factor. The reactive may be supplied by
either Idaho Power's system or from capacitive correction at the Facilty or both. Idaho Power wil
charge the Seller (as specified in Appendix 5) for reactive that is provided from Idaho Power's system.
At some Facilities, because of system considerations, it may not be practical to provide all of
the reactive compensation at the Facilty. In these instances, Idaho Power shall specify the power
factor and compensation necessary at the Facilty.
The Seller wil have the option to furnish the reactve compensation that is required at the
Facilty. If the Seller furnishes the reactive compensation, the Facility must be operated within five
percent (5%) of the specified power factor. The Seller must also design the Facilty to avoid possible
overvoltage that can occur under certain conditions when capacitors are applied to the generator
terminals.
A-7 DC TO AC CONVERTERS
A-7.1 Direct current generators may be operated in parallel with Idaho Power's system through a
synchronous inverter. The inverter installation wi\ be designed such that an Idaho Power system
interruption wil result in the immediate removal of the inverter power flow to Idaho Power. Harmonics
and/or spurious frequencies generated by the Seller's generator-inverter combinations must be limited
to avoid causing any reduction in quality of electric service to Idaho Power's customers.
A-S SWITCHING REQUIREMENTS
A-S.1 Idaho Power reserves the right to open and secure by lock any disconnecting device without
prior notice to Seller for any of the following reasons:
A-8.1 .1 System emergency;
A-S.1.2 Inspection of the Seller's Facilty protectve equipment reveals a condition which
might adversely impact Idaho Power or Idaho Power's customers;
A-8.1.3 Seller's generating equipment interferes with Idaho Power's customers, or system.
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A-8.2 Seller shall maintain a written record of all operating (opening and closing) by Seller of the
Seller's interconnection with Idaho Power. Each operation wil be recorded by the date. hour and
minute and wil include the generator kWh reading at the time of the operation. This record wil be
maintained on a monthly basis and the original wil be mailed to Idaho Power on the first business day
of the following month. Idaho Power wil provide the forms necessary for tilng this monthly switching
report.
A-9 GENERATION SCHEDULING AND REPORTING
A-9.1 For installations under 750 kVA. the Seller shall read its generator kWh/demand meter within
the 24-hour period following 12:00 noon on the last day of each month. That kWh meter reading is
to be recorded on the Monthly Power Production Switching Report.
A-9.2 For installations 750 kVA and above. see Appendix O.
A-9.3 The written record of the end-ot-month meter reading on the Monthly Power Production
Switching Report. subject to subsequent review and correction by Idaho Power, wil be the basis of
payment for energy purchased by Idaho Power from the Seller. An adjustment in the kWhs delivered
wil be made to compensate for the losses in B-6.
A-9.4 At the end of each month. the Monthly Power Production Switching Report wil be mailed to:
Operations and Joint Facilties Accounting
Idaho Power Company
POBox 70
Boise. Idaho 83707
A-9.5 Payment to the Seller wil be made no later than thirt (30) days following receipt of the
Monthly Power Production and Switching Report.
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APPENDIX 8
SPECIAL FACILITIES, POINT OF DELIVERY, METERING,
AND OPERATION DATE
PROJECT NO 21765151
MAGIC WEST COGENERATION PROJECT
8.1 DESCRIPTION OF FACILITY
The Seller's electrical Facilit is described as natural gas fired turbine generator packages with
total nameplate rating of less than 10 MW net at 4,160 volts, three phase, 60 Hz.
B-2 LOCATION OF FACILITY
The Facilty is located in the SE Quarter of Section 29, Township 5 South, Range 10 East, Boise
Meridian, Elmore County, at the Magic Valley potato processing facility in Glenns Ferry, Idaho.
B-3 SCHEDULED OPERATION DATE
Seller has selected January 1, 1995, as the Scheduled Operation Date and December 1, 1994,
as the First Energy Date. In making these selections, Seller recognizes that to allow for
adequate testing of the Facilty's degree of completion and reliabilty, it must achieve its First
Energv Date at least thirty (30) days prior to the Operation Date. Idaho Power, based on the
information supplied by Seller, wil schedule its construction so that all Special Facilities,
Disconnection Equipment and Metering Equipment wil be completed in time so as not to delay
Seller's achieving the First Energy Date. However. if Seller fails to pay the costs specified in
B-l1 below at the time specified therein, or materially changes the specifications or design of
the Facilty or Seller-furnished Interconnection Facilities from what was previously provided to
Idaho Power, Idaho Power may be required to reschedule its construction of these facilities
which could adversely impact Seller's abilty to achieve its scheduled First Energy Date.
B- FAILURE TO ACHIEVE OPERATION DATE
If Seller has not achieved the Operation Date within eleven (11) months of the Scheduled
Operation Date, such failure shall be deemed to be an event of default pursuant to Article XXi.
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8-5 POINT OF DELIVERY
The Point of Delivery of energy from the Seller to Idaho Power wil be the 138,000 volt bushings
of the Seller's transformer. The 11,000 kVA transformer will be owned and maintained by the
Seller. The transformer connection wil be 138 kV grounded Wye/4.16 kV Delta.
8-6 LOSSES
Until modified by mutual agreement, losses shall be set at 2.00% of the metered energy
delivered. When Seller has supplied Idaho Power with the data needed to properly analyze the
Losses associated with the Facility, Idaho Power and Seller wil review that data and re-set the
loss factor for the Facilty. If the Parties are unable to agree, they will submit the dispute to the
Commission for resolution. Any adjustment wil be retroactive to the First Energy Date.
B-7 METERING AND TELEMETRY
The Metering Equipment, wil be on the 4,160 volt side of the Seller's step up transformer.
Idaho Power provided metering equipment wil consist of: current and potential transformers,
a meter enclosure, an electronic bi-directional meter for measuring net generation, an isolation
relay, transducer, communication equipment, and all meter wiring. Seller provided metering
equipment wil consist of all conduit and junction boxes from the metering transformers to the
meter enclosure and all high side conductor and connectors. Seller wil arrange for and make
available at Seller's cost, a telephone circuit dedicated to Idaho Power's use terminating in an
RJ-11 receptacle to be used for load profilng and another telephone circuit dedicated to Idaho
Power's communication equipment for continuous teleretering of the project's kilowatt output
to Idaho Power's Designated Dispatch Facility. The meter wil register kilowatt-hours and
kilowatts of demand. Idaho Power provided meter and communication equipment wil be owned
and maintained by Idaho Power with total cost of purchase, installation, operation and
maintenance, including administrative cost to be reimbursed to Idaho Power by the Seller.
8-8 SPECIAL FACILITIES
The construction of approximately 3/4 mile of three phase 138,000 volt single pole transmission
line with switching provisions and the reconstruction of approximately 1/4 mile of 12.5 kV
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distribution circuit wil be supplied and maintained by Idaho Power. The total cost of these
facilties wil be reimbursed to Idaho Power by the Seller.
B-9 REACTIVE POWER
The Seller shall operate the synchronous generators within plus or minus 5% of unity power
factor, or as listed in Appendix A.
B-10 DISCONNECTION EQUIPMENT
Disconnection Equipment is required to insure that the Sellers Facility wil be disconnected from
Idaho Powers system in the event of a disturbance on either Idaho Power's system or the
Sellers Facilty. This equipment is for the protection of Idaho Power's equipment only and wil
be located at the Point of Delivery. Idaho Power wil supply a three phase 138,000 volt gang
operated disconnect switch, a 138,000 volt potential transformer, a 138,000 volt circuit
switcher and a relay cabinet containing relays, associated wiring, logic, and batteries. Seller wil
install all Idaho Power supplied equipment, and all wiring and conduit necessary for the operation
of the interconnection equipment. Idaho Power wil supply details for the interconnection panel
and wil connect and test the equipment prior to operation of the facility. Seller wil provide
drawings of their interconnection wiring for engineering approval before installation. The total
cost of the interconnecton equipment, connection and testing wil be reimbursed to Idaho Power
by the Seller.
8-11 COSTS
The total cost of the 138,000 kV transmission line Special Facilties is $160,000. The total cost
of the distribution line Special Facilties is $3,444. The total cost of the Metering Equipment is
$8,236. The total cost of the communication equipment is $8,500. In addition, there wil be
a monthly charge for the communication circuit lease cost associated with the telemetry
equipment. The communications circuit lease is $280.00 per month as of the date of this
Agreement. Seller recognizes that the monthly communications circuit charge may be adjusted
bV Idaho Power as the cost to Idaho Power is adjusted by the owner of the communications
circuit. The total cost of the Disconnecting Equipment is $93,468. The total cost to be paid
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by the Seller is $273,648. This represents the amount that wil be charged by Idaho Power if
the Seller makes the payment on or before January 18, 1993. If the Seller does not make this
payment by the specified date, the costs wil be subject to update. Idaho Power wil not
schedule construction or order Special Facilities which are not ordinarily maintained in Idaho
Power's inventory until payment has been made. In addition to the installation and construction
charges above, during the term of the agreement Seller wil pay Idaho Power the operation and
maintenance charge specified in Schedule 72 INTERCONNECTIONS TO NON~UTllITV
GENERATION or its successor schedules(s). This monthly operation and maintenance charge
wil be calculated based on $160,000.00 of 138 kV rated Interconnection Facilties plus an
additional $110,204.00 of Interconnection Facilties rated below 138 kV. The total cost shown
above is an estimate calculated on the basis of average costs. When the actual total cost is
determined, Idaho Power wil adjust the total cost amount to reflect the actual total cost
incurred by Idaho Power. Beginning with the month of this adjustment, the operation and
maintenance charges wil also be adjusted. When the actual total cost is known, within sixty
(60) days Idaho Power wil refund any overpayment or Seller wil remit any underpayment.
