Central Coast Community Energy (3CE) Contracts under $200,000/fiscal year Vendor Total Engagement Amount From To Service Scope Remarks 1 Bay Media, Inc. DBA Media Systems Group $ 5,302 5/30/2025 10/30/2025 Renewal and Amendment No.1 to renew and continue services effective May 30, 2025 through
October 30, 2025. Audio-visual products and
services for IT Department
2 Granicus $ 1,423 8/1/2025 7/31/2026 1 Year eDisclosure Maintenance and Support for Board Clerk Services
3 Duncan Weinberg Genzer Pembroke $50,000 9/23/2025 N/A Perform legal services on behalf of 3CE: Drafting, revision, analysis, negotiation, and related legal
services in connection with transactions for or
related to, or which help facilitate, the sale and
purchase of electric energy for the benefit of 3CE’s
customers.
Staff Report Item 13
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Leo Kim, Director of Power Supply
SUBJECT: Authorize the CEO to execute a Third Amendment to the Energy Storage Agreement (“ESA”) with GEM A-CAES, LLC and any necessary ancillary documents to add $125,000,000 and revise the commercial operation date for a total revised total not to exceed amount of $895,000,000, a revised commercial operation date of December 31, 2030 and a term of 25 years DATE: November 12, 2025
RECOMMENDATION:
Authorize the CEO to execute a Third Amendment to the Energy Storage Agreement (“ESA”) with GEM A-CAES, LLC and any necessary ancillary documents to add $125,000,000 and revise the commercial operation date for a total revised total not to exceed amount of $895,000,000, a revised commercial operation date of December 31, 2030 and a term of 25 years.
BACKGROUND:
3CE entered into the original Energy Storage Agreement (“ESA”) with Seller in December of 2022 following Operations Board approval, for a 200-MW long duration (> 8-hour discharge duration) battery energy storage project, using advanced compressed air technology, for a term of 25 years and a commercial operation date of 2028.
In December of 2023, 3CE executed the 1st Amendment to the ESA granting a one-year extension to allow more time for Seller to secure financing. The driver for the delay was that Seller’s Application for Certification (“AFC”) with the California Energy Commission (“CEC”) was put on hold, as the developer worked on design optimization (cavern suitability and transmission pathways).
In August 2024, Seller exercised a contractual right to delay additional milestones. Additionally, in December of 2024, 3CE executed the 2nd Amendment extending the deadline to secure financing by no later than the guaranteed construction start date of November 23, 2025. The delays were attributed to Seller being told by the transmission owner (SCE) that the interconnection upgrades could not be completed by ESA’s expected commercial operation deadline nor the in-service date reflected in the interconnection agreement (IA) between Seller and Southern California Edison.
DISCUSSION/ANALYSIS:
In April of 2025, 3CE received notice from Seller that it was still unable to secure necessary financing for the project due to on-going permitting and interconnection challenges, along with economic pressures due to inflation, increased financing and other delivery costs. The Seller requested a price adjustment and a thirteen-month delay to the anticipated commercial operation deadline of November 23, 2029.
Staff evaluated Seller’s request and terms under which 3CE could accommodate such a request. Having considered a number of different scenarios and contract structures, staff were able to find mutual agreement with Seller on terms that meet their development and financing needs while maintaining value to 3CE customers. The attached amendment reflects these negotiated amendments to the underlying agreement, which staff recommend modifying to ensure value to 3CE customers and to continue our support for non-lithium energy storage technology solutions, both for 3CE’s portfolio and the California grid more broadly.
Overview of the Project
FISCAL IMPACT:
The fiscal impact of the Willow Rock ESA will increase the previously approved not to exceed amount from $775,000,000 to $895,000,000 over the 25-year term.
CONCLUSION:
Approval of this 3rd Amendment to the Energy Storage Agreement will support 3CE’s compliance with the State’s RA regulatory requirements & procurement mandates, diversify the grid’s fleet of energy storage facilities with a safer technology, and contribute to meeting its aggressive goal of 100% clean and renewable by 2030.
ATTACHEMNT(S):
1. Original executed ESA (Redacted)
2. Proposed 3rd Amendment to Original ESA (Redacted)
WILLOW ROCK ENERGY STORAGE CENTER
APPROVAL VERSION
12 DECEMBER 2022
1 ENERGY STORAGE AGREEMENT
COVER SHEET
Seller: Gem A-CAES LLC (“Seller”)
Buyer: Central Coast Community Energy, a California joint powers authority (“Buyer”) Description of Facility: The Willow Rock Energy Storage Center, a 500 MW/4,000 MWh grid-connected compressed air energy storage facility, located in Kern County, California, as further described in Exhibit A.
Milestones:
Milestone Date for Completion
Site Control 10/1/2019
Final approval of Application for Certification
received from CEC 1/1/2024
Seller’s receipt of Phase II Interconnection study
results for Seller’s Interconnection Facilities 3/14/2022 Executed Interconnection Agreement 7/27/2023
Financial Close
Expected Construction Start Date 6/1/2024
Guaranteed Construction Start Date 6/1/2024
Initial Synchronization 1/31/2028
Network Upgrades completed 12/31/2027
Expected Commercial Operation Date 6/1/2028
Guaranteed Commercial Operation Date 6/1/2028
Delivery Term: Twenty-five (25) Contract Years.
Storage Contract Capacity: 200 MW at eight (8) hour discharge, subject to adjustment pursuant to Exhibit B, Section 5.
Guaranteed Storage Availability:
Guaranteed Efficiency Rate:
2 Contract Price
The Contract Price shall be:
Contract Year Contract Price
1 - 25
Product: In each case, as associated with the Storage Contract Capacity:
☒ RAR Attributes
☒ Local RAR Attributes (if any)
☒ Flexible RAR Attributes (if any)
☒ Energy Settlement
Scheduling Coordinator: Seller or Seller’s SC
Development Security and Performance Security
Development Security:
Performance Security:
TABLE OF CONTENTS
Page
i
ARTICLE 1 DEFINITIONS ..........................................................................................................1
1.1 Contract Definitions ...............................................................................................1
1.2 Rules of Interpretation..........................................................................................16 ARTICLE 2 TERM; CONDITIONS PRECEDENT....................................................................17
2.1 Contract Term.......................................................................................................17
2.2 Delivery Term.......................................................................................................17
2.3 Development; Construction; Progress Reports.....................................................18
2.4 Remedial Action Plan...........................................................................................18
2.5 Pre-Commercial Operation Date ..........................................................................19
2.6 Bridging Capacity.................................................................................................19 ARTICLE 3 PURCHASE AND SALE........................................................................................19
3.1 Purchase and Sale of Product ...............................................................................19
3.2 Ownership of Standalone Energy Storage Incentives. .........................................20
3.3 Future Environmental Attributes..........................................................................20
3.4 Changes in Law as Related to Contract Net Qualifying Capacity .......................20
3.5 No Electrical Output.............................................................................................21 ARTICLE 4 OBLIGATIONS AND DELIVERIES.....................................................................21
4.1 Delivery ................................................................................................................21
4.2 Delivery of Resource Adequacy Benefits. ...........................................................21
4.3 Seller’s Option To Provide Alternate Capacity....................................................22
4.4 Reduction in Delivery Obligation.........................................................................23
4.5 Reserved ...............................................................................................................23
4.6 Buyer’s Re-Sale of RA Product............................................................................23
4.7 Hold-Back and Substitute Capacity......................................................................24
4.8 Storage Availability..............................................................................................25
4.9 Storage Capacity Tests .........................................................................................25
4.10 Interconnection Capacity......................................................................................25 ARTICLE 5 TAXES AND REPORTING ...................................................................................26
5.1 Allocation of Taxes and Charges..........................................................................26
5.2 Cooperation. .........................................................................................................26
5.3 Dodd-Frank Compliance. .....................................................................................26 ARTICLE 6 MAINTENANCE OF THE FACILITY..................................................................27
6.1 Maintenance of the Facility. .................................................................................27
6.2 Maintenance of Health and Safety........................................................................27
6.3 Shared Facilities. ..................................................................................................27 ARTICLE 7 METERING.............................................................................................................28
7.1 Metering................................................................................................................28
ii
7.2 Meter Verification. ...............................................................................................28 ARTICLE 8 INVOICING AND PAYMENT; CREDIT..............................................................28
8.1 Statements and Invoicing......................................................................................28
8.2 Payment. ...............................................................................................................28
8.3 Books and Records. ..............................................................................................29
8.4 Billing Disputes. ...................................................................................................29
8.5 Netting of Payments. ............................................................................................29
8.6 Seller’s Development Security. ............................................................................29
8.7 Seller’s Performance Security. .............................................................................30
8.8 First Priority Security Interest in Cash or Cash Equivalent Collateral.................30 ARTICLE 9 NOTICES ................................................................................................................31
9.1 Addresses for the Delivery of Notices..................................................................31
9.2 Acceptable Means of Delivering Notice ..............................................................31 ARTICLE 10 FORCE MAJEURE...............................................................................................31
10.1 Definition..............................................................................................................31
10.2 Termination Following Force Majeure Event ......................................................32
10.3 Notice for Force Majeure. ....................................................................................32 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION.......................................................33
11.1 Events of Default..................................................................................................33
11.2 Remedies; Declaration of Early Termination Date. .............................................35
11.3 Termination Payment ...........................................................................................35
11.4 Notice of Payment of Termination Payment ........................................................36
11.5 Disputes With Respect to Termination Payment..................................................36
11.6 Rights And Remedies Are Cumulative ................................................................36 ARTICLE 12 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES ..........36
12.1 No Consequential Damages..................................................................................36
12.2 Waiver and Exclusion of Other Damages. ...........................................................36 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; AUTHORITY............................37
13.1 Seller’s Representations and Warranties. .............................................................37
13.2 Buyer’s Representations and Warranties..............................................................38
13.3 General Covenants................................................................................................39
13.4 Prevailing Wage ...................................................................................................40 ARTICLE 14 ASSIGNMENT......................................................................................................40
14.1 General Prohibition on Assignments....................................................................40
14.2 Collateral Assignment ..........................................................................................40 ARTICLE 15 DISPUTE RESOLUTION.....................................................................................42
15.1 Governing Law.....................................................................................................42
15.2 Dispute Resolution. ..............................................................................................42 ARTICLE 16 INDEMNIFICATION ...........................................................................................42
iii
16.1 Indemnity..............................................................................................................42
16.2 Claim Notice.........................................................................................................43
16.3 Defense of Claims ................................................................................................43
16.4 Rights and Remedies are Cumulative...................................................................44 ARTICLE 17 INSURANCE ........................................................................................................44
17.1 Insurance...............................................................................................................44 ARTICLE 18 CONFIDENTIAL INFORMATION.....................................................................45
18.1 Definition of Confidential Information ................................................................45
18.2 Duty to Maintain Confidentiality .........................................................................45
18.3 Irreparable Injury; Remedies................................................................................46
18.4 Disclosure to Lenders, Etc....................................................................................46
18.5 Press Releases.......................................................................................................46
18.6 Information and Shared Learning.........................................................................46 ARTICLE 19 MISCELLANEOUS..............................................................................................47
19.1 Entire Agreement; Integration; Exhibits...............................................................47
19.2 Amendments.........................................................................................................47
19.3 No Waiver.............................................................................................................47
19.4 No Agency, Partnership, Joint Venture or Lease .................................................47
19.5 Severability...........................................................................................................47
19.6 Mobile-Sierra........................................................................................................47
19.7 Counterparts..........................................................................................................48
19.8 Electronic Delivery...............................................................................................48
19.9 Binding Effect.......................................................................................................48
19.10 No Recourse to Members of Buyer......................................................................48
19.11 Forward Contract..................................................................................................48
19.12 Further Assurances...............................................................................................48
iv
Exhibits:
Exhibit A Facility Description
Exhibit B Facility Construction and Commercial Operation Exhibit C Compensation
Exhibit D Energy Settlement Sample Calculations
Exhibit E Progress Reporting Form
Exhibit F Form of Commercial Operation Date Certificate Exhibit G Form of Installed Capacity Certificate
Exhibit H Form of Construction Start Date Certificate
Exhibit I Form of Letter of Credit
Exhibit J Form of Guaranty
Exhibit K Form of Replacement RA Notice
Exhibit L Storage Availability
Exhibit M Storage Capacity Tests
Exhibit N Notices
Exhibit O Technical Operating Restrictions
Exhibit P Metering Diagram
Exhibit Q Scheduled Maintenance Intervals
ENERGY STORAGE AGREEMENT
This Energy Storage Agreement (“Agreement”) is entered into as of _________ (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” All capitalized terms used in this Agreement are used with the meanings ascribed to them in Article 1 to this Agreement.
RECITALS
WHEREAS, Seller intends to develop, design, permit, construct, own, and operate the Facility; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions set forth in this Agreement, the Product;
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the following:
ARTICLE 1
DEFINITIONS
1.1 Contract Definitions. The following terms, when used herein with initial capitalization, shall have the meanings set forth below:
“Affiliate” means, with respect to any Person, each Person that directly or indirectly controls, is controlled by, or is under common control with such designated Person. For purposes of this definition and the definition of “Permitted Transferee”, “control”, “controlled by”, and “under common control with”, as used with respect to any Person, shall mean (a) the direct or indirect right to cast at least fifty percent (50%) of the votes exercisable at an annual general meeting (or its equivalent) of such Person or, if there are no such rights, ownership of at least fifty percent (50%) of the equity or other ownership interest in such Person, or (b) the right to direct the policies or operations of such Person.
“Agreement” has the meaning set forth in the Preamble and includes any Exhibits, schedules and any written supplements hereto, the Cover Sheet, and any designated collateral, credit support or similar arrangement between the Parties. “Alternating Current” or “AC” means alternating current. “Ancillary Services” means all ancillary services, products and other attributes, if any, associated with the Facility.
“Automated Dispatch System” has the meaning set forth in the CAISO Tariff. “Availability Adjustment” or “AA” has the meaning set forth in Exhibit L.
2 “Bankrupt” means with respect to any entity, such entity (a) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Law, (b) has any such petition filed or commenced against it which remains unstayed or undismissed for a period of ninety (90) days, (c) makes an assignment or any general arrangement for the benefit of creditors, (d) otherwise becomes bankrupt or insolvent (however evidenced), (e) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (f) is generally unable to pay its debts as they fall due. “Bridging Capacity” means Resource Adequacy Benefits, if any, equivalent to those that would have been provided by the Storage Contract Capacity, and, to the extent that Facility was eligible for Local RAR, located within NP 15 or Greater Bay Area Local Capacity Area Resource and that satisfies the MTR Mandate.
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 AM and ends at 5:00 PM Pacific Prevailing Time (PPT) for the Party sending a Notice, or payment, or performing a specified action. “Buyer” means Central Coast Community Energy, a California joint powers authority. “Buyer Default” means an Event of Default of Buyer.
“CAISO” means the California Independent System Operator Corporation. “CAISO Grid” has the same meaning as “CAISO Controlled Grid” as defined in the CAISO Tariff.
“CAISO Operating Order” means “Operating Instruction” as defined in the CAISO Tariff.
“CAISO Tariff” means the California Independent System Operator Corporation Agreement and Tariff, Business Practice Manuals (BPMs), and Operating Procedures, including the rules, protocols, procedures and standards attached thereto, as the same may be amended or modified from time-to-time and approved by FERC; provided that if there is a conflict between the BPMs, the CAISO Operating Agreement or the Operating Procedures, on the one hand, and the Tariff, on the other hand, the Tariff will control. “Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Facility can accept at or deliver to the Delivery Point at a particular moment and that can be purchased and sold under CAISO market rules, including Resource Adequacy Benefits, but excluding the right to dispatch the Storage Capacity for the charging, discharging, or other delivery of Energy or Ancillary Services.
“Capacity Damages” has the meaning set forth in Exhibit B. “CEQA” means the California Environmental Quality Act.
3 “CFTC” means the U.S. Commodity Futures Trading Commission. “CFTC Regulations” means the rules, regulations, orders, supplementary information, guidance, questions and answers, staff letters and interpretations published or issued by the CFTC, in each applicable case as amended, and when used herein may also include specific citations to Titles, Parts or Sections of Title 17 of the Code of Federal Regulations without otherwise limiting the applicability of other rules, regulations, orders, supplementary information, guidance, questions and answers, staff letters and interpretations. “Change of Control” means, except in connection with public market transactions of equity interests or capital stock of Seller’s Ultimate Parent, any circumstance in which Ultimate Parent ceases to own, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Seller; provided that in calculating ownership percentages for all purposes of the foregoing:
(a) any ownership interest in Seller held by Ultimate Parent indirectly through one or more intermediate entities shall not be counted towards Ultimate Parent’s ownership interest in Seller unless Ultimate Parent directly or indirectly owns more than fifty percent (50%) of the outstanding equity interests in each such intermediate entity; and (b) ownership interests in Seller owned directly or indirectly by any Lender (including any tax equity provider) shall be excluded from the total outstanding equity interests in Seller. “CIRA Tool” means the CAISO Customer Interface for Resource Adequacy. “Claim” has the meaning set forth in Section 16.2(a).
“COD Certificate” has the meaning set forth in Exhibit B. “Commercial Operation” has the meaning set forth in Exhibit B. “Commercial Operation Date” has the meaning set forth in Exhibit B. “Commercial Operation Delay Damages” or “COD Delay Damages” means an amount equal to
“Commodity Exchange Act” means the U.S. Commodity Exchange Act, as amended, 7 USC Section 1, et seq.
“Competitive Solicitation Process” has the meaning set forth in the CAISO Tariff. “Compliance Costs” has the meaning set forth in Section 3.4. “Compliance Expenditure Cap” has the meaning set forth in Section 3.4. “Compliance Showings” means the (a) the Resource Adequacy Requirements compliance or advisory showings (or similar or successor showings), (b) if applicable, the Local RAR compliance or advisory showings (or similar or successor showings) and (c) if applicable, the FCR
4 compliance or advisory showings (or similar successor showings), that Buyer is required to make to the CPUC (and, to the extent authorized by the CPUC, to the CAISO), pursuant to the Resource Adequacy Rulings, to the CAISO pursuant to the CAISO Tariff, or to any Governmental Authority having jurisdiction.
“Confidential Information” has the meaning set forth in Section 18.1. “Construction Delay Damages” means an amount equal to
“Construction Start” has the meaning set forth in Exhibit B. “Construction Start Date” has the meaning set forth in Exhibit B. “Contract Net Qualifying Capacity” or “Contract NQC” means, at any point in time, the maximum quantity of Net Qualifying Capacity (in MW) for which a storage facility having a storage capacity of the Storage Contract Capacity with eight (8) hours of continuous discharging at the maximum rate of discharge, having achieved Full Capacity Deliverability Status sufficient to fully deliver the Storage Contract Capacity, and performing with operational characteristics equal to those required by the Guaranteed Storage Availability, Guaranteed Efficiency Rate, and the Technical Operating Restrictions as may be counted in any given Showing Month pursuant to the then current Law, including counting conventions set forth in the Resource Adequacy Rulings and the CAISO Tariff applicable to Resource Adequacy Resources. “Contract Price” has the meaning set forth on the Cover Sheet. “Contract Term” has the meaning set forth in Section 2.1. “Contract Year” means a period of twelve (12) consecutive months beginning on the Commercial Operation Date and ending at midnight at the end of the day prior to the anniversary of the Commercial Operation Date.
“Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third-party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace the Agreement; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating the Agreement. “Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
“CPM Capacity” has the meaning set forth in the CAISO Tariff. “CPM Capacity Payment” has the meaning set forth in the CAISO Tariff. “CPUC” means the California Public Utilities Commission or any successor agency performing similar statutory functions.
5 “CPUC Filing Guide” is the document issued annually by the CPUC which sets forth the guidelines, requirements and instructions for load serving entities to demonstrate compliance with the CPUC’s resource adequacy program.
“Credit Rating” means, with respect to any entity, the rating then assigned to such entity’s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issuer rating by S&P or Moody’s. If ratings by S&P and Moody’s are not equivalent, the lower rating shall apply.
“Curtailment Order” means any of the following:
(a) a curtailment ordered by CAISO, including through the Automated Dispatch System or a CAISO Operating Order, for the following reasons: (i) any System Emergency, or (ii) any warning of an anticipated System Emergency, or warning of an imminent condition or situation, which jeopardizes CAISO’s electric system integrity or the integrity of other systems to which CAISO is connected;
(b) a curtailment ordered by the Participating Transmission Owner for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Participating Transmission Owner’s electric system integrity or the integrity of other systems to which the Participating Transmission Owner is connected;
(c) a curtailment ordered by CAISO or the Participating Transmission Owner due to scheduled or unscheduled maintenance on the Participating Transmission Owner’s transmission facilities that prevents (i) Buyer from receiving or (ii) Seller from delivering Facility Energy to the Delivery Point; or
(d) a curtailment in accordance with Seller’s obligations, or due to physical or operational limitations on the transfer of electric power, under its Interconnection Agreement with the Participating Transmission Owner or distribution operator. “Damage Payment” means the dollar amount that equals the amount of the Development Security.
“DAP” has the meaning set forth in Exhibit C.
“Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Defaulting Party” has the meaning set forth in Section 11.1(a). “Delivery Point” has the meaning set forth in Exhibit A.
6 “Delivery Term” shall mean the period of Contract Years set forth on the Cover Sheet beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement.
“Development Cure Period” has the meaning set forth in Exhibit B. “Development Security” means (i) cash, (ii) a Guaranty or (iii) a Letter of Credit in the amount set forth on the Cover Sheet.
“Early Termination Date” has the meaning set forth in Section 11.2(a). “Efficiency Rate” means the round-trip efficiency of the Facility determined in accordance with Exhibit M.
