AGENDA
ORANGE COUNTY POWER AUTHORITY
SPECIAL MEETING OF THE BOARD OF DIRECTORS
Monday, August 25, 2025
4:30 p.m.
This meeting will proceed as an in-person meeting at 15310 Barranca Parkway, Suite 250, Irvine, CA 92618. In addition, as a convenience to the public, the Orange County Power Authority is providing an option for members of the public to remotely view and participate in the meeting.
Further details are below. Please note that, in the event of a technical issue causing a disruption in the remote participation option, the meeting may continue unless otherwise required by law.
Note: Any member of the public may provide comments to the Orange County Power Authority Board of Directors on any agenda items by requesting to speak during Item 4. When providing comments to the Board, it is requested that you provide your name and city of residence for the record. Commenters are requested to address their comments to the Board as a whole through the Chair. Comments may be provided in the following manner:
To provide comments during the meeting, in-person attendees, please fill out the public speaker slip and provide it to the clerk at the beginning of the meeting. Before Item 4, the Chair or Clerk will ask members of the public to join the queue to provide public comment. The queue will remain open for a reasonable amount of time to allow members of the public sufficient time to request to speak and inform the Board of the number of speakers. After such time, the queue will be closed and the members of the public who have joined the queue to speak will be recognized at the appropriate time may speak. To join the queue on Zoom video conference by computer or mobile phone, use the “Raise Hand” feature. If joining the meeting using the Zoom dial-in number, you can raise your hand and join the queue by pressing *9. Members of the public will not be shown on video but will be able to speak when called upon.
Comments shall generally be limited to three minutes when speaking, provided that the Chair may equally reduce each speaker’s time to accommodate a large number of speakers or a large number of agenda items. If you have anything that you wish to be distributed to the Board, please provide it via [email protected], who will distribute the information to the Members.
The public may participate using the following remote options:
ZOOM WEBINAR
Please click the link below to join the webinar:
Launch Meeting - Zoom
Dial-in: 1-669-900-6833
Webinar ID: 831 8712 0176
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
4. PUBLIC COMMENTS ON AGENDA ITEMS
Opportunity for members of the public to address the Board on any items on the agenda.
5. REGULAR CALENDAR
1. APPROVE LONG-TERM ENERGY STORAGE AGREEMENT WITH LOCK
ENERGY CENTER, LLC
Recommended Actions:
Authorize the CEO to execute the Energy Storage Agreement to provide resource adequacy and arbitrage service from the Lock Energy Center and to make elections with respect to the options granted to OCPA under the Agreement to make the following changes on or before February 28, 2026:
1. Reduce the Agreement from a twenty (20)-year term to a fifteen (15)-year term, with a corresponding change in price, depending on the financial benefit to OCPA; and
2. Reduce the battery energy storage system (BESS) capacity purchased by OCPA from 115 megawatt (MW) down to a capacity as low as 30MW depending on OCPA’s evaluation of need.
6. ADJOURNMENT
Compliance with the Americans with Disabilities Act
Board of Directors meetings comply with the protections and prohibitions of the Americans with Disabilities Act. Individuals with a disability who require a modification or accommodation, including auxiliary aids or services, in order to participate in the public meeting may contact 949- 263-2612. Requests for disability-related modifications or accommodations require different lead times and should be provided at least 72-hours in advance of the public meeting.
Availability of Board Documents
Copies of the agenda and agenda packet are available at www.ocpower.org. Late-arriving documents related to a Board meeting item which are distributed to a majority of the Board prior to or during the Board meeting are available for public review as required by law. Public records, including agenda-related documents, can be requested electronically at [email protected] or by mail to 15642 Sand Canyon Avenue, P.O. Box 54283, Irvine, CA 92619-4283. The documents may also be posted at the above website. Such public records are also available for inspection, by appointment, at 15310 Barranca Parkway, Suite 250, Irvine, CA 92618. Please contact [email protected] to arrange an appointment.
ORANGE COUNTY POWER AUTHORITY
Staff Report – Item 5.1
--------------------------------------------------------------------------------------------------------------------- To: Orange County Power Authority Board of Directors
From: Louis Ting, Director of Power Resources
Approved by: Joe Mosca, Chief Executive Officer
Subject: APPROVE LONG-TERM ENERGY STORAGE AGREEMENT WITH LOCK
ENERGY CENTER, LLC
Date: August 25, 2025
--------------------------------------------------------------------------------------------------------------------
STRATEGIC GOALS
☐ Enrich & Grow the OCPA Community:
☐ Prioritize Fiscal Sustainability & Affordability:
☐ Design & Deploy Community-Aligned Customer Programs:
☒ Energize Our Community with Renewable Energy:
☐ Raise Awareness of Community Energy & Advocate for Our Customers:
☐ Not Applicable:
RECOMMENDED ACTION(S)
Authorize the CEO to execute the Energy Storage Agreement (ESA) to provide resource adequacy and arbitrage service from the Lock Energy Center and to make elections with respect to the options granted to OCPA under the Agreement to make the following changes on or before February 28, 2026:
1. Reduce the agreement from a twenty (20)-year term to a fifteen (15)-year term, with a corresponding change in price, depending on the financial benefits to OCPA; and,
2. Reduce the battery energy storage system (BESS) capacity purchased by OCPA from 115 megawatt (MW) down to a capacity as low as 30MW, depending on OCPA’s evaluation of need.
BACKGROUND
The California Public Utilities Commission (CPUC) issued the decision D.23-02-040 (Decision) dated February 28, 2023, ordering load serving entities (LSE) to procure newly-built capacity resources to meet the supplemental Mid-Term Reliability (MTR) requirements. Specifically, for Orange County Power Authority (OCPA), an additional net qualifying capacity (NQC) of 76 megawatts (MW) in aggregate. This CPUC procurement order requires OCPA to procure NQC from new projects in the amount of 38 MW by June 1, 2026, and an additional 38 MW by June 1, 2027. The NQC from the new project(s) must be under long-term agreement(s) of at least 10 years in duration. This MTR requirement aims to incentivize the construction of new generating facilities in the State of California to maintain reliable electric service due to the continued increase in electricity demand, as suggested by the California Energy Commission (CEC) through its load forecasting efforts. CPUC also points to the accelerating impacts of climate change, the likelihood of fossil-fueled generation resource retirements, and the likelihood of delays beyond 2026 in procuring long lead-time resources required by CPUC.
With this order from CPUC, OCPA has issued two Request for Proposals since the Decision, one in March of 2024 and more recently, one in February of 2025. In addition to meeting the CPUC MTR requirements, OCPA included in the RFPs to solicit resources to meet the Renewable Portfolio Standard (RPS) mandate. This approach is an “all source” RFP for resources meeting all requirements per the CPUC and California Independent System Operator (CAISO) regulations, which includes RPS, capacity, system energy, and hedging values. For the 2024 RFP, with the evaluations and shortlisting of three new projects, and further negotiations with the proposers, the OCPA Board of Directors has approved the Shell Energy North America (SENA) agreement on November 25, 2024. This fourteen (14) year agreement will provide the necessary bundled energy and RPS compliance resources. However, the agreement with SENA does not include the capacity attributes to meet the CPUC MTR requirements. Further negotiations with a second proposer for the MTR resources have ended without agreed-upon terms to address the gaps in commercial terms and conditions. The third shortlisted proposer has decided not to follow through with OCPA for the development of the proposed new project. Between the two RFPs, several developers have reached out to OCPA and its advisors with potential MTR-qualified projects for consideration and evaluation. After several months of discussions, several projects have experienced higher demand than the suppliers can provide, and others have postponed the projects due to transmission system constraints as determined by the CAISO deliverability process. However, one entity has provided a path to a new MTR qualified project with a firm offer, but has decided to redirect its efforts due to internal circumstances. With the 2025 RFP issuance on February 26, 2025, the proposals submitted by a dozen entities on and before April 3, 2025, have presented strong opportunities to comply with the order. OCPA has evaluated all projects submitted, and has shortlisted several strong candidates to meet MTR and RPS requirements. However, with the implementation of several Federal actions, including the tariff negotiations and the House of Representatives 1 (H.R.1) that has been signed into law, several proposers have made adjustments to their proposals. Adjustments include mostly two key commercial terms: Changes to the pricing of the resources and services, and the guaranteed commercial operation dates being delayed. In the meantime since April 3, 2025 after the proposals received, several projects became available for OCPA’s consideration through bi-lateral means. OCPA has reevaluated the proposals based on the adjustments to the project commercial terms and conditions, and has entered into negotiations with the entities with the highest evaluated projects. These projects have been determined with the least amount of exposures to risks that were determined, and these are also what we believe to be the least-cost and best-fit projects for OCPA. One of the projects is the Lock Energy Center (Lock) with its standalone battery energy storage system (BESS).