8-12 SALVAGE
No later than sixty (60) days after the termination or expiration of this Agreement, Idaho Power
wil prepare and forward to Seller an estimate of the remaining value of those Idaho Power
furnished Interconnection Facilties described in this Appendix, less the cost of removal and
transfer to Idaho Power's nearest warehouse, if the Interconnection Facilties wil be removed.
If SeUer elects not to retain ownership of the Interconnecton Facilties but instead wishes that
Idaho Power purchase such facilties from Seller at the net salvage value, Idaho Power may then
be invoiced by Seller for the net salvage value estimated by Idaho Power for the interconnection
facilties and shall pay said amount to Seller within thirt (30) days after receipt of said invoice.
Seller shall have the right to offset the invoice amount against any present or future payments
due Idaho Power.
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APPENDIXC
LUMP SUM REFUND PAYMENT FOR PERMANENT CURTAILMENT
OF PORTION OR ALL OF ANNUAL NET ENERGY AMOUNT
UNDER 20-YEAR CONTRACT
Contract Year of Dollars
CurtaUment Per Annual
Commencement Megawatt Hour
1 31
2 44
3 57
4 69
5 81
6 92
7 102
8 111
9 118
10 124
11 128
12 130
13 128
14 124
15 116
16 104
17 87
18 65
19 36
20 18
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APPENDIX D
OPERATING INSTRUCTIONS FOR PLANTS OVER 750 KW
1. Prior to initial start-up at least one day in advance the Project shall:
A. Provide Idaho Power's System Scheduling at the Boise Bench System Dispatching Center
with an estimate of the hourly generation that is expected to be produced during the first
scheduled test day. The phone number for System Scheduling is listed below.
B. Notify the Division Substation Supervisor of project start up plans. The phone number
is listed below.
C. The kWh meter should be read and entered on the Monthly Power Production and
Switching Report (Form No: Cogen CAD-A-1).
2. Before 10:00 a.m. on each normal work day, after the initial start-up, the Projec wil report to
the system scheduling offce the previous day's actual generation based upon midnight to
midnight meter readings and the estimate of generation planned for the following day or days.
The phone number to report the actual generation and scheduling estimate is listed below. Note
that the System Scheduling number is answered only between the hours of 8 a.m. to 5 p.m.
Mountain Time, on weekdays and that generation estimates must be provided for weekend days
and holidays.
3. Each time the generator breaker is closed or opened (including testing and normal operation),
Idaho Powets system dispatchers must be notified by phone as soon as possible. Prompt
reporting is very important. The Designated Dispatch Facilty is manned 24 hours a day, 7 days
a week, and the phone number is listed below.
4. In addition to promptly notifying the system dispatchers, the record of each breaker opening and
closing must be entered on the Monthly Power Production and Switching Report mentioned in
1-C above.
5. For questions or problem concerning:
Power Scheduling:[phone]
System Dispatching:[phone]
Metering:Meter Engineer - Boise
[phone]
or
Division Metering Supervisor
Payette
Boise
Twin Falls
Pocatello
[phone]
[phone]
[phone]
[phone]
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Substations:Division Substtion Supervisor
Payette
Boise
Twin Falls
Pocatello
[phone]
[phone]
[phone]
[phone]
Biling: Operations and Joint Facilities Accounting - Boise
(2081 383-2593
Contract: Customer Generation - Boise
(2081 383.2427
6. Toll free numbers for Operating Reportng:
System Scheduling
System Dispatching
1-800-356-4328
1-800-348-4328
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APPENDIX E
CERTIFICATION OF DESIGN ENGINEER
, on behalf of himself and
, hereinafter collectively referred to as "Design Engineer",
hereby states and certfies to Idaho Power as follows:
1 . That Design Engineer is a Ucensed Professional Engineer in good standing in the
The undersigned
State of Idaho.
2. That Design Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
"Agreement", between Idaho Power as Buyer, and
as Seller, dated
3. That the cogeneration or small power production project which is the subject of the
Agreement and this Certification is identified as IPCo Facility No and is further
designated as Federal Energy Regulatory Commission Cogeneration Project No and is
hereinafter referred to as the "Project".
4. That the Project, which is commonly known as the
Project, is located in Section _' Township_,
Range _' Boise Meridian, County, Idaho.
5. That Design Engineer recognizes that the Agreement provides for the Project to
furnish electrical energy to Idaho Power for a I year penod.
6. That Design Engineer has substantial experience in the design, construction and
operation of electric power plants of the same type as this Project.
7. That Design Engineer has reviewed the engineering design and construction of the
Project, including the civil work, electrical work, generating equipment, Sellerfurnished interconnection
equipment and other Project facilties and equipment.
8. That the Project has been constructed in accordance with said plans and
specifications, all applicable codes and consistent with Prudent Electical Practices as tha term is
described in the Agreement.
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9. That the design and constructon of the Project is such that with reasonable and
prudent operation and maintenance practices by Seller, the Project is capable of performing in
accordance with the terms of the Agreement and with Prudent Electcal Practices for a
(_I year period.
1 O. That Design Engineer has supplied the Seller with at least one copy of said Plans
and Specifications bearing his Stamp and the words "CERTIFIED FOR IDAHO P.U.C SECURITY
ACCEPTANCE" on each sheet thereof.
11. That Design Engineer recognizes that Idaho Power, in accordance with
paragraph 5.2(2) of the Agreement, in interconnecting the Project with its system, is relying on
Engineer's representations and opinions contained in this Certfication.
12. That Design 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.
By
(P.E. Stamp)
Date
STATE OF IDAHO
County of
)
Iss
)
On this _ day of , 19_, before me, the undersigned. a Notary
Public, personally appeared , personally known, who being duly sworn, did
say that he is the individual who executd the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this certficate first above written.
Notary Public for Idaho
Residing at:
(NOTARIAL SEAL)
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APPENDIX E
ENGINEER'S CERTIFICATION OF DESIGN &
CONSTRUCTION ADEQUACY
The undersigned , on behalf of himself and
, hereinafter collectvely referred to as "Engineer", hereby
states and certifies to Idaho Power as follows:
1 . That Engineer is a Licensed Professional Engineer in good standing in the State of
Idaho.
2. That Engineer has reviewed the Rrm Energy Sales Agreement, hereinafter
"Agreement", between Idaho Power as Buyer, and
as Seller, dated
3. That the cogeneration or small power production project which is the subject of the
Agreement and this Certification is identified as IPCo Facilty No and is furter
designated as Federal Energy Regulatory Commission Cogeneration Project No and is
hereinafter referred to as the "Project".
4. That the Project, which is commonly known as the
Project, is located in Section _' Township_,
Range _' Boise Meridian,County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a i year period.
6. That Engineer has substantial experience in the design, constrction and operation
of elecric power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project
and has made the analysis of the plans and specifications independently.
8. That Engineer has reviewed the engineering design and construction of the Project,
including the civil work, electrical work, generating equipment, Seller furnished interconnection equip-
ment and other Project facilities and equipment.
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9. That the Project has been constructed in accordance with said plans and
specifications, all applicable codes and consistent with Prudent Electrical Practices as that term is
described in the Agreement.
1 O. That the design and construction of the Project is such that with reasonable and
prudent operation and maintenance practices by Seller, the Project is capable of performing in
accordance with the terms of the Agreeent and with Prudent Electrical Practices for a
C_I year period.
1 t. That Enginee recognizes that Idaho Power, in accordance with paragraph 5.3 of
the Agreement, in interconnecting the Project with its system, is relying on Engineer's representations
and opinions contained in this Certification.
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.
By
(P.E. Stamp)
Date
STATE OF IDAHO
County of
)
) ss
)
On this _ day of , 19_, before me, the undersigned, a Notary
Public, personally appeared , personally known, who being duly sworn, did
say that he is the individual who executed the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, i have hereunto set my hand and affixed my offcial seal, the day
and year in this certificate first above written.
(NOTARIAL SEAL)Notary Public for Idaho
Residing at:
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APPENDIX E
ENGINEER'S CERTIFICATION OF
OPERATIONS & MAINTENANCE POLICY
The undersigned , on behalf of himself and
. hereinafter collectvely referred to as "Engineer", heeby
states and certifies to Idaho Power as follows:
1 . That Engineer is a licensed Professional Engineer in good standing in the State of
Idaho.
2. That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
"Agreement", between Idaho Power as Buyer, and
as Seller, dated
3. That the cogeneration or small power production project which is the subject of the
Agreement and this Certification is identified as IPCo Facilty No and is further
designated as Federal Energy Regulatory Commission Cogeneration Project No and is
hereinafter referred to as the "Project".
4. That the Project. which is commonly known as the
Project, is located in Section _' Township_,
Range _' Boise Meridian,County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Project to furnish
electrical energy to Idaho Power for a ) year period.
6. That Engineer has substantial experience in the design, construction and operation
of electic power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has reviewed and/or supervised the review of the Policy for Operation
and Maintenance (O&M Policy) for this Project and it is his professional opinion that, provided said
Project has been designed and built to appropriate standards, adherence to said O&M Policy wil result
-54-
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,~./'".
in the Project's producing at or near the design electrcal output, efficiency, and plant factor for a
(_) year period.