“Effective Date” has the meaning set forth on the Preamble. “Electrical Losses” means, subject to meeting any applicable CAISO requirements and in accordance with Section 7.1, losses of Energy within the Facility’s energy storage equipment along with all transmission or transformation losses (a) between the Delivery Point and the Storage Facility Metering Point associated with delivery of charging Energy and (b) between the Storage Facility Metering Point and the Delivery Point associated with delivery of discharged Energy. “Energy” means alternating current electrical energy measured in MWh. “Energy In” has the meaning set forth in Part II.B of Exhibit M. “Energy Management Software” has the meaning set forth in in Exhibit A. “Energy Out” has the meaning set forth in Part II.B of Exhibit M. “Energy Settlement” has the meaning set forth in Exhibit C. “Energy Supply Bid” has the meaning set forth in the CAISO Tariff. “ES Payment” has the meaning set forth in Exhibit C.
“Event of Default” has the meaning set forth in Section 11.1. “Expected Commercial Operation Date” is the date set forth on the Cover Sheet by which Seller reasonably expects to achieve Commercial Operation. “Expected Construction Start Date” is the date set forth on the Cover Sheet by which Seller reasonably expects to achieve Construction Start. “Facility” means the energy storage facility described on the Cover Sheet and in Exhibit A (including the operational requirements of the energy storage facility), located at the Site and including the Energy Management Software and related storage and mechanical equipment and associated facilities and equipment required to deliver Product (but excluding any Shared Facilities), and as such storage facility may be expanded or otherwise modified from time to time
7 in accordance with the terms of this Agreement. This equipment includes but is not limited to transformers, batteries, fire suppression, thermal management, enclosures, and inverters. “Facility Energy” means the Energy discharged from the Facility during any Settlement Interval or Settlement Period.
“FCR” means the flexible capacity requirements established for load serving entities by the CPUC pursuant to the Resource Adequacy Rulings, the CAISO pursuant to the CAISO Tariff, or by any other Governmental Authority having jurisdiction. “FERC” means the Federal Energy Regulatory Commission.
“Financial Close” means Seller or one of its Affiliates has obtained debt or equity financing commitments from one or more Lenders sufficient to construct the Facility, including such financing commitments from Seller's owner(s).
“Force Majeure Event” has the meaning set forth in Section 10.1. “Forced Facility Outage” means an unexpected failure of one or more components of the Facility or any outage on the Transmission System that prevents Seller from receiving Energy or making Energy available at the Delivery Point and that is not the result of a Force Majeure Event. “Full Capacity Deliverability Status” has the meaning set forth in the CAISO Tariff. “Future Environmental Attributes” shall mean any and all attributes (other than Energy, Capacity Attributes and Standalone Energy Storage Incentives) under any and all other international, federal, regional, state or other law, rule, regulation, bylaw, treaty or other intergovernmental compact, decision, administrative decision, program (including any voluntary compliance or membership program), competitive market or business method (including all credits, certificates, benefits, and emission measurements, reductions, offsets and allowances related thereto) that are attributable, now, or in the future, to the generation of electrical energy by Storage Contract Capacity. Future Environmental Attributes do not include investment tax credits or production tax credits associated with the construction or operation of the Facility, or other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation. “Gains” means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner. Factors used in determining the economic benefit to a Party may include, without limitation, reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., SP-15), all of which should be calculated for the remaining Contract Term, and include the value of Capacity Attributes.
8 “Governmental Authority” means any federal, state, provincial, local or municipal government, any political subdivision thereof or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or entity with authority to bind a Party at law, including CAISO; provided, however, that “Governmental Authority” shall not in any event include any Party. “Guaranteed Commercial Operation Date” means the date set forth on the Cover Sheet as the same may be extended from time to time in accordance with Exhibit B. “Guaranteed Construction Start Date” means the Expected Construction Start Date, as such date may be extended by the Development Cure Period. “Guaranteed Efficiency Rate” means the percentage specified on the Cover Sheet. “Guaranteed Storage Availability” has the meaning set forth on the Cover Sheet. “Guarantor” means, with respect to Seller, any Person that (a) is an Affiliate of Seller, or other third party reasonably acceptable to Buyer, (b) has an Investment Grade Credit Rating, (c) has a tangible net worth of at least (d) is
incorporated or organized in a jurisdiction of the United States and is in good standing in such jurisdiction, and (e) executes and delivers a Guaranty for the benefit of Buyer. “Guaranty” means a guaranty from a Guarantor provided for the benefit of Buyer substantially in the form attached as Exhibit J.
“Hold-Back Capacity” has the meaning set forth in Section 4.7(a). “Incremental Capacity” means capacity that was not included in the CPUC’s 2019-2020 IRP RESOLVE/SERVM baseline generator list identified in CPUC Decision 21-06-035. “Indemnifiable Loss(es)” has the meaning set forth in Section 16.1. “Indemnified Party” has the meaning set forth in Section 16.1. “Indemnifying Party” has the meaning set forth in Section 16.1. “Initial Synchronization” means the initial delivery of Facility Energy to the Delivery Point.
“Installed Capacity” means the maximum dependable operating capability of the Facility to discharge Energy at the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point, that achieves Commercial Operation (up to but not in excess of the Storage Contract Capacity), adjusted for ambient conditions on the date of the performance test, and as evidenced by a certificate substantially in the form attached as Exhibit G hereto. “Interconnection Agreement” means the interconnection agreement or agreements entered into by Seller pursuant to which the Facility will be interconnected with the Transmission System, providing for interconnection capacity available or allocable to the Facility that is no less
9 than the Storage Contract Capacity, and pursuant to which Seller’s Interconnection Facilities and any other Interconnection Facilities will be constructed, operated and maintained during the Contract Term.
“Interconnection Facilities” means the interconnection facilities, Network Upgrades, control and protective devices and metering facilities required to connect the Facility with the Transmission System in accordance with the Interconnection Agreement. “Interest Rate” has the meaning set forth in Section 8.2. “Investment Grade Credit Rating” means a Credit Rating of BBB- or higher by S&P or Baa3 or higher by Moody’s.
“Joint Powers Act” means the Joint Exercise of Powers Act of the State of California (Government Code Section 6500 et seq.).
“Joint Powers Agreement” means that certain Joint Powers Agreement dated February 21, 2017, as amended from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act.
“June 2025 MTR Deadline” has the meaning set forth in Section 2.6(a). “Law” means any applicable law, statute, rule, regulation, decision, writ, order, decree or judgment, permit or any interpretation thereof, promulgated or issued by a Governmental Authority.
“Lender” means, collectively, any Person (i) providing senior or subordinated construction, interim, back leverage or long-term debt, equity or tax equity financing or refinancing for or in connection with the development, construction, purchase, installation or operation of the Facility, whether that financing or refinancing takes the form of private debt (including back-leverage debt), equity (including tax equity), public debt or any other form (including financing or refinancing provided to a member or other direct or indirect owner of Seller), including any equity or tax equity investor directly or indirectly providing financing or refinancing for the Facility or purchasing equity ownership interests of Seller or its Affiliates, and any trustee or agent or similar representative acting on their behalf, (ii) providing Interest Rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations or (iii) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Facility. “Letter(s) of Credit” means one or more irrevocable, standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a Credit Rating of at least A- with an outlook designation of “stable” from S&P or A3 with an outlook designation of “stable” from Moody’s, in a form substantially similar to the letter of credit set forth in Exhibit I.
“Licensed Professional Engineer” means an independent, professional engineer selected by Seller and reasonably acceptable to Buyer, licensed in the State of California.
10 “Local RAR” means the local resource adequacy requirements established for load serving entities by the CPUC pursuant to the Resource Adequacy Rulings, the CAISO pursuant to the CAISO Tariff, or by any other Governmental Authority having jurisdiction. “Local RAR Attributes” means, with respect to a Shown Unit, any and all Resource Adequacy Benefits of the Shown Unit, as may be identified from time to time by the CPUC, CAISO, or other Governmental Authority having jurisdiction over Local RAR that can be counted toward an Buyer’s Local RAR.
“Losses” means, with respect to the Non-Defaulting Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of this Agreement for the remaining Contract Term, determined in a commercially reasonable manner, which economic loss (if any) shall be deemed to be the loss (if any) to such Party represented by the difference between the present value of the payments required to be made during the remaining Contract Term of this Agreement and the present value of the payments that would be required to be made under transaction(s) replacing this Agreement. Factors used in determining economic loss to a Party may include reference to information supplied by one or more third parties, which shall exclude Affiliates of the Non-Defaulting Party, including quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets, comparable transactions, forward price curves based on economic analysis of the relevant markets, settlement prices for comparable transactions at liquid trading hubs (e.g., NP-15), all of which should be calculated for the remaining Contract Term and must include the value of Capacity Attributes.
“Major Subcontractors” means any first-tier subcontractor of Seller with which Seller has an agreement having an aggregate value in excess of for performance of any part of the work at the Site.
“Meter Service Agreement” has the meaning set forth in the CAISO Tariff. “Milestones” means the development activities for significant permitting, interconnection, financing, and construction milestones set forth on the Cover Sheet. “Monthly RA Capacity Payment” has the meaning set forth in Exhibit C. “Monthly Storage Availability” has the meaning set forth in Exhibit L. “Moody’s” means Moody’s Investors Service, Inc.
“MW” means megawatts in alternating current, unless expressly stated in terms of direct current.
“MWh” means megawatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“MTR Mandate” means the mandatory procurement obligations for Incremental Capacity pursuant to the CPUC Decision No. 21-06-036.
11 “Negotiation Period” has the meaning set forth in Section 3.4(b). “NERC” means the North American Electric Reliability Corporation or any successor entity performing similar functions.
“Net Qualifying Capacity” has the meaning set forth in the CAISO Tariff. “Network Upgrades” has the meaning set forth in the CAISO Tariff. “Non-Defaulting Party” has the meaning set forth in Section 11.2. “Notice” shall, unless otherwise specified in the Agreement, mean written communications by a Party to be delivered by electronic mail (e-mail) or other form as identified in and in accordance with Exhibit N.
“Notification Deadline” means twenty (20) Business Days before the relevant deadlines for the corresponding Compliance Showings applicable to the relevant Showing Month. “Notice of Claim” has the meaning set forth in Section 16.2. “NP-15” means the Existing Zone Generation Trading Hub for Existing Zone region NP15 as set forth in the CAISO Tariff.
“Pacific Prevailing Time” means the prevailing standard time or daylight savings time, as applicable, in the Pacific time zone.
“Participating Generator Agreement” has the meaning set forth in the CAISO Tariff. “Participating Load Agreement” has the meaning set forth in the CAISO Tariff. “Participating Transmission Owner” or “PTO” means an entity that owns, operates and maintains transmission or distribution lines and associated facilities or has entitlements to use certain transmission or distribution lines and associated facilities where the Facility is interconnected. For purposes of this Agreement, the Participating Transmission Owner is set forth in Exhibit A.
“Party” or “Parties” has the meaning set forth in the Preamble. “Performance Security” means (i) cash, (ii) a Guaranty or (iii) a Letter of Credit in the amount set forth on the Cover Sheet.
“Permitted Transferee” means (i) any Affiliate of Seller or (ii) any entity that has, or is controlled by another Person that satisfies the following requirements:
(a) A tangible net worth of not less than
or an Investment Grade Credit Rating; and
12 (b) At least five (5) years of experience in the ownership and operations of power generation facilities similar to the Facility, or has retained a third-party with such experience to operate the Facility,
or (iii) any other entity approved in writing by Buyer acting reasonably and in good faith. “Person” means any individual, sole proprietorship, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, incorporated organization, institution, public benefit corporation, unincorporated organization, government entity or other entity.
“Planned Outage” has the meaning set forth in Section 4.4(a). “PNode” has the meaning set forth in the CAISO Tariff.
“Product” has the meaning set forth on the Cover Sheet. “Progress Report” means a progress report including the items set forth in Exhibit E. “Prudent Operating Practice” means (a) the applicable practices, methods and acts required by or consistent with applicable Laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the electric utility industry during the relevant time period with respect to grid-interconnected, utility-scale storage facilities in the Western United States, or (b) any of the practices, methods and acts which, in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the industry with respect to grid-interconnected, utility-scale stand-alone storage in the Western United States.
Prudent Operating Practice includes compliance with applicable Laws, applicable reliability criteria, and the criteria, rules and standards promulgated in the National Electric Safety Code and the National Electrical Code, as they may be amended or superseded from time to time, including the criteria, rules and standards of any successor organizations. “RA Guarantee Date” means the date that is sixty (60) days after Commercial Operation Date.
“RA Product” has the meaning set forth in Section 4.2(a). “RA Shortfall” means that the total RA Product delivered to Buyer, plus any Replacement RA is less than the Storage Contract Capacity for reasons other than the acts or omission of Buyer. “RA Shortfall Month” means any month during which there is an RA Shortfall. “Real-Time Market” has the meaning set forth in the CAISO Tariff. “Remedial Action Plan” has the meaning in Section 2.4.
13 “Replacement RA” means Resource Adequacy Benefits, if any, equivalent to those that would have been provided by the Storage Contract Capacity with respect to the applicable Showing Month, and, to the extent that Facility was eligible for Local RAR, located within NP 15 or Greater Bay Area Local Capacity Area Resource; provided that any Replacement RA capacity must be communicated by Seller to Buyer with Replacement RA product information in a Notice to Buyer no later than the Notification Deadline. In addition, if the CPUC issues a decision that requires Replacement RA to be Incremental Capacity in order for Buyer’s purchase of the Storage Contract Capacity to satisfy the MTR Mandate, then the Replacement RA must also qualify as Incremental Capacity.
“Replacement Unit” has the meaning set forth in Section 4.3. “RAR Attributes” means, with respect to a Shown Unit, any and all Resource Adequacy Benefits of the Shown Unit, as may be identified from time to time by the CPUC, CAISO, or other Governmental Authority having jurisdiction over RAR that can be counted toward a Buyer’s RAR. “Resource Adequacy Benefits” means the rights and privileges attached to the Facility that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in any Resource Adequacy Rulings and includes any local, zonal or otherwise locational attributes associated with the Facility, in addition to any flex attributes. “Resource Adequacy Plan” has the meaning set forth in the CAISO Tariff. “Resource Adequacy Requirements” or “RAR” means the resource adequacy requirements established for Buyer pursuant to the Resource Adequacy Rulings, the CAISO pursuant to the CAISO Tariff, or by any other Governmental Authority having jurisdiction. “Resource Adequacy Rulings” means CPUC Decisions 04-01-050, 04-10-035, 05-10-042, 06-04-040, 06-06-064, 06-07-031 06-07-031, 07-06-029, 08-06-031, 09-06-028, 10-06-036, 11-06-022, 12-06-025, 13-06-024, 14-06-050, and any other existing or subsequent decisions, resolutions, or rulings related to resource adequacy, including, without limitation, the CPUC Filing Guide, in each case as may be amended from time to time by the CPUC, and any other existing or subsequent ruling or decision, or any other resource adequacy Law, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time-to-time throughout the Delivery Term.
“S&P” means the Standard & Poor’s Financial Services, LLC (a subsidiary of The McGraw-Hill Companies, Inc.).
“Schedule” has the meaning set forth in the CAISO Tariff, and “Scheduled” has a corollary meaning.
“Scheduling Coordinator” or “SC” means an entity certified by the CAISO as qualifying as a Scheduling Coordinator pursuant to the CAISO Tariff for the purposes of undertaking the functions specified in “Responsibilities of a Scheduling Coordinator,” of the CAISO Tariff, as amended from time to time.
“Security Interest” has the meaning set forth in Section 8.8.
14 “Seller” has the meaning set forth on the Cover Sheet. “Settlement Amount” means the Non-Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other. If the Non-Defaulting Party’s Costs and Losses exceed its Gains, then the Settlement Amount shall be an amount owing to the Non-Defaulting Party. If the Non-Defaulting Party’s Gains exceed its Costs and Losses, then the Settlement Amount shall be zero dollars ($0). The Settlement Amount does not include consequential, incidental, punitive, exemplary or indirect or business interruption damages. “Settlement Interval” has the meaning set forth in the CAISO Tariff. “Settlement Period” has the meaning set forth in the CAISO Tariff. “Shared Facilities” means the gen-tie lines, transformers, substations, or other equipment, permits, contract rights, and other assets and property (real or personal), in each case, as necessary to enable delivery of Energy from the Facility (which is excluded from Shared Facilities) to the point of interconnection, including the Interconnection Agreement itself, that are used in common with third parties.
“Shared Facilities Agreement” has the meaning set forth in Section 6.3. “Showing Month” means the calendar month of the Delivery Term that is the subject of the Compliance Showing, as set forth in the Resource Adequacy Rulings and outlined in the CAISO Tariff. For illustrative purposes only, pursuant to the CAISO Tariff and Resource Adequacy Rulings in effect as of the Effective Date, the monthly Compliance Showing made in June is for the Showing Month of August.
“Shown Unit(s)” means the Facility or any generation or storage unit providing Replacement RA.
“Site” means the real property on which the Facility is or will be located, as further described in Exhibit A, and as shall be updated by Seller at the time Seller provides an executed Construction Start Date certificate in the form of Exhibit H to Buyer. “Site Control” means that, for the Contract Term, Seller (or, prior to the Delivery Term, its Affiliate): (a) owns or has the option to purchase the Site; (b) is the lessee or has the option to lease the Site; or (c) is the holder of an easement or an option for an easement, right-of-way grant, or similar instrument with respect to the Site.
“Standalone Energy Storage Incentives” means: (a) all federal, state, or local Tax credits or other Tax benefits associated with the construction or ownership from the Facility (including credits under Sections 38, 45, 46 and 48 of the Internal Revenue Code of 1986, as amended); (b) any federal, state, or local grants, subsidies or other like benefits relating in any way to the Facility; and (c) any other form of incentive relating in any way to the Facility that is not a Future Environmental Attribute.
15 “Storage Capacity” means the maximum dependable operating capability of the Facility to discharge Energy that can be sustained for eight (8) consecutive hours, as the same may be adjusted pursuant to Exhibit M.
“Storage Capacity Test” means any test or retest of the capacity of the Facility and/or Efficiency Rate conducted in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit M.
“Storage Contract Capacity” means that portion of the Storage Capacity (in MW) of the Facility being purchased by Buyer initially equal to the amount set forth on the Cover Sheet, as the same may be adjusted from time to time pursuant to Section 5 of Exhibit B. “Storage Contract Output” means the product of the Storage Contract Capacity multiplied by eight (8) hours, represented in MWh.
“Storage Facility Meter” means the bi-directional revenue quality meter or meters (with a 0.3 accuracy class, or as otherwise required by CAISO), along with a compatible data processing gateway or remote intelligence gateway, telemetering equipment and data acquisition services sufficient for monitoring, recording and reporting, in real time, the amount of charging Energy delivered to the Storage Facility Metering Point and the amount of discharging Energy discharged from the Facility at the Storage Facility Metering Point to the Delivery Point. For clarity, the Facility will contain multiple measurement devices that will make up the Storage Facility Meter, and, unless otherwise indicated, references to the Storage Facility Meter shall mean all such measurement devices and the aggregated data of all such measurement devices, taken together. “Storage Facility Metering Point” means the location or locations of the Storage Facility Meter shown on Exhibit P.
“Subsequent Buyer” means the purchaser of RA Product from Buyer in a re-sale of RA Product by Buyer.
“Substitute Capacity” means “RA Substitute Capacity” as defined in the CAISO Tariff. “Substitute Capacity Request” has the meaning set forth in Section 4.7(b). “Supply Plan” has the meaning set forth in the CAISO Tariff. “System Emergency” means any condition that requires, as determined and declared by CAISO or the PTO, automatic or immediate action to (i) prevent or limit harm to or loss of life or property, (ii) prevent loss of transmission facilities or generation supply in the immediate vicinity of the Facility, or (iii) to preserve Transmission System reliability. “Tax” or “Taxes” means all U.S. federal, state and local and any foreign taxes, levies, assessments, surcharges, duties and other fees and charges of any nature imposed by a Governmental Authority, whether currently in effect or adopted during the Contract Term, including ad valorem, excise, franchise, gross receipts, import/export, license, property, sales and use, stamp, transfer, payroll, unemployment, income, and any and all items of withholding, deficiency, penalty, additions, interest or assessment related thereto.
16 “Technical Operating Restrictions” mean the technical operating restrictions set forth in Exhibit O.
“Terminated Transaction” has the meaning set forth in Section 11.2(a). “Termination Payment” has the meaning set forth in Section 11.3. “Transmission System” means the transmission facilities operated by the CAISO, now or hereafter in existence, which provide energy transmission service downstream from the Delivery Point.
“Ultimate Parent” means Hydrostor Inc., an Ontario business corporation.
1.2 Rules of Interpretation. In this Agreement, except as expressly stated otherwise or unless the context otherwise requires:
(a) headings and the rendering of text in bold and italics are for convenience and reference purposes only and do not affect the meaning or interpretation of this Agreement; (b) words importing the singular include the plural and vice versa and the masculine, feminine and neuter genders include all genders; (c) the words “hereof”, “herein”, and “hereunder” and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) a reference to an Article, Section, paragraph, clause, Party, or Exhibit is a reference to that Section, paragraph, clause of, or that Party or Exhibit to, this Agreement unless otherwise specified;
(e) a reference to a document or agreement, including this Agreement means such document, agreement or this Agreement including any amendment or supplement to, or replacement, novation or modification of this Agreement, but disregarding any amendment, supplement, replacement, novation or modification made in breach of such document, agreement or this Agreement;
(f) a reference to a Person includes that Person’s successors and permitted assigns;
(g) the term “including” means “including without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the work or provision with respect to which such examples are provided; (h) references to any statute, code or statutory provision are to be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or reenacted, and include references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom unless the context otherwise requires; (i) in the event of a conflict, a mathematical formula or other precise
17 description of a concept or a term shall prevail over words providing a more general description of a concept or a term;
(j) references to any amount of money shall mean a reference to the amount in United States Dollars;
(k) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning in Prudent Operating Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Operating Practice but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings; and
(l) each Party acknowledges that it was represented by counsel in connection with this Agreement and that it or its counsel reviewed this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
ARTICLE 2
TERM; CONDITIONS PRECEDENT
2.1 Contract Term.
(a) The term of this Agreement shall commence on the Effective Date and shall remain in full force and effect until the conclusion of the Delivery Term, subject to any early termination provisions and any contract term extension provisions set forth herein (“Contract Term”); provided, however, Buyer’s obligations to pay for or accept, and Seller’s obligation to deliver, any Product are subject to Seller’s completion of the conditions precedent pursuant to Section 2.2.