DISCUSSION/ANALYSIS
OCPA staff and its advisors evaluated and analyzed the Lock project amongst the other standalone BESS proposals, and Lock presented the highest evaluated values based on the quantitative and qualitative analysis. The Guarantor of the Lock Energy Center, LLC. will be the NextEra Energy Capital Holdings, Inc. as of the effective date of the ESA should this be approved by OCPA Board of Directors, and NextEra Energy, Inc. is the parent company.
Lock project is a standalone BESS with the ability to provide resource adequacy (RA) and hedging values for OCPA. The RA attributes provide the NQC to meet the CPUC MTR requirements. In addition, the NQC provides resources to meet CPUC compliance with Slice-of-Day (SOD) RA requirements. In addition, the Lock project provides hedging values through the arrangements as agreed in the Energy Storage Agreement to provide energy arbitrage within the CAISO energy market. OCPA will have the full toll, or the operational control of the BESS to charge the BESS during the hours when energy prices are forecasted to be the lowest, or negative, and discharge and generate during the hours when demand is high, which correlates with high energy prices.
Lock project is located in Fresno County, California, and the BESS will be built on all private lands. The project has conducted its California Environmental Quality Act process from 2021 through 2024, and the final Environmental Impact Reports has been certified by Fresno County Planning Commission in October, 2024. The Fresno County Conditional Use Permit was issued in November, 2024. With all of the recent Federal actions, NextEra and OCPA believe that there may be minimal risks with the uncertainties of the tariff changes, and the ESA provides the framework with a specified fixed cost increase due to a tariff, where OCPA may elect to terminate the ESA. The specified fixed cost was negotiated to ensure the burden of the tariff(s) are shared between NextEra and OCPA. With respect to the repeal of the Inflation Reduction Act, and the subsequent guidance from the Treasury, NextEra and OCPA believe that the Lock’s Guaranteed Commercial Operation Date (COD) is well before the start of the sunsetting of the tax credits in 2033 when the law requires the start of construction. Similar to the Grace Orchard project, Lock will be posting collateral security for the benefit of OCPA in connection with the development of the project, which security can be called upon if Lock does not complete the project by the Guaranteed Commercial Operation Date by June 1, 2028, subject to certain permitted extensions. Similar to the Grace Orchard project awarded back in 2023, OCPA has negotiated financial covenants that will allow it to avoid posting collateral security for its obligations related to construction of Lock. If OCPA is unable to meet its covenants, then it will be required to post collateral security in the form of a letter of credit that is substantially the same amount that is being posted by Lock for development security. If OCPA is unable to post this security, then Lock will have the right to terminate the PPA and, if occurring prior to Lock’s COD, OCPA will be subject to an early termination fee in the amount of this security. Similar to Grace Orchard project, Lock has the right to terminate the PPA without penalty or cause if any additional members withdraw from OCPA. This was necessary in order to give Lock comfort that it has a reliable long-term partner.
Lock includes a BESS with guaranteed capacities ranging from 30MW to 115MW at OCPA’s option to elect on or before February 28, 2026, and the option to elect the tenor of the ESA between a 15-year or a 20-year agreement, which presents cost differentials for OCPA. With the uncertainties of the Federal actions and the volatility in the energy and capacity markets, the negotiated options for OCPA to elect may present opportunities to optimize both the positions within OPCA’s power portfolio and the impacts on our financial models.
Based on the quantitative analysis amongst the short-listed standalone battery projects, Lock presented the highest net value based on the RA and energy arbitrage value projections.
Compared to two other shortlisted standalone BESS proposals, Lock’s net dollar value on an annual basis ranges from over 200% to over 1,300% higher than the second-highest evaluated standalone BESS project. The net dollar value range is based on OCPA’s option to elect the 30MW to 115MW capacity calculations for Lock. Compared with the RA-only, the third standalone BESS proposal, the RA-only proposal did not provide a positive net value due to the lack of any energy arbitrage feature as proposed. From the qualitative analysis, Lock’s development risks, as mentioned above, demonstrate the highest de-risking efforts compared with the other evaluated projects, considering environmental process readiness, CAISO transmission deliverability, and jurisdictional permitting progress. Similar to the Grace Orchard project, NextEra Energy, Inc., the parent company, and NextEra Energy Capital Holdings, Inc. (Parental Guarantee) have been reviewed by staff, and based on our risk policy and credit risk guidelines, they meet or exceed our expectations based on our criteria.
FISCAL IMPACT
The competitive capacity pricing of the ESA are confidential under the CPUC’s rules regarding market sensitive information. The long-term purchase of capacity will provide OCPA with significant value and cost certainty over the term of this ESA and provide NQC to meet CPUC MTR requirements.
ATTACHMENT(S)
Attachment A – Energy Storage Agreement with Lock Energy Center, LLC. (REDACTED)
CONFIDENTIAL
Execution Version
ENERGY STORAGE AGREEMENT
COVER SHEET
Seller: Lock Energy Center, LLC, a Delaware limited liability company Buyer: Orange County Power Authority, a California joint powers authority (“OCPA”) Description of Facility: A 115 MW/460 MWh battery energy storage facility located in Fresno County, in the State of California, with its first point of interconnection to be with transmission facilities that are under the operational control of a California balancing authority.
Milestones:
Milestone Expected Date for
Completion
Execute Interconnection Agreement Completed
Expected Construction Start Date 07/01/2027
Full Capacity Deliverability Status Obtained Commercial Operation Date
Expected Commercial Operation Date 06/01/2028
Guaranteed Commercial Operation Date 06/01/2028 (subject to extensions in
accordance with
Section 4 of
Exhibit B)
Delivery Term: The Delivery Term shall be the delivery term set forth in the defined term “Delivery Term.”.
Guaranteed Storage Capacity: 115 MW at four (4) hours of continuous discharge.
Guaranteed Efficiency Rate: for Contract Year 1, and decreasing annually by per Contract Year.
Guaranteed Commercial Operation Date: 06/01/2028, subject to extensions in accordance with Section 4 of Exhibit B.
Contract Price: The Storage Rate set forth in the defined term “Storage Rate.” Product
☒ Facility Energy
☒ Ancillary Services, if any, that may be obtained from the Facility ☒ Capacity Attributes, including Resource Adequacy Benefits, if any, associated with the Facility (select options below as applicable):
☐ Energy Only Status
☒ Full Capacity Deliverability Status (upon the RA Guarantee Date) ☒ All rights and products and attributes associated with the maximum dependable operating capability of the Storage Facility to be charged with, store and discharge electric energy.