9. That Engineer recognizes that Idaho Power, in accordance wi paragraph 5.3 of
the Agreement, is relying on Engineet s representations and opinions contained in this Certification.
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.
By
(P.E. Stamp)
Date
County of
)
) ss
)
STATE OF IDAHO
On this _ day of , 19_, before me, the undersigned, a Notary
Public, personally appeared , personally known, who being duly sworn, did
say that he is the individual who executed the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day
and year in this cerficate first above written.
Notary Public for Idaho
Residing at:
(NOTARIAL SEAl)
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¡~/....
APPENDIX E
ENGINEER'S CERTIFICATION OF ONGOING
OPERATIONS AND MAINTENANCE
The undersigned , on behalf of himself and
, hereinafter collectively referred to as "Engineer", hereby
states and certifies to Idaho Power as follows:
1 . That Engineer is a Licensed Professional Engineer in good standing in the State of
Idaho.
2. That Engineer has reviewed the Firm Energy Sales Agreement, hereinafter
"Agreement-, between Idaho Power as Buyer, and
as Seller, dated
3. That the cogeneration or small power production project which is the subject of the
Agreement and this Certfication is identified as IPCo Facilty No and is further
designated as Federal Energy Regulatory Commission Cogeneration Project No and is
hereinafter referred to as the "Project".
4. That the Project, which is commonly known as the
Project, is located in Section _, Township_,
Range _' Boise Meridian,County, Idaho.
5. That Engineer recognizes that the Agreement provides for the Project to furnish
electncal energy to Idaho Power for a ) year period.
6. That Engineer has substantial experience in the design, construction and operation
of electric power plants of the same type as this Project.
7. That Engineer has no economic relationship to the Design Engineer of this Project.
8. That Engineer has made a physical inspection of said Project, its operations and
maintenance records since the last previous certified inspection, and the Project's Policy for Operation
and Maintenance IO&M Policy) beanng the words "CERTIFIED FOR IDAHO P.U.C. SECURITY
APPROVAL - and the Stamp of the Certifying Engineer. It is Engineer's professional opinion, based on
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the Project's appearance, that its ongoing operation and maintenance has been substantially in
accordance with said O&M Policy; that it is in reasonably good operating condition; and that if
adherence to said O&M Policy continues, the Project wil continue producing at or near its design
electrical output, effciency, and plant factor for (_J years.
9. That Engineer recognizes that Idaho Power, in accordance with paragraph 21.4.3
of the Agreement, is relying on Engineer's representations and opinions contained in this Certification.
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.
By
(P.E. Stamp)
Date
County of
J
J ss
J
STATE OF IDAHO
On this _ day of ,19_, before me, the undersigned, a Notary
Public, personally appeared , personally known, who being duly sworn, did
say that he is the individual who executed the within instrument, and acknowledged to me that he
executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my offcial seal, the day
and year in this certificate first above written.
Notary Public for Idaho
Residing at:
(NOTARIAL SEAL)
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,/"/"'\
APPENDIX F
Fuel Supplier - Fuel Transporter ("FS") recognizes that Glenns Ferry Cogeneration Parters, Ltd.
("GFCP") has elected to sell the electrical output of the Magic West Cogeneration Facility to Idaho
Power at levelized rates under a twenty (20) year Firm Energy Sales Agreement. FS understands and
agrees that Idaho Power wil be a "Lender" as that term is defined and used in the Fuel Supply and Fuel
Transportation Agreements. FS understands that under the Firm Energy Sales Agreement if GFCP
permanently curtails its sales of firm electrical energy to Idaho Power prior to the conclusion of the
twenty (20) year term of the Firm Energy Sales Agreement, GFCP's election to be paid levelized rates
wil trigger a substantial overpayment liabilty payment to Idaho Power. FS furter recognizes that
Idaho Power's wilingness to purchase firm energy from the Magic West Cogeneration Facility at
levelized rates was based, in part, on FS's commitment to supply and deliver fuel in an amount
sufficient to allow the Magic West Cogeneration Facility to generate the annual Net Energy amount in
the Firm Energy Sales Agreement each year during the full twenty (20) year term of the Firm Energy
Sales Agreement. FS recognizes that if it terminates or permanently curtails its sales/deliveries of fuel
to GFCP, such termination - curtailment could cause a permanent curtailment, as described in
paragraph 21.3 of the Firm Energy Sales Agreement. FS and GFCP agree that Idaho Power is an
intended third-part beneficiary of the Fuel Supply and Fuel Transportation Agreements. GFCP and FS
further agree that they will be jointly and severally liable to Idaho Power for any damages Idaho Power
may incur as a result of an uncured breach by FS of the conditions and covenants of the Fuel
Supply/Fuel Transportation Agreements, and such uncured breach results in any permanent curtilment
by GFCP.
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"""'\
APPENDIXG
Magic West, Inc. ("MW") recognizes that Glenns Ferr Cogeneration Parters, Ltd. ("GFCP") has
el6cted to sell the electrical output of the Magic West Cogeneration Facilty to Idaho Power at levelized
rates under a twenty (20) year Firm Energy Sales Agreement. MW understands and agrees that Idaho
Power wil be a "Lender" as that term is defined and used in the Thermal Energy Service Agreement.
MW understands that under the Firm Energy Sales Agreement if GFCP permanently curtils its sales
of firm electric energy to Idaho Power prior to the conclusion of the twenty (20) year term of the Firm
Energy Sales Agreement, GFCP's election to be paid levelized rates wil trigger a substantial
overpayment liability payment to Idaho Power. MW further recognizes that Idaho Power's wilingness
to purchase firm energy from the Magic West Cogeneration Facilty at levelized rates was based, in
part, on MW's commitment to purchase suficient thermal energy under the Thermal Energy Service
Agreement to assure the Magic West Cogeneration Facilty wil be a Qualifying Facility under PURPA
for the full twenty (20) year term of the Firm Energy Sales Agreement. MW recognizes that if it
terminates or permanently curtils its purchases of thermal energy from GFCP, the Magic West
Cogeneration Facilty may lose its qualifying facilty status. Such loss of qualifying facilty status wil
be a default under the Firm Energy Sales Agreement and would cause a permanent curtailment, as
described in paragraph 21.3 of the Firm Energy Sales Agreement. MW and GFCP agree that Idaho
Power is an intended third-part beneficiary of the Thermal Energy Service Agreement. GFCP and MW
further agree that they wil be jointly and severally liable to Idaho Power for any damages Idaho Power
may incur as a result of the loss of the Magic West Cogeneration Facilty qualifying facility status, if
such loss of qualifying facility status is a result of an uncured breach by MW of the conditions and
covenants in the Thermal Energy Service Agreement, and such breach results in the failure by MW to
purchase the amounts of thermal energy required to maintain qualifying facilty status.
-59-
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,~/".
APPENDIX H
DETERMINATION OF ELIGIBILITY FOR OPERATION DATE
1 . Prior to initial startup and during the determination of eligibilty for an Operation Date, the
Facilty wil observe all the applicable requirements of APPENDIX C - OPERTING
INSTRUCTIONS FOR PLANTS OVER 750 kW.
2. The test period ("Test Period") for determination of eligibilty for an Operation Date shall be thirt
(30) consecutive days.
3. Concurrently with the start of its Test Period, the Facilty wil notify Idaho Power, in writing, of
the date and time the test is considered to have started.
4. For each 24 hour period during the Test Period, the Facility wil record, at a minimum, the net
generation, in kWh, delivered l. scheduled) to Idaho Power.
5. The Facilty wil record all outages occurring during the Test Period. For each outage, the record
wil include, at a minimum, the starting time, the ending time, the total time the unit was
disconnected from Idaho Power's system, and the cause(s) of the outage whether internal or
external to the Facilty.
6. If the Test Period spans the end of any month, the Facilty wil report to Idaho Power the
previous month's total net generation delivered per the requirements of Paragraph A-9 -
GENERATION SCHEDULING AND REPORTING. The total kWh delivered during the month wil
be correctly designated as having occurred either prior to the date stipulated in 3. above or after
the start of the Test Period.
7. Prior to the determination of an Operation Date, all kWhs delivered are Surplus Energy and wil
be paid for at the Surplus Energy Purchase Price.
8. At the end of the Test Period, the Facilty wil submit to Idaho Power, in writing, the following;
a. the complete daily record per 4.; and
b. the total net kilowatt hours delivered to Idaho Power (the sum of 4.); and
c. the complete outage record per 5., including total hours of outage; and
-60-
L960
(~r,
d. a calculation showing the Service Factor (SF) which is defined as
SF = (SHrrPH) x 100%
where
TPH is defined as the Test Period Hours which equals
24 hours x 30 consecutive days = 720 hours
and,
SH is defined as Service Hours which equals
TPH - total outage hours (from Bel
e. a calculation showing the Net Capacity Factor (NCFI which equals
ANG/PRSNFEA x 100%
where
ANG is defined as actual net generation delivered
during the Test Penod (from 8bl
and,
PRSNFEA is defined as the Pro-Rated Seasonal Net Firm
Energy Amount (from paragraph 6.2 of the Agreement)
f. A letter certifying to the above and requesting Idaho Powet s concurrence that the
Facility has, indeed, demonstrated the necessary degree of completion and
reliability and is thus eligible for an Operation Date.
9. The Facilty shall be deemed eligible for an Operation Date if during the Test Period both th
Service Factor and the Net Capacity Factor are equal to or greater than 90%. If both Factors
are shown to exceed the minimum requirement, then the eligible Operation Date for the Facilty,
per paragraph 1.12, shall be deemed to have occurred at 0001 hours Mountain Time on the day
following the day defined in 3. above as the day the test began.