(b) Applicable provisions of this Agreement shall continue in effect after termination, including early termination, to the extent necessary to enforce or complete the duties, obligations or responsibilities of the Parties arising prior to termination. The confidentiality obligations of the Parties under Article 18 and all indemnity and audit rights shall remain in full force and effect for five (5) years following the termination of this Agreement.
2.2 Delivery Term.
(a) The Delivery Term shall not commence until Seller completes each of the following conditions:
(i) Seller has delivered to Buyer (A) a completion certificate from a Licensed Professional Engineer substantially in the form of Exhibit F and (B) a certificate from a Licensed Professional Engineer substantially in the form of Exhibit G setting forth the Installed Capacity on the Commercial Operation Date;
(ii) A Participating Generator Agreement and/or a Participating Load Agreement (as required by the CAISO) and a Meter Service Agreement between Seller and CAISO
18 shall have been executed and delivered and be in full force and effect, and a copy of each such agreement delivered to Buyer;
(iii) An Interconnection Agreement between Seller and the PTO shall have been executed and delivered and be in full force and effect and a copy of the Interconnection Agreement delivered to Buyer;
(iv) All applicable regulatory authorizations, approvals and permits for operation of the Facility have been obtained (or if not obtained, applied for and reasonably expected to be received within ninety (90) days) and all conditions thereof that are capable of being satisfied on the Commercial Operation Date have been satisfied and shall be in full force and effect, and Seller has delivered to Buyer an attestation certificate from an officer of Seller certifying to the satisfaction of this condition;
(v) Seller has obtained all real property rights required for the operation of the Facility during the Delivery Term, and Seller has provided evidence of such rights to Buyer; (vi) Insurance requirements for the Facility pursuant to Article 17 have been met, with evidence provided in writing to Buyer;
(vii) Seller has delivered the Performance Security to Buyer in accordance with Section 8.7; and
(viii) Seller has paid Buyer for all amounts owing under this Agreement, if any, including Construction Delay Damages and COD Delay Damages.
2.3 Development; Construction; Progress Reports. Within fifteen (15) days after the close of (i) each calendar quarter from the first calendar quarter following the Effective Date until the Construction Start Date, and (ii) each calendar month from the first calendar month following the Construction Start Date until the Commercial Operation Date, Seller shall provide to Buyer a Progress Report and attend regularly scheduled meetings between representatives of Buyer and Seller to review such monthly reports and discuss Seller’s construction progress. The Parties shall cooperate, acting reasonably and in good faith, to identify a mutually acceptable schedule for such meetings. Details regarding the form and content of the Progress Report are set forth in Exhibit E. Seller shall also provide Buyer with any reasonably requested documentation (subject to confidentiality restrictions) directly related to the achievement of Milestones within ten (10) Business Days of receipt of such request by Seller. For the avoidance of doubt, Seller is solely responsible for the design and construction of the Facility, including the location of the Site, obtaining all permits and approvals to build the Facility, the Facility layout, and the selection and procurement of the equipment comprising the Facility.
2.4 Remedial Action Plan. If Seller misses three (3) or more Milestones, or misses any one (1) by more than ninety (90) days, except as the result of Force Majeure Event or Buyer Default, Seller shall submit to Buyer, within ten (10) Business Days of the relevant missed Milestone completion date, a remedial action plan (“Remedial Action Plan”), which will describe in detail any delays (actual or anticipated) beyond the scheduled Milestone dates, including the cause of the delay (e.g., governmental approvals, financing, property acquisition, design activities, equipment procurement, project construction, interconnection, or any other factor), Seller’s
19 detailed description of its proposed course of action to achieve the missed Milestones and all subsequent Milestones by the Guaranteed Commercial Operation Date; provided, that delivery of any Remedial Action Plan shall not relieve Seller of its obligation to provide Remedial Action Plans with respect to any subsequent Milestones and to achieve Commercial Operation by the Guaranteed Commercial Operation Date plus any additional time allotted for the payment of COD Delay Damages in accordance with the terms of this Agreement.
2.5 Pre-Commercial Operation Date. Prior to the Commercial Operation Date, Seller shall have exclusive rights to test, charge and discharge the Facility. Seller is responsible for procuring, at its own cost, any Energy required for commissioning purposes and for arranging for the discharge of such Energy into the grid. Seller shall be entitled to all CAISO revenues and other amounts paid by CAISO with respect to the Facility testing for periods prior to the Commercial Operation Date.
2.6 Bridging Capacity.
(a) Buyer intends to use the Incremental Capacity associated with the Storage Contract Capacity for Buyer’s procurement obligations set forth in CPUC Decision No. 21-06-035 that requires qualifying projects to be online no later than June 1, 2025 (the “June 2025 MTR Deadline”). If Seller reasonably believes that it will be unable to achieve Commercial Operation by the June 2025 MTR Deadline, Seller shall notify Buyer to that effect. Following issuance of such Notice, Seller and Buyer shall cooperate, acting reasonably and in good faith, to arrange for and deliver Bridging Capacity consistent with the terms and conditions of this Agreement that satisfies Buyer’s obligations under the MTR Mandate associated with the June 2025 MTR Deadline from the period of June 1, 2025 until the Facility achieves Commercial Operation. Buyer shall reimburse Seller for all out of pocket costs and expenses associated with procurement and delivery of Bridging Capacity and further details regarding the supply and purchase of Bridging Capacity shall be established through definitive documents. (b) Seller shall use reasonable commercial efforts to accelerate the Commercial Operation Date to achieve Buyer’s June 2025 MTR Deadline where practical. No later than December 1, 2023 Seller shall Notify Buyer of the status of efforts to accelerate the Commercial Operation Date. Seller’s obligations under this Section 2.6(b) shall not require Seller to incur incremental costs, modify the technology, equipment or design of the Facility or otherwise take actions that, in the Sellers reasonable opinion, may adversely affect the Seller, the Facility, the Seller’s ability to perform under this Agreement or the cost to the Seller of performing under this Agreement.
(c) Notwithstanding the foregoing, Seller shall have no liability to Buyer if Seller fails to provide Bridging Capacity or accelerate the Commercial Operation Date pursuant to this Section 2.6.
ARTICLE 3
PURCHASE AND SALE
3.1 Purchase and Sale of Product. Subject to the terms and conditions of this Agreement, during the Delivery Term, Buyer will purchase all the Product associated with the
20 Storage Contract Capacity at the Contract Price and in accordance with Exhibit C, and Seller shall supply and deliver to Buyer all the Product associated with the Storage Contract Capacity.
3.2 Ownership of Standalone Energy Storage Incentives. Seller will own any Standalone Energy Storage Incentives.
3.3 Future Environmental Attributes. The Parties acknowledge and agree that Future Environmental Attributes may be created by a Governmental Authority through Laws enacted after the Effective Date. Any such Future Environmental Attributes shall be retained by Seller.
3.4 Changes in Law as Related to Contract Net Qualifying Capacity. (a) Seller’s maximum, aggregate liability
(the “Compliance Costs”) arising due to a change in Law occurring after the Effective Date
(the
“Compliance Expenditure Cap”) except to the extent that additional Compliance Costs are incurred prior to termination of this Agreement pursuant to Section 3.4(b). If Seller reasonably anticipates that the Compliance Expenditure Cap will be exceeded or the Compliance Expenditure Cap is exceeded, Seller may provide Notice to Buyer of such anticipated or actual Compliance Costs, which shall be accompanied by written documentation reasonably establishing the anticipated or actual Compliance Costs; provided that any such Notice must be delivered by Seller within twenty-four (24) months following the date the actual Compliance Costs exceed the compliance Expenditure Cap.
(b) Following receipt of Notice under Section 3.4(a), the Parties shall meet and confer, acting reasonably and in good faith, for a negotiation period of not less than thirty (30) days (the “Negotiation Period”) to discuss potential amendments to this Agreement to mitigate the effects of the change in Law in excess of the Compliance Expenditure Cap. If the Parties have not reached an agreement to amend this Agreement by the end of the Negotiation Period, either Party shall have the right to terminate this Agreement by issuing Notice to the other Party. Such termination shall become effective on the later of (i) thirty (30) days after the date that Seller incurs Compliance Costs in excess of the Compliance Expenditure Cap or (ii) issuance of such Notice to the other Party. If either Party terminates this Agreement pursuant to this Section 3.4(b), such termination shall be without liability to either Party, and Buyer shall promptly return to Seller the Development Security or Performance Security then held by Buyer in accordance with this Agreement.
(c) On a periodic basis, upon the request of either Party, the Parties shall meet to review existing or proposed changes in Law that may impact the Contract Net Qualifying Capacity, the Resource Adequacy Benefits allocated to Buyer associated with the Storage Contract Capacity or the Contract Price.
(d) If there is a change in Law that results in Buyer not being able to apply the Storage Contract Capacity towards satisfaction of its Resource Adequacy Requirements or the
21 current market for Resource Adequacy Benefits is replaced with an alternate market structure, then promptly following receipt of Notice from Buyer, the Parties shall meet and confer, acting reasonably and in good faith, to discuss possible amendments to this Agreement to maintain its value to both Parties.
(e) Notwithstanding the foregoing, Compliance Costs shall not include any lost revenue, costs or expenses arising from a failure to provide the Product to the extent such failure is attributable to Seller’s failure to meet its contractual obligations, including the failure of the Facility to satisfy the Guaranteed Storage Availability or Guaranteed Efficiency Rate.
3.5 No Electrical Output. Neither the purchase of the Product nor the Energy Settlement confers to Buyer any right to the electrical output or Energy from the Facility. Rather, the Product confers the right to include the Storage Contract Capacity in its Compliance Showings.
The Energy Settlement confers the right for Buyer to receive payments regardless of whether the Facility is charged or discharged. Specifically, no Energy or ancillary services associated with the Facility are required to be made available to Buyer, and Buyer shall not be responsible for compensating Seller for Seller’s commitments to the CAISO required by this Agreement. Seller retains the right to sell any Capacity Attributes from the Facility other than those Capacity Attributes required for the Product.
ARTICLE 4
OBLIGATIONS AND DELIVERIES
4.1 Delivery. Subject to the provisions of this Agreement, commencing on the start of the Delivery Term through the end of the Contract Term, Seller shall supply and deliver the Product to Buyer, and Buyer shall accept and pay for the Product, in accordance with the terms of this Agreement.
4.2 Delivery of Resource Adequacy Benefits.
(a) Seller shall deliver the Resource Adequacy Benefits associated with the Storage Contract Capacity from the Shown Unit (the “RA Product”) by submitting to CAISO in its Supply Plan the Storage Contract Capacity for the Facility and the characteristics of the Shown Unit for Buyer.
(b) Seller shall cause all Supply Plans to meet and be filed in conformance with the requirements of the CPUC and the CAISO Tariff. Seller shall submit, or cause the Shown Unit’s SC to submit, on a timely basis with respect to each applicable Showing Month, Supply Plans in accordance with the Tariff and CPUC requirements to identify and confirm the RA Product delivered to Buyer for each Showing Month of the Delivery Term. (c) In no event shall a Shown Unit utilize coal or coal materials as a source of fuel. A Shown Unit must be a specific resource that is connected directly to the CAISO-controlled grid or be under the operational control of CAISO. A Shown Unit may not be an unspecified import. Seller shall identify the Shown Unit(s) and Storage Contract Capacity by providing Buyer with the required information no later than the Notification Deadline for the relevant Showing Month.
22 (d) If CAISO rejects the Supply Plan or the Resource Adequacy Plan with respect to any part of the RA Product for the Shown Unit in any Showing Month, the Parties shall confer, make such corrections as are necessary for acceptance, and resubmit the corrected Supply Plan for validation before the applicable deadline for the Showing Month. (e) The RA Product is delivered and received when the CIRA Tool shows that the Supply Plan submitted in compliance with Buyer’s instructions, including Buyer’s instructions to withhold all or part of the RA Product from Seller’s Supply Plan for any Showing Month during the Delivery Term, has been accepted for the RA Product from the Shown Unit(s) by CAISO.
Seller has failed to deliver the RA Product if (i) Buyer has elected to submit the RA Product from the Shown Unit(s) in its Resource Adequacy Plan and such submission is accepted by the CPUC and the CAISO but the Supply Plan and Resource Adequacy Plan are not matched in the CIRA Tool and are rejected by CAISO due to the acts or omissions of Seller notwithstanding performance of the Parties’ obligations in Section 4.2(d) or (ii) Seller fails to submit the volume of RA Product for any Showing Month in such amount as instructed by Buyer for the applicable Showing Month. Seller will not have failed to deliver the RA Product if Buyer fails or chooses not to submit the Shown Unit(s) and the RA Product in its Resource Adequacy Plan with the CPUC or CAISO.
(f) Hold-Back Capacity, if any, is deemed RA Product delivered, unless utilized under Section 4.7 as Substitute Capacity, then RA Product is delivered according to the timeline requirements therein.
4.3 Seller’s Option To Provide Alternate Capacity. If Seller is unable to provide the full RA Product for a Showing Month for any reason, including, without limitation, as provided in Section 4.4, then Seller may, at no cost to Buyer, provide Buyer with Replacement RA from one or more replacement units having the same Capacity Attributes as the Facility (each such unit, a “Replacement Unit”) in an amount such that the total amount of RA Product provided to Buyer from the Facility and any Replacement Unit(s) for each Showing Month is not more than the Storage Contract Capacity, provided that in each case:
(a) Seller shall notify Buyer in writing of its intent to provide Replacement RA and shall identify the proposed Replacement Units from which such Replacement RA shall be provided no later than the Notification Deadline for Buyer’s Compliance Showings related to such Showing Month;
(b) The proposed Replacement Units must (i) be accepted by the CAISO, and (ii) otherwise satisfy the requirements of this Agreement; (c) Seller shall, or shall cause the SC to submit a Supply Plan for each Showing Month and, if applicable, annual filing, no later than the Notification Deadline for Buyer’s Compliance Showings;
(d) If Seller does not comply with the requirements of Sections 4.3(a), (b) and (c) for the applicable Showing Month and, if applicable, annual filing, then any such Replacement Units shall not be deemed a Replacement Unit for purposes of this Agreement for that Showing Month; and
23 (e) The designation of any Replacement Unit(s) by Seller shall be subject to Buyer’s prior written approval, which shall not be unreasonably withheld.
Once Seller has identified in writing any Replacement Units that meetthe requirements of this Section 4.3 and Buyer has approved such Replacement Units as consistent with this Agreement, then any such Replacement Units shall be deemed a Shown Unit for purposes of this Agreement for that Showing Month. Buyer’s approval of a Replacement Unit as to a given Showing Month shall not be construed as approval of such Replacement Unit for any subsequent Showing Month.
4.4 Reduction in Delivery Obligation.
(a) Facility Maintenance. No later than thirty (30) days prior to the start of each Contract Year, Seller will deliver to Buyer the expected schedule for performing maintenance on the Facility over the upcoming Contract Year. Such schedule shall be consistent with the scheduled maintenance requirements described in Exhibit Q between June 1st and September 30th of any calendar year, Seller shall not schedule any non-emergency maintenance that reduces the energy storage capability of the Storage Contract Capacity by more than ten percent (10%), unless (i) such outage is required to avoid damage to the Facility, (ii) such maintenance is necessary to maintain equipment warranties and cannot be scheduled outside the months of June through September, (iii) such outage is required in accordance with Prudent Operating Practice, or (iv) the Parties agree otherwise in writing (a “Planned Outage”). Seller shall be permitted to reduce deliveries of Product during a Planned Outage.
(b) Forced Facility Outage. Seller shall be permitted to reduce deliveries of Product during any Forced Facility Outage. Seller shall provide Buyer with Notice and expected duration (if known) of any Forced Facility Outage.
(c) Force Majeure Event. Seller shall be permitted to reduce deliveries of Product during any Force Majeure Event.
(d) Health and Safety. Seller shall be permitted to reduce deliveries of Product as necessary to maintain health and safety pursuant to Section 6.2.
4.5 Reserved.
4.6 Buyer’s Re-Sale of RA Product.
(a) Buyer may re-sell all or part of the RA Product; provided that any such re-sale must not increase Seller’s obligations hereunder other than as set forth in this Section 4.6. For any such resale, the Resource Adequacy Plan of Buyer as used herein will refer to the Resource Adequacy Plan of the Subsequent Buyer. Seller shall, or shall cause the Shown Unit’s SC, to follow Buyer’s instructions with respect to providing such resold RA Product to Subsequent Buyers, to the extent such instructions are consistent with Seller’s obligations under this Agreement. Seller shall, and shall cause the Shown Unit’s SC, to take all commercially reasonable actions and execute all documents or instruments reasonably necessary to allow such Subsequent Buyers to use such resold RA Product in a manner consistent with Buyer’s rights under this Agreement. If Buyer incurs any liability to a Subsequent Buyer due to the failure of Seller or the Shown Unit’s SC to comply with this Agreement, Seller will be liable to Buyer for the amounts
24 Seller would have owed Buyer under this Agreement if Buyer had not resold the Product. (b) Buyer shall notify Seller in writing of any resale of RA Product and the Subsequent Buyer no later than two (2) Business Days before the Notification Deadline for each Showing Month for which Buyer has resold the RA Product. Buyer shall notify Seller of any subsequent changes or further resales no later than two (2) Business Days before the Notification Deadline for the Showing Month.
(c) If CAISO or CPUC develops a centralized capacity market, Buyer will have exclusive rights to direct the Seller or the Unit’s SC to offer, bid, or otherwise submit the RA Product for re-sale into such market, and Seller and the Shown Unit’s SC shall comply with the Buyer’s direction and Buyer shall retain and receive all revenues from such re-sale. (d) Buyer shall have the exclusive right to direct the Seller or the Shown Unit’s SC to offer, bid, or otherwise submit the RA Product into the CAISO Competitive Solicitation Process (CSP) for CPM Capacity. Seller and the Shown Unit’s SC shall comply with the Buyer’s direction and, to the extent that the CAISO designates the RA Product as CPM Capacity, Buyer shall be entitled to retain and receive the CPM Capacity Payment. Unless otherwise instructed by Buyer, (i) Seller shall not, and shall cause the Shown Unit’s SC to not, offer any portion of the RA Product to CAISO as CPM Capacity and (ii) if CAISO designates any portion of the Storage Contract Capacity as CPM Capacity, then Seller shall, and shall cause the Shown Unit’s SC to, promptly (and in any event within one (1) Business Day of the time Seller receives notification from CAISO) notify Buyer of such designation, and if CAISO makes such a designation, Seller shall not, and shall cause the Shown Unit’s SC to not, accept any such designation by CAISO unless and until Buyer has agreed to accept such designation.
4.7 Hold-Back and Substitute Capacity.
(a) No later than three (3) Business Days before the relevant deadline for the initial Compliance Showing with respect to a particular Showing Month, Buyer may request in writing that Seller not list, or cause the Shown Unit’s SC not to list, in the Shown Unit’s Supply Plan a portion or all of the RA Product for such Showing Month included in the Delivery Term (“Hold-Back Capacity”). The amount of RA Product that is the subject of Buyer’s request for Hold-Back Capacity shall be deemed RA Product delivered consistent with Section 4.2 (a) for purposes of calculating the payments due hereunder. Seller shall, or shall cause the Shown Unit’s SC to, comply with Buyer’s request under this Section 4.7. (b) In any Showing Month in which Buyer has designated Hold-Back Capacity, Buyer may request, in writing, that Seller make the Hold-Back Capacity available for Buyer’s use as Substitute Capacity within the respective Showing Month (“Substitute Capacity Request”) with the following schedule:
(i) For Buyer’s Substitute Capacity Requests that are to be scheduled with CAISO prior to the Showing Month (e.g., through the CAISO RA Substitute Capacity Assessment), the Substitute Capacity Request shall be received by Seller at least two (2) Business Days prior to the applicable CAISO scheduling deadline. Seller shall, or shall cause the Unit’s Scheduling Coordinator to, comply with Buyer’s request under this Section 4.7(b), provided
25 that to the extent Seller is unable to provide the requested Substitute Capacity from the Facility due to a Planned Outage or a Forced Facility Outage, Seller shall not be liable for any amounts under Section (b) of Exhibit C.
(ii) For Buyer’s Substitute Capacity Requests that are to be scheduled with CAISO after the commencement of the Showing Month, the Substitute Capacity Request shall be received by Seller at least five (5) Business Days before Buyer submits its Substitute Capacity in the CIRA Tool. Seller shall, or shall cause the Replacement Unit’s Scheduling Coordinator to, comply with Buyer’s request under this Section 4.7(b), provided that to the extent Seller is unable to provide the requested Substitute Capacity from the Facility due to a Planned Outage or a Forced Facility Outage, Seller shall not be liable for amounts under Section (b) of Exhibit C.
4.8 Storage Availability.
(a) During the Delivery Term, the Facility shall maintain a Monthly Storage Availability during each month of no less than the Guaranteed Storage Availability, which Monthly Storage Availability shall be calculated in accordance with Exhibit L. (b) If the Monthly Storage Availability during any month is less than the Guaranteed Storage Availability, then Buyer’s payment for the Product calculated pursuant to Exhibit C shall be calculated by reference to the Availability Adjustment as determined in accordance with Exhibit L.