Scheduling Coordinator: Seller (or Seller’s designee)
Security Amounts:
Seller Credit Support:
Seller Development Security:
Seller Performance Security:
Guarantor: NextEra Energy Capital Holdings, Inc. (as of the Effective Date) Buyer Credit Support: See Section 8.10
i
Table of Contents
ARTICLE 1 DEFINITIONS ........................................................................................................ 1
1.1 Contract Definitions............................................................................................. 1
1.2 Rules of Interpretation ...................................................................................... 22 ARTICLE 2 TERM; CONDITIONS PRECEDENT; EXTENSIONS ....................................... 23
2.1 Contract Term. ................................................................................................... 23
2.2 Seller’s Condition Precedent. ............................................................................ 23
2.3 Intentionally Omitted. ....................................................................................... 24
2.4 Other Conditions Precedent.............................................................................. 24
2.5 Development; Construction; Progress Reports............................................... 25
2.6 Remedial Action Plan ........................................................................................ 25
2.7 New Trade Measure Events .............................................................................. 25
2.8 Seller’s Termination for Convenience Right ................................................... 27 ARTICLE 3 PURCHASE AND SALE ...................................................................................... 28
3.1 Purchase and Sale of Product ........................................................................... 28
3.2 Intentionally omitted. ........................................................................................... 28
3.3 RTD Imbalance Energy. .................................................................................... 28
3.4 Ownership of Incentives. ................................................................................... 28
3.5 Intentionally omitted. ........................................................................................... 28
3.6 Intentionally omitted. ........................................................................................... 28
3.7 Capacity Attributes. ........................................................................................... 28
3.8 Resource Adequacy Failure. ............................................................................. 29
3.9 Intentionally omitted. ........................................................................................... 30
3.10 Intentionally omitted. ........................................................................................... 30
3.11 Intentionally omitted. ........................................................................................... 30
3.12 Intentionally omitted. ........................................................................................... 30
3.13 Compliance Expenditure Cap. .......................................................................... 30
3.14 Project Configuration ........................................................................................ 31 ARTICLE 4 OBLIGATIONS AND DELIVERIES ................................................................... 31
4.1 Delivery. .............................................................................................................. 31
4.2 Title and Risk of Loss. ....................................................................................... 32
4.3 Scheduling, Forecasts, and Outages. ................................................................ 32
4.4 Dispatch Down/Curtailment. ............................................................................ 35
4.5 Charging and Discharging Energy. .................................................................. 36
4.5 Intentionally Omitted. ....................................................................................... 38
4.6 Reduction in Energy Delivery Obligation........................................................ 38
4.7 Intentionally omitted. ........................................................................................ 39
4.8 Storage Availability and Efficiency. ................................................................. 39
4.9 Storage Facility Testing. .................................................................................... 40
4.10 Intentionally omitted .......................................... Error! Bookmark not defined.
ARTICLE 5 TAXES .................................................................................................................. 41
5.1 Allocation of Taxes and Charges. ..................................................................... 41 ii
5.2 Cooperation. ....................................................................................................... 42 ARTICLE 6 MAINTENANCE OF THE FACILITY ................................................................ 42
6.1 Maintenance of the Facility. .............................................................................. 42
6.2 Maintenance of Health and Safety. .................................................................. 42
6.3 Dedicated Interconnection Capacity. ............................................................... 42
6.4 Shared Facilities. ................................................................................................ 42 ARTICLE 7 METERING ........................................................................................................... 43
7.1 Metering. ............................................................................................................. 43
7.2 Meter Verification. ............................................................................................. 44 ARTICLE 8 INVOICING AND PAYMENT; CREDIT ............................................................ 44
8.1 Invoicing.............................................................................................................. 44
8.2 Payment. ............................................................................................................. 44
8.3 Books and Records. ............................................................................................ 44
8.4 Payment Adjustments; Billing Errors. ............................................................ 45
8.5 Billing Disputes................................................................................................... 45
8.6 Netting of Payments. .......................................................................................... 45
8.7 Seller’s Development Security. ......................................................................... 45
8.8 Seller’s Performance Security. ......................................................................... 46
8.9 Buyer’s Financial Statements. .......................................................................... 46
8.10 Buyer’s Financial Covenants and Buyer Credit Support. ............................. 46
8.11 Intentionally Omitted. ..................................................................................... 48
8.12 First Priority Security Interest in Cash or Cash Equivalent Collateral ....... 49 ARTICLE 9 NOTICES .............................................................................................................. 49
9.1 Addresses for the Delivery of Notices............................................................... 49
9.2 Acceptable Means of Delivering Notice ........................................................... 49 ARTICLE 10 FORCE MAJEURE ............................................................................................. 50
10.1 Definition. ........................................................................................................... 50
10.2 No Liability If a Force Majeure Event Occurs ............................................... 51
10.3 Notice ................................................................................................................... 51
10.4 Termination of the Agreement Following Force Majeure Event .................. 51 ARTICLE 11 DEFAULTS; REMEDIES; TERMINATION ..................................................... 52
11.1 Events of Default ................................................................................................ 52
11.2 Remedies; Declaration of Early Termination Date. ....................................... 54
11.3 Damage Payment; Termination Payment ....................................................... 55
11.4 Notice of Payment of Termination Payment or Damage Payment ............... 56
11.5 Disputes With Respect to Termination Payment or Damage Payment ........ 57
11.6 Seller Pre-COD Liability Limitation. ............................................................... 57
11.7 Rights And Remedies Are Cumulative ............................................................ 57
11.8 Mitigation............................................................................................................ 57 ARTICLE 12 LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES. ....... 57 iii
12.1 No Consequential Damages. .............................................................................. 57
12.2 Waiver and Exclusion of Other Damages. ....................................................... 57 ARTICLE 13 REPRESENTATIONS AND WARRANTIES; ADDITIONAL
COVENANTS ............................................................................................... 59
13.1 Seller’s Representations and Warranties. ....................................................... 59
13.2 Buyer’s Representations and Warranties. ....................................................... 59
13.3 General Covenants. ............................................................................................ 60
13.4 Additional Seller Commitments. ...................................................................... 61 ARTICLE 14 ASSIGNMENT.................................................................................................... 61
14.1 General Prohibition on Assignments. .............................................................. 61
14.2 Change of Control. ............................................................................................. 61
14.3 Collateral Assignment ....................................................................................... 62
14.4 Shared Facilities; Portfolio Financing. ............................................................ 62
14.5 Accommodation of Lenders. ............................................................................. 62
14.6 Special Financing Arrangements. .................................................................... 62
14.7 Option.................................................................................................................. 63 ARTICLE 15 DISPUTE RESOLUTION ................................................................................... 63
15.1 Governing Law. .................................................................................................. 63
15.2 Dispute Resolution. ............................................................................................ 63
15.3 Attorneys’ Fees. .................................................................................................. 64
15.4 Venue. .................................................................................................................. 64 ARTICLE 16 INDEMNIFICATION ......................................................................................... 64
16.1 Indemnification. ................................................................................................. 64
16.2 Claims.................................................................................................................. 64 ARTICLE 17 INSURANCE ...................................................................................................... 65
17.1 Insurance. ........................................................................................................... 65 ARTICLE 18 CONFIDENTIAL INFORMATION ................................................................... 66
18.1 Definition of Confidential Information. ........................................................... 66
18.2 Duty to Maintain Confidentiality. .................................................................... 66
18.3 Irreparable Injury; Remedies. .......................................................................... 67
18.4 Further Permitted Disclosure. .......................................................................... 67
18.5 Press Releases ..................................................................................................... 68 ARTICLE 19 MISCELLANEOUS ............................................................................................ 68
19.1 Entire Agreement; Integration; Exhibits......................................................... 68
19.2 Amendments. ...................................................................................................... 68
19.3 No Waiver. .......................................................................................................... 68
19.4 No Agency, Partnership, Joint Venture or Lease. .......................................... 68
19.5 Severability. ........................................................................................................ 68
19.6 Mobile-Sierra...................................................................................................... 68
19.7 Counterparts. ..................................................................................................... 69 iv
19.8 Electronic Delivery............................................................................................. 69
19.9 Binding Effect. .................................................................................................... 69
19.10 No Recourse to Members of Buyer................................................................... 69
19.11 Forward Contract. ............................................................................................. 69
19.12 Change in Electric Market Design. .................................................................. 69
19.13 Further Assurances ............................................................................................ 70
EXHIBITS
Exhibit A Facility Description
Exhibit B Facility Construction and Commercial Operation Exhibit C Compensation
Exhibit D Scheduling Coordinator Responsibilities; Managed Instructions Exhibit E Progress Reporting Form
Exhibit F-1 [Intentionally Omitted]
Exhibit F-2 [Intentionally Omitted]
Exhibit F-3 Monthly Expected Available Effective Storage Capacity Exhibit F-4 Monthly Available Storage Capability
Exhibit G [Intentionally Omitted]
Exhibit H Form of Commercial Operation Date Certificate Exhibit I-1 [Intentionally Omitted]
Exhibit I-2 Form of Effective Storage Capacity Certificate Exhibit J Form of Construction Start Date Certificate
Exhibit K Form of Letter of Credit issued on behalf of Seller for the benefit of Buyer Exhibit L Form of Letter of Credit issued on behalf of Buyer for the benefit of Seller Exhibit M [Intentionally Omitted]
Exhibit N Notices
Exhibit O Storage Capacity Tests
Exhibit P Storage Facility Availability
Exhibit Q Operating Restrictions
Exhibit R Metering Diagram
Exhibit S Form of Guaranty
Exhibit T Form of Consent to Collateral Assignment
Exhibit U CAISO Charge Codes
Exhibit V Form of Credit Notice
CONFIDENTIAL
Execution Version
ENERGY STORAGE AGREEMENT
This Energy Storage Agreement (“Agreement”) is entered into as of August [___], 2025 (the “Effective Date”), between Buyer and Seller. Buyer and Seller are sometimes referred to herein individually as a “Party” and jointly as the “Parties.” Except as otherwise specified herein, 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, 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; and 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:
“AC” means alternating current.