10. If, at the end of the Test Period, either the Service Factor or the Net Capacity Factor (or both i
are found to be below 90%, the Test Period wil be extended on a day to day basis until such
time as at the conclusion of a period of 30 consecutive days, both the Service Factor and the
Net Capacity factor ~ simultaneously above 90%. The date when the Facilty becomes eligible
for an Operation date, in this case, shall be deemed to have occurred at 0001 hours Mountain
Time on the day following the day 30 days previous to the conclusion of the extnded Test
Period.
-61-
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~..,.-..I~ ..
11. Once the Facilty has accomplished all the requirements of paragraph 5.2, including either 9. or
10. above, Idaho Power wil, as part of the routine month-end payment process, and in addition
to any payment due for the then current month, remit to the Seller the difference between the
appropriate seasonal rate of paragraph 7.1 and the Surplus Energy Purchase Price previously
paid for Test Period energy. If the project's Operation Date has been determined per 10., this
adjustment wil apply to only the 30 consecutive days prior to the conclusion of the Test Period.
No interest wil be paid on any adjustment amounts.
-62-
L962
EXHIBIT 2
.
APE-'RVED PER c:ISSICN
ORDER NO. 25505...: I'
Facility No. 21765151
Project: Magic West. ") .."
V"'.".:l".. .. .f" ,l //,". ,,' '..
/' ::;&t.....y"- .~ _),¡ , _Lu ~ .
MY J. WALTER
W1ISSICN SECARY
~..---,...
FIRST AMENDMENT TO THE
FIRM ENERGY SALES AGREEMENT
tJ .. _ · ATHIS FIRST AMENDMENT entered into on the.J day of r 1994, to
the FIRM ENERGY SALES AGREEMENT (the" Agreement") dated as of DecemerU92, between
GLENNS FERRY COGENERTION PARTERS, LTD ("Seller"), and IDAHO POWER COMPANY, ("Idaho
Power"), hereinafter sometimes referred to correctively as .Parties", or individually as "Part", for
Seller's cogeneration project ("Facilty").
WIT N E SSE T H:
WHEREAS, the Agreement was approved by the Idaho Public Utilities Commission
("Commission") on January 22, 1993 per Order No. 24674: and
WHEREAS, the Seller desires to delay the Scheduled Operation Date of this Facilty by
one year: and
WH EREAS, the Partes desire to embody various other miscellaneous change'S which
have taken place since the Agreement was first signed.
NOW THEREFORE, the Parti8$ have agreed to amend the Agreement as follows:
1. ARTICLE VII: PURCHASE PRICE AND METOD OF PAYMENT; ADJUSTMENT OF PURCHASE
PRICE
In Paragraph 7.1.1 Base Payment..
"35.63 MillslkWh" is changed to "37.22" Mils/kWh"
"58.16 MiIslkWh" ;5 changed to "SO.77. MiJslkWh"
"48.47 MilslkWh" is changed to "50.64" MilslkWh"
2.B-3 SCHEDULED OPERATION DATE
"January 1, 1995" is changed to "January 1, 1996" (Scheduled Operation Date)
"December 1, 1994" is changed to December 1, 1995" (First Energy Date)
3. B-11 COSTS is amended to read as follows:
The cost of the 138 kV transmission line Special Facilties is $155,500. The cost of
. 1 -
PS275
the distribution line Special Facilities is $3,444. The cost of right-af-way acquisition
is $4,500. The cost of the Metering Equipment is $8,236. The cost of the
communication equipment is $8,500. In addition, there wil be a monthly charge for
the communication circuit lease cost associated with the telemetry equipment. The
communications circuit lease is $280.00 per month as of the date of this Agreement.
Seller recognizes that the monthly communications circuit charge may be adjusted by
Idaho Power as the cost to Idaho Power is adjusted by the owner of the
communications circuit. The cost of the Disconnecting Equipment is $103,000. The
total cost to be paid by the Seller is $283,180. The $283,180 represents the amount
that wil be charged by Idaho Power if the Seller makes the payment on or before
FebNary 1, 1995. If the Seller does not make this payment by the specified date, the
cost wil be subject to update. Idaho Power wil not schedule construction or order
Special Facilties which are not ordinarily maintained in Idaho Powets inventory until
payment has ben made. In addition to the instllaton and constrction charges above.
during the term of the agreement Seller will pay Idaho Power the operation and
maintenance charge specifed in Schedule 72 INTERCONNECTIONS TO NON-UTILITY
GENERATION or it successor schedules(s). This monthly operation and maintenance
charge wil be calculated based on $160,000.00 of 138 kV rated Interconnecton
Falites plus an additional $119.736.00 of Interconnection Facilties rated below 138
kV. The total cost shown above is an estimate calculated on the basis of average
cost. When the acl tol cost is determined, Idaho Power will adjust the total cost
amount to reflect the actual total cost incurred by Idaho Power. Beginning with the
mo of this adjusten the operaon and maintenance charges wil also be adjusted.
When th acal tol cost is known. witin si (60) days Idaho Power wil refund any
overpyment or Seller will remit any underpayment.
4. Except as modifed by this First Amendment, all other parts of the Agreement shall remain in
full forc8 and effec.
- 2-
PS276
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the
day and year herein written.
IDAHO POWER COMPANY
Bv~JL~
Vice Presi,nt. Power SupplyDate ¥¥t4
By r; .'f
Date
- 3-
PS277
STATE OF IDAHO )
) ssCounty of Ada )
On thiS¿ day of . 19~ before me. the undersigned. a
Notary Public. personally appeared Jan Packwood, personally known, who being duly sworn, did
say that he is the Vice President, Power Supply of the corporation that executed the within
instrument, and acknowledged to me that such corporation executed the same as a free act and
deed.
IN WITNESS WHEREOF, I have hereunto set my harid and affxed my official seal, the
day and year in this certificate first above written.
(NOTARIAL SEAL)
~ z:4n. iIResiding at. . ""4 t\J
STATE OF Cdocc.dC)
County of Ai C'=J1(t
)
) ss
)
.
On this -=day of Apr w\ , 19.Q, before me, the undersgned, a
Notary Public, personally appeared Alc.O h fO, bt~, personally known, who being duly
sworn, did say that he is the individual who executed the within instment, and acknowledged to
me that he executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affxed my offcial seal, the
day and year in this certificate first above wntten.
(NOTARIAL SEAl)
~-_.
~nc.f~ eWe iAÔ
Residing at: po (\( Q C C .0
- 4-
PS278
EXHIBIT 3
/I~i-_. .~,....t 1--.;-,i
APPRO PER MI ENi:ayDATE JAN 8, 1996.~-z U a?"J. WATEc:ISICN SECAR
Facilty No. 21765151
Project: Magic West
SECOND AMNDMENT TO THE
FIRM ENERGY SALES AGREEMENT
i
~
THIS SECOND AMNDMENT entered into on the.3 day of tv..'w 199(
to the FIRM ENERGY SAES AGREEMNT (the "Agreement") dated as of December 9, 1992,
between GLENNS FERRY COGENERATION PARTNERS, LTD ('Seller"), and IDAHO POWER
COMPAN, t'ldaho Power"), hereinafter sometimes referred to collectively as "Parties", or
individually as "Party", for Seller's cogeneration project ("Facilty").
WITNESSETH:
WHEREA, the Agreement was approved by the Idaho Public Utilties
Commssion t'Commssion'') on January 22,1998 per Order No. 24674; and
WHREA, the First Amendment was approved by the Idaho Public Utilties
Commssion ("Commssion") on May 18,1994 per Order No. 25505; and
WHERE, the Paries desire to embody various other Itscellaneous changes
which have taen place since the Agreement was first signed.
NOW THEREFORE, the Paries have agreed to amend the Agreement as
follows:
1. Paragraph 4.1.8.1 - "$15,000,000.00" is changed to read "$17,000,000.00"
2. Paragraph 4.1.8.2 - is changed to read:
"Other than the first mortgage liens perlttted herein, Permtted
Encumbrances as that term is defined in that certin Credit Agreement between
Seller and Toronto Dominion (Texas) Inc., as Agent and as Collateral Agent, and The
Toronto Doltnion Bank, Houston Agency, as Lettr of Credit Issuing Bank, as Lender,
pursuant to which the Lender extends credit to Seller to construct, install and equip
the Facilty (the "Credit Agreement")) or temporary mechanics, statutory or similar
liens incurred in the ordinary course of business in an amount not to exceed in
aggregate ten thousand dollars ($10,000.00), Seller wil not permit any liens or
encumbrances of any nature whatsoever to be placed on the Facilty without Idaho
Power's prior written consent, which consent will not be unreasonably withheld. If
any unpermtted lien or encumbrance is placed on the Facilty, Seller wil provide
- 1 -
PS265
,'" .,:o! .r-,/.-
Idaho Power with a bond, insurance or other security acceptble to Idaho Power in
an amount suffcient to secure the full discharge of such unpermitted lien or
encumbrance."