4.9 Storage Capacity Tests.
(a) Prior to the Commercial Operation Date, Seller shall schedule and complete a Storage Capacity Test in accordance with Exhibit M. Thereafter, Seller and Buyer shall have the right to run retests of the Storage Capacity Test in accordance with Exhibit M. (b) Buyer shall have the right to send one or more representative(s) to witness all Storage Capacity Tests. Alternatively, to the extent that any Storage Capacity Tests are done remotely, and no representatives are needed on the Site, Seller shall arrange for both Parties to have access to all data and other information arising out of such tests. Buyer shall be responsible for all costs, expenses and fees payable or reimbursable to its representative(s) witnessing any Storage Capacity Test.
(c) Following each Storage Capacity Test, Seller shall submit a testing report in accordance with Exhibit M. If the Storage Capacity determined pursuant to a Storage Capacity Test varies from the then current Storage Contract Capacity, then the Storage Capacity determined pursuant to the Storage Capacity Test shall become the new Storage Contract Capacity solely for purposes of the Energy Settlement, Section (a)(ii) of Exhibit C and Exhibit L. If the Storage Capacity Test was performed pursuant to Section (c)(iii) of Exhibit C and the resulting Efficiency Rate varies from the then current Efficiency Rate used to calculate the AEA under Section (c) of Exhibit C, then the AEA shall be recalculated using the greater of (a) the Efficiency Rate determined pursuant to the Storage Capacity Test or (b) the Guaranteed Efficiency Rate.
4.10 Interconnection Capacity. Seller shall have and maintain interconnection capacity
26 available or allocable to the Facility that is no less than the Storage Contract Capacity under the Interconnection Agreement throughout the Delivery Term. Seller shall be responsible for all costs of interconnecting the Facility to the Transmission System.
ARTICLE 5
TAXES AND REPORTING
5.1 Allocation of Taxes and Charges. Seller shall pay or cause to be paid all Taxes on or with respect to the Facility or on or with respect to the sale and making available of Product to Buyer, that are imposed on Product prior to its delivery to Buyer at the time and place contemplated under this Agreement. Buyer shall pay or cause to be paid all Taxes on or with respect to the delivery to and purchase by Buyer of Product that are imposed on Product at and after its delivery to Buyer at the time and place contemplated under this Agreement (other than withholding or other Taxes imposed on Seller’s income, revenue, receipts or employees), if any.
If a Party is required to remit or pay Taxes that are the other Party’s responsibility hereunder, such Party shall promptly pay the Taxes due and then seek and receive reimbursement from the other for such Taxes. In the event any sale of Product hereunder is exempt from or not subject to any particular Tax, Buyer shall provide Seller with all necessary documentation within thirty (30) days after the Effective Date to evidence such exemption or exclusion. If Buyer does not provide such documentation, then Buyer shall indemnify, defend, and hold Seller harmless from any liability with respect to Taxes from which Buyer claims it is exempt.
5.2 Cooperation. Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, however, that neither Party shall be obligated to incur any financial or operational burden to reduce Taxes for which the other Party is responsible hereunder without receiving due compensation therefor from the other Party. All Product delivered by Seller to Buyer hereunder shall be a sale made at wholesale, with Buyer reselling such Product.
5.3 Dodd-Frank Compliance.
(a) Delegation of Reporting Party. Pursuant to CFTC Regulation 45.8(d)(2), to the extent permitted by the CFTC Regulations, Seller shall be the “reporting counterparty” for purposes of this Agreement and reporting the Energy Settlement. Buyer shall notify Seller if Buyer becomes obligated to be the reporting counterparty under CEC Regulation Part 45. (b) Representations. Each Party hereby represents and warrants to the other as of the Effective Date that (i) it is not a “financial entity” within the meaning of the Commodity Exchange Act, (ii) it is entering into this Agreement to hedge or mitigate its own commercial risk pursuant to CFTC regulations, and (iii) it is not entering into this Agreement for investment or speculative purposes.
(c) Cooperation. Each Party will provide to the other Party any information reasonably requested by such other Party to enable such other Party to comply with CFTC Regulations in connection with the Energy Settlement.
(d) Permitted Disclosure. Notwithstanding anything contained in Article 18 to
27 the contrary, Buyer and Seller hereby acknowledge and agree that the Parties shall be entitled, each at its own expense, to report and disclose information concerning any or all transactions under this Agreement (including information regarding the economic terms and valuations of such transactions) to any applicable Governmental Authority (or a third party data repository as required by a Governmental Authority), from time to time, as may be required by Laws or as such Party may determine, in its reasonable discretion, to be necessary or advisable for it to comply with Laws. Additionally, to the extent either Party needs additional information or details from the other Party in order to comply with any such Laws (including information concerning such other Party’s organization, corporate status, status under the CFTC’s regulations and/or unique entity identifier), such other Party shall promptly provide such additional information or details to the first Party upon request therefor.
(e) No Event of Default. Notwithstanding any provision of this Agreement to the contrary, each Party agrees that an Event of Default, termination event or similar event shall not occur under this Agreement or any other contract between the Parties solely on the basis of a breach of any covenant or agreement in this Section 5.3; provided, however, that, without limiting any duty to mitigate, nothing in this Section 5.3 shall prejudice any other right or remedy of a Party at law or under this Agreement or any other contract with respect to any misrepresentation or breach hereunder or thereunder.
ARTICLE 6
MAINTENANCE OF THE FACILITY
6.1 Maintenance of the Facility. Seller shall comply with Law and Prudent Operating Practice relating to the operation and maintenance of the Facility, the generation and sale of Product, and the disposal and recycling of any equipment associated with the Facility, including without limitation batteries.
6.2 Maintenance of Health and Safety. Seller shall take reasonable safety precautions with respect to the operation, maintenance, repair and replacement of the Facility. If Seller becomes aware of any circumstances relating to the Facility that create an imminent risk of damage or injury to any Person or any Person’s property, Seller shall take prompt action to prevent such damage or injury and shall give Notice to Buyer’s emergency contact identified on Exhibit N of such condition. Such action may include, to the extent reasonably necessary, disconnecting and removing all or a portion of the Facility, or suspending the supply of Energy or discharging Energy to Buyer.
6.3 Shared Facilities. The Parties acknowledge and agree that certain of the Interconnection Facilities, Seller’s rights and obligations under the Interconnection Agreement and Seller’s rights and obligations under transmission service agreements with a PTO, may be subject to certain shared facilities and/or co-tenancy agreements (“Shared Facilities Agreements”) to be entered into among two or more of Seller, the Participating Transmission Owner, Seller’s Affiliates, and/or third parties pursuant to which certain Interconnection Facilities, interconnection service and/or transmission service may be subject to joint ownership and/or shared maintenance and operation arrangements; provided that such Shared Facilities Agreements shall permit Seller to perform or satisfy, and shall not purport to limit, its obligations hereunder, including providing interconnection capacity for the Facility in an amount not less than the Storage Contract Capacity.
28 ARTICLE 7
METERING
7.1 Metering. Seller shall measure all Energy using the Storage Facility Meter consistent with the CAISO Tariff.
7.2 Meter Verification. Annually, if Seller or Buyer has reason to believe there may be a meter malfunction, Seller shall test the meter. The tests shall be conducted by independent third parties qualified to conduct such tests. Buyer shall be notified seven (7) days in advance of such tests and have a right to be present during such tests. If a meter is inaccurate, it shall be promptly repaired or replaced.
ARTICLE 8
INVOICING AND PAYMENT; CREDIT
8.1 Statements and Invoicing.
(a) As soon as reasonably practicable after the end of each month of the Delivery Term, Seller shall calculate the ES Payment for each day of the prior month and the Monthly RA Capacity Payment. The ES Payment will be reflected as a credit on the invoice against the Monthly RA Capacity Payment.
(b) Each invoice shall be in a format reasonably specified by Buyer, covering the services provided in the preceding month determined in accordance with the applicable provisions of this Agreement. The invoice shall be delivered by electronic mail in accordance with Exhibit N.
(c) To the extent that the CAISO publishes any changes to the DAP (as defined in Exhibit C) used to calculate the ES Payment within sixty (60) days following the end of the month for which the ES Payment was calculated, Seller shall recalculate the ES Payment due for such month and include any adjustment in the next invoice issued under this Section 8.1.
8.2 Payment. Buyer shall make payment to Seller for Product by wire transfer or ACH payment to the bank account designated by Seller in Exhibit N, which may be updated by Seller by Notice hereunder. Buyer shall pay undisputed invoice amounts within thirty (30) days after receipt of the invoice. If such due date falls on a weekend or legal holiday, such due date shall be the next Business Day. Payments made after the due date will be considered late and will bear interest on the unpaid balance. If the amount due is not paid on or before the due date or if any other payment that is due and owing from one Party to another is not paid on or before its applicable due date, a late payment charge shall be applied to the unpaid balance and shall be added to the next billing statement. Such late payment charge shall be calculated based on the 3-month prime rate (or any equivalent successor rate accepted by a majority of major financial institutions) published on the date of the invoice in The Wall Street Journal (or, if The Wall Street Journal is not published on that day, the next succeeding date of publication), plus two percent (2%) (the “Interest Rate”). If the due date occurs on a day that is not a Business Day, the late payment charge shall begin to accrue on the next succeeding Business Day.
29 8.3 Books and Records. To facilitate payment and verification, each Party shall maintain all books and records necessary for billing and payments, including copies of all invoices under this Agreement, for a period of at least five (5) years or as otherwise required by Law. Upon five (5) Business Days’ Notice to the other Party, either Party shall be granted access to the accounting books and records within the possession or control of the other Party pertaining to all invoices generated pursuant to this Agreement. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement because the compensation under this Agreement exceeds Ten Thousand Dollars ($10,000).
8.4 Billing Disputes. A Party may, in good faith, dispute the correctness of any invoice or any adjustment to an invoice rendered under this Agreement or adjust any invoice for any arithmetic or computational error within twelve (12) months of the date the invoice, or adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be required to be made when due. Any invoice dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment. Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of the dispute, any required payment shall be made within five (5) Business Days of such resolution along with interest accrued at the Interest Rate from and including the original due date to but excluding the date paid. Inadvertent overpayments shall be returned via adjustments in accordance with Section 8.5. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 8.4 within twelve (12) months after the invoice is rendered or subsequently adjusted, except to the extent any misinformation was from a third party not affiliated with any Party and such third party corrects its information after the twelve (12)-month period. If an invoice is not rendered within twelve (12) months after the close of the month during which performance occurred, the right to payment for such performance is waived.
8.5 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of Product during the monthly billing period under this Agreement or otherwise arising out of this Agreement, including any related damages calculated pursuant to Exhibit B, interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it.
8.6 Seller’s Development Security. To secure its obligations under this Agreement, Seller shall deliver Development Security to Buyer within thirty (30) days of the Effective Date.
Seller shall maintain the Development Security in full force and effect. Upon the earlier of (i) Seller’s delivery of the Performance Security, or (ii) sixty (60) days after termination of this Agreement, Buyer shall return the Development Security to Seller, less the amounts drawn in accordance with this Agreement. If the Development Security is a Letter of Credit and the issuer of such Letter of Credit (x) fails to maintain the minimum Credit Rating specified in the definition of Letter of Credit, (y) indicates its intent not to renew such Letter of Credit and such Letter of Credit expires prior to the Commercial Operation Date, or (z) fails to honor Buyer’s properly documented request to draw on such Letter of Credit by such issuer, Seller shall have ten (10)
30 Business Daysto either post cash or deliver a substitute Letter of Credit that meets the requirements set forth in the definition of Development Security.
8.7 Seller’s Performance Security. To secure its obligations under this Agreement, Seller shall deliver Performance Security to Buyer on or before the Commercial Operation Date.
If the Performance Security is not in the form of cash or Letter of Credit, it shall be substantially in the form set forth in Exhibit J. Seller shall maintain the Performance Security in full force and effect, subject to any draws made by Buyer in accordance with this Agreement, until the following have occurred: (A) the Delivery Term has expired or terminated early; and (B) all payment obligations of the Seller then due and payable under this Agreement, including compensation for penalties, Termination Payment, indemnification payments or other damages are paid in full (whether directly or indirectly such as through set-off or netting). Following the occurrence of both events, Buyer shall promptly return to Seller the unused portion of the Performance Security. If the Performance Security is a Letter of Credit and the issuer of such Letter of Credit (i) fails to maintain the minimum Credit Rating set forth in the definition of Letter of Credit, (ii) indicates its intent not to renew such Letter of Credit and such Letter of Credit expires prior to the Commercial Operation Date, or (iii) fails to honor Buyer’s properly documented request to draw on such Letter of Credit by such issuer, Seller shall have ten (10) Business Days to either post cash or deliver a substitute Letter of Credit that meets the requirements set forth in the definition of Performance Security.
8.8 First Priority Security Interest in Cash or Cash Equivalent Collateral. To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to Buyer a present and continuing first-priority security interest (“Security Interest”) in, and lien on (and right to net against), and assignment of the Development Security, Performance Security, any other cash collateral and cash equivalent collateral posted pursuant to Sections 8.6 and 8.7 and any and all interest thereon or proceeds resulting therefrom or from the liquidation thereof, whether now or hereafter held by, on behalf of, or for the benefit of Buyer, and Seller agrees to take all action as Buyer reasonably requires in order to perfect Buyer’s Security Interest in, and lien on (and right to net against), such collateral and any and all proceeds resulting therefrom or from the liquidation thereof.
Upon or any time after the occurrence of an Event of Default caused by Seller, an Early Termination Date resulting from an Event of Default caused by Seller, or an occasion provided for in this Agreement where Buyer is authorized to retain all or a portion of the Development Security or Performance Security, Buyer may do any one or more of the following (in each case subject to the final sentence of this Section 8.8):
(a) Exercise any of its rights and remedies with respect to the Development Security and Performance Security, including any such rights and remedies under Law then in effect;
(b) Draw on any outstanding Letter of Credit issued for its benefit and retain any cash held by Buyer as Development Security or Performance Security; and
31 (c) Liquidate all Development Security or Performance Security (as applicable) then held by or for the benefit of Buyer free from any claim or right of any nature whatsoever of Seller, including any equity or right of purchase or redemption by Seller.
Buyer shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce Seller’s obligations under this Agreement (Seller remains liable for any amounts owing to Buyer after such application), subject to Buyer’s obligation to return any surplus proceeds remaining after these obligations are satisfied in full.
ARTICLE 9
NOTICES
9.1 Addresses for the Delivery of Notices. Any Notice required, permitted, or contemplated hereunder shall be in writing, shall be addressed to the Party to be notified at the address set forth on Exhibit N or at such other address or addresses as a Party may designate for itself from time to time by Notice hereunder.
9.2 Acceptable Means of Delivering Notice. Each Notice required, permitted, or contemplated hereunder shall be deemed to have been validly served, given or delivered if sent by electronic mail at the time indicated by the time stamp upon delivery, except that if received after 5 PM Pacific Prevailing Time, it shall be deemed received on the next Business Day.
Notwithstanding the foregoing, Notices of outages or other scheduling or dispatch information or requests, may be sent by electronic mail, or any other mutually-acceptable form of electronic communication, and shall be considered delivered upon successful completion of such transmission (or, in the case of electronic mail, if no notice of delivery failure is received). Notices of claimed breach of this Agreement or an Event of Default must concurrently be sent by hand delivery or overnight carrier with delivery fees either prepaid or an arrangement with such carrier made for the payment of such fees.
ARTICLE 10
FORCE MAJEURE
10.1 Definition.
(a) “Force Majeure Event” means any act or event that delays or prevents a Party from timely performing all or a portion of its obligations under this Agreement or from complying with all or a portion of the conditions under this Agreement if such act or event, despite the exercise of reasonable efforts, cannot be avoided by and is beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance, or noncompliance. (b) Without limiting the generality of the foregoing, so long as the following events, despite the exercise of reasonable efforts, cannot be avoided by, and are beyond the reasonable control (whether direct or indirect) of and without the fault or negligence of the Party relying thereon as justification for such delay, nonperformance or noncompliance, a Force Majeure Event may include an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; landslide; mudslide; sabotage;
32 terrorism; earthquake; or other cataclysmic events; an act of public enemy; war; blockade; civil insurrection; riot; civil disturbance; epidemic; pandemic; unknown subsurface conditions that affect construction completion; or strikes or other labor difficulties caused or suffered by a Party or any third party except as set forth below.
(c) Notwithstanding the foregoing, the term “Force Majeure Event” does not include (i) economic conditions that render a Party’s performance of this Agreement at the Contract Price unprofitable or otherwise uneconomic (including an increase in component costs for any reason, including foreign or domestic tariffs, Buyer’s ability to buy storage capacity at a lower price, or Seller’s ability to sell the Product, or any component thereof, at a higher price, than under this Agreement); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the Facility, except to the extent such inability is caused by a Force Majeure Event; (iii) the inability of a Party to make payments when due under this Agreement, unless the cause of such inability is an event that would otherwise constitute a Force Majeure Event as described above; (iv) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Facility except to the extent such inability is caused by a Force Majeure Event; or (v) any equipment failure except if such equipment failure is caused by a Force Majeure Event.
10.2 Termination Following Force Majeure Event. If a Force Majeure Event has occurred after the Commercial Operation Date that has caused either Party to be wholly or partially unable to perform its obligations hereunder, and the impacted Party has claimed and received relief from performance of its obligations for a consecutive twelve (12) month period, then the non-claiming Party may terminate this Agreement upon Notice to the other Party. In addition, if a Force Majeure Event causes the Facility to be materially damaged such that returning the Facility to the full operational status that existed prior to the Force Majeure Event is reasonably expected to take more than twelve (12) months, Seller may terminate this Agreement upon Notice to Buyer.
Upon any such termination, neither Party shall have any liability to the other Party, save and except for those obligations specified in Section 2.1(b), and Buyer shall promptly return to Seller any Performance Security then held by Buyer, less any amounts drawn in accordance with this Agreement. Notwithstanding the foregoing, the occurrence and continuation of a Force Majeure Event shall not (a) suspend or excuse the obligation of a Party to make any payments due hereunder, (b) suspend or excuse the obligation of Seller to achieve the Guaranteed Construction Start Date or the Guaranteed Commercial Operation Date beyond the extensions provided in Exhibit B, or (c) limit Buyer’s right to declare an Event of Default pursuant to Section 11.1(b)(ii) or (iv) and receive a Damage Payment upon exercise of Buyer’s default right pursuant to Section
11.2. 10.3 Notice for Force Majeure. Within two (2) Business Days of the Party becoming aware of that a Force Majeure Event will affect the Party’s performance under this Agreement, the claiming Party shall provide the other Party with oral notice of the Force Majeure Event, and within two (2) weeks thereafter the claiming Party shall provide the other Party with Notice in the form of a letter describing in detail the occurrence giving rise to the Force Majeure Event, including the nature, cause, estimated date of commencement thereof, and the anticipated extent of any delay or interruption in performance. Failure to provide timely Notice shall not constitute a waiver of the Force Majeure Event, but the relief granted shall be based on the date Notice is provided rather than the date of the Force Majeure Event. Upon written request from Buyer, Seller shall provide
33 documentation demonstrating to Buyer’s reasonable satisfaction that each day of the claimed delay was the result of a Force Majeure Event and did not result from Seller’s actions or failure to exercise due diligence or take reasonable actions. The claiming Party shall promptly notify the other Party in writing of the cessation or termination of such Force Majeure Event, all as known or estimated in good faith by the affected Party. The suspension of performance due to a claim of a Force Majeure Event must be of no greater scope and of no longer duration than is required by the Force Majeure Event.
ARTICLE 11
DEFAULTS; REMEDIES; TERMINATION
11.1 Events of Default. An “Event of Default” shall mean, (a) with respect to a Party (the “Defaulting Party”) that is subject to the Event of Default, the occurrence of any of the following:
(i) the failure by such Party to make, when due, any payment required pursuant to this Agreement and such failure is not remedied within ten (10) Business Days after Notice thereof;
(ii) any representation or warranty made by such Party herein is false or misleading in any material respect when made or when deemed made or repeated, and such default is not remedied within thirty (30) days after Notice thereof; (iii) the failure by such Party to perform any material covenant or obligation set forth in this Agreement (except to the extent constituting a separate Event of Default set forth in this Section 11.1) and such failure is not remedied within thirty (30) days after Notice thereof;
(iv) such Party becomes Bankrupt;
(v) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Section 14.2; or
(vi) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume all the obligations of such Party under this Agreement to which it or its predecessor was a party by operation of Law or pursuant to an agreement reasonably satisfactory to the other Party. (b) with respect to Seller as the Defaulting Party, the occurrence of any of the following:
(i) the failure by Seller to achieve the Construction Start Date days after the Guaranteed Construction Start Date;
(ii) the failure by Seller to achieve Commercial Operation within days after the Guaranteed Commercial Operation Date;
34 (iii) if not remedied within ten (10) days after Notice thereof, the failure by Seller to deliver a Remedial Action Plan required under Section 2.4 that demonstrates a reasonable plan for completing the Facility within days after the Guaranteed Commercial Operation Date;
(iv) Seller sells, assigns, or otherwise transfers, or commits to sell, assign, or otherwise transfer, the Product, or any portion thereof, during the Delivery Term to any party other than Buyer except as expressly permitted under this Agreement; (v) if Seller fails to maintain at least of the Storage Contract Capacity for more than ;
(vi) failure by Seller to satisfy the collateral requirements pursuant to Sections 8.6 or 8.7 after Notice and expiration of the cure periods set forth therein, including the failure to replenish the Performance Security amount in accordance with this Agreement in the event Buyer draws against either for any reason other than to satisfy a Damage Payment or a Termination Payment; or
(vii) with respect to any outstanding Letter of Credit provided for the benefit of Buyer that is not then required under this Agreement to be canceled or returned, the failure by Seller to provide for the benefit of Buyer either (1) cash, or (2) a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit, in each case, in the amount required hereunder within ten (10) Business Days after Seller receives Notice of the occurrence of any of the following events:
(A) the issuer of the outstanding Letter of Credit shall fail to maintain a Credit Rating of at least A- by S&P or A3 by Moody’s; (B) the issuer of such Letter of Credit becomes Bankrupt; (C) the issuer of the outstanding Letter of Credit shall fail to comply with or perform its obligations under such Letter of Credit and such failure shall be continuing after the lapse of any applicable grace period permitted under such Letter of Credit;
(D) the issuer of the outstanding Letter of Credit shall fail to honor a properly documented request to draw on such Letter of Credit; (E) the issuer of the outstanding Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Letter of Credit;
(F) such Letter of Credit fails or ceases to be in full force and effect at any time; or
(G) Seller shall fail to renew or cause the renewal of each outstanding Letter of Credit on a timely basis as provided in the relevant Letter of Credit and as provided in accordance with this Agreement, and in
35 no event less than thirty (30) days prior to the expiration of the outstanding Letter of Credit.
