20120412Letter of Understanding and Agreement.pdf

MMIAN IHO
RECE WSPOWER.
An IDACORP company
1 PM t:
JASON B. WILLIAMS
Corporate Counsel 1JTLITIOM, jwiIIiams(idahopower.com
!ON
April 11, 2012
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83702
Re: Case No. [PC-E-1 0-19
Grand View Solar PV One, LLC - Letter of Understanding and Agreement
Relating to Contract Default, Scheduled Operation Date, and Generator
Interconnection Agreement
Dear Ms. Jewell:
Enclosed please find a copy of a Letter of Understanding and Agreement between
Idaho Power Company and Grand View Solar PV One, LLC. Please file the enclosed letter
in the contract file for this matter.
Very truly yours,
Jason B. Williams
JBW:csb
Enclosure
cc: Peter J. Richardson (w/encl.)
Donald L. Howell, II, IPUC (w/encl.)
Kristine A. Sasser, IPUC (w/encl.)
Rick Sterling, IPUC (w/encl.)
Randy Allphin, IPC (w/o end.)
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707
RECEtVED
m PM
UTLT_S An OACORP Company
JASON B. WILLIAMS
Corporate Counsel
jwilliams©idahopower.com
April 3, 2012
VIA E-MAIL: sstocker©coronacapitalpartners.com
Sean Stocker
Corona Capital Partners
300 Great Oaks Boulevard, Suite 320
Albany, New York 12203
Re: Grand View Solar One PV -Letter of Understanding and Agreement Relating
to Contract Default, Scheduled Operation Date, and Generator Interconnection
Agreement-IPUC Case No. IPC-E-10-19
Mr. Stocker:
As Idaho Power Company's (Idaho Power") Randy Aliphin explained In his phone call
with you on March 28, 2012, this Letter of Understanding and Agreement is meant to express, In
writing, the mutual agreement and understandings reached between Idaho Power and Grand
View Solar One PV, LLC ("Grand View One') for Its qualifying facility generation project
("Project") regarding the Material Breach for failing to maintain the required security and for
falling to meet the Scheduled Operation Date required in Grand View One's Idaho Public
Utilities Commission-approved Firm Energy Sales Agreement dated June 8, 2010 ("FESA").
Paragraph 5.7 of the FESA requires the Project to post security in the amount of
$900,000. This amount may be reduced by ten percent (10%) if the Project evidences
that the interconnection is progressing and will enable the Project to meet the Scheduled
Operation Date. Idaho Power received a Standby Letter of Credit in the amount of
$900,000 which was subsequently reduced to $810,000 pursuant to the terms of the
FESA.
The Standby Letter of Credit expired on March 1, 2012 and was not otherwise extended,
updated or replaced. Thus, the Project was in Material Breach effective March 1, 2012.
The FESA also contains a provision which Idaho Power has interpreted to mean that the
Project's Scheduled Operation Date was January 30, 3011. The Project did not achieve its
Operation Date by January 30, 2011. Grand View One disputes Idaho Power's interpretation of
the FESA that the Scheduled Operation Date was January 30, 2011, and, instead, asserts that
the FESA has a "rolling" Scheduled Operation Date and the deadline for such Operation Date
has not yet expired.
Letter of Understanding and Agreement
April 3, 2012 Page 1 of 3
On March 22, 2012, Idaho Power sent Grand View Solar One a Notice of Material
Breach of the Firm Energy Sales Agreement and Notice of Termination ("Notice") for failing to
maintain the required security; and (2) failing to meet the Scheduled Operation Date. Pursuant
to the Section 5.3.2 of the FESA, the Notice also sought collection of Delay Liquidated Damages
in the amount of $900,000 for the Project's failure to achieve its Scheduled Operation Date
On March 23, 2012, Idaho Power received a response to the Notice from Grand View
One wherein Grand View One disputed Idaho Powers claim that it failed to meet the Scheduled
Operation Date. In addition, Grand View One's response claimed it had immediately available
funds in the amount of $475,000 to pay the obligation associated with its Generator
Interconnection Agreement ("GIA') as well as a letter of credit necessary to meet its security
obligations. Grand View One indicated it would be willing to make the GIA payment as well as
post the letter of credit if Idaho Power would agree to not pursue its Delay Liquidated Damages
claim.