3. Paragraph 13.3.2 - is changed to read:
''If Idaho Power determes tht curtnt, interruption or reducton of Net
Firm Energy deliveries is necessar because of line construction or maintenance
requirements, emergencies, operattng conditions on its system, or as otherwise
required by Prudent Electrica Practices. It, for reasons other than an event of force
majeure, Idaho Power requires such a curtlment, interruption or reduction of Net
Firm Energy deliveries for a period that exceeds twenty (20) consecutive days,
beginning with the twenty-first day of such interruption, curilment or reduction,
Seller wil be deemed to be delivering Net Firm Energy at a rate determned by
dividing the seasonal Net Firm Energy amount specified in paragraph 6.2 for the
season in which the interruption or curtailment occurs by the number of hours in that
season. Idaho Power shall be obligated to make payments in accordance with this
Agreement for Net Firm Energy so calculated for the remainder of any such
curtlment period. Idaho Power wil notify Seller when the interruption, curtilent
or reduction is terminated."
4. Paragraph 14.2.4 is changed to read:
''Business Interruption (Loss oC1ncome) Insurance with minium daily limits
not less than seventy-five percent (75%) of the Faciltys estimated gross daily
electrical revenue or one hundred percent (100%) of annual business income (i.e.,
profit before income taxes, debt service and continuing operating expenses)
whichever is greater and total policy limits not less than twenty percent (20%) of the
Facility's estimated gross annual revenue from the sale of electrical energy or one
hundred percent (100%) of the annual business income (as described above) for a
period of up to twelve (12) months, whichever is greater."
5. Paragraph 14.2.4(c) is changed to read:
"The deductible for this insurance coverage shall not exceed thirty (30) days
gross daily revenues from the sale of electrical energy."
6. Article XV (4) is changed to read:
"Seller's obligation under paragraph 21.3 to pay liquidated damges as a result
of a permaent curtailment will not be excused even if the permaent curtailment
arises out of an event afforce maeure."
- 2-
PS266
.-,r.
7. Paragraph 21.2 Default is changed to read:
Default - If either Par fa to perform any of the term or conditions of this
Agreement, (an "event of default") the nondefaulting Pary shal1cause notice in
writing to be given to the defaulting Par, specifg the maner in which such
default occurred. If the defaulting Pary shall fai to cure such default within the
sixty (60) days after servce of such notice, or if the defaulting Pary reasonably
demonstates to the other Part that the default can be cured within a commercially
reasonable time but not withi such six (60) day period, and iCthe defaulting Pary
does not commnce such cure within the sixty (60) day period and continue to
dilgently pursue such cure, then, the nondefaulting Pary may pursue its legal or
equitable remedies.
8. Paragraph 21.4.2 Debt Service Reserve Account - (a) is changed to read:
Debt Service Reserve Account - (a) During the period of time in which the
Facilty acts as security for a first mortgage lien which is senior to Idaho Power's
security interest in the Facilty as described in paragraph 4.1.8 above, Seller shall
mantain a debt service reserve account containing cash in an amount equal to fift
percent (50%) of the Faciltys estimated Annual Debt Service rounded to the nearest
$1,000. With Idaho Power's consent, this debt service reserve account may be
coordinated with any debt service reserve account required by Seller's fist mortgage
lender to avoid duplication of accounts.
9. Paragraph 21.4.3 is changed to read:
In lieu of establishing and funding the above-described debt service reserve
account, with Idaho Power's prior written consent Seller may substitute irrevocable
standby letter(s) of credit, book entry certificate(s) of deposit or other security
instrument(s) acceptable to Idaho Power. During the period when the Facilty is
security for a first mortgage lien that is senior to Idaho Power's lien, the Seller may,
in lieu of establishing and funding the above-described debt service reserve account,
substitute Debt Service Loan(s) as such term is defined in Section 2.1(c) of the Credit
Agreement and Idaho Power and the first mortgage lender wil be joint beneficiaries
of the security instrument(s). When Idaho Power's security interest i~ the senior
security interest in the Facilty, Idaho Power wil be the sole beneficiary of the
security instrument(s) acceptable to Idaho Power.
.3-
PS267
.i" l . ,.~\/"f \
10. ARTICLE XXI: NOTICES
Notices are amended to read as follows:
"To Seller:Toronto Domion (Texas) Inc
Attn: Manager, Agency
909 Fannin, Suite 1700
Houston, TX 77010
To Idaho Power:Vice President, Bulk Power Markets
Idao Power Company
P OBo% 70
Boise, ID 83707"
11. Appendix B to this Agreement is deleted in its entirety and the following is
substituted in its place:
"APPENDIXB
SPECIA FACILITIES, POINT OF DELIVERY, METERING,
AN OPERATION DATE
PROJECT NO 21765151
MAGIC WEST COGENERATION PROJECT
B-1 DESCRIPTION OF FACILITY
The Seller's electrical Facilty is described as a natural gas fired turbine
synchronous generator package with total net rating of less than 10 MW net at
12,470 volts, three phase, 60 Hz.
B~2 LOCATION OF FACILITY
The Facilty is located in the SE Quarter of Section 29, Township 5 South,
Range 10 East, Boise Meridian, Elmore County, at the Magic West, Inc potato
processing facilty in Glenns Ferry, Idaho.
B-3 SCHEDULED OPERATION DATE
Seller has selected March 7, 1996, as the Scheduled Operation Date and
Februar 5, 1996, as the First Energy Date. In making these selections, Seller
recognizes that to allow for adequate testing of the Facilty's degree of
completion and reliabilty. it must achieve its First Energy Date at least thi
(30) days prior to the Operation Date. Idaho Power, based on the information
supplied by Seller, wil schedule its construction so that al Special Facilties,
Disconnection Equipment and Metering Equipment wil be completed in time
so as not to delay Seller's achieving the First Energy Date. However, if Seller
fails to pay the costs specified in B-11 below at the time specified therein, or
materially changes the specifications or design of the Facilty or Seller-
furnished Interconnection Facilties from what was previously provided to
- 4-
PS268
~," ../".r-,, \
Idaho Power, Idaho Power may be required to reschedule its construction of
these facilties which could adversely impact Seller's abilty to achieve its
scheduled First Energy Date.
B4 FAIURE TO ACHIE OPERATION DATE
If Seller has not achieved the Operation Date within eleven (11) months of the
Scheduled Operation Date, such failure shal be deemed to be an event of
default pursuant to Aricle XX.
B-3 POINT OF DELIVRY
The Point of Delivery of energy from the Seller to Idaho Power wil be the
12.47 kV bushings on the Idaho Power side of the Seller's transformer. The
10,000 kVA transformer wil be owned and mantained by the Seller. The
transformer connection wil be 12.47 kV Grounded Wye /12.47 kV Delta.
B-6 LOSSES
The metering point and the Point of Delivery oC energy are at the same
location, so no adjustment to energy for losses wil be necessary.
B-7 METERING AN TELEMETRY
The Metering Equipment, wil be on the Idaho ~ower side of the Seller's
transformer. Idaho Power provided metering equipment wil consist of:
current and potential transformers, a meter enclosure, an electronic bi-
directional meter for.measuring net generation, an isolation relay, transducer,
communication equipment. and all meter wiring. Seller will arrange for and
make available at Seller's cost, a telephone circuit dedicated to Idaho Power's
use terminating in an RJ-ll receptacle to be used for load profiling. At Seller's
cost, Idaho Power wil arrange for a second telephone circuit dedicated to
Idaho Power's communication equipment for continuous telemetering of the
project's kilowatt output to Idaho Power's Designated Dispatch Facilty. The
meter wil register kilowatt-hours and kilowatts of demand. Idaho Power
provided meter and communication equipment wil be owned and maintained
by Idaho Power with total cost of purchase, installation, operation and
mantenance. including administrative cost to be reimbursed to Idaho Power
by the Seller.
B-8 SPECIA FACILITIES
The construction of a substation breaker, with associated buss, relaying,
control equipment and 138 kV PT's for fault detection, and a 3 phase 12.47 kV
dedicated distribution line including all appropriate poles, crossarni,
cond,?ctor, and disconnects and other associated hardware wil be supplied
and maintained by Idaho Power. The total cost of these facilties wil be
reimbursed to Idaho Power by the Seller.
- 5 -
PS269
.' .fr-,/'\
~
RECTIVE POWER
The Seller shal operate the synchronous generators within plus or minus 5%
of unity power factor, or as listed in Appendix.A
B-iO DISCONNECTION EQUIPMENT
8-9
Disconnection Equipment is required to insure that the Seller's Facility wil
be disconnected from Idaho Power's system in the event of a disturbance on
either Idaho Power's system or the Seller's Facilty. Ths equipment is for the .
protection of Idaho Power's equipment only and wil be located at the Point of. .
Delivery. Idaho Power wil provide and inst a three phase pole mounted 15
kV oil switch to be used as a breaker, the disconnection panel which includes
the relays and associated logic, a pole mounted transformer bank for ground
fault detection, and a pole with three single phase safety switches which wil
also be for the connection of Seller's conductor at the Point of Delivery. Seller
wil supply and install conduit and cable connecting CT's on the Seller's
transformer to the disconnecting paneL. Idaho Power wil supply details for
the discnnection panel and wil connect and test the equipment prior to
operation of the facilty. Seller wil provide drawings of their interconnection
wiring for engineering approval before instalation. The total cost of the
disconnection equipment. installation, connection and testing wil be
reimbursed to Idaho Power by the Seller.