11.2 Remedies; Declaration of Early Termination Date. If an Event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“Non-Defaulting Party”) shall have the following rights:
(a) to send Notice, designating a day, no earlier than the day such Notice is deemed to be received and no later than twenty (20) days after such Notice is deemed to be received, as an early termination date of this Agreement (“Early Termination Date”) that terminates this Agreement (the “Terminated Transaction”) and ends the Delivery Term effective as of the Early Termination Date;
(b) to accelerate all amounts owing between the Parties, and to collect as liquidated damages (i) the Damage Payment (in the case of an Event of Default by Seller occurring before the Commercial Operation Date, including an Event of Default under Section 11.1(b)(i) or
11.1(b)(ii)), or (ii) the Termination Payment calculated in accordance with Section 11.3 below (in the case of any other Event of Default by either Party); (c) to withhold any payments due to the Defaulting Party under this Agreement; (d) to suspend performance; or
(e) to exercise any other right or remedy available at law or in equity, including specific performance or injunctive relief, except to the extent such remedies are expressly limited under this Agreement;
provided, that payment by the Defaulting Party of the Damage Payment or Termination Payment, as applicable, shall constitute liquidated damages and the Non-Defaulting Party’s sole and exclusive monetary remedy for any Terminated Transaction and the Event of Default related thereto.
11.3 Termination Payment. The Termination Payment (“Termination Payment”) for a Terminated Transaction shall be the aggregate of all Settlement Amounts plus any or all other amounts due to or from the Non-Defaulting Party (as of the Early Termination Date) netted into a single amount. The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for the Terminated Transaction as of the Early Termination Date. Third parties supplying information for purposes of the calculation of Gains or Losses may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information. The Settlement Amount shall not include consequential, incidental, punitive, exemplary, indirect or business interruption damages. Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non-Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (a) the actual damages that the Non-Defaulting Party would incur in connection with a Terminated Transaction would be difficult or impossible to predict with certainty, (b) the Damage Payment or Termination Payment described in Section 11.2 or this Section 11.3 (as applicable) is a reasonable and appropriate approximation of such damages, and (c) the Damage Payment or Termination Payment described in Section 11.2 or this Section 11.3 (as applicable) is the exclusive
36 remedy of the Non-Defaulting Party in connection with a Terminated Transaction but shall not otherwise act to limit any of the Non-Defaulting Party’s rights or remedies if the Non-Defaulting Party does not elect a Terminated Transaction as its remedy for an Event of Default by the Defaulting Party.
11.4 Notice of Payment of Termination Payment. As soon as practicable after a Terminated Transaction, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Damage Payment or Termination Payment and whether the Termination Payment is due to or from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of such amount and the sources for such calculation.
The Termination Payment shall be made to or from the Non-Defaulting Party, as applicable, within ten (10) Business Days after such Notice is effective.
11.5 Disputes With Respect to Termination Payment. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment, in whole or in part, the Defaulting Party shall, within five (5) Business Days of receipt of the Non-Defaulting Party’s calculation of the Termination Payment, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute. Disputes regarding the Termination Payment shall be determined in accordance with Article 15.
11.6 Rights And Remedies Are Cumulative. Except where an express and exclusive remedy or measure of damages is provided, the rights and remedies of a Party pursuant to this Article 11 shall be cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
ARTICLE 12
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
12.1 No Consequential Damages. EXCEPT TO THE EXTENT PART OF AN
EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN, OR PART OF AN ARTICLE 16 INDEMNITY CLAIM, OR INCLUDED IN A LIQUIDATED DAMAGES CALCULATION,
OR ARISING FROM FRAUD OR INTENTIONAL MISREPRESENTATION, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER OR ITS INDEMNIFIED PERSONS FOR ANY
SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR
LOSSES OR DAMAGES FOR LOST REVENUE OR LOST PROFITS, WHETHER
FORESEEABLE OR NOT, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT.
12.2 Waiver and Exclusion of Other Damages. EXCEPT AS EXPRESSLY SET
FORTH HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM THAT THE EXPRESS REMEDIES AND
MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. ALL LIMITATIONS OF LIABILITY CONTAINED IN
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO SELLER’S LIMITATION OF LIABILITY AND THE PARTIES’ WAIVER OF
CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF THE REMEDIES FOR BREACH
37 OF WARRANTY PROVIDED IN THIS AGREEMENT ARE DEEMED TO “FAIL OF THEIR ESSENTIAL PURPOSE” OR ARE OTHERWISE HELD TO BE INVALID OR UNENFORCEABLE.
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS AND EXCLUSIVE
REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR
MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR’S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. EXCEPT
WITH RESPECT TO CLAIMS FOR INDEMNIFICATION FOR THIRD PARTY CLAIMS, SELLER’S AGGREGATE LIABILITY TO BUYER FOR ANY EVENT OF DEFAULT OR
TERMINATION OCCURRING PRIOR TO THE COMMERCIAL OPERATION DATE SHALL
NOT EXCEED THE DAMAGES PAYMENT PLUS ANY LIQUIDATED DAMAGES PAID OR ACCRUED THROUGH THE DATE OF SUCH TERMINATION.
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 4.8, 11.2, AND 11.3, AND AS PROVIDED
IN EXHIBIT B AND EXHIBIT L THE PARTIES ACKNOWLEDGE THAT THE DAMAGES
ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT OTHERWISE OBTAINING AN
ADEQUATE REMEDY IS INCONVENIENT, AND THAT THE LIQUIDATED DAMAGES
CONSTITUTE A REASONABLE APPROXIMATION OF THE ANTICIPATED HARM OR LOSS. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED
ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE
CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. THE PARTIES HEREBY WAIVE ANY RIGHT TO CONTEST SUCH PAYMENTS AS AN UNREASONABLE PENALTY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT MONEY DAMAGES AND THE
EXPRESS REMEDIES PROVIDED FOR HEREIN ARE AN ADEQUATE REMEDY FOR THE
BREACH BY THE OTHER OF THE TERMS OF THIS AGREEMENT, AND EACH PARTY
WAIVES ANY RIGHT IT MAY HAVE TO SPECIFIC PERFORMANCE WITH RESPECT TO ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES; AUTHORITY
13.1 Seller’s Representations and Warranties. As of the Effective Date, Seller represents and warrants as follows:
(a) Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct business in the State of California and each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller. (b) Seller has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all
38 covenants and obligations on its part to be performed under and pursuant to this Agreement. The execution, delivery and performance of this Agreement by Seller have been duly authorized by all necessary limited liability company action on the part of Seller and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Seller or any other party to any other agreement with Seller.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Seller with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Seller, subject to any permits that have not yet been obtained by Seller, the documents of formation of Seller or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Seller is a party or by which any of its property is bound. (d) This Agreement has been duly executed and delivered by Seller. This Agreement is a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) The Facility is located in the State of California. (f) Seller will be responsible for obtaining all permits necessary to construct and operate the Facility and Seller will be the applicant on any CEQA documents. Seller acknowledges that Buyer is purchasing the Product under this Agreement and does not intend to be the lead agency for the Facility.
(g) The Product includes the exclusive right to claim the Storage Contract Capacity from the Facility as an incremental resource for purposes of the MTR Mandate. (h) Seller has not and will not sell, assign, or transfer the right to claim the output of the Facility associated with the Storage Contract Capacity as an incremental resource for purposes of the MTR Mandate to any other person or entity. (i) Seller will reasonably cooperate with Buyer to ensure Buyer can use the Product to meet the procurement mandates set forth in the MTR Mandate.
13.2 Buyer’s Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
(a) Buyer is a joint powers authority and a validly existing community choice aggregator, duly organized, validly existing and in good standing under the laws of the State of California and the rules, regulations and orders of the California Public Utilities Commission, and is qualified to conduct business in each jurisdiction of the Joint Powers Agreement members. All Persons making up the governing body of Buyer are the elected or appointed incumbents in their positions and hold their positions in good standing in accordance with the Joint Powers Agreement and other Law.
39 (b) Buyer has the power and authority to enter into and perform this Agreement and is not prohibited from entering into this Agreement or discharging and performing all covenants and obligations on its part to be performed under and pursuant to this Agreement, except where such failure does not have a material adverse effect on Buyer’s performance under this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly authorized by all necessary action on the part of Buyer and does not and will not require the consent of any trustee or holder of any indebtedness or other obligation of Buyer or any other party to any other agreement with Buyer.
(c) The execution and delivery of this Agreement, consummation of the transactions contemplated herein, and fulfillment of and compliance by Buyer with the provisions of this Agreement will not conflict with or constitute a breach of or a default under any Law presently in effect having applicability to Buyer, the documents of formation of Buyer or any outstanding trust indenture, deed of trust, mortgage, loan agreement or other evidence of indebtedness or any other agreement or instrument to which Buyer is a party or by which any of its property is bound.
(d) This Agreement has been duly executed and delivered by Buyer. This Agreement is a legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as limited by laws of general applicability limiting the enforcement of creditors’ rights or by the exercise of judicial discretion in accordance with general principles of equity. (e) Buyer warrants and covenants that with respect to its contractual obligations under this Agreement, it will not claim immunity on the grounds of sovereignty or similar grounds with respect to itself or its revenues or assets from (1) suit, (2) jurisdiction of court (provided that such court is located within a venue permitted in Law and under the Agreement), (3) relief by way of injunction, order for specific performance or recovery of property, (4) attachment of assets, or (5) execution or enforcement of any judgment; provided, however that nothing in this Agreement shall waive the obligations or rights set forth in the California Tort Claims Act (Government Code Section 810 et seq.).
(f) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
13.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
(a) It shall continue to be duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and to be qualified to conduct business in California and each jurisdiction where the failure to so qualify would have a material adverse effect on its business or financial condition;
(b) It shall maintain (or obtain from time to time as required) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and (c) It shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and in material compliance with any Law.
40 13.4 Prevailing Wage. Seller shall comply with all applicable federal, state and local laws, statutes, ordinances, rules and regulations, and the orders and decrees of any courts or administrative bodies or tribunals, including, without limitation employment discrimination laws and prevailing wage laws. Seller shall use reasonable efforts to ensure that all employees hired by Seller, and its contractors and subcontractors, that will perform construction work or provide services at the Site related to construction of the Facility are paid wages at rates not less than those prevailing for workers performing similar work in the locality as provided by applicable California law, if any (“Prevailing Wage Requirement”). Buyer agrees that Seller’s obligations under this Section 13.4 will be satisfied upon the execution of a project labor agreement related to construction of the Facility.
ARTICLE 14
ASSIGNMENT
14.1 General Prohibition on Assignments. Except as provided below, neither Party may voluntarily assign this Agreement or its rights or obligations under this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld, conditioned or delayed. Any Change of Control of Seller or direct or indirect change of control of Buyer (whether voluntary or by operation of law) will be deemed an assignment and will be subject to the same conditions as any other form of assignment. Any purported assignment made without required written consent, or in violation of the conditions to assignment set out below, shall be null and void. Buyer will have no obligation to provide any consent, or enter into any agreement, that materially and adversely affects any of Buyer’s rights, benefits, risks or obligations under this Agreement, or to modify the Agreement, except as set forth below. Seller shall be responsible for Buyer’s reasonable third party costs, including reasonable attorneys’ fees, associated with the preparation, review, execution and delivery of documents in connection with any assignment of this Agreement.
14.2 Collateral Assignment. Subject to the provisions of this Section 14.2, Seller has the right to assign this Agreement as collateral for any financing or refinancing of the Facility. In connection with any financing or refinancing of the Facility by Seller, upon request of Seller, Buyer shall in good faith work with Seller and Lender to agree upon a consent to collateral assignment of this Agreement (“Collateral Assignment Agreement”). The Collateral Assignment Agreement shall include the following provisions:
(a) Buyer shall give written notice of an Event of Default by Seller to the Person(s) to be specified by Lender in the Collateral Assignment Agreement, before exercising its right to terminate this Agreement as a result of such Event of Default; provided that such written notice shall be provided to Lender at the time Notice is provided to Seller and the additional cure period of Lender agreed to in the Collateral Assignment Agreement shall not commence until Lender has received written notice of such Event of Default; (b) Following an Event of Default by Seller under this Agreement, Buyer may require Seller or Lender to provide to Buyer a report concerning:
(i) The status of efforts by Seller or Lender to develop a plan to cure the Event of Default;
41 (ii) Impediments to the cure plan or its development; (iii) If a cure plan has been adopted, the status of the cure plan’s implementation (including any modifications to the plan as well as the expected timeframe within which any cure is expected to be implemented); and
(iv) Any other information which Buyer may reasonably require related to the development, implementation and timetable of the cure plan.
Seller or Lender must provide the report to Buyer within ten (10) Business Days after Notice (in the case of Seller) or written notice (in the case of Lender) from Buyer requesting the report. Buyer will have no further right to require the report with respect to a particular Event of Default after that Event of Default has been cured;
(c) Lender will have the right to cure an Event of Default on behalf of Seller, only if Lender sends written notice to Buyer before the later of (i) the expiration of any cure period, and (ii) ten (10) Business Days after Lender’s receipt of written notice of such Event of Default from Buyer, indicating Lender’s intention to cure. Lender must remedy or cure the Event of Default within the cure period under this Agreement and any additional cure periods agreed in the Collateral Assignment Agreement, which shall not exceed a maximum of one hundred twenty (120) days (or one hundred eighty (180) days in the event of a bankruptcy of Seller, or any foreclosure or similar proceeding if required by Lender to cure any Event of Default); (d) Lender will have the right to consent before any termination of this Agreement which does not arise out of an Event of Default; (e) Lender will receive prior written notice of and the right to approve material amendments to this Agreement, which approval will not be unreasonably withheld, delayed or conditioned;
(f) If Lender, directly or indirectly, takes possession of, or title to the Facility (including possession by a receiver or title by foreclosure or deed in lieu of foreclosure), Lender or its designee must assume all of Seller’s obligations arising under this Agreement and all related agreements (subject to such limits on liability as are mutually agreed to by Seller, Buyer, and Lender as set forth in the Collateral Assignment Agreement); provided, before such assumption, if Buyer advises Lender that Buyer will require that Lender cure (or cause to be cured) any Event of Default existing as of the possession date in order to avoid the exercise by Buyer (in its sole discretion) of Buyer’s right to terminate this Agreement with respect to such Event of Default, then Lender at its option, and in its sole discretion, may elect to either:
(i) Cause such Event of Default to be cured (other than any Events of Default which relate to Seller’s bankruptcy or similar insolvency proceedings), or (ii) Not assume this Agreement;
(g) If Lender elects to sell or transfer the Facility (after Lender directly or indirectly, takes possession of, or title to the Facility), or sale of the Facility occurs through the
42 actions of Lender (for example, a foreclosure sale where a third party is the buyer, or otherwise), then Lender shall cause the transferee or buyer to assume all of Seller’s obligations arising under this Agreement and all related agreements as a condition of the sale or transfer. Such sale or transfer may be made only to an entity that (i) meets the definition of Permitted Transferee and (ii) is an entity that Buyer is permitted to contract with under applicable Law; and (h) Subject to Lender’s cure of any Events of Defaults under the Agreement in accordance with Section 14.2(f), if (i) this Agreement is rejected in Seller’s bankruptcy or otherwise terminated in connection therewith Lender shall have the right to elect within thirty (30) days after such rejection or termination, to cause Buyer to enter into a replacement agreement with Seller having the same terms as this Agreement for the remaining term thereof, or (ii) if Lender or its designee, directly or indirectly, takes possession of, or title to, the Facility (including possession by a receiver or title by foreclosure or deed in lieu of foreclosure) after any such rejection or termination of this Agreement, promptly after Buyer’s written request, Lender must itself or must cause its designee to promptly enter into a new agreement with Buyer having the same terms as this Agreement for the remaining term thereof, provided that in the event a designee of Lender, directly or indirectly, takes possession of, or title to, the Facility (including possession by a receiver or title by foreclosure or deed in lieu of foreclosure), such designee shall be approved by Buyer, not to be unreasonably withheld.
ARTICLE 15
DISPUTE RESOLUTION
15.1 Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the State of California, without regard to principles of conflicts of Law. To the extent enforceable at such time, each Party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this Agreement. The Parties agree that any suit, action or other legal proceeding by or against any Party (or its affiliates or designees) with respect to or arising out of this Agreement shall be brought in the federal courts of the United States or the courts of the State of California sitting in the County of Monterey, California.
15.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) days following the receipt of a Notice from either Party identifying such dispute, the Parties shall meet, negotiate and attempt, in good faith, to resolve the dispute quickly, informally and inexpensively. If the Parties are unable to resolve a dispute arising hereunder within the earlier of either thirty (30) days of initiating such discussions, or within forty (40) days after Notice of the dispute, then either Party may seek any and all remedies available to it at law or in equity, subject to the limitations set forth in this Agreement.
ARTICLE 16
INDEMNIFICATION
16.1 Indemnity. Each Party (the “Indemnifying Party”) agrees to defend, indemnify and hold harmless the other Party, its directors, officers, agents, attorneys, consultants, employees and representatives (the “Indemnified Party”) from and against all third party claims, demands, losses, liabilities, penalties, and expenses, including reasonable attorneys’ and expert witness fees
43 (collectively, “Indemnifiable Losses”) for personal injury or death to Persons, damage to the property of any third party and any fines or penalties imposed by any Governmental Authority arising out of or relating to or in any way connected with the Indemnifying Party’s or its Affiliates’ negligence or willful misconduct. Nothing in this Section 16.1 shall enlarge or relieve Seller or Buyer of any liability to the other for any breach of this Agreement. Neither Party shall be indemnified for its damages to the extent resulting from its negligence, intentional acts or willful misconduct. These indemnity provisions shall not be construed to relieve any insurer of its obligation to pay claims consistent with the provisions of a valid insurance policy.
16.2 Claim Notice.
(a) Notice of Claim. Subject to the terms of this Agreement and upon obtaining knowledge of an Indemnifiable Loss for which it is entitled to indemnity under this Article 16, the Indemnified Party will promptly provide Notice to the Indemnifying Party in writing of any damage, claim, loss, liability or expense which the Indemnified Party has determined has given or could give rise to an Indemnifiable Loss under Section 16.1 (“Claim”).
The Notice is referred to as a “Notice of Claim.” A Notice of Claim will specify, in reasonable detail, the facts known to the Indemnified Party regarding the Indemnifiable Loss. (b) Failure to Provide Notice. A failure to give timely Notice or to include any specified information in any Notice as provided in this Section 16.2 will not affect the rights or obligations of the Indemnified Party except and only to the extent that, as a result of such failure, the Indemnifying Party was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise materially damaged as a direct result of such failure.
16.3 Defense of Claims. If, within ten (10) days after giving a Notice of Claim regarding a Claim to the Indemnifying Party pursuant to Section 16.2(a), the Indemnified Party receives Notice from the Indemnifying Party that the Indemnifying Party has elected to assume the defense of such Claim, the Indemnifying Party will not be liable for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof; provided, however, that if the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Claim within ten (10) days after receiving Notice from the Indemnified Party that the Indemnified Party believes the Indemnifying Party has failed to take such steps, or if the Indemnifying Party has not undertaken fully to indemnify the Indemnified Party with respect to all Indemnifiable Losses relating to the matter, the Indemnified Party may assume its own defense, and the Indemnifying Party will be liable for all reasonable costs or expenses, including attorneys’ fees, paid or incurred in connection therewith. Without the prior written consent of the Indemnified Party, the Indemnifying Party will not enter into any settlement of any Claim which would lead to liability or create any financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder; provided, however, that the Indemnifying Party may accept any settlement without the consent of the Indemnified Party if such settlement provides a full release to the Indemnified Party and no requirement that the Indemnified Party acknowledge fault or culpability. If a firm offer is made to settle a Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder and the Indemnifying Party desires to accept and agrees to such offer, the Indemnifying Party will give Notice to the Indemnified Party to that effect. If the Indemnified Party fails to
44 consent to such firm offer within ten (10) calendar days after its receipt of such Notice, the Indemnified Party may continue to contest or defend such Claim and, in such event, the maximum liability of the Indemnifying Party to such Claim will be the amount of such settlement offer, plus reasonable costs and expenses paid or incurred by the Indemnified Party up to the date of such Notice.
16.4 Rights and Remedies are Cumulative. Except for express remedies already provided in this Agreement, the rights and remedies of a Party pursuant to this Article 16 are cumulative and in addition to the rights of the Parties otherwise provided in this Agreement.