“Accepted Compliance Costs” has the meaning set forth in Section 3.13(c). “AD/CVD” means antidumping and/or countervailing duty.
“Adjusted Days of Liquidity On Hand” or “ADLH” has the meaning set forth in Section 8.10(d)(i).
“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 Transfer” and “Permitted Transferee”, “control” (including, with correlative meanings, the terms “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. Notwithstanding the foregoing, with respect to Seller, Affiliate shall include its Ultimate Parent, NEER, NEECH, NEOP, and NEP, and their respective direct or indirect subsidiaries. “After-Tax Basis” means, with respect to any payment received, or deemed to have been received, by any Person, the amount of such payment (the “Base Payment”), supplemented by a 2 further payment (the “Additional Payment”) to such Person so that the sum of the Base Payment plus the Additional Payment will be equal to the Base Payment, after deduction of the amount of all taxes required to be paid by such Person in respect of the receipt or accrual of the Base Payment and the Additional Payment (taking into account any current or previous credits or deductions arising from the underlying event giving rise to the payment, the Base Payment and the Additional Payment). Such calculations shall be made on the assumption that the recipient is subject to Federal income taxation at the statutory rate applicable to corporations under subchapter C of the Internal Revenue Code of 1986, as amended, and subject to the highest state and local income tax rate then in effect for corporations in the states in which the Person is subject to taxation during the applicable fiscal year, and shall take into account the deductibility, if applicable (for Federal income tax purposes), of state and local income taxes.
“Agreement” has the meaning set forth in the Preamble and includes the Cover Sheet; any Exhibits, schedules, and written supplements hereto; and any designated collateral, credit support or similar arrangement between the Parties.
“Ancillary Services” means spinning reserve, non-spinning reserve, frequency regulation ramp support, VAR dispatch, power factor correction, voltage control, and any other ancillary services that the Facility is capable of providing consistent with the Operating Restrictions, as each is defined in the CAISO Tariff. For avoidance of doubt, black start is not included. “Ancillary Services Bid” has the meaning set forth in the CAISO Tariff. “Applicable Tariff Orders” means (A) the following executive orders: (i) Imposing Duties To Address the Synthetic Opioid Supply Chain in the People's Republic of China, 90 Fed.
Reg. 9121 (Feb. 7, 2025); (ii) Imposing Duties To Address the Situation at Our Southern Border, 90 Fed. Reg. 9117 (Feb. 7, 2025); (iii) Imposing Duties To Address the Flow of Illicit Drugs Across Our Northern Border, 90 Fed. Reg. 9113 (Feb. 7, 2025); (iv) Adjusting Imports of Steel into the United States, 90 Fed. Reg. 9817 (Feb. 18, 2025); (v) Adjusting Imports of Aluminum into the United States, 90 Fed. Reg. 9807 (Feb. 18, 2025); (vi) Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits, Executive Order 14257 (90 Fed. Reg. 15,041 Apr. 7, 2025); (vii) Ensuring National Security and Economic Resilience through Section 232 Actions on Processed Critical Minerals and Derivative Products, Executive Order 14272 90 Fed. Reg. 16,437 (April 25, 2025); (viii) Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources, Executive Order 14315 90 Fed. Reg. 12,961 July 10, 2025); (viii) Further Modifying the Reciprocal Tariff Rates, Executive Order 90 Fed. Reg. 37,963 (August 6, 2025); (ix) Amendment to Duties to Address the Flow of Illicit Drugs Across Our Northern Border, 90 Fed. Reg. 37,957 (August 6, 2025); and (x) Addressing Threats to the United States by the Government of the Russian Federation, 90 Fed. Reg. 38,701 (August 11, 2025), and (B) any other executive orders, proclamations, or issuances by or pursuant to the authority of the President of the United States of America affecting tariffs or import restrictions issued on or after January 20, 2025 under the International Economic Emergency Powers Act of 1977, the Trade Act of 1974, the Trade Expansion Act of 1962, or the Tariff Act of 1930.
“Automated Dispatch System” or “ADS” has the meaning set forth in the CAISO Tariff. 3 “Automatic Generation Control” or “AGC” has the meaning set forth in the CAISO Tariff.
“Availability Adjustment” has the meaning set forth in Exhibit P. “Availability Standard” has the meaning set forth in the CAISO Tariff. “Bank Agreements” mean the MUFG Credit Agreement and any other any credit agreement, loan agreement, letter of credit, reimbursement agreement, bond purchase agreement, liquidity agreement or other agreement or instrument (or any amendment, supplement or modification thereto) entered into by Buyer with any Person under which any Person or Persons undertakes to make loans, extend credit or liquidity to Buyer or to purchase securities pursuant to such agreement in connection with any bonds, notes or other such obligations. “Bankrupt” or “Bankruptcy” 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.
“Business Day” means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday in California. A Business Day begins at 8:00 a.m. and ends at 5:00 p.m. local time for the Party sending a Notice or payment or performing a specified action. “Buyer” has the meaning set forth on the Cover Sheet.
“Buyer Credit Support” means a Letter of Credit in the amount set forth in Section 8.10. “Buyer Default” means an Event of Default of Buyer.
“Buyer Dispatched Test” has the meaning set forth in Section 4.9(c). “Buyer’s Indemnified Parties” has the meaning set forth in Section 18.2. “CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.
“CAISO Certification” means the certification and testing requirements for a storage unit set forth in the CAISO Tariff that are applicable to the Storage Facility, including certification and testing for all Ancillary Services, PMAX, and PMIN associated with such storage units, that are applicable to the Storage Facility.