B-ll COSTS
The total cost of the substation Special Facilties is $157,000. The total cost of
the distribution line Special Facilties is $16,700. The total cost olthe Metering
Equipment is $10,800. The total cost of the communication equipment is
$8,500. In addition, there wil be a monthly.charge for the communication
circuit lease cost associated with the telemetry equipment. The.i.
communications circuit lease is $320.00 per month as of the date of this
Agreement. Seller recognizes that the monthly communications circuit charge
may be adjusted by Idaho Power as the cost to Idaho Power is adjusted by the
owner of the cOl1unications circuit. The total cost of the Disconnecting
Equipment is $41,600. The total cost to be paid by the Seller is $284,600. This
represents the amount that wil be charged by Idaho Power if the Seller maes
the payment on or before December 11, 1995. Irthe Seiie~ does not mae this
payment by the specified date, the costs wil be subject to update. Idaho
Power wil not schedule construction or order Special Facilties which are not
ordinarily maintained in Idaho Power's inventory until payment has been
made. In addition to the installation and construction charges above, during
the term of the agreement Seller wil pay Idaho Power the operation and
.6-
PS270
.." .
~
.,../-\
matenance charge specied in Schedul~ 72 INTRCONNECTIONS TO NON-
UTILITY GENERATION or its successor schedules(s). The tota cost shown
above is an estimte calculated on the basis of average costs. When the actua
total cost is determined, Idaho Power wil adjust the total cost amount to
reflect the actual total cost incurred by Idaho Power. Beginning with the
month of this adjustent, the operation and mantenace charges wil also be
adjusted. When the act tota cost is known, within six (60) days Idaho
Power wil refund any overpayment or Seller wil renut any underpayment.
B-12 SALVAGE
No later than sixty (60) days afr the termination or expiration of this
Agreement, Idaho Power wil prepare and forward to Seller an estimate of the
remaining value of those Idaho Power turnished Interconnection Facilties
described in this Appendix, less the cost of removal and transfer to Idaho
Power's nearest warehouse, if the Interconnection Facilties will be removed.
It Seller elects not to retan ownership of the Interconnection Facilties but
instead wishes that Idaho Power purchase such facilties from Seller at the net
salvage value, Idaho Power may then be invoiced by Seller for the net salvage
value estimated by Idaho Power for the interconnection facilties and shal pay
said amount to Seller within thirty (30) days after receipt of said invoice.
Seller shall have the right to offset the invoice amount against any present or
future payments due Idaho Power."
- 7 -
PS271
.'
" .1'--,('
12. Appendix C - Lump Sum Refund Payment for Permanent Curtailment is deleted in
its entirety and following substituted in its place.
"APPENDIXC
LUM SUM REFUND PAYMNT FOR PERMANT CURTAILMENT
OF PORTION OR ALL OF ANUAL NET ENERGY AMOUNT
UNDER 20-YE CONTRCT
Contract Year or Dollas
Curaiment Per Anual
Commencement Mel!awatt Hour
1 32
2 46
3 59
4 72
5 85
6 96
7 107
8 116
9 124
10 130
11 134
12 135
13 134
14 130
15 121
16 109
17 91
18 68
19 38
90 lQ
13. Except as modifed by this Second Amendment, all other pars of the Agreement shall
remain in full force and effect.
- 8-
PS272
.'
..l'",r'\....\
IN WITNESS WHREOF, the Paries hereto have executed this Amendment as
of the day and year herein writtn.
:~
/' Jan B PackwoodVice President, Bulk Power MarketsDate I~.
GLENNS FERRY COGENERATION
PARTNERS, LTD
sJYì(ΡtJ '1 grl.lJ¡crv-
Its ¡ pf!.ES/DcIJT. i I';, (:-Date li/1.(C r-I .,
- 9 -
PS273
..r.. ,. ¡ot..
,.
,r, /-"¡
STATE OF IDAHO )
) ssCounty of Ada. )
On this.i day of "Jl..,. . 19K. before me, the undersigned, a
Notary Public, personaly appeared Jan B Packwood, personaly known, who being duly
sworn, did say that he is the Vice President. Bul Power Markets of the corporation that
executed the within instrument. and acknowledged to me that such corporation executed
the sam as a free act and deed.
IN WITNESS WHREOF, I have hereunto set my hand and aixed my offcial
seal, the day and year in this certificate first above written.
(NOTARIAL SEA)
~L.~. ~otary~or~
Residig at: J
My Commssion Expires -l"v~ /99'1
STATE OF Nt-r,l, ~I( )
tf ) 55County of N8w t"R.Ic. )
On this .:;¿.lt day of !ÌJ t' t" "" i. -I , 19 r¡ j ,before me, the undersigned. a
Notary Public. personally appeared liJ~/( L l-'~t-Nt/....1è , personally known, who
being duly sworn, did say that he is the individual who executed the within instrument,f -and acknowledged to me that he executed the same as a free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and afixed my offcial
seal, the day and year in this certificate first above written."
. l-L .~(NOTARIAL SEA) No i ry Public for NEw "c'£1.
Residing at: 1Vi; iI~K. l
My Commssion E . ires
PETER J. FELTMAN
Notar Public, State of New YorkNo. 31-48281
QualifIed In New York County ,1 /CommsJon Explras Jiie 22. 189;, '"
. fJP-
~
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PS274
EXHIBIT 4
.:~-.:.*SID~PO~
An lDARP comny
May 23, 2008
Glen Ferr Cogeneration Parers, Ltd
c/o Power Plant Management Servce, LLC
7001 Boulevard 26, Suite 310
Nort Richland Hill, TX 76180
Attn:. Fred Barber / Sco.tt Gross
RE: Magic West Project
Dea Fred and Scott:
Arcle 3.2 of the Fir Energy Sales Agreement between Idaho Power Company and
Glenns Fer Cogeneration Parers, Ltd dated December 9, 1992 ("Agreement") specfies:
"Seller warrants that prior to interconnection with Idaho Power the Facility wil be a
"qualifing facilty" as that term is used and defined in 18 CFR 292.207. Afer initial
qualifcation, Seller will take such steps as may be required to maintain the F acUity's
"qualifing facility" status during the term of this Agreement and Seller's failure to maintain
qualifing facilty status wil be a material breach of this Agreement. ..
Idaho Power understands the potato processing facility ("Host Facility") tht was using
the stea from the Magic West Project ha ceased to operate and the project is dependent upon
the Host Facilty's use of the provided steam to retain its Qufyg Facility status.
. Subsequently, it is Idaho Power's undertading th the Magic West Project is no longer a
Qufyg Facility. The loss of Qualifyig Facility statu is a material breach of the Agreeent
and Idaho Power wil begi the proces of termating ths Agreeent, including but not limited
to calcuation and request for payment of damages as specfied withn the Agreeent.
In recent months, Idaho Power and representatives from your organation have discussed
alternatives to terination of ths agreement and/or argements to keep the genertion facilty
operatig. In a leter from your organzation dated May 16,2008, you have proposed a tolling
arangement tht is unaccetable to Idaho Power Company. Idaho Power believes the only
proposal that warts fuer discusion would be for the Magic West Project to operate, under a
new contrct, without Quaifyg Facilty status, and sell energy to Idaho Power at the existig
contract rates for the remainng term of the Agreement.
In anticip~tion of ths option not being accetable to Glen Ferr Cogeneration Parers,
Ltd, Idaho Power has caculated liquidated damages of $1 1,234,700 as provided in the
Agrment. Please respond by June~, 2008 with a plan for payment of the specified damages.
Page i of2
POBox 70 Boise, Idaho 83707 1221 W Idaho St Boise, Idaho 83702
PS5
Idaho Power intends to proceed with filig notice with the Idaho Public Utiliies
Commission of the material breach and teration of ths agreement. . Please contact me at
[phone] if you have any furter questions.
~~
M. Mark Stokes
Manager, Power Supply Planing
Idaho Power Company
cc: Barara Nevi (Blak Hill)
Karl Bokenp (!eo)
Jim Miler (IPCe)
Randy Allphi (!Co)
Bar Klie (IPCo)
Donovan Walker (!eo)
. Page2of2
POBox 70 Boise, Idao 83707 1221 W Idaho St. Boise, Idao 83702
PS6
EXHIBIT 5
--
..- --== ~
'Iacl HlllsldahtJ IIana,øniønt, Inc.
June 10, 2008
Mr. M. Mark Stokes
Manger, Power Supply Planning
Idaho Power Company
P. a.Box 70
Boise, Idaho 83707
Re: Firm Energy Sales Agrement (as amended, the "FESA") between Idaho Power
Company ("Idaho Powet') and Glenns Ferr Cogeneration Parners, Ltd. (the
"Parnership") - Magic West Project
Dear Mark:
We have received and reviewed your letter dated May 23, 2008 (the "May Lettt'), in
which Idaho Power identifies a purported material breach of the FEA, Idao Power's
intention to begin the process of terminating the FESA, and its assessment of liquidated
damages payable under the FEA. Given that the May Letter does not identify itself as a
formal notice of default or termnation under and in accordance with the terms of the
FEA, we do not consider it as such. Further, although we understad that Idao Power
believes that the Facilty (as defined in the FESA) has lost its "qualifying facilty" status
(as that term is used and defined in 18 C.F.R. 292.207) due to the termnation of the
operations of Idaho Fresh-Pak, the Facilty's steam host, Idaho Power should consider the
following informtion in light of the conclusions outlined in the May Letter:
1. It is premature for Idaho Power to conclude that the Facilty is no
longer a qualifying facilty. Compliance with the criteria of the Federal
Energy Regulatory Commission (the "PERC") for status as a qualying
facilty is meaured over the course of the calendar year. Idaho Power's
conclusion that the Facilty has not satisfied PERC's criteria presently,
therefore, is speculative. If the Parnership conclude that the Facilty may
be unable to satisfy FERC's criteria for qualifying facilty status under the
circumstances, the Parership wil undertake efforts to preserve such
status, including petitioning the FERC for a temporary waiver of the
applicable standards for qualfying facilty status, and a reaffirmation of
the Facilty's status as a qualfying facilty. We wil apprise Idaho Power
of any such petition.