ARTICLE 17
INSURANCE
17.1 Insurance.
(a) General Liability. Seller shall maintain, or cause to be maintained at its sole expense, (i) commercial general liability insurance, including products and completed operations and personal injury insurance, in a minimum amount of Two Million Dollars ($2,000,000) per occurrence, and an annual aggregate of not less than Two Million Dollars ($2,000,000), endorsed to provide contractual liability in said amount, specifically covering Seller’s obligations under this Agreement and including Buyer as an additional insured; and (ii) an umbrella insurance policy with a minimum limit of liability of Five Million Dollars ($5,000,000). Defense costs shall be provided as an additional benefit and not included within the limits of liability. Such insurance shall contain standard cross-liability and severability of interest provisions. (b) Employer’s Liability Insurance. Employers’ Liability insurance shall not be less than One Million Dollars ($1,000,000.00) for injury or death occurring as a result of each accident. With regard to bodily injury by disease, the One Million Dollar ($1,000,000) policy limit will apply to each employee.
(c) Workers Compensation Insurance. Seller, if it has employees, shall also maintain at all times during the Contract Term workers’ compensation and employers’ liability insurance coverage in accordance with applicable requirements of California Law. (d) Business Auto Insurance. Seller shall maintain at all times during the Contract Term business auto insurance for bodily injury and property damage with limits of One Million Dollars ($1,000,000) per occurrence. Such insurance shall cover liability arising out of Seller’s use of all owned (if any), non-owned and hired vehicles, including trailers or semi-trailers in the performance of the Agreement.
(e) Construction All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, construction all-risk form property insurance covering the Facility during such construction periods, and naming the Seller (and Lender if any) as the loss payee. (f) Contractor’s Pollution Liability. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, Pollution Legal Liability Insurance in the amount of Two Million Dollars ($2,000,000) per
45 occurrence and in the aggregate, naming the Seller (and Lender if any) as additional named insured.
(g) Subcontractor Insurance. Seller shall require all of its Major Subcontractors to carry at least the same levels of insurance as Seller, provided Major Subcontractors shall not be required to carry construction all-risk form property insurance. All Major Subcontractors shall include Seller as an additional insured to (i) comprehensive general liability insurance; (ii) workers’ compensation insurance and employers’ liability coverage; and (iii) business auto insurance for bodily injury and property damage. All Major Subcontractors shall provide a primary endorsement and a waiver of subrogation to Seller for the required coverage pursuant to this Section 17.1(g).
(h) Evidence of Insurance. Seller shall deliver to Buyer certificates of insurance evidencing such coverage (i) within sixty (60) days after execution of the Agreement and upon annual renewal thereafter with respect to insurance required to be in place prior to the start of construction and (ii) within thirty (30) days prior to the start of construction and upon annual renewal thereafter with respect to insurance required to be in place during construction.
These certificates shall specify that Buyer shall be given at least thirty (30) days prior Notice by Seller in the event of cancellation or termination of coverage. Such insurance shall be primary coverage without right of contribution from any insurance of Buyer. Any other insurance maintained by Seller is for the exclusive benefit of Seller and shall not in any manner inure to the benefit of Buyer.
ARTICLE 18
CONFIDENTIAL INFORMATION
18.1 Definition of Confidential Information. The following constitutes “Confidential Information,” whether oral or written which is delivered by Seller to Buyer or by Buyer to Seller including: (a) the terms and conditions of, and proposals and negotiations related to, this Agreement, and (b) information that either Seller or Buyer stamps or otherwise identifies as “confidential” or “proprietary” before disclosing it to the other. Confidential Information does not include (i) information that was publicly available at the time of the disclosure, other than as a result of a disclosure in breach of this Agreement; (ii) information that becomes publicly available through no fault of the recipient after the time of the delivery; (iii) information that was rightfully in the possession of the recipient (without confidential or proprietary restriction) at the time of delivery or that becomes available to the recipient from a source not subject to any restriction against disclosing such information to the recipient; and (iv) information that the recipient independently developed without a violation of this Agreement.
18.2 Duty to Maintain Confidentiality. Confidential Information will retain its character as Confidential Information but may be disclosed by the recipient (the “Receiving Party”) if and to the extent such disclosure is required (a) to be made by any requirements of Law, (b) pursuant to an order of a court or (c) in order to enforce this Agreement. If the Receiving Party becomes legally compelled (by interrogatories, requests for information or documents, subpoenas, summons, civil investigative demands, or similar processes or otherwise in connection with any litigation or to comply with any Law, order, regulation, ruling, regulatory request, accounting disclosure rule or standard or any exchange, control area or independent system operator rule) to
46 disclose any Confidential Information of the disclosing Party (the “Disclosing Party”), Receiving Party shall provide Disclosing Party with prompt Notice so that Disclosing Party, at its sole expense, may seek an appropriate protective order or other appropriate remedy. If the Disclosing Party takes no such action after receiving the foregoing Notice from the Receiving Party, the Receiving Party is not required to defend against such request and shall be permitted to disclose such Confidential Information of the Disclosing Party, with no liability for any damages that arise from such disclosure. Each Party hereto acknowledges and agrees that information and documentation provided in connection with this Agreement may be subject to the California Public Records Act (Government Code Section 6250 et seq.). The provisions of this Article 18 shall survive and shall continue to be binding upon the Parties for period of one (1) year following the date of termination of this Agreement.
18.3 Irreparable Injury; Remedies. Receiving Party acknowledges that its obligations hereunder are necessary and reasonable in order to protect Disclosing Party and the business of Disclosing Party, and expressly acknowledges that monetary damages would be inadequate to compensate Disclosing Party for any breach or threatened breach by Receiving Party of any covenants and agreements set forth herein. Accordingly, Receiving Party acknowledges that any such breach or threatened breach will cause irreparable injury to Disclosing Party and that, in addition to any other remedies that may be available, in law, in equity or otherwise, Disclosing Party will be entitled to obtain injunctive relief against the threatened breach of this Agreement or the continuation of any such breach, without the necessity of proving actual damages.
18.4 Disclosure to Lenders, Etc.. Notwithstanding anything to the contrary in this Article 18, Confidential Information may be disclosed by Seller to any actual or potential Lender or any of its Affiliates, and Seller’s actual or potential agents, advisors, actual or potential investors, consultants, contractors, or trustees, so long as the Person (other than a Person that has an ethical duty to Seller) to whom Confidential Information is disclosed agrees in writing to be bound by confidentiality provisions no less stringent than those in this Article 18 (subject to customary survival terms). Seller shall provide Notice to Buyer of any disclosure of Confidential Information pursuant to this Section 18.4, including the identity of the party receiving such Confidential Information.
18.5 Press Releases. The Parties shall consult with each other, acting reasonably and in good faith, before issuing any press release or making any other public announcement with respect to this Agreement or the transactions contemplated herein. Except as required by applicable Law, neither Party shall issue (or cause its Affiliates to issue) any press release or make any other public announcement regarding the transactions contemplated by this Agreement unless both Parties have agreed upon the contents of any such public statement. A Party’s consent shall not be unreasonably withheld, conditioned or delayed.
18.6 Information and Shared Learning. Seller understands that Buyer is entering into the Agreement in part to gain operational and market information regarding the performance, efficiency, operations, maintenance, and multiple uses of energy storage and storage assets as an integral part of Buyer’s portfolio of assets to meet its customers’ needs as well as to gain an understanding of the impact of energy storage on load forecasting as a load serving entity.
Throughout the Contract Term upon Buyer’s request, and annually in a written report, Seller agrees to share such information with Buyer, including meter data and hourly charging and discharging
47 data but excluding cost or similar proprietary information, with such information to be treated by Buyer as Confidential Information. Seller shall provide such applicable meter data to Buyer in a format and to a platform specified by Buyer that is reasonably acceptable to Seller. To the extent any information disclosed to Buyer under this Agreement is Seller’s propriety intellectual property, such disclosure shall not result in the transfer of ownership therein nor in any license or other right to use such intellectual property being granted to Buyer.
ARTICLE 19
MISCELLANEOUS
19.1 Entire Agreement; Integration; Exhibits. This Agreement, together with the Cover Sheet and Exhibits attached hereto constitutes the entire agreement and understanding between Seller and Buyer with respect to the subject matter hereof and supersedes all prior agreements relating to the subject matter hereof, which are of no further force or effect. The Exhibits attached hereto are integral parts hereof and are made a part of this Agreement by reference. The headings used herein are for convenience and reference purposes only. In the event of a conflict between the provisions of this Agreement and those of the Cover Sheet or any Exhibit, the provisions of first the Cover Sheet, and then this Agreement shall prevail, and such Exhibit shall be corrected accordingly.
19.2 Amendments. This Agreement may only be amended, modified or supplemented by an instrument in writing executed by duly authorized representatives of Seller and Buyer; provided, that, for the avoidance of doubt, this Agreement may not be amended by electronic mail communications.
19.3 No Waiver. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default.
19.4 No Agency, Partnership, Joint Venture or Lease. Seller and the agents and employees of Seller shall, in the performance of this Agreement, act in an independent capacity and not as officers or employees or agents of Buyer. Under this Agreement, Seller and Buyer intend to act as energy seller and energy purchaser, respectively, and do not intend to be treated as, and shall not act as, partners in, co-venturers in or lessor/lessee with respect to the Facility or any business related to the Facility. This Agreement shall not impart any rights enforceable by any third party (other than a permitted successor or assignee bound to this Agreement) or, to the extent set forth herein, any Lender or Indemnified Party.
19.5 Severability. In the event that any provision of this Agreement is unenforceable or held to be unenforceable, the Parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby. The Parties shall, however, use their best endeavors to agree on the replacement of the void, illegal or unenforceable provision(s) with legally acceptable clauses which correspond as closely as possible to the sense and purpose of the affected provision and this Agreement as a whole.
19.6 Mobile-Sierra. Notwithstanding any other provision of this Agreement, neither Party shall seek, nor shall they support any third party seeking, to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint
48 to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties. Further, absent the prior written agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of service of this Agreement proposed by a Party shall be the “public interest” standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956). Changes proposed by a non-Party or FERC acting sua sponte shall be subject to the most stringent standard permissible under applicable Law.
19.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument and each of which shall be deemed an original.
19.8 Electronic Delivery. This Agreement may be duly executed and delivered by a Party by execution and electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party, and, if delivery is made by electronic format, the executing Party shall promptly deliver, via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Agreement shall be binding on and enforceable against the executing Party whether or not it delivers such original counterpart.
19.9 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
19.10 No Recourse to Members of Buyer. Buyer is organized as a Joint Powers Authority in accordance with the Joint Exercise of Powers Act of the State of California (Government Code Section 6500, et seq.) pursuant to its Joint Powers Agreement and is a public entity separate from its constituent members. Buyer shall solely be responsible for all debts, obligations and liabilities accruing and arising out of this Agreement. Seller shall have no rights and shall not make any claims, take any actions or assert any remedies against any of Buyer’s constituent members, or the employees, directors, officers, consultants or advisors of Buyer or its constituent members, in connection with this Agreement.
19.11 Forward Contract. The Parties acknowledge and agree that this Agreement constitutes a “forward contract” within the meaning of the U.S. Bankruptcy Code, and Buyer and Seller are “forward contract merchants” within the meaning of the U.S. Bankruptcy Code. Each Party further agrees that, for all purposes of this Agreement, each Party waives and agrees not to assert the applicability of the provisions of 11 U.S.C. § 366 in any bankruptcy proceeding wherein such Party is a debtor. In any such proceeding, each Party further waives the right to assert that the other Party is a provider of last resort to the extent such term relates to 11 U.S.C. §366 or another provision of 11 U.S.C. § 101-1532.
19.12 Further Assurances. Seller agrees to use commercially reasonable efforts to cooperate with respect to any future changes to this Agreement needed to satisfy requirements of Governmental Authorities associated with changes in Law to maximize benefits to Buyer, including: (i) modification of the description of Capacity Attributes as may be required, including updating the Agreement to reflect any mandatory contractual language required by Governmental Authorities; or (ii) submission of any reports, data, or other information required by Governmental
49 Authorities; provided that Seller shall have no obligation to modify this Agreement, or take other actions not required under this Agreement, if such modifications or actions would materially adversely affect, or could reasonably be expected to have or result in a material adverse effect on, any of Seller's rights, benefits, risks and/or obligations under this Agreement. Each of the Parties hereto agree to provide such information, execute and deliver any instruments and documents and to take such other actions as may be necessary or reasonably requested by the other Party which are not inconsistent with the provisions of this Agreement and which do not involve the assumptions of obligations other than those provided for in this Agreement, to give full effect to this Agreement and to carry out the intent of this Agreement. [Signatures on following page]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
GEM A-CAES LLC, a Delaware limited
liability company
By:
Name:
Title:
CENTRAL COAST COMMUNITY
ENERGY, a California joint powers
authority
By:
Name:
Title:
Approved as to form:
By:
Name:
Title:
Exhibit A - 1
EXHIBIT A
FACILITY DESCRIPTION
Site Name: Willow Rock Energy Storage Center
Site includes all or some of the following APNs: 315-081-09 County: Kern County, California
CEQA Lead Agency: California Energy Commission
Type of Storage Facility: Advanced Compressed Air Energy Storage (A-CAES) Energy Management Software: The Facility will include an advanced microgrid controller for aggregated dispatch. Seller’s energy management software shall have the following capabilities:
Remotely operable, 2-4 second timestamps, historian (at least 5 years of storage), SCADA/AGC communication and operability with the Facility controller and Buyer’s SC and provides the ability to participate in the CAISO Day-Ahead and Real Time energy markets and to otherwise comply with the CAISO’s requirements for Seller to deliver the Product.
Operating Characteristics of Storage Facility:
Technical Operating Restrictions of Storage Facility: See Exhibit O.
Storage Contract Capacity: 200 MW
Maximum Output: 1,600 MWh
Maximum Charging Capacity: 200 MW
Maximum Discharging Capacity: 200 MW
Delivery Point: Facility PNode at the Whirlwind Substation at the 220 kV bus Point of Interconnection: Whirlwind Substation
Storage Facility Meter Location: See Exhibit P.
PNode: WIRLWIND_2_B1
Participating Transmission Owner: Southern California Edison Company
Exhibit B - 1
EXHIBIT B
MAJOR PROJECT DEVELOPMENT MILESTONES AND COMMERCIAL
OPERATION
1. Construction Start.
a. “Construction Start” will occur upon Seller’s acquisition of all applicable regulatory authorizations, approvals and permits required to start construction of the Facility, has executed an engineering, procurement, and construction contract and issued thereunder a full notice to proceed thereunder that authorizes the contractor to mobilize to Site and begin physical construction (including, at a minimum, excavation for foundations or the installation or erection of improvements) at the Site. The date of Construction Start will be evidenced by and subject to Seller’s delivery to Buyer of a certificate substantially in the form attached as Exhibit H hereto, and the date certified therein shall be the “Construction Start Date.” The Seller shall cause Construction Start to occur no later than the Guaranteed Construction Start Date. b. If Construction Start is not achieved by the Guaranteed Construction Start Date, Seller shall pay Construction Delay Damages to Buyer on account of such delay. Construction Delay Damages shall be payable for each day for which Construction Start has not begun by the Guaranteed Construction Start Date. Construction Delay Damages shall be payable to Buyer by Seller until Seller reaches Construction Start of the Facility On or before the tenth (10th)
day of each month, Buyer shall invoice Seller for Construction Delay Damages, if any, accrued during the prior month and, within ten (10) Business Days following Seller’s receipt of such invoice, Seller shall pay Buyer the amount of the Construction Delay Damages set forth in such invoice. Construction Delay Damages shall be refundable to Seller pursuant to Section 2(b) of this Exhibit B. The Parties agree that Buyer’s receipt of Construction Delay Damages shall be Buyer’s sole and exclusive remedy for Seller’s unexcused delay in achieving the Construction Start Date on or before the Guaranteed Construction Start Date, but shall (x) not be construed as Buyer’s declaration that an Event of Default has occurred under any provision of Section 11.1 of the Agreement and (y) not limit Buyer’s right to declare an Event of Default pursuant to Section
11.1(b)(i) of the Agreement and receive a Damage Payment upon exercise of Buyer’s default right pursuant to Section 11.2 of the Agreement.
2. Commercial Operation of the Facility. “Commercial Operation” means the condition existing when Seller has fulfilled all of the conditions precedent in Section 2.2 of the Agreement and provided Notice to Buyer substantially in the form of Exhibit F (the “COD Certificate”) (ii) Seller has notified Buyer in writing that it has provided the required documentation to Buyer and met the conditions for achieving Commercial Operation, and (iii) Buyer has acknowledged to Seller in writing that Buyer agrees that Commercial Operation has been achieved. The “Commercial Operation Date” shall be the date on which Commercial Operation is achieved; provided, however, that if the Commercial Operation Date occurs before the Expected Commercial Operation Date, Buyer may elect to defer the start of the Delivery Term until the Expected Commercial Operation Date. If
Exhibit B - 2
Buyer makes such an election, Seller shall have no obligation under this Agreement related to delivery of the Product until the Expected Commercial Operation Date and Seller shall be permitted to operate the Facility in any commercially reasonable manner and retain any revenue generated in connection therewith.
a. Seller shall cause Commercial Operation for the Facility to occur by the Guaranteed Commercial Operation Date. Seller shall notify Buyer that it intends to achieve Commercial Operation at least sixty (60) days before the anticipated Commercial Operation Date.
b. If Seller achieves Commercial Operation for the Facility by the Guaranteed Commercial Operation Date (excluding any adjustments to the Guaranteed Commercial Operation Date pursuant to paragraphs 4(b) and 4(c) below), all Construction Delay Damages paid by Seller shall be refunded to Seller. Seller shall include a request for refund of the Construction Delay Damages with the first invoice to Buyer after Commercial Operation. This paragraph 2(b) is not applicable to any Construction Delay Damages paid by Seller under paragraph 4(c) below. c. If Seller does not achieve Commercial Operation by the Guaranteed Commercial Operation Date, as it may be extended as provided herein, Seller shall pay COD Delay Damages to Buyer for each day after the Guaranteed Commercial Operation Date until the Commercial Operation Date
and shall be paid to Buyer in advance on a monthly basis. A prorated amount will be returned to Seller if COD is achieved during the month for which COD Delay Damages were paid in advance. The Parties agree that Buyer’s receipt of COD Delay Damages shall be Buyer’s sole and exclusive remedy for Seller’s failure to achieve the Commercial Operation Date on or before the Guaranteed Commercial Operation Date, but shall (x) not be construed as Buyer’s declaration that an Event of Default has occurred under any provision of Section 11.1 of the Agreement and (y) not limit Buyer’s right to receive a Damage Payment upon exercise of Buyer’s default right pursuant to Section 11.2 of the Agreement.
3. Termination for Failure to Achieve Commercial Operation. If the Facility has not achieved Commercial Operation within days after the Guaranteed Commercial Operation Date, Buyer may elect to terminate this Agreement in accordance with Sections 11.1(b)(ii) and 11.2 of the Agreement.
4. Extension of Guaranteed Construction Start Date and Guaranteed Commercial Operation Date.
a. The Guaranteed Construction Start Date and the Guaranteed Commercial Operation Date shall, subject to notice and documentation requirements set forth below, be automatically extended on a day-for-day basis due to (a) a Force Majeure Event, (b) delays in obtaining permits or approvals of any type, including approvals required from the CAISO or the PTO, for the construction, operation, or maintenance of the Facility, provided, that Seller has exercised all reasonable diligence in connection with obtaining such permits or approvals (“Permitting
Exhibit B - 3
Delay”), and (c) delays in the PTO or CAISO completing any Interconnection Facilities, provided, that Seller has timely executed the Interconnection Agreement and fully performed its obligations thereunder (“Interconnection Delay”), for a period of up to days on a cumulative basis (collectively, the “Development Cure Period”). Any extensions of the Guaranteed Construction Start Date under this Section 4(a) shall also extend the Guaranteed Commercial Operation Date, and such days shall only be counted once for purposes of determining whether the day limit was reached.
Notwithstanding anything in this Agreement to the contrary, except as provided in paragraphs 4(b) and 4(c) below, the cumulative extensions granted under the Development Cure Period shall not exceed days for any
reason, including a Force Majeure Event, and no extension shall be given if (i) the delay was the result of Seller’s failure to take all commercially reasonable actions to meet its requirements and deadlines, (ii) Seller failed to provide requested documentation as provided below, or (iii) Seller failed to provide Notice to Buyer as required in the next two sentences. Seller shall provide prompt Notice to Buyer of a delay, but in no case more than thirty (30) days after Seller became aware of such delay, except that in the case of a delay occurring within sixty (60) days of the Expected Commercial Operation Date, or after such date, Seller must provide Notice within five (5) Business Days of Seller becoming aware of such delay.
Seller shall provide Notice of a Force Majeure Event in accordance with Section
10.3 of the Agreement. Upon request from Buyer, Seller shall provide documentation demonstrating to Buyer’s reasonable satisfaction that the delays described above did not result from Seller’s actions or failure to take commercially reasonable actions.
b.
c.
Exhibit B - 4
d. Notwithstanding anything in this Agreement to the contrary, the cumulative extensions available under paragraphs 4(a), 4(b) and 4(c) above shall not exceed days for any reason.
5. Failure to Reach Storage Contract Capacity. If, at Commercial Operation, the Installed Capacity is less than one hundred percent (100%) of the Storage Contract Capacity, Seller shall have one hundred twenty (120) days after the Commercial Operation Date to install additional capacity or otherwise modify the Facility such that the Installed Capacity is equal to (but not greater than) one hundred percent (100%) of the Storage Contract Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit G hereto specifying the new Installed Capacity. If Seller fails to construct the Storage Contract Capacity by such date, Seller shall pay Capacity Damages to Buyer, in an amount equal to for each
MW that the Storage Contract Capacity exceeds the Installed Capacity, and the Storage Contract Capacity and other applicable portions of the Agreement shall be adjusted accordingly.