“CAISO Charges Invoice” has the meaning set forth in Exhibit D. 4 “CAISO Dispatch” means any Charging Instruction or Discharging Instruction given by the CAISO to the Facility, whether through ADS, AGC or any successor communication protocol, communicating an Ancillary Service Award (as defined in the CAISO Tariff) or directing the Storage Facility to charge or discharge at a specific MW rate for a specified period of time or amount of MWh.
“CAISO Grid” has the same meaning as “CAISO Controlled Grid” 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.
“Capacity Attribute” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the amount of power that the Storage Facility can discharge to the Delivery Point, at a particular moment and that can be purchased, sold or conveyed under CAISO or CPUC market rules, including Resource Adequacy Benefits. “Capacity Damages” means Storage Capacity Damages.
“CEC” means the California Energy Commission or its successor agency. “Change in Law” means the occurrence, after the Effective Date (or such other date to the extent so specified in any particular provision), of any of the following: (a) the adoption or taking effect of any Law; (b) any change in any Law or in the administration, interpretation or application of any Law by any Governmental Authority; (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; (d) any change to a Resource Adequacy Ruling; (e) any order, decision, resolution, rule, regulation, guidance document, or other determination of the CPUC, or (f) any change in the CAISO Tariff or any document included in the definition thereof whether or not approved by FERC. “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 any class of outstanding equity interests in Seller; provided, 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; provided further, a Change of Control shall not be deemed to have occurred as a result of a Permitted Transfer.
5 “Charge Code” has the meaning set forth in the CAISO Tariff. “Charging Energy” means Energy delivered to the Storage Facility (including pursuant to a Charging Instruction), as measured at the Storage Facility Metering Point by the Storage Facility Meter, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use.
“Charging Instruction” means the operating instruction, and any subsequent updates, given by Buyer in accordance with the Applicable Instructions, and any action of Seller or the SC in accordance with the Applicable Instructions, or given by the CAISO to Seller or the Scheduling Coordinator, directing the Storage Facility to charge at a specific MW rate for a specified period of time or amount of MWh; provided, any such operating instruction shall be in accordance with the Operating Restrictions. Any instruction to charge the Storage Facility pursuant to a Buyer Dispatched Test shall be considered a Charging Instruction. “Commercial Operation” has the meaning set forth in Exhibit B. “Commercial Operation Date” means the date Commercial Operation is achieved. “Commercial Operation Delay Damages” means an amount equal to “Commercial Operation Storage Capacity Test” means the Storage Capacity Test conducted in connection with Commercial Operation of the Storage Facility, including any additional Storage Capacity Test for additional Storage Facility capacity installed after the Commercial Operation Date pursuant to Section 5 of Exhibit B. “Communications Protocols” means certain Operating Restrictions developed by the Parties pursuant to Exhibit Q that involve procedures and protocols regarding communication with respect to the operation of the Storage Facility pursuant to this Agreement. “Compensable Penalties” has the meaning set forth in Section 12.2. “Compliance Actions” has the meaning set forth in Section 3.13(a). “Compliance Expenditure Cap” has the meaning set forth in Section 3.13. “Confidential Information” has the meaning set forth in Section 18.1. “Consent to Collateral Assignment” has the meaning set forth in Section 14.3. “Construction Start” has the meaning set forth in Exhibit B. “Construction Start Date” has the meaning set forth in Exhibit B. “Contract Price” has the meaning set forth on the Cover Sheet. For clarity, the Contract Price is the Storage Rate.
“Contract Term” has the meaning set forth in Section 2.1. 6 “Contract Year” means a period of twelve (12) consecutive months. The first Contract Year shall commence on the Commercial Operation Date and each subsequent Contract Year shall commence on 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 the Non-Defaulting Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace this Agreement; any Compensable Penalties; and all reasonable attorneys’ fees and expenses incurred by the Non-Defaulting Party in connection with terminating this Agreement.
“Cover Sheet” means the cover sheet to this Agreement, which is incorporated into this Agreement.
“COVID-19” means the epidemic disease designated coronavirus disease 2019 (COVID-19) by the World Health Organization and the related virus designated Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) by the International Committee on Taxonomy of Viruses, and any variants and mutations thereof, and the efforts of a Governmental Authority to combat such disease.
“CPUC” means the California Public Utilities Commission, or successor entity. “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 Fitch, S&P or Moody’s. If ratings by Fitch, S&P and Moody’s are not equivalent, the lower rating shall apply. “Critical Minerals Proceeding” means the DOC’s investigation and proceeding concerning that certain Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Processed Critical Minerals and Derivative Products, 90 Fed. Reg. 13,372 (Dep’t of Commerce April 25, 2025).
“Curtailment Order” means any of the following:
(a) CAISO orders, directs, alerts, or provides notice to a Party to curtail deliveries of Facility Energy 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; or (iii) in response to an Energy oversupply or potential Energy oversupply; (b) a curtailment ordered by the Transmission Provider, including a PTO, 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 Transmission Provider’s electric system integrity or the integrity of other systems to which the Transmission Provider is connected;
7 (c) a curtailment ordered by CAISO or the Transmission Provider, including PTO, due to a Transmission System Outage; or
(d) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Transmission Provider or distribution operator. “Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which the Facility is unable to provide any Product pursuant to a Curtailment Order; provided that the Curtailment Period shall be inclusive of the time required for the Facility to ramp down and ramp up
“Cycles” means, at any point in time during any Contract Year, the number of equivalent charge/discharge cycles of the Storage Facility, which shall be deemed to be equal to (a) the total cumulative amount of Discharging Energy from the Storage Facility at such point in time during such Contract Year (expressed in MWh) divided by (b) four (4) times the weighted average Effective Storage Capacity for such Contract Year to date. “Damage Payment” means: (a) with respect to Seller,
; and (b) with respect to Buyer, the amount as calculated in Section
11.3(a)(ii).
“Day-Ahead Market” or “DAM” has the meaning set forth in the CAISO Tariff. “Day-Ahead Schedule” has the meaning set forth in the CAISO Tariff. “Dedicated Interconnection Capacity” has the meaning set forth in Section 6.3. “Defaulting Party” has the meaning set forth in Section 11.1(a). “Delivery Point” has the meaning set forth in Exhibit A. “Delivery Term” shall mean the period of twenty (20) Contract Years (subject to the following two sentence of this defined term) beginning on the Commercial Operation Date, unless terminated earlier in accordance with the terms and conditions of this Agreement. Buyer will have the option, by no later than February 28, 2026, to reduce the twenty (20) Contract Year duration instead to fifteen (15) Contract Years. Such option may only be exercised by Buyer once pursuant to a written exercise of reduction Notice received by Seller prior to 5:00 p.m. Pacific Standard Time on the February 28, 2026 date set forth in the immediately preceding sentence and following a proper and effective exercise, this Agreement will automatically be amended to reflect a fifteen (15) Contract Term Delivery Term and to reflect a revised Storage Rate as set forth in the defined term “Storage Rate”.
“Development Cure Period” has the meaning set forth in Exhibit B. “Development Security” means the Storage Development Security. 8 “Discharging Energy” means all Energy delivered to the Delivery Point from the Storage Facility, as measured at the Storage Facility Metering Point by the Storage Facility Meter, as such meter readings are adjusted by the CAISO for any applicable Electrical Losses or Station Use. “Discharging Instruction” means the operating instruction, and any subsequent updates, given by Buyer in accordance with the Applicable Instructions and any action of Seller or the SC in accordance with the Applicable Instructions or the CAISO to the Facility, directing the Storage Facility to discharge Discharging Energy at a specific MW rate for a specified period of time or to an amount of MWh; provided, any such operating instruction or updates shall be in accordance with the Operating Restrictions and the CAISO Tariff. Any instruction to discharge the Storage Facility pursuant to a Buyer Dispatched Test shall be considered a Discharging Instruction. “Disclosing Party” has the meaning set forth in Section 18.2. “Dispatch Instruction” has the meaning set forth in the CAISO Tariff. “DOC” means the U.S. Department of Commerce.