350 Indiana Street. Suite 400, Golden, Colorado 80401
General: 303-568-3260 Facsimile: 303-568-3261
PS1
Idaho Power Company
June 10,2008
Page 2
2. Even if a breach had occured under Section 3.2 of the FESA,
wouldn't the Parership get the benefit of a notice of the default and the
cure period specified in Section 21.2 of the FESA? Section 21.2 requies
that a notice in wrtig be giveii to the defaultig part, and is quite clear
on the limtations of the pursit of remedes by a non-defaultig par,
statig, "If the defaultig Par shall fail to cure such default withi the
sixty (60) days after service of (the default) notice, or if the defaultig
Part reasonably demonstrtes to the other Part that the default can be
cured with a commercially reaonable tie but not with such sixty
(60) day period, and if the defaultig Par does not commence such cure
within the sixty (60) day period and contiue to diligently pure such
cure, then, the nondefaultig Par may purue its legal or equitable
remedes. "
3. Idaho Power assert in the May Letter tht liquidate dages of
$l 1,234,700 are payable, without (i) citing on what basis the daages are
payable, (ü) providig a calculation of such amount or (ii) referencing the
applicable provision of the FESA pursuant to which such amounts are
payable. Given the lack of substatition of the liquidated daages claim,
we wil not have a plan' for payment of the specified damages, as requested
in the May Letter, as we believe those amounts are not due. If you would
like to discuss ths issue fuer, we ar open to a meeting where your
points could be reviewed.
We understad tht our readig of the provisions of the FESA may differ with Idaho
Power's, and would be wiling, under Section 21,1 of the FESA, to tae any reultig
difference of opinon to the Idao Public Utiities Commssion ("PUC") for reolution.
If, as you state in the last paragraph of the May letter, it is Idao Power's intention to
uniaterally file a notice of materal breach and termtion of the FESA with the PUC,
the Parersp wi vigorously challenge any such action. We contiue to believe tht an
amicable resolution is in the best interest of al pares, and we would like to purue
fuer discussions with Idao Power to work though thes issues, as well as to reach an
arrangement whereby the Parership ca contiue to provide power to Idaho Power
under term that are acceptable to both pares. The tollig proposal that you reference in
the May Letter was intended to be a stag point for discussions between the pares,
and we hope tht Idao Power wil be open to working with the Parership to formulate
term for a tollg or other argement that wi be workable for Idaho Power and the
Parerhip.
If, at any point in the futue, a default actually ha occurrd under the FESA on which
Idao Power intends to tae action and notify the Partership, we would remid you of
your obligations to the lenders to the Facilty to provide all written notices under the
FESA diectly to their Collatera Agent, both under Arcle XX of the FESA (as
amended puruant to the Second Amendment to the Fir Energy Sales Agreement, dated
PS2
Idaho Power Company
June 10,2008
Page 3
December 30, 1995), and under Section i.Ol(c) of the Consent an Agreement, dated as
of December is, 1995, between Idaho Power an Toronto Domion (Texas), Inc., as
Collatera Agent, precessor in interest to Cal yon, New York Brach, the curnt
Collateral Agent.
We look forw to fuer dicusions with you.
Respectfly,
Glenn Fer Cogeneration Parers, Ltd.
By: Glenns Ferr Magement, Inc.,
its Geer ParerBY.~
Name: Steven J. Helmers
Title: Vice President
cc: Fre Barber, Power Plant Management Serce, LLC
Scott Grss, Power Plant Manement Servces, LLC
Barbara Nevins, Blak Hills Generation, Inc.
Mak Lux, Black Hils Energy, Inc.
Tom Ohlcher, Black Hils COIporation
Ted VandereL, Calyon - Crit Agrcole em
Aie Shea Calyon - Crédit Agrcole cm
PS3
EXHIBIT 6
?)IDA~PORQD
An IDACORP Company
BARTON L. KLINE
Senior Attorney
August 7, 2008
CERTIFIED MAL
RETUR RECEIPT REQUESTED
Steven J. Helmers, Vice President
Black Hils Idaho Management, Inc.
350 Indiana Street, Suite 400
Golden, Colorado 80401
Re: Firm Energy Sales Agreement (as amended, the "FESA") between Idaho Power
Company ("Idaho Power") and Glenns Ferr Cogeneration Parers, Ltd.
("Glenns Ferr") - Magic West Project
Dear Mr. Helmers:
Mark Stokes has requested that I reply to your letter dated June 10, 2008 (the "June
letter") in which you responded to the notice of material breach and defau1t Idao Power sent to
Glenns Ferr on May 23,2008 (the "May 23 letter" or "defau1t notice"). In your June letter, you
assert that (1) Glenns Ferr has not defau1ted in its performance of the FESA and (2) that Idaho
Power has not really notified Glenn Ferry that it has defaulted.
The purose of ths letter is to make sure there is no misunderstading on Glenn Ferr's
par. Idao Power does not concur with Glenns Ferr's interpretation of the May 23 letter. The
May 23 letter complies with the default notice requirements of the FE SA. It is Idaho Power's
position that the sixty-day cure penod specified in paragraph 21.2 of the FESA commenced on
May 23,2008, and expired on Ju1y 22,2008.
Idaho Power believes that your asserton that the May 23 letter does not constitute a
notice of default under the FE SA will be a very difficult position to sustain in light of the explicit
language in the default notice advising Glenns Ferr that there has been a matenal breach of the
FESA, that Idaho Power intends to termate the FESA, and specifying the amount Idaho Power
seeks to recover in the way of liquidated damages for the permanent curlment of energy
defenses and material breach of the FESA by Glenns Ferr.
Your June letter also asserts that the May 23 letter canot be considered a notice of
defau1t because it failed to enumerate the provisions of the FESA recogng your nght to cure
any defau1t. As noted above, Idaho Power recognizes thåt the FESA permits Glenns Ferr to
cure defau1ts. Of course, if Glenns Ferr had any intent or abilty to cure the curent defau1ts,
Idaho Power would have expected to have received some indication of the steps Glenns Ferr
was takg to cure the defaults.
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, 10 83702
Steven J. Helmer, Vice President
August 7, 2008
Page 2
In the June letter, you also claim that it is a requirement of the FESA that Idaho Power's
notice of default provide a calcu1ation of the liquidated damages amount and reference the
applicable provisions of the FE SA under which such damages are payable. The FESA contas
no such requirements. Idaho Power presumes that sophisticated entities like Glenn Ferr and its
lender have the ability to interpret the FESA. Neverteless, to avoid any confusion, I have
enclosed a schedule to ths letter showing how the $11,234,700 amount cited in the defau1t notice
was computed. (Attachment No.1.)
You wil note that Attchment No. 1 shows that Idaho Power has computed the liquidated
damages from December of 2007. As you know, Glenns Ferr has not delivered any energy to
Idaho Power. since December 2007. The fact that the project has ceased generation and the
thermal host for the project has permanently closed its potato processing operations in Glenns
Ferr makes it abundantly clear that the Glenns Ferr project has permanently curailed the
deliveries of energy to Idaho Power it agreed to provide under the FESA. (paragraph 6.3.) Such
permanent curlment is a breach and defau1t under the FESA.
In your June letter, you also note a requiement to notify Glenns Ferr's lenders that a
default has occured. First, I note that you copied your June letter to two individuas at Calyon-
Crédit Agricole CIB. As a result, it appears that the lender has actu notice of Idaho Power's
May 23 default notice. I have provided a copy of this letter to Calyon at the last address we have
for them. This shou1d elimnate any confsion on the par of Glenns Ferr and Calyon regarding
Idaho Power's notice of default and expiration of the cure period.
I have also enclosed (Attchment No.2) a recent letter from Glenns Ferr in which it.
diected Idao Power to send notices under Aricle 27 of the FESA to Glenns Ferr. Idaho
Power has complied with Glenns Ferry's wishes as identified in Attachment No.2.
Finally, in the June'letter, you indicate a willngness to contiue discussions to resolve
Glenns Ferr's default without the necessity to proceed to litigation. Idaho Power ha mae
numerous efforts to resolve ths matter and, frany, the Company has concluded that Glenns
Ferr does not have a good faith intent to address the problem. Idaho Power is certnly willing
to continue discussions to resolve the matter; however, under the circumstaces, those
discussions will need to be done in conjunction with settement of litigation.