Exhibit C - 1
EXHIBIT C
COMPENSATION
Buyer shall compensate Seller for the Product in accordance with this Exhibit C. (a) Resource Adequacy Benefits. The “Monthly RA Capacity Payment” shall be paid on a monthly basis at the rate of
(b) Credit for RA Shortfall. For each RA Shortfall Month occurring after the RA Guarantee Date, the Monthly RA Capacity Payment shall be subject to a Buyer credit equal to
(c) Energy Settlement. All Product related to energy settlement shall be paid on a monthly basis as set forth below (the “Energy Settlement”).
.
Exhibit C - 2
(ii)
(iii)
Exhibit D - 1
EXHIBIT D
ENERGY SETTLEMENT SAMPLE CALCULATIONS
This Exhibit illustrates how the Energy Settlement would be calculated for one day. As the Energy Settlement calculation is computed on a monthly basis, this calculation would be repeated for every day of the month
Exhibit D - 2
Exhibit D
-3
Exhibit D
-4
Exhibit E - 1
EXHIBIT E
PROGRESS REPORTING FORM
Each Progress Report must include the following items:
1. Executive Summary.
2. Facility description.
3. Site plan of the Facility.
4. Description of any material planned changes to the Facility or the Site.
5. Gantt chart schedule showing progress on achieving each of the Milestones.
6. Summary of activities during the previous calendar quarter or month, as applicable, including any OSHA labor hour reports.
7. Forecast of activities scheduled for the current calendar quarter.
8. Written description about the progress relative to Seller’s Milestones, including whether Seller has met or is on target to meet the Milestones.
9. List of issues that will likely or potentially affect Seller’s Milestones.
10. A status report of start-up activities including a forecast of activities ongoing and after start-up, and a report on Facility performance including performance projections for the next twelve (12) months.
11. Prevailing wage reports as required by Law.
12. Progress and schedule of all major agreements, contracts, permits, approvals, technical studies, financing agreements and major equipment purchase orders showing the start dates, completion dates, and completion percentages.
13. Pictures, in sufficient quantity and of appropriate detail, in order to document construction and startup progress of the Facility, the interconnection into the Transmission System and all other interconnection utility services.
14. Supplier Diversity Reporting (if applicable). Format to be provided by Buyer.
15. Any other documentation reasonably requested by Buyer.
Exhibit F - 1
EXHIBIT F
FORM OF COMMERCIAL OPERATION DATE CERTIFICATE
This certification (“Certification”) of Commercial Operation is delivered by [LICENSED PROFESSIONAL ENGINEER] (“Engineer”) to Central Coast Community Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated [DATE] (“Agreement”) by and between [SELLER] and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
As of [DATE], Engineer hereby certifies and represents to Buyer the following:
1. The Facility is fully operational, reliable and interconnected, fully integrated and synchronized with the Transmission System.
2. Seller has installed equipment for the Facility with a nameplate capacity of no less than of the Storage Contract Capacity.
3. Seller has commissioned all equipment in accordance with its respective manufacturer’s specifications.
4. Seller has demonstrated functionality of the Facility’s communication systems and automatic generation control (AGC) interface to operate the Facility as necessary to respond and follow instructions, including an electronic signal conveying real time and intra-day instructions, directed by the Buyer in accordance with the Agreement and/or the CAISO.
5. The Facility is fully capable of charging, storing and discharging energy up to no less than of the Storage Contract Capacity and receiving instructions to charge, store and discharge Energy, all within the operational constraints and subject to the applicable Technical Operating Restrictions.
6. Authorization to parallel the Facility was obtained from the Participating Transmission Owner.
7. The PTO has provided the Commercial Operation Date Approval Letter.
8. The CAISO has provided notification supporting Commercial Operation, in accordance with the CAISO Tariff.
9. Seller shall have caused the Facility to be included in the Full Network Model and has the ability to offer Energy Supply Bids into the CAISO Day-Ahead Market and Real-Time Market with respect to the Facility.
Exhibit F - 2
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Printed Name:
Title:
Exhibit G - 1
EXHIBIT G
FORM OF INSTALLED CAPACITY CERTIFICATE
This certification (“Certification”) of Installed Capacity is delivered by [LICENSED PROFESSIONAL ENGINEER] (“Engineer”) to Central Coast Community Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated [DATE] (“Agreement”) by and between [SELLER] and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
I hereby certify the following:
The Storage Capacity Test demonstrated a maximum dependable operating capability that can be sustained for eight (8) consecutive hours to discharge electric energy of __ MW AC to the Delivery Point, in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 of the Agreement and Exhibit M thereto (the “Installed Capacity”).
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Printed Name:
Title:
Exhibit H - 1
EXHIBIT H
FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by [SELLER ENTITY] (“Seller”) to Central Coast Community Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated [DATE] (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Certification but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Seller hereby certifies and represents to Buyer the following:
1 Construction Start (as defined in Exhibit B of the Agreement) has occurred, and a copy of the full notice to proceed that Seller issued to its contractor as part of Construction Start is attached hereto;
2 the Construction Start Date occurred on _____________ (the “Construction Start Date”); and
3 the precise Site on which the Facility is located, which must be within the boundaries of the previously identified Site, is:
_____________________________________________________________________.
IN WITNESS WHEREOF, the undersigned has executed this Certification on behalf of Seller as of this ________ day of _____________, 20__.
[SELLER ENTITY]
By:
Printed Name:
Title:
Exhibit I - 1
EXHIBIT I
FORM OF LETTER OF CREDIT
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date:
Bank Ref.:
Amount: US$[XXXXXXXX]
Expiration Date:
Beneficiary:
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
Attn: Dennis Dyc-O’Neal, Director of Power Supply Resources Ladies and Gentlemen:
By the order of __________ (“Applicant”), we, [insert bank name and address] (“Issuer”) hereby issue our Irrevocable Standby Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) in favor of Central Coast Community Energy, a California joint powers authority (“Beneficiary”), for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100), pursuant to that certain Energy Storage Agreement dated as of ______ and as amended (the “Agreement”) between Applicant and Beneficiary. This Letter of Credit shall become effective immediately and shall expire on [Insert Date] which is one year after the issue date of this Letter of Credit, or any expiration date extended in accordance with the terms hereof (the “Expiration Date”).
Funds under this Letter of Credit are available to Beneficiary by valid presentation on or before the Expiration Date of a dated statement purportedly signed by your duly authorized representative, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein, referencing our Letter of Credit No. [XXXXXXX] (“Drawing Certificate”).
The Drawing Certificate may be presented by (a) physical delivery, (b) as a PDF attachment to an e-mail to [bank email address] or (c) facsimile to [bank fax number] confirmed by [e-mail to [bank email address]]. Transmittal by facsimile or email shall be deemed delivered when received.
The original of this Letter of Credit (and all amendments, if any) is not required to be presented in connection with any presentment of a Drawing Certificate by Beneficiary hereunder in order to receive payment.
We hereby agree with the Beneficiary that all documents presented under and in compliance with the terms of this Letter of Credit, that such drafts will be duly honored upon presentation to the
Exhibit I - 2
Issuer on or before the Expiration Date. All payments made under this Letter of Credit shall be made with Issuer’s own immediately available funds by means of wire transfer in immediately available United States dollars to Beneficiary’s account as indicated by Beneficiary in its Drawing Certificate or in a communication accompanying its Drawing Certificate.
Partial draws are permitted under this Letter of Credit, and this Letter of Credit shall remain in full force and effect with respect to any continuing balance.
It is a condition of this Letter of Credit that the Expiration Date shall be deemed automatically extended without an amendment for a one year period beginning on the present Expiration Date hereof and upon each anniversary for such date, unless at least one hundred twenty (120) days prior to any such Expiration Date we have sent to you written notice by overnight courier service that we elect not to extend this Letter of Credit, in which case it will expire on the date specified in such notice. No presentation made under this Letter of Credit after such Expiration Date will be honored.
Notwithstanding any reference in this Letter of Credit to any other documents, instruments or agreements, this Letter of Credit contains the entire agreement between Beneficiary and Issuer relating to the obligations of Issuer hereunder.
This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (2007 Revision) International Chamber of Commerce Publication No. 600 (the “UCP”), except to the extent that the terms hereof are inconsistent with the provisions of the UCP, including but not limited to Articles 14(b) and 36 of the UCP, in which case the terms of this Letter of Credit shall govern. In the event of an act of God, riot, civil commotion, insurrection, war or any other cause beyond Issuer’s control (as defined in Article 36 of the UCP) that interrupts Issuer’s business and causes the place for presentation of the Letter of Credit to be closed for business on the last day for presentation, the Expiration Date of the Letter of Credit will be automatically extended without amendment to a date thirty (30) calendar days after the place for presentation reopens for business.
Please address all correspondence regarding this Letter of Credit to the attention of the Letter of Credit Department at [insert bank address information], referring specifically to Issuer’s Letter of Credit No. [XXXXXXX]. For telephone assistance, please contact Issuer’s Standby Letter of Credit Department at [XXX-XXX-XXXX] and have this Letter of Credit available.
All notices to Beneficiary shall be in writing and are required to be sent by certified letter, overnight courier, or delivered in person to: Central Coast Community Energy, Attn: Dennis Dyc-O’Neal, Director of Power Supply Resources, 70 Garden Court, Suite 300, Monterey, CA 93940.
Only notices to Beneficiary meeting the requirements of this paragraph shall be considered valid.
Any notice to Beneficiary which is not in accordance with this paragraph shall be void and of no force or effect.
[Bank Name]
___________________
[Insert officer name]
[Insert officer title]
Exhibit I - 3
(DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD)
Drawing Certificate
[Insert Bank Name and Address]
Ladies and Gentlemen:
The undersigned, a duly authorized representative of Central Coast Community Energy, a California joint powers authority, 70 Garden Court, Suite 300, Monterey, CA 93940, as beneficiary (the “Beneficiary”) of the Irrevocable Letter of Credit No. [XXXXXXX] (the “Letter of Credit”) issued by [insert bank name] (the “Bank”) by order of __________ (the “Applicant”), hereby certifies to the Bank as follows:
1. Applicant and Beneficiary are party to that certain Energy Storage Agreement dated as of ___________, 20__ (the “Agreement”).
2. Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________ because a Seller Event of Default (as such term is defined in the Agreement) has occurred or other occasion provided for in the Agreement where Beneficiary is authorized to draw on the letter of credit has occurred.
OR
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the full available amount under the Letter of Credit, because Applicant is required to maintain the Letter of Credit in force and effect beyond the Expiration Date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such Expiration Date.
3. The undersigned is a duly authorized representative of Central Coast Community Energy and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to Central Coast Community Energy by wire transfer in immediately available funds to the following account:
[Specify account information]
Central Coast Community Energy
_______________________________
Name and Title of Authorized Representative
Date___________________________
Exhibit J - 1
EXHIBIT J
FORM OF GUARANTY
This Guaranty (this “Guaranty”) is entered into as of [_____] (the “Effective Date”) by and between [_____], a [______] (“Guarantor”), and Central Coast Community Energy, a California joint powers authority (together with its successors and permitted assigns, “Buyer”).
Recitals
A. Buyer and [SELLER ENTITY], a _____________________ (“Seller”), entered into that certain Energy Storage Agreement (as amended, restated or otherwise modified from time to time, the “ESA”) dated as of [____], 20___.
B. Guarantor is entering into this Guaranty as Performance Security to secure Seller’s obligations under the ESA, as required by Section 8.7 of the ESA.
C. It is in the best interest of Guarantor to execute this Guaranty inasmuch as Guarantor will derive substantial direct and indirect benefits from the execution and delivery of the ESA.
D. Initially capitalized terms used but not defined herein have the meaning set forth in the ESA.
Agreement
1. Guaranty. For value received, Guarantor does hereby unconditionally, absolutely and irrevocably guarantee, as primary obligor and not as a surety, to Buyer the full, complete and prompt payment by Seller of any and all amounts and payment obligations now or hereafter owing from Seller to Buyer under the ESA, including, without limitation, compensation for penalties, the Termination Payment, indemnification payments or other damages, as and when required pursuant to the terms of the ESA (the “Guaranteed Amount”), provided, that Guarantor’s aggregate liability under or arising out of this Guaranty shall not exceed ________ Dollars ($___________).
The Parties understand and agree that any payment by Guarantor or Seller of any portion of the Guaranteed Amount shall thereafter reduce Guarantor’s maximum aggregate liability hereunder on a dollar-for-dollar basis. This Guaranty is an irrevocable, absolute, unconditional and continuing guarantee of the full and punctual payment and performance, and not of collection, of the Guaranteed Amount and, except as otherwise expressly addressed herein, is in no way conditioned upon any requirement that Buyer first attempt to collect the payment of the Guaranteed Amount from Seller, any other guarantor of the Guaranteed Amount or any other Person or entity or resort to any other means of obtaining payment of the Guaranteed Amount. In the event Seller shall fail to duly, completely or punctually pay any Guaranteed Amount as required pursuant to the ESA, Guarantor shall promptly pay such amount as required herein.
2. Demand Notice. For avoidance of doubt, a payment shall be due for purposes of this Guaranty only when and if a payment is due and payable by Seller to Buyer under the terms and conditions of the ESA. If Seller fails to pay any Guaranteed Amount as required pursuant to the ESA for five (5) Business Days following Seller’s receipt of Buyer’s written notice of such failure (the “Demand Notice”), then Buyer may elect to exercise its rights under this Guaranty and may
Exhibit J - 2
make a demand upon Guarantor (a “Payment Demand”) for such unpaid Guaranteed Amount. A Payment Demand shall be in writing and shall reasonably specify in what manner and what amount Seller has failed to pay and an explanation of why such payment is due and owing, with a specific statement that Buyer is requesting that Guarantor pay under this Guaranty. Guarantor shall, within five (5) Business Days following its receipt of the Payment Demand, pay the Guaranteed Amount to Buyer.
3. Scope and Duration of Guaranty. This Guaranty applies only to the Guaranteed Amount.
This Guaranty shall continue in full force and effect from the Effective Date until the earlier of the following: (x) all Guaranteed Amounts have been paid in full (whether directly or indirectly through set-off or netting of amounts owed by Buyer to Seller), or (y) replacement Performance Security is provided in an amount and form required by the terms of the ESA. Further, this Guaranty (a) shall remain in full force and effect without regard to, and shall not be affected or impaired by any invalidity, irregularity or unenforceability in whole or in part of this Guaranty, and (b) subject to the preceding sentence, shall be discharged only by complete performance of the undertakings herein. Without limiting the generality of the foregoing, the obligations of the Guarantor hereunder shall not be released, discharged, or otherwise affected and this Guaranty shall not be invalidated or impaired or otherwise affected for the following reasons:
(i) the extension of time for the payment of any Guaranteed Amount, or (ii) any amendment, modification or other alteration of the ESA, or (iii) any indemnity agreement Seller may have from any party, or (iv) any insurance that may be available to cover any loss, except to the extent insurance proceeds are used to satisfy the Guaranteed Amount, or
(v) any voluntary or involuntary liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting, Seller or any of its assets, including but not limited to any rejection or other discharge of Seller’s obligations under the ESA imposed by any court, trustee or custodian or any similar official or imposed by any law, statue or regulation, in each such event in any such proceeding, or
(vi) the release, modification, waiver or failure to pursue or seek relief with respect to any other guaranty, pledge or security device whatsoever, or (vii) any payment to Buyer by Seller that Buyer subsequently returns to Seller pursuant to court order in any bankruptcy or other debtor-relief proceeding, or (viii) those defenses based upon (A) the legal incapacity or lack of power or authority of any Person, including Seller and any representative of Seller to enter into the ESA or perform its obligations thereunder, (B) lack of due execution, delivery, validity or enforceability, including of the ESA, or (C) Seller’s inability to pay any Guaranteed Amount or perform its obligations under the ESA, or
Exhibit J - 3
(ix) any other event or circumstance that may now or hereafter constitute a defense to payment of the Guaranteed Amount, including, without limitation, statute of frauds and accord and satisfaction;
provided that Guarantor reserves the right to assert for itself any defenses, setoffs or counterclaims that Seller is or may be entitled to assert against Buyer (except for such defenses, setoffs or counterclaims that may be asserted by Seller with respect to the ESA, but that are expressly waived under any provision of this Guaranty).
4. Waivers by Guarantor. Guarantor hereby unconditionally waives as a condition precedent to the performance of its obligations hereunder, with the exception of the requirements in Paragraph 2, (a) notice of acceptance, presentment or protest with respect to the Guaranteed Amounts and this Guaranty, (b) notice of any action taken or omitted to be taken by Buyer in reliance hereon, (c) any requirement that Buyer exhaust any right, power or remedy or proceed against Seller under the ESA, and (d) any event, occurrence or other circumstance which might otherwise constitute a legal or equitable discharge of a surety. Without limiting the generality of the foregoing waiver of surety defenses, it is agreed that the occurrence of any one or more of the following shall not affect the liability of Guarantor hereunder:
(i) at any time or from time to time, without notice to Guarantor, the time for payment of any Guaranteed Amount shall be extended, or such performance or compliance shall be waived; (ii) the obligation to pay any Guaranteed Amount shall be modified, supplemented or amended in any respect in accordance with the terms of the ESA; (iii) any (a) sale, transfer or consolidation of Seller into or with any other entity, (b) sale of substantial assets by, or restructuring of the corporate existence of, Seller or (c) change in ownership of any membership interests of, or other ownership interests in, Seller; or (iv) the failure by Buyer or any other Person to create, preserve, validate, perfect or protect any security interest granted to, or in favor of, Buyer or any Person.
5. Subrogation. Notwithstanding any payments that may be made hereunder by the Guarantor, Guarantor hereby agrees that until the earlier of payment in full of all Guaranteed Amounts or expiration of the Guaranty in accordance with Paragraph 3, it shall not be entitled to, nor shall it seek to, exercise any right or remedy arising by reason of its payment of any Guaranteed Amount under this Guaranty, whether by subrogation or otherwise, against Seller or seek contribution or reimbursement of such payments from Seller.
6. Representations and Warranties. Guarantor hereby represents and warrants that (a) it has all necessary and appropriate [limited liability company][corporate] powers and authority and the legal right to execute and deliver, and perform its obligations under, this Guaranty, (b) this Guaranty constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the execution, delivery and performance of this Guaranty does not and will not contravene Guarantor’s organizational documents, any applicable Law or any contractual provisions binding on or affecting Guarantor, (d) there are no actions, suits or proceedings pending before any court,
Exhibit J - 4
governmental agency or arbitrator, or, to the knowledge of the Guarantor, threatened, against or affecting Guarantor or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of Guarantor to enter into or perform its obligations under this Guaranty, and (e) no consent or authorization of, filing with, or other act by or with respect to, any arbitrator or Governmental Authority, and no consent of any other Person (including, any stockholder or creditor of the Guarantor), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty by Guarantor.
7. Notices. Notices under this Guaranty shall be deemed received if sent to the address specified below: (i) on the day received if served by overnight express delivery, and (ii) four Business Days after mailing if sent by certified, first class mail, return receipt requested. If transmitted by facsimile, such notice shall be deemed received when the confirmation of transmission thereof is received by the party giving the notice. Any party may change its address or facsimile to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 7.
If delivered to Buyer, to it at [____]
Attn: [____]
Fax: [____]
If delivered to Guarantor, to it at [____]
Attn: [____]
Fax: [____]
8. Governing Law and Forum Selection. This Guaranty shall be governed by, and interpreted and construed in accordance with, the laws of the United States and the State of California, excluding choice of law rules. The Parties agree that any suit, action or other legal proceeding by or against any party (or its affiliates or designees) with respect to or arising out of this Guaranty shall be brought in the federal courts of the United States or the courts of the State of California sitting in the City and County of Monterey, California.
9. Miscellaneous. This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of Buyer and its successors and permitted assigns pursuant to the ESA. No provision of this Guaranty may be amended or waived except by a written instrument executed by Guarantor and Buyer. This Guaranty is not assignable by Guarantor without the prior written consent of Buyer. No provision of this Guaranty confers, nor is any provision intended to confer, upon any third party (other than Buyer’s successors and permitted assigns) any benefit or right enforceable at the option of that third party. This Guaranty embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings of the parties hereto, verbal or written, relating to the subject matter hereof. If any provision of this Guaranty is determined to be illegal or unenforceable (i) such provision shall be deemed restated in accordance with applicable Laws to reflect, as nearly as possible, the original intention of the parties hereto and (ii) such determination
Exhibit J - 5
shall not affect any other provision of this Guaranty and all other provisions shall remain in full force and effect. This Guaranty may be executed in any number of separate counterparts, each of which when so executed shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Guaranty may be executed and delivered by electronic means with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
[Signature on next page]
Exhibit J - 6
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered by its duly authorized representative on the date first above written.
GUARANTOR:
[_______]
By: _______________________________
Printed Name: ______________________
Title: _____________________________
BUYER:
[_______]
By: _______________________________
Printed Name: ______________________
Title: _____________________________
By: _______________________________
Printed Name: ______________________
Title: _____________________________
Exhibit K - 1
EXHIBIT K
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by [SELLER ENTITY] (“Seller”) to Central Coast Community Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated __________ (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Notice but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.
Pursuant to Section 4.3 of the Agreement, Seller hereby provides the below Replacement RA product information:
Exhibit K - 2
[SELLER ENTITY]
By:
Printed Name:
Title:
Exhibit L - 1
EXHIBIT L
STORAGE AVAILABILITY
Monthly Storage Availability
(a) Calculation of Monthly Storage Availability. Seller shall calculate the “Monthly Storage Availability” in a given month using the formula set forth below:
Monthly Storage Availability (%) =
[MNTHHRSm - UNAVAILHRSm ]
MNTHHRSm
where:
m = relevant month “m” in which availability is calculated; MNTHHRSm is the total number of On-Peak Hours for the month; On-Peak Hours means the applicable Availability Assessment Hours as defined in the CAISO Tariff.