“Early Termination Date” has the meaning set forth in Section 11.2(a). “Economic Bids” has the meaning set forth in the CAISO Tariff. “Effective Date” has the meaning set forth on the Preamble. “Effective Storage Capacity” means the lesser of (a) PMAX, and (b) the maximum dependable operating capacity of the Storage Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW AC at the Delivery Point (i.e., measured at the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point) pursuant to the most recent Storage Capacity Test (including the Commercial Operation Storage Capacity Test), as evidenced by a certificate substantially in the form attached as Exhibit I-2 hereto, in either case (a) or (b) up to but not in excess of (i) the Guaranteed Storage Capacity (with respect to a Commercial Operation Storage Capacity Test) or (ii) the Installed Storage Capacity (with respect to any other Storage Capacity Test).
“Efficiency Rate” means the rate calculated by dividing Energy Out by Energy In (a) pursuant to Exhibit O for the initial Efficiency Rate, and (b) based on actual Storage Facility operations for each calendar month thereafter.
“Electrical Losses” means all transmission or transformation losses (a) between the Storage Facility Metering Point and the Delivery Point associated with delivery of Discharging Energy, and (b) between the Delivery Point and the Storage Facility Metering Point associated with delivery of Charging Energy to the Storage Facility, in each case as applicable. “Energy” means electrical energy, measured in kilowatt-hours or multiple units thereof. “Energy In” means AC energy charged (in MWh) to the Storage Facility as measured at the Storage Facility Meter pursuant to a Charging Instruction. 9 “Energy Management System” or “EMS” means the Facility’s energy management system.
“Energy Out” means that total AC energy discharged (in MWh) as measured at the Storage Facility Meter pursuant to a Discharging Instruction. “Equipment” means batteries, battery modules, onboard sensors, control components, inverters, or any of their components.
“Event of Default” has the meaning set forth in Section 11.1. “Excused Event” has the meaning set forth in Exhibit P. “Expected Commercial Operation Date” has the meaning set forth on the Cover Sheet. “Expected Construction Start Date” has the meaning set forth on the Cover Sheet. “Facility” means the Storage Facility.
“Facility Energy” means Discharging Energy during any Settlement Interval or Settlement Period.
“FERC” means the Federal Energy Regulatory Commission or any successor government agency.
“Fifteen Minute Market” or “FMM” has the meaning set forth in the CAISO Tariff. “Fitch” means Fitch Ratings Ltd., or its successor.
“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 that prevents Seller from making Product available at the Delivery Point and that is not the result of a Force Majeure Event.
“Full Capacity Deliverability Status” or “FCDS” has the meaning set forth in the CAISO Tariff.
“Full Capacity Deliverability Status Finding” means a written confirmation from the CAISO that the Facility is eligible for Full Capacity Deliverability Status. “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 10 markets, settlement prices for comparable transactions at liquid trading hubs (e.g., ZP-26), all of which should be calculated for the remaining Contract Term and include the value of Capacity Attributes.
“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 and the CPUC; provided, “Governmental Authority” shall not in any event include any Party. “Guaranteed Capacity” means the Guaranteed Storage Capacity. “Guaranteed Commercial Operation Date” has the meaning set forth on the Cover Sheet.
“Guaranteed Efficiency Rate” means, for each Contract Year, the minimum guaranteed Efficiency Rate of the Storage Facility set forth on the Cover Sheet for such Contract Year. “Guaranteed Storage Availability” has the meaning set forth in Section 4.8. “Guaranteed Storage Capacity” means the maximum dependable operating capability of the Storage Facility to discharge Energy, as measured in MW AC at the Delivery Point (i.e., measured at the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point) for four (4) hours of continuous discharge, set forth on the Cover Sheet, as may be adjusted pursuant to Exhibit B, Section 5.
“Guarantor” means, with respect to Seller, any Person that (a)(i) is NextEra Energy Capital Holdings, Inc. (provided it is an Affiliate of Seller), or other third party reasonably acceptable to Buyer or (ii) has a Credit Rating of
, (b) is incorporated or organized in a jurisdiction of the United States and is in good standing in such jurisdiction, and (c) 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 S, or as reasonably acceptable to Buyer. “Import Restraint” means any withhold release order or other law, rule, or regulation, including the Uyghur Forced Labor Prevention Act, or any action of a Governmental Authority under any such order, law, rule, or regulation, that prevents or delays the import or release of any Equipment into the United States.
“Incentives” means: (a) all federal, state, or local Tax credits or other Tax benefits associated with the production of electricity from, or the construction, operation or the ownership of, the Facility or any part thereof (including the Tax Credits and other credits under Sections 38, 45, 45Y, 46, 48, and 48E 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, including a cash grant available under Section 1603 of Division B of the American Recovery and Reinvestment Act of 2009, in lieu of federal Tax credits or any similar or substitute payment 11 available under subsequently enacted federal legislation; and (c) any other form of incentive relating in any way to the Facility that is not a Capacity Attribute. “Indemnified Party” has the meaning set forth in Section 16.1. “Indemnifying Party” has the meaning set forth in Section 16.1. “Independent Evaluator” means, with respect to a Trade Measure Amendment Notice, an independent third-party validation firm that
“Initial Synchronization” means the commencement of Trial Operations (as defined in the CAISO Tariff).
“Installed Capacity” means the installed Storage Capacity. “Installed Storage Capacity” means the lesser of (a) PMAX, and (b) maximum dependable operating capacity of the Storage Facility to discharge Energy for four (4) hours of continuous discharge, as measured in MW AC at the Storage Facility Meter Point by the Storage Facility Meter and adjusted for Electrical Losses to the Delivery Point, that achieves Commercial Operation, as evidenced by a certificate substantially in the form attached as Exhibit I-1 hereto. “Inter-SC Trade” has the meaning set forth in the CAISO Tariff. “Interconnection Agreement” means the interconnection agreement entered into by Seller (or its Affiliate) pursuant to which the Facility will be interconnected with the Transmission System, and pursuant to which Seller’s Interconnection Facilities and any other Interconnection Facilities will be constructed, operated and maintained during the Contract Term. “Interconnection Capacity Limit” means the maximum instantaneous amount of Energy that is permitted to be delivered from the Facility to the Delivery Point under the Interconnection Agreement for the Facility, in the amount of 115 MW.
“Interconnection Facilities” means the interconnection facilities, control and protective devices and metering facilities required to connect the Facility with the Transmission System in accordance with the Interconnection Agreement.
“Interconnection Point” means the PG&E Gates 500 kV substation in Fresno County, CA.
“Interest Rate” has the meaning set forth in Section 8.2. “Interim Milestones” means the development activities for significant milestones set forth on the Cover Sheet, not including the Expected Commercial Operation Date, Guaranteed Commercial Operation Date, or the RA Guarantee Date.
12 “ITC” means the investment tax credit established pursuant to Section 48, Section 48E, or other applicable provisions of the United States Internal Revenue Code of 1986, as such Law may be amended or superseded.
“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, with an effective date of November 20, 2020, as amended by that certain First Amendment dated February 9, 2021 and that certain Second Amendment dated October 25, 2022, as such agreement may be further amended or amended and restated from time to time, under which Buyer is organized as a Joint Powers Authority in accordance with the Joint Powers Act. “kWh” means a kilowatt-hour measured in alternating current, unless expressly stated in terms of direct current.