Very try yours,~~
Baron L. Kline
BLK:csb
Enclosures
cc: Calyon New York Branch - w/encls. (via certified mail, retu receipt)
(Att: Project Finance Group)
Glenns Ferr Cogeneration Parers, Ltd. (via certfied mail, retu receipt)
(Att: Fred Barber/Scott Gross)
Magic West
Permanent Curtilment Calculation
Annual Net Firm Energy 83,220 MWh
(Paragraph 6.3 of FESA)
Dollars Per
Annual
Megawatt Hour
(Appendix C of
FESA)Thermal Host
(Revised by Closure and Calculated Lump
Contract Second Permanent Sum Liquidated
Calendar Year Year Amendment)Curtailment Damages Payment
121 1996 Thru 111 1997 1 $32
121 1997 Thru . 111 1998 2 $46
121 1998 Thru 111 1999 3 $59
121 1999 Thru 111 2000 4 $72
121 2000 Thru 11/2001 5 $85
121 2001 Thru 111 2002 6 $96
121 2002 Thru 111 2003 7 $107
121 2003 Thru 111 2004 8 $116
121 2004 Thru 111 2005 9 $124
121 2005 Thru 111 2006 10 $130
121 2006 Thru 111 2007 11 $134
121 2008 111 2009 13 $134 83,220 MWh $11,151,480
121 2009 Thru 111 2010 14 $130 83,220 MWh $10,818,600
121 2010 Thru 111 2011 15 $121 83,220 MWh $10,069,620
121 2011 Thru 11/2012 16 $109 83,220MWh $9,070,980
121 2012 Thru 111 2013 17 $91 83,220 MWh $7,573,020
121 2013 Thru 11/2014 18 $68 83,220 MWh $5,658,960
121 2014 Thru 111 2015 19 $38 83,220 MWh $3,162,360
121 2015 Thru 111 2016 20 $19 83,220 MWh $1,581,180
ATTACHMENT NO.1
'./.
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G.l~t1rJí: F:eFtjl',¡'filnrigeit)en, Iti~.
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GUNNS FERRY COGENERTLON.~ARí"NBRS. ern...' .." ......:. ;. . ". . .... . .... .-"" . . ,. .
By;:Ólënns lØf Måiiemëilf" rne,..:Gen~~_
Na~e: Frêi-" ~.
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i'OOillieard'í6 '.Scte3.l0 * r.ort Rlçh Hills;f~ . 16180 -.817.616;0750 . FaidI11.616:Ð754
ATTACHMENT NO.2
EXHIBIT 7
IPC0000004
GLENNS FERRY COGENERATION
PARTNERS, LTD.
c/o Power Plant Management Services, LLC
7001 Boulevard 26, Suite 310
North Richland Hills, TX 76180
Augut 28, 2008
Baron L. Kline, Esq.
Idao Power Company
P. O. Box 70
Boise, Idaho 83707
Re: Fir Energy Sales Agreement (as amended the "FESA") between Idaho Power
Company ("Idaho Power") and Glenns Ferr Cogeneration Parers, Ltd. (the
"Parership") - Magic West Project (the "Project")
Dear Mr. Kline:
We have received and reviewed your letter dated August 7, 2008 (the "August IPC Letter"), in
which Idaho Power contends tht the Parnership is in breach and default under the FESA and
that the applicable cure penod has expired. A significant portion of the August IPC Letter
devotes itself to establishing the pnor May 23rd letter from Idaho Power to the Parership (the
"May IPC Letter") as a valid default notice. Wheter or not the May IPC Lettr constituted a
valid notice of default is actuly the least of the questions suroundig that communication. As
outlned in the Parership's June 10, 2008, response (the "June Parership Response"), the
basis for the default that Idaho Power is attempting to declar, whether though the May IPC
Letter or the Augu IPC Letter, is unfounded. There are simply no provisions in the FESA that
support a curent declaration of an event of default against the Parership on the bases
referenced in the Mayor August IPC Letters. Idaho Power, consequently, is not entitled to tae
action against the Project or the Parership with regard to those purorted defaults, and is
certainly not entitled to daages as a result.
The May IPC Letter specified the Project's loss of quafying facilty statu as the basis for a
default under the FESA. As explained in the June Parership Response, there has been no such
loss of statu, and therefore, no breach of the FESA on that basis.
The August IPC Lettr suggests tht there ha been a permanent curailment of energy puruat
to which Idaho Power is entitled to collect daages. Ths is a position that was not asserted in
the May IPC Letter, and we note that it is the only basis on which liquidated daages ar
payable under the FESA. The Project ha not been permanently curled. It is tre that the
steam host for the Project, Idao Fresh-Pak, has terminated its operations at the Project, which,
in tu, has temporaly suspended the Project's energy production; however, Idaho Fresh-Pak
IPC0000004
IPC0000005
Idaho Power Company
August 28, 2008
Page 2
ha indicated that there are at least two potential pares interested in its facilties adjacent to the
Project. For one of those paries, the Parership is in the process of executing a non-dislosure
agreement to obtai detals regarding the potential sale. In addition, the Parership is attempting
to bring yet another entity to the Project as a potential steam host. Consequently, there is no
permanency with respect to the suspension of operations at the Project, and a temporar
reduction in the amount of energy that the Project delivers to Idaho Power canot be the basis of
a "permanent curlment." If Idaho Power would like a demonstration of the Project's abilty to
generate, the Partership would be happy to accommodate you at your convenience.
In light of the foregoing, the August IPC Letter's suggestion of litigation is unwaranted and
prematue. As you know, the FESA requires that any disputes be heard before the Idaho Public
Utilties Commssion (the "PUC"). As we previously stated in our June Parership Response,
we would be willing to take our differences of opinion on the interpretation of the terms of the
FESA before the PUC for resolution. However, we believe that both paries would be much
better served by meangf discussions rather than meaningless saber ratting.
It is disappointing that Idao Power is focusing on the dubious position that the Project ha been
permanently curled, rather th the actual statu and circumstaces of the Project or what
would be best for Idaho Power's ratepayers. Under the FESA, Idaho Power has no "nght" to
request energy from the Project, but rather takes power at the convenience of the generator. At
times, this energy is more expensive than other energy available to Idaho Power customers at the
applicable hourly pricing. Consequently, when the Project operates, it may displace less
expensive generation. The Parership offered Idaho Power the abilty to calIon energy from the
Project at times that would benefit the ratepayers both in price and reliabilty, and conveyed the
offer to Idaho Power via a term sheet meant to trgger discussions. Although Idaho Power
specificaly requested this proposal, it refued to discuss it afer its submission by the
Parership. Ths refusal, together with other, previous efforts by the Parership to open
discussions on the FESA tht Idaho Power declined, evidences Idaho Power's, not the
Parership's, failure to parcipate in a meagful way in the efforts to improve the sitution at
the Project. Contrar to the las paragraph of your August IPC Letter, the Parership ha been
fortight in its commwications with Idaho Power, and ha made numerous attempts to discuss
the matter with Idaho Power though meetings, correspondence and phone conversations. We
would be happy to provide you with a detailed list of each of our efforts to contat and discuss
the Project with Idaho Power over the past months. Let us know if that would be helpfu to you.
As we hope our previous commwications and actions have clearly demonstrted, the Parership
is willng to set all accusations, arguents and counter-arguents aside, and meet with Idaho
Power to resolve the issues at the Project, either by modifications to previous offers or by
stag with a blan sheet of paper. If Idaho Power is interested in moving forward in a positive
and constive way, we would ask that you propose several meeting ties and locations for the
pares to meet. The Parnership will ensure paricipation and ful cooperation. We trly believe
an amicable solution best serves alL.
IPC0000005
IPC0000006
Idao Powr Compay
Augt 28, 2008
Page 3
We look forw to your rens.
Sincely,
GLENS FERRY COGENERATION
PARTN, LTD.
By: Glen Ferr Magement, Inc.,
its Genera Parer
. ~'-'By: /). j'i. e. Ei. At:9 vi
Name: Mà Segel .-Title: CPo
cc: Tim Mier, Idao Power Copay
Ma Stokes, Idao Power Comp y
Fre Babe, Power Plan ent Serces, LLC
Scott Gr, PowerPlanMang Servces, LLC
Barbar Nev, Blak Hill Gen' on, Inc.
Mak Lux, Bla.Hills Energ, Inc.
Tom Ohlher, Black Hils Co raon
Steve Helner Black Hils Corp . . on
Ted Vandenel, Calyon - Credit . cole em
Ane Shean Calyon - Crét Agr. Ie em
IPC0000006
EXHIBIT 8
Magic West
Permanent Curtilment Calculation
Annual Net Firm Energy (Section 6.3)83,220 MWh
Dollars Per
Annual
Megawatt Hour
(Appendix C)
(Revised by Actual Curtailment Calculated
Contract Second (Complete plant Contract Lump
Calendar Year Year Amendment)shutdown)Sum Payment
12/ 1996 Thru 11/ 1997 1 $32
12/ 1997 Thru 11/ 1998 2 $46
12/ 1998 Thru 11/ 1999 3 $59
12/ 1999 Thru 11/ 2000 4 $72
12/ 2000 Thru 11/ 2001 5 $85
12/ 2001 Thru 11/ 2002 6 $96
12/ 2002 Thru 11/ 2003 7 $107
12/ 2003 Thru 11/ 2004 8 $116
121 2004 Thru 11/ 2005 9 $124
12/ 2005 Thru 11/ 2006 10 $130 83,220 MWh $10,818,600
12' 2006 Thru 11/ 2007 11 $134 83,220 MWh $11,151,480
12/ 2007 Thru 11/ 2008 12 $135 83,220 MWh $11,234,700
12/ 2008 Thru 11/ 2009 13 $134 83,220 MWh $11,151,480
12/ 2009 Thru 11/ 2010 14 $130 83,220 MWh $10,818,600
12/ 2010 Thru 11/ 2011 15 $121 83,220 MWh $10,069,620
12/ 2011 Thru 11/ 2012 16 $109 83,220 MWh $9,070,980
12/ 2012 Thru 11/ 2013 17 $91 83,220 MWh $7,573,020
12/ 2013 Thru 11/2014 18 $68 83,220 MWh $5,658,960
12/ 2014 Thru 11/ 2015 19 $38 83,220 MWh $3,162,360
12/ 2015 Thru 11/ 2016 20 $19 83,220 MWh $1,581,180