Pursuant to Mr. Allphin's March 28, 2012, telephone call with you, the Notice, and Grand
View One's response to the Notice, the parties' mutual understanding and agreement, having the
benefit of consultation with their own respective counsel, is as follows:
The parties hereby agree as follows:
(1)An Operation Date of no later than January 12, 2013, is a commercially reasonable time
period in which to allow Grand View One to have its project commercially operational;
(2)The commercially reasonable time period granted to Grand View One to achieve its
Operation Date is a fair and reasonable time for Grand View One to achieve its Operation Date,
and Grand View One shall not bring any legal or equitable challenge to the same, and by this
agreement knowingly and intelligently waives its rights to bring any possible legal claim related
thereto;
(3)Grand View One shall post security as required by the FESA in the amount of Eight-
Hundred Ten Thousand Dollars ($810,000) to secure the Operation Date commitment ("Delay
Security"). This Delay Security shall be posted no later than Friday, April 6, 2012 by 5:00 p.m.
Mountain Time in a form as described in Appendix A attached hereto. If Grand View One fails to
achieve a January 12, 2013, Operation Date, Idaho Power shall have the right to immediately
draw the funds from the Delay Security and the FESA will terminate without any further action or
notice required by Idaho Power. The parties agree that the damages Idaho Power and its
customers incur due to Grand View One's failure to achieve its Operation Date are difficult or
impossible to calculate with certainty, and that the Delay Security is an appropriate
approximation of such damages. The stated Delay Liquidated Damages and Delay Security for
such are reasonable, and Grand View One shall not bring any legal or equitable challenges to
the same, and by this agreement knowingly and intelligently waives its rights to bring any
possible legal claim related thereto;
(4)In the event Grand View One achieves its Operation Date by or before January 12, 2013,
Idaho Power shall release the Delay Security posted hereunder thirty (30) days after the
Operation Date has been achieved;
Letter of Understanding and Agreemeni
April 3, 2012 Page 2 of 3
(5)If Grand View One does not post the required Delay Security by the date certain of Friday,
April 6, 2012 by 5:00 p.m. Mountain Time, the FESA will be terminated with no further notice
required or legal challenges to the termination thereof;
(6)If Grand View One does not achieve the Operation Date on or before January 12, 2013, by
5:00 p.m. Mountain Time, the FESA will be terminated with no further notice required or legal
challenges to the termination thereof; and
(7)Grand View One shall pay Four-Hundred Seventy Five Thousand Dollars ($475,000)
representing the required construction deposit pursuant to the GIA, which payment shall be
made by no later than Friday, April 6, 2012. If Grand View One does not pay the required
construction deposit by Friday, April 6, 2012, by 5:00p.m. Mountain Time, the FESA will be
terminated with no further notice required or legal challenges to the termination thereof.
(8)If it can be reasonably demonstrated that Idaho Power was the cause of any delays that
would prevent Grand View One from achieving the Operation Date of January 12, 2013, then the
Operation Date shall be extended by the length of such delays or to some other reasonable date
as mutually agreed. It Is hereby stipulated by both parties that no such claim that Idaho Power
was or is the cause of any such delays exists as of the date of execution of this Agreement.
Capitalized terms uses in this agreement that are not defined herein shall have the meaning set
forth in the FESA.
Each party's signature below indicates that party's acceptance of this Lejer of Understanding
and Agreement and the averments and contents thereof. DATED this day of April 2012.
Agreed to and Accepted on behalf of Idaho Power Company: \
f!,lsa Grow JetS B. Williams
'-Senior Vice President, Power Supply Corporate Counsel
Idaho Power Company Idaho Power Company
!Zlo and &pted n behalf of Grand View Solar One PV, LLC
Q 4J
Sean Stocker Peter Richard
Grand View Solar One PV, LLC Attorney for Grand View Solar One PV, LLC
Letter of Understanding and Agreemens
April 3, 2012 Page 3°f 3
APPENDIX A
FORMS OF LIQUID SECURITY
The Seller shall provide Idaho Power with commercially reasonable security instruments such as
Cash Escrow Security, Guarantee or Letter of Credit as those terms are defined below or other
forms of liquid financial security that would provide readily available cash to Idaho Power to
satisfy the Delay Security requirement within this Agreement.
For the purpose of this Appendix A, the term "Credit Requirements" shall mean acceptable
financial creditworthiness of the entity providing the security instrument in relation to the term of
the obligation in the reasonable judgment of Idaho Power, provided that any guarantee and/or
letter of credit issued by any other entity with a short-term or long-term investment grade credit
rating by Standard & Poor's Corporation or Moody's Investor Services, Inc. shall be deemed to
have acceptable financial creditworthiness.
I. Cash Escrow Security - Seller shall deposit funds in an escrow account established by the
Seller in a banking institution acceptable to both Parties equal to the Delay Security.
2. Guarantee or Letter of Credit Security - Seller shall post and maintain in an amount
equal to the Delay Security: (a) a guaranty from a party that satisfies the Credit
Requirements, in a form acceptable to Idaho Power at its discretion, or (b) a Letter of
Credit in a form acceptable to Idaho Power, in favor of Idaho Power. The Letter of
Credit will be issued by a financial institution acceptable to both parties.