“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 and/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 and/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 , having assets of at least and with such bank having a Credit Rating of at least , in a form substantially similar to the letter of credit set forth in: (a) Exhibit K if issued on behalf of Seller for the benefit of Buyer; and (b) Exhibit L if issued on behalf of Buyer for the benefit of Seller. “Licensed Professional Engineer” means an independent, professional engineer selected by Seller and reasonably acceptable to Buyer, licensed in the State of California. “Local Capacity Area Resource” has the meaning set forth in the CAISO Tariff. “Local RAR” means the local Resource Adequacy Requirements established for load-serving entities by the CAISO pursuant to the CAISO Tariff, the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority. “Local RAR” may also be known as 13 local area reliability, local resource adequacy, local resource adequacy procurement requirements, or local capacity requirement in other regulatory proceedings or legislative actions. “Locational Marginal Price” or “LMP” has the meaning set forth in the CAISO Tariff. “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.
Factors used in determining economic loss to a Non-Defaulting 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., ZP-26), all of which should be calculated for the remaining Contract Term, and must include the value of Capacity Attributes, and Incentives. “Managed Instructions” have the meaning set forth in Section 4.3(b)(i) and Exhibit D. “Master File” has the meaning set forth in the CAISO Tariff. “Milestones” means the development activities for significant milestones set forth on the Cover Sheet.
“Monthly Capacity Payment” means the payment required to be made by Buyer to Seller each month of the Delivery Term as compensation for the provision of Effective Storage Capacity and Capacity Attributes associated with the Storage Facility and other Product, as calculated in accordance with Exhibit C.
“Moody’s” means Moody’s Investors Service, Inc., or its successor. “MUFG Credit Agreement” means that certain Revolving Credit Agreement between Buyer and MUFG Union Bank, N.A. dated as of September 21, 2021, as such agreement may be further amended or amended and restated from time to time. “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.
“NEECH” means NextEra Energy Capital Holdings, Inc.
“NEER” means NextEra Energy Resources, LLC.
“NEOP” means XPLR Infrastructure Operating Partners, LP (f/k/a NextEra Energy Operating Partners, LP).
14 “NEP” means XPLR Infrastructure, LP (f/k/a NextEra Energy Partners, LP). “Negative LMP” means, in any Settlement Period or Settlement Interval, the LMP at the Facility’s PNode is less than zero dollars ($0).
“NERC” means the North American Electric Reliability Corporation. “Net Buyer CAISO Settlements” has the meaning set forth in Section 4.3(e)(ii). “Net Buyer CAISO Settlements Protocol” has the meaning set forth in Section 4.3(e)(iii). “Net Qualifying Capacity” has the meaning set forth in the CAISO Tariff. “Network Upgrades” has the meaning set forth in the CAISO Tariff. “New Trade Measure Event” has the meaning set forth in Section 2.7. “New Trade Measure Extensions” has the meaning set forth in Exhibit B. “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 hand delivery, United States mail, next Business Day courier service, or electronic messaging (e-mail).
“NQC Reduction” has the meaning set forth in Section 3.8(e). “Off-Peak Hour” means any hour that is not an On-Peak Hour. “On-Peak Hour” means any hour from hour-ending 0700 to hour-ending 2200 (i.e., 6:00 AM to 9:59 PM) on Monday through Saturday, Pacific Prevailing Time, excluding North American Electric Reliability Council (NERC) holidays.
“Operating Restrictions” means those restrictions, rules, requirements, and procedures set forth in Exhibit Q.
“Participating Generator Agreement” has the meaning set forth in the CAISO Tariff. “Participating Transmission Owner” or “PTO” has the meaning set forth in the CAISO Tariff.
“Party” has the meaning set forth in the Preamble.
“Party Security” has the meaning set forth in Section 8.12. “Performance Measurement Period” means each two (2) consecutive Contract Year periods during the Delivery Term, calculated on a non-rolling basis such that no Contract Year is included in more than one Performance Measurement Period. The first Performance Measurement 15 Period shall include Contract Years 1 and 2. The second Performance Measurement Period shall be comprised of Contract Years 3 and 4, and so on.
“Performance Security” means (i) cash, (ii) a Letter of Credit, or (iii) a Guaranty in the amount set forth on the Cover Sheet.
“Permitted Transfer” means each of the following transactions:
(a) Transactions among Affiliates of Seller, including any corporate reorganization, merger, combination or similar transaction or transfer of assets or ownership interests involving Seller or its Affiliates; provided, that: (i) Ultimate Parent retains the authority, directly or indirectly, to control Seller (or if applicable, the surviving entity), or (ii) a wholly-owned, indirect subsidiary of Ultimate Parent operates the Facility;
(b) A Change of Control of Ultimate Parent, NEECH, NEP, NEOP, or NEER; (c) Any change of economic and voting rights triggered in Seller’s organization documents arising from the financing of the Facility and that does not result in the transfer of ownership, economic or voting rights in any entity that had no such rights immediately prior to the change;
(d) The direct or indirect transfer of shares of, or equity interests in, Seller to a Lender; or
(e) A transfer of the Facility (or the direct or indirect ownership of equity interests in Seller) in connection with any of the following: (i) all or substantially all of the assets of NEER, NEECH, or Ultimate Parent; (ii) all or substantially all of NEER’s or Ultimate Parent’s renewable energy generation portfolio; or (iii) all or substantially all of NEER’s or Ultimate Parent’s solar generation and/or energy storage portfolio; or (iv) the direct or indirect transfer of shares of, or equity interests in, Seller to a person in which, following the transfer, an Affiliate of NEER continues to hold an economic interest in the Facility; provided, that in the case of each of (i) through (iv) above: (A) the transferee (1) executes and delivers to Buyer a written agreement under which the transferee assumes in writing all of Seller’s duties and obligations under this Agreement and otherwise agrees to be bound by all of the terms and conditions of this Agreement, and (2) meets the Seller credit security requirements; and (B) the entity that operates the Facility following such transfer is (or contracts with) a Qualified Operator. “Permitted Transferee” means (i) any Affiliate of Seller or (ii) any entity that satisfies, or is controlled by another Person that satisfies the following requirements:
(a)
; and
(b) At least three (3) years of experience in the ownership and operations of energy storage facilities similar to the Facility, including the duties of the Scheduling Coordinator, or has retained a third-party with such experience to operate the Facility and act as Scheduling Coordinator.
16 Notwithstanding the foregoing, with respect to Seller, Permitted Transferee shall include its Ultimate Parent, NEER, NEECH, NEOP, and NEP, and their respective direct or indirect subsidiaries.
“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” means a period during which the Facility is either in whole or in part not capable of providing service due to planned maintenance that has been scheduled in advance in accordance with Section 4.6(a).
“PMAX” means the applicable CAISO-certified maximum operating level of the Storage Facility.
“PMIN” means the applicable CAISO-certified minimum operating level of the Storage Facility.
“PNode” has the meaning set forth in the CAISO Tariff.
“Portfolio” means the single portfolio of electrical energy generating, energy storage, or other assets and entities, including the Facility (or the interests of Seller or Seller’s Affiliates or the interests of their respective direct or indirect parent companies), that is pledged as collateral security in connection with a Portfolio Financing.
“Portfolio Financing” means any tax equity or debt transaction entered into by an Affiliate of Seller that is secured only by a Portfolio.
“Portfolio Financing Entity” means any Affiliate of Seller that enters into a tax equity transaction or incurs debt in connection with any Portfolio Financing. “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 industry during the relevant time period with respect to grid-interconnected energy storage in the Western United States, or (b) any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result 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 energy storage in the Western United States. Prudent Operating Practice shall include compliance with applicable Laws, applicable reliability criteria, and the applicable criteria, rules and standards promulgated in 17 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.
“PTC” means the production tax credit established pursuant to Section 45 or Section 45Y, each to the extent applicable to the Facility, of the United States Internal Revenue Code of 1986, as such Law may be amended or superseded.