UNAVAILHRSm, is the total number of On-Peak Hours in the month during which the Storage Contract Capacity was unavailable to deliver discharged Energy for any reason other than the occurrence of any of the following (each, an “Excused Event”): a Force Majeure Event, Storage Capacity Tests, System Emergencies, Curtailment Order, Planned Outages not to exceed the hours permitted under Exhibit Q, or limitations contained in the Technical Operating Restrictions in Exhibit O. To be clear, hours of unavailability caused by any Excused Event will not be included in UNAVAILHRSm for such month. Any other event that results in unavailability of the Storage Contract Capacity for less than a full hour or that results in unavailability of less than all of the Storage Contract Capacity as adjusted pursuant to Section 4.9(c) will count as an equivalent percentage of the applicable hour(s) for this calculation. For example, if the Storage Contract Capacity is 50% unavailable for 50% of an hour (but fully available the other 50% of the hour), it will be considered to be unavailable for 25% of the hour.
If the Storage Contract Capacity or any portion thereof was previously deemed unavailable for an hour or part of an hour, and Seller provides a revised Notice indicating the Storage Contract Capacity is available for that hour or part of an hour by 5:00 a.m. of the morning Buyer schedules or bids the Storage Contract Capacity in the Day-Ahead Market, the Storage Contract Capacity will be deemed to be available to the extent set forth in the revised Notice.
If the Storage Contract Capacity or any portion thereof was previously deemed unavailable for an hour or part of an hour and Seller provides a revised Notice indicating the Storage Contract Capacity is available for that hour or part of an hour at least sixty (60) minutes prior to the time the Seller is required to schedule or bid the Storage Contract Capacity in the Real-Time Market, and the Storage Contract Capacity is dispatched in the Real-Time Market, the Storage Contract
Exhibit L - 2
Capacity will be deemed to be available to the extent set forth in the revised Notice.
As used in this Exhibit L, all references to Storage Contract Capacity mean Storage Contract Capacity as adjusted pursuant to Section 4.9(c).
Availability Adjustment
The applicable “Availability Adjustment” or “AA” is calculated as follows:
(i) If the Monthly Storage Availability is greater than or equal to the Guaranteed Storage Availability, then:
AA = 100%
(ii) If the Monthly Storage Availability is less than the Guaranteed Storage Availability, but greater than or equal to then:
AA = 100% - ( - Monthly Storage Availability)
(iii) If the Monthly Storage Availability is less than then:
AA = 0
Exhibit M - 1
EXHIBIT M
STORAGE CAPACITY TESTS
Storage Capacity Test Notice and Frequency
A. Commercial Operation Date Storage Capacity Test. Upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Storage Capacity Test prior to the Commercial Operation Date. Such initial Storage Capacity Test shall be performed in accordance with this Exhibit M and shall establish the initial Storage Contract Capacity hereunder based on the actual capacity of the Facility determined by such Storage Capacity Test.
B. Subsequent Storage Capacity Tests. Following the Commercial Operation Date, once each Contract Year, Seller may perform a Storage Capacity Test and will give Buyer ten (10) Business Days prior Notice to Seller of such test. In addition, Buyer shall have the right to require a test or retest of the Storage Capacity Test at any time upon no less than five (5) Business Days prior Notice to Seller if Buyer provides data with such Notice reasonably indicating that the Storage Capacity has varied materially from the results of the most recent Storage Capacity Test.
Following the Commercial Operation Date, Seller may perform a Storage Capacity Test. Seller shall have the right to run a retest of any Storage Capacity Test upon five (5) Business Days’ prior Notice to Buyer (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practice).
C. Test Results and Re-Setting of Storage Capacity and Efficiency Rate. No later than fifteen (15) days following any Storage Capacity Test, Seller shall submit a testing report detailing results and findings of the test. The report shall include Storage Facility Meter readings and plant log sheets verifying the operating conditions and output of the Facility. The results of the test shall be binding for purposes of Section 4.9(c) of the Agreement, provided, that if Seller requests to run a retest within ten (10) Business Days following completion of the Storage Capacity Test, the results of the retest shall be used to replace the Storage Capacity and Efficiency Rate and shall be effective as of the date the original Storage Capacity Test was completed.
Storage Capacity Test Procedures
PART I. GENERAL.
Each Storage Capacity Test (including the initial Storage Capacity Test and all re-performances thereof) shall be conducted in accordance with Prudent Operating Practice and the provisions of this Exhibit M. For ease of reference, a Storage Capacity Test is sometimes referred to in this Exhibit M as a “SCT”. Buyer or its representative may be present for the SCT and may, for informational purposes only, use its own metering equipment (at Buyer’s sole cost).
PART II. REQUIREMENTS APPLICABLE TO ALL STORAGE CAPACITY TESTS.
A. Purpose of Test. Each SCT shall:
(1) Determine an updated Storage Capacity;
Exhibit M - 2
(2) Determine an updated Efficiency Rate.
B. Test Elements. Each SCT shall include the following test elements:
(1) The measurement of charging Energy, as measured by the Storage Facility Meter or other mutually agreed meter, that is required to charge the Facility up to the Maximum Stored Energy Level (as defined in Exhibit O) not to exceed the Storage Contract Output (MWh) (“Energy In”); (2) The measurement of discharged Energy, as measured by the Storage Facility Meter or other mutually agreed meter, that is discharged from the Facility to the Delivery Point until the Stored Energy Level reaches zero MWh as indicated by the energy storage management system (“Energy Out”);
(3) Electrical output at Maximum Discharging Capacity (as defined in Exhibit A) at the Storage Facility Meter and concurrently at the Facility Meter (MW);
(4) Electrical input at Maximum Charging Capacity (as defined in Exhibit 0) at the Storage Facility Meter (MW);
C. Parameters. During each SCT, the following parameters shall be measured and recorded simultaneously for the Facility, at five (5) minute intervals:
(1) discharge time (minutes);
(2) charging energy (MWh);
(3) discharging energy (MWh); and
(4) Stored Energy Level (MWh).
D. Site Conditions. During each SCT, the following conditions at the Site shall be measured and recorded simultaneously at thirty (30) minute intervals:
(1) Relative humidity (%);
(2) Barometric pressure (inches Hg) near the horizontal centerline of the Facility; and
(3) Ambient air temperature (°F).
E. Test Showing. Each SCT must demonstrate that the Facility:
(1) successfully started;
(2) operated until Stored Energy Level is zero (0) MWh as indicated by the energy storage management system,or when the Facility is no longer
Exhibit M - 3
capable of discharging at the Maximum Discharge Capacity for five minutes;
(3) operated for between ten (10) and twenty-four (24) hours at Maximum Charging Capacity;
(4) has a Storage Capacity of an amount that is, at least, equal to the Maximum Stored Energy Level (as defined in Exhibit O); and
(5) is able to deliver discharged Energy to the Delivery Point as measured by the Facility Meter for eight (8) consecutive hours at a rate equal to the Maximum Discharging Capacity.
F. Test Conditions.
(1) General. At all times during a SCT, the Facility shall be operated in compliance with Prudent Operating Practice and all operating protocols recommended, required or established by the manufacturer for operation at Maximum Discharging Capacity and Maximum Charging Capacity (as each is defined in Exhibit A).
(2) Abnormal Conditions. If abnormal operating conditions that prevent the recordation of any required parameter occur during a SCT, Seller may postpone or reschedule all or part of such SCT in accordance with Part II.F below.
(3) Instrumentation and Metering. Seller shall provide all instrumentation, metering and data collection equipment required to perform the SCT. The instrumentation, metering and data collection equipment electrical meters shall be calibrated in accordance with Prudent Operating Practice.
G. Conditions Precedent to Storage Capacity Test
(1) Control System Functionality: The storage facility control system shall be successfully configured to receive data from the energy storage system, exchange distributed network protocol 3 data with the Buyer SCADA device, and transfer data to the database server for the calculation, recording and archiving of data points.
(2) Communications: Remote Terminal Unit (RTU) testing should be successfully completed prior to SCT. The interface between Buyer’s RTU and the storage facility SCADA system should be fully tested and functional prior to starting testing. This includes verification of data transmission pathway between the Buyer’s RTU and Seller’s control system interface and the ability to record SCADA data.
Exhibit M - 4
(3) Commissioning Checklist: Commissioning Checklist shall be successfully completed on all installed facility equipment, including verification that all controls, set points, and instruments of the control system are configured. (4) Control System Functionality: The control system is operable within the requirements and has been successfully configured to receive data from the energy storage system and transfer data to the onsite servers for the calculation, recording and archiving of data points.
(5) Ambient Air Temperatures: Are below the 95th percentile temperature (93 oF) at all times during the test.
H. Incomplete Test. If any SCT is not completed in accordance herewith, Buyer may in its sole discretion: (i) accept the results up to the time the SCT stopped; (ii) require that the portion of the SCT not completed, be completed within a reasonable specified time period; or (iii) require that the SCT be entirely repeated.
Notwithstanding the above, if Seller is unable to complete a SCT due to a Force Majeure Event or the actions or inactions of Buyer or the CAISO or the PTO, Seller shall be permitted to reconduct such SCT on dates and at times reasonably acceptable to the Parties.
I. Final Report. Within fifteen (15) Business Days after the completion of any SCT, Seller shall prepare and submit to Buyer a written report of the results of the SCT, which report shall include:
(1) a record of the personnel present during the SCT that served in an operating, testing, monitoring or other such participatory role;
(2) the measured data for each parameter set forth in Part II.A through C, including copies of the raw data taken during the test; (3) the level of Storage Capacity, Energy In, Energy Out, Efficiency Rate, Charging Capacity, and Stored Energy Level determined by the SCT, including supporting calculations; and
(4) Seller’s statement of either Seller’s acceptance of the SCT or Seller’s rejection of the SCT results and reason(s) therefor.
Within ten (10) Business Days after receipt of such report, Buyer shall notify Seller in writing of either Buyer’s acceptance of the SCT results or Buyer’s rejection of the SCT and reason(s) therefor.
If either Party rejects the results of any SCT, such SCT shall be repeated in accordance with Part II.F.
J. Supplementary Storage Capacity Test Protocol. No later than sixty (60) days after commencement of Facility construction, Seller shall deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld) an
Exhibit M - 5
updated supplement to this Exhibit M with additional and supplementary details, procedures and requirements applicable to Storage Capacity Tests based on the then current design of the Facility (“Supplementary Storage Capacity Test Protocol”). Thereafter, from time to time, Seller may deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld) any Seller recommended updates to the then current Supplementary Storage Capacity Test Protocol. The initial Supplementary Storage Capacity Test Protocol (and each update thereto), once approved by Buyer, shall be deemed an amendment to this Exhibit M.
K. Adjustment to Storage Capacity. The total amount of discharged Energy delivered to the Delivery Point (expressed in MWh AC) during each of the first eight (8) hours of discharge (up to, but not in excess of, the product of (i) the original Storage Contract Capacity set forth on the Cover Sheet, as such original Storage Contract Capacity on the Cover Sheet may have been adjusted (if at all) under this Agreement, multiplied by (ii) eight (8) hours), shall be divided by eight (8) hours to determine the Storage Capacity, which shall be expressed in MW AC, and shall be the new Storage Capacity in accordance with Section 4.9(c) of the Agreement until updated pursuant to a subsequent Storage Capacity Test.
L. Adjustment to Efficiency Rate. At Seller’s election, the Energy Efficiency Rate may be calculated either as (a) the total amount of Energy Out (as reported in Part II.B above) divided by the total amount of Energy In (as reported in Part II.B above), and expressed as a percentage, or (b) the total Energy discharged by the Facility over all hours over the preceding Contract Year divided by the total Energy used to charge the Facility over the proceeding Contract Year (adjusting, as appropriate for any Energy stored at the start and end of the applicable Contract Year).
Exhibit N - 1
EXHIBIT N
NOTICES
GEM A-CAES LLC
(“Seller”)
CENTRAL COAST COMMUNITY
ENERGY (“Buyer”)
All Notices:
Street: 365 Bay Street, Suite 300
City: Toronto, ON Canada M5H 2V1
Attn: Jordan Cole, Chief Commercial
Officer
Phone: (416) 409-8549
Email: [email protected]
All Notices:
Street: 70 Garden Court, Suite 300
City: Monterey, CA Zip: 93940
Attn: Dennis Dyc-O’Neal, Director of Power
Supply Resources
Phone: (831) 641-7240
Email: [email protected]
Reference Numbers:
Duns:
Federal Tax ID Number: 384202374
Reference Numbers:
Duns: 080977851
Federal Tax ID Number: 82-2386705
Invoices:
Attn: Hydrostor Accounting
Phone: (416) 548-7880 ext. 2100
Email: [email protected]
Invoices:
Attn: Accounts Payable-Power Services
Phone: (831) 641-7218
Email: [email protected]
Scheduling:
Attn: Dean Command, Chief Operating
Officer
Phone: (416) 648-0202
Email: [email protected]
Scheduling:
Attn: The Energy Authority
Phone: (425) 460-1110
Email: [email protected]
Confirmations:
Attn: Dean Command, Chief Operating
Officer
Phone: (416) 648-0202
Email: [email protected]
Confirmations:
Attn: Jeremy Clark, Manager of Energy Trading
Phone: (831) 641-7214
Email: [email protected]
Payments:
Attn: Hydrostor Accounting
Phone: (416) 548-7880 ext. 2100
Email: [email protected]
Payments:
Attn: ___________
Phone: ___________
Email: [email protected]
Wire Transfer:
Bank:
ABA:
ACCT:
Wire Transfer:
Bank: River City Bank
ABA:
ACCT:
Exhibit N - 2
GEM A-CAES LLC
(“Seller”)
CENTRAL COAST COMMUNITY
ENERGY (“Buyer”)
Credit and Collections:
Attn: Hydrostor Accounting
Phone: (416) 548-7880 ext. 2100
Email: [email protected]
With additional Notices of an Event of
Default or Force Majeure Event to:
Central Coast Community Energy
Attn: Brian Kimball, General Counsel
Phone: (831) 257-4000
Email: [email protected]
with a copy to:
Hall Energy Law PC
Attn: Stephen Hall
Phone: (503) 313-0755
Email: [email protected]
With additional Notices of an Event of
Default to:
Hydrostor Inc.
Attn: Patrick Moyer, General Counsel
Phone: (416) 804-0332
Email: [email protected]
with a copy to:
Climate Edge Law Group
Attn: Paul Lacourciere
Phone: (415) 577-1397
E-mail: [email protected]
Emergency Contact:
Attn:
Phone:
Facsimile:
Email:
Exhibit O - 1
EXHIBIT O
TECHNICAL OPERATING RESTRICTIONS
The Facility shall be subject to the following Technical Operating Restrictions:
Description Value Notes
1. Storage Contract Capacity 200 MW
2. Maximum Stored Energy Level 1,600 MWh
3. Maximum Charging Capacity 200 MW
4. Maximum Discharging Capacity 200 MW
5. Maximum State of Charge (SOC)
during Charging 100%
6. Minimum State of Charge (SOC)
during Discharging 0%
7. Minimum Discharge Duration
Minimum amount of time to
discharge after each turbine
start
8. Minimum Charging Duration
Minimum amount of time to
discharge after each turbine
start
9. Daily Dispatch Limits
10 Minimum Down Time
Minimum amount of time to
stay offline after any shut
down of turbine or
compressor
Exhibit P - 1
EXHIBIT P
METERING DIAGRAM
[To be provided prior to Construction Start]
Exhibit Q - 1
EXHIBIT Q
SCHEDULED MAINTENANCE INTERVALS
1.1 Maintenance Plans
(a) Not later than ninety (90) days before the beginning of each calendar year the Seller shall prepare and submit to the Buyer its proposed maintenance plan (a “Maintenance Plan”) for that calendar year; provided that the Maintenance Plan for the first Contract Year shall be prepared and submitted by the Seller to the Buyer not later than sixty (60) days after the Commercial Operation Date. (b) Each proposed Maintenance Plan shall contain, such detail as is reasonably acceptable to the Buyer.
1.2 Scheduled Outages
(a) The Parties shall coordinate, acting reasonably and in good faith, to establish reasonable maintenance schedules for the various components of the charging and discharging systems of the Facility. The outages will follow Prudent Operating Practice. Seller and Buyer shall use reasonable commercial efforts to coordinate all forecasted maintenance to coincide with Buyer’s forecasted dispatch schedules to minimize any loss of revenue.
1.3 Major Overhauls During Peak Summer Months
(a) Major overhauls may not be scheduled during June, July, August unless otherwise agreed by the Parties, acting reasonably and in good faith.
2. Reporting Scheduled Maintenance
(a) The Buyer must be informed, in advance, any time the facility is planning to perform scheduled maintenance The advance notification requirements are as follows:
24 Hours - is required for maintenance lasting 24
hours or less.
7 Days - is required for maintenance lasting
more than one day.
3 Months
with
monthly
updates
- is required for a major overhaul.
Emergency - As soon as possible.
Exhibit Q - 2
2.1 Limited Generation Due to Maintenance
(a) Maintenance may be performed while the Facility is operating at reduced (limited) generation.
(b) If the Facility has more than one generating unit, maintenance may be performed on one unit while the other unit(s) is operating.
2.2 Allowance
(a) Subject to Section 2.3, Outage Periods for scheduled maintenance shall not exceed 450 Hours in any 12-month period except as described in this paragraph. This allowance may be used in increments of an hour or longer on a consecutive or non-consecutive basis. In the event the full 450 hours is not used during a 12-month period, up to 200 unused maintenance hours may be rolled over from one 12-month period to the next. Thus a total of 650 hours (450+200) is the maximum scheduled maintenance allowance for a 12-month period.
2.3 Application of Maintenance Hours
(a) All On-Peak Hours that the Facility is unavailable to discharge due to scheduled maintenance (each an “Outage Period”) will be deducted from the allotted 450 hours/year.
(b) For example, if the Facility was shut down for scheduled maintenance all day each day from Thursday through the following Wednesday, 25 hours (5 days x 5 hours) would be deducted from the allotted 450 hours.
(c) All hours that the Facility is shut down for a major overhaul will be deducted first from any prior year rollover (see IV) the Facility had acquired and accumulated (up to 200 hours) and any additional hours needed for the major overhaul will be deducted from any remaining hours in the Facility's allotted 450 hours/year.
Docusign Envelope ID: C34D74E7-3A3B-4E93-81BB-60B3B0E6B838 6 Third Amendment to Energy Storage Agreement (Willow Rock) (b) Governing Law. This Third Amendment shall be governed by the laws of the State of California, without regard to principles of conflicts of Law. (c) Successors and Assigns. This Third Amendment shall be binding on and inure to the benefit of the heirs, executors, administrators, successors, assigns, agents, legal representatives, bankruptcy trustees and attorneys of the Parties.
(d) Authorization. The persons who have executed this Third Amendment represent and warrant that they are duly authorized to execute this Third Amendment in their individual or representative capacity as indicated.
(e) Headings. The Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.
(f) Severability. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction.
(g) Counterparts. This Third Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. This Third Amendment may be duly executed and delivered by a Party by email delivery of the executed signature page of a counterpart to the other Party. If delivery is made by email, the delivering Party shall, at the other Party’s request, promptly deliver via overnight delivery, a complete original counterpart that it has executed to the other Party, but this Third Amendment shall be binding on and enforceable against the delivering Party whether or not it delivers such original counterpart.
[Signature Pages Attached]
Docusign Envelope ID: C34D74E7-3A3B-4E93-81BB-60B3B0E6B838 Signature Page
IN WITNESS WHEREOF, Buyer and Seller, intending to be legally bound hereby, have executed this Third Amendment to Energy Storage Agreement as of the Effective Date.
GEM A-CAES LLC, a Delaware limited
liability company
By:
Name: Jon Norman
Title: President
GEM A-CAES LLC, a Delaware limited
liability company
By:
CENTRAL COAST COMMUNITY
ENERGY, a California joint powers
authority
By:
Name:
Title:
Approved as to form:
By:
Name:
Title:
Jordan Cole
Chief Commercial Officer
Name:
Title:
Docusign Envelope ID: C34D74E7-3A3B-4E93-81BB-60B3B0E6B838 Third Amendment to Energy Storage Agreement (Willow Rock) Annex 1
AMENDED EXHIBIT A
FACILITY DESCRIPTION
Site Name: Willow Rock Energy Storage Center
APN: Site includes all or some of the following
County: Kern County, California
CEQA Lead Agency: California Energy Commission
Type of Storage Facility: Advanced Compressed Air Energy Storage (A-CAES) Energy Management Software: the Facility will include an advanced microgrid controller for aggregated dispatch. Seller’s energy management software shall have the following capabilities:
remotely operable, 2-4 second timestamps, historian (at least five (5) years of storage), SCADA/AGC communication and operability with the Facility controller and Buyer’s SC and provides the ability to participate in the CAISO Day-Ahead and Real Time energy markets and to otherwise comply with the CAISO’s requirements for Seller to deliver the Product.
Operating Characteristics of Storage Facility:
Technical Operating Restrictions of Storage Facility: see Exhibit O (Technical Operating Restrictions)
Storage Contract Capacity: 200MW
Maximum Output: 1,600 MWh
Maximum Charging Capacity: 200 MW
Maximum Discharging Capacity: 200 MW
Delivery Point: Facility PNode at the Whirlwind Substation at the 220 kV bus Point of Interconnection: Whirlwind Substation
Storage Facility Meter Location: see Exhibit P (Metering Diagram) PNode: WIRLWIND_2_B1
Participating Transmission Owner: Southern California Edison Company Generation-Tie Parameters: an approximately nineteen (19)-mile long 220 kV generation tie (gen-tie) line, predominantly overhead, interconnecting the Facility to the SCE Whirlwind Substation.