“Qualified Operator” means Seller or an operator of energy storage facilities that has sufficient experience and technical capability to perform for Seller’s benefit the obligations of Seller under this Agreement related to the operation and maintenance of the Facility in accordance with the applicable requirements of this Agreement, as evidenced by such operator having operated at least one (1) battery energy storage facility having a nameplate capacity rating of one (1) MW and/or two (2) MWh or more, for not less than two (2) years. “Qualifying Capacity” has the meaning set forth in the CAISO Tariff. “RA Compliance Showing” means the (a) Local RAR compliance or advisory showings (or similar or successor showings), (b) RAR compliance or advisory showings (or similar or successor showings), and (c) Flexible RAR compliance or advisory showings (or similar successor showings), in each case, an entity is required to make to the CAISO pursuant to the CAISO Tariff, to the CPUC (and, to the extent authorized by the CPUC, to the CAISO) pursuant to the Resource Adequacy Rulings, or to any Governmental Authority.
“RA Deficiency Amount” means the liquidated damages payment that Seller shall pay to Buyer for an applicable RA Shortfall Month as calculated in accordance with Section 3.8(b). “RA Guarantee Date” means the first day of the first calendar month that is at least two (2) months after the Commercial Operation Date. For illustrative purposes, if the Commercial Operation Date is June 30, the RA Guarantee Date shall be September 1, as evidenced by CAISO’s acceptance of Buyer’s monthly Resource Adequacy Plan.
“RA Shortfall” has the meaning set forth in Section 3.8(a). “RA Shortfall Month” has the meaning set forth in Section 3.8(a). “Real-Time Price” means the Resource-Specific Settlement Interval LMP as defined in the CAISO Tariff. If there is more than one applicable Real-Time Price for the same period of time, Real-Time Price shall mean the price associated with the smallest time interval. “Receiving Party” has the meaning set forth in Section 18.2. “Remedial Action Plan” has the meaning set forth in Section 2.6. “Replacement RA” means Resource Adequacy Benefits, if any, equivalent to those that would have been provided by the Storage Facility with respect to the applicable month in which a RA Deficiency Amount is due to Buyer, and located within SP 15 TAC Area and, to the extent 18 that the Storage Facility would have qualified as a Local Capacity Area Resource for such month, described as a Local Capacity Area Resource.
“Requested Confidential Information” has the meaning set forth in Section 18.2. “Required Credit Rating” means, with respect to any Person, if such Person has only one Credit Rating, then one of the following, or if such Person has two or more Credit Ratings, at least “Residual Unit Commitment” has the meaning set forth in the CAISO Tariff. “Resource Adequacy Benefits” means the rights and privileges attached to the Storage Facility that satisfy any entity’s resource adequacy obligations, as those obligations are set forth in any Resource Adequacy Rulings and shall include any local, zonal or otherwise locational attributes associated with the Storage Facility.
“Resource Adequacy Plan” or “RA Plan” has the meaning set forth in the CAISO Tariff. “Resource Adequacy Requirements” or “RAR” means the resource adequacy requirements applicable to an entity as established by the CAISO pursuant to the CAISO Tariff, by the CPUC pursuant to the Resource Adequacy Rulings, or by any other Governmental Authority.
“Resource Adequacy Resource” shall have the meaning used in Resource Adequacy Rulings.
“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, 15-06-063, 16-06-045, 17-06-027, 18- 06-030, 18-06-031, 19-02-022, 19-06-026, 19-10-021, 20-01-004, 20-03-016, 20-06-002, 20-06- 028, 20-12-006 and any other existing or subsequent ruling or decision, or any other resource adequacy laws, rules or regulations enacted, adopted or promulgated by any applicable Governmental Authority, however described, as such decisions, rulings, Laws, rules or regulations may be amended or modified from time-to-time throughout the Contract Term. “RTD” has the meaning set forth in the definition of CAISO Real Time Market in the CAISO Tariff.
“RTD Imbalance Energy” has the meaning set forth in the CAISO Tariff. “RTD Price” means the relevant LMP for the CAISO Settlement Point during the applicable RTD Settlement Interval.
“S&P” means the Standard & Poor’s Financial Services, LLC (a subsidiary of S&P Global Inc.) or its successor.
“SCADA System” means the standard supervisory control and data acquisition systems to 19 be installed by Seller as part of the Facility, including those system components that enable Seller to receive ADS, AGC, or similar instructions from the CAISO. “Schedule” has the meaning set forth in the CAISO Tariff, and “Scheduled” has a corollary meaning.
“Scheduled Energy” means the Charging Energy or Discharging Energy that clears under the applicable CAISO market based on the final Day-Ahead Schedule(s), FMM Schedule(s) (as defined in the CAISO Tariff), and/or any other financially binding Schedule(s), market instruction or dispatch for the Facility for a given period of time implemented in accordance with the CAISO Tariff.
“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 8.12. “Self-Schedule” has the meaning set forth in the CAISO Tariff. “Seller” has the meaning set forth on the Cover Sheet.
“Seller Initiated Test” has the meaning set forth in Section 4.9(c). “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. “Settlement Point” means the CAISO designated PNode for the Facility. “SQMD Plan” 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 or by Seller for electric generation or storage facilities owned by Seller other than the Facility.
“Short-Notice Opportunity RA Outage” has the meaning set forth in the CAISO Tariff. 20 “Showing Month” shall be the calendar month of the Delivery Term that is the subject of the RA 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 RA Compliance Showing made in June is for the Showing Month of August.
“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 J to Buyer. “Site Control” means that Seller or 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, or the holder of an option for, an easement, right-of-way grant, or similar instrument with respect to the Site. “SOC” or “State of Charge” means the (a) level of charge of the Storage Facility relative to (b) the Effective Storage Capacity multiplied by four (4) hours, expressed as a percentage. “Station Use” means the Energy (including Energy produced or discharged by the Storage Facility) that is used within the Storage Facility to power the information technology, telecommunications, lights, motors, temperature control systems, control facility systems and other electrical loads that are necessary for operation of the Storage Facility except during periods in which the Storage Facility is charging or discharging pursuant to a Charging Instruction or Discharging Instruction.
“Storage Capacity Damages” has the meaning set forth in Section 5 of Exhibit B. “Storage Capacity Test” or “SCT” means any test or retest of the Storage Facility to establish the Installed Storage Capacity or Effective Storage Capacity conducted in accordance with the testing procedures, requirements and protocols set forth in Section 4.9 and Exhibit O. “Storage Development Security” means (a) cash or (b) a Letter of Credit in the amount set forth on the Cover Sheet for the Guaranteed Storage Capacity. “Storage Facility” means the energy storage facility described on the Cover Sheet and in Exhibit A, located at the Site and including mechanical equipment and associated facilities and equipment required to deliver Product, and as such storage facility may be expanded or otherwise modified from time to time in accordance with the terms hereof; provided, the “Storage Facility” does not include the Shared Facilities.
“Storage Facility Meter” means the CAISO approved bi-directional revenue quality meter or meters (with a 0.3 accuracy class), 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 Storage Facility at the Storage Facility Metering Point to the Delivery Point for the purpose of invoicing in accordance with Section 8.1. For clarity, the Facility may contain multiple measurement devices that will make up the Storage Facility Meter, and, unless otherwise indicated, 21 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(s) of the Storage Facility Meter shown in Exhibit R.
“Storage Rate” means for each Contract Year of the Delivery Term, (subject to the following sentence). If Delivery Term is reduced to fifteen (15) Contract Years as provided in the defined term “Delivery Term”, then Storage Rate for each Contract Year of the Delivery Term shall be increased to mean “Stored Energy Level” means, at a particular time, the amount of Energy in the Storage Facility available to be discharged as Discharging Energy, expressed in MWh. “Supplementary Storage Capacity Test Protocol” has the meaning set forth in Exhibit O.
“System Emergency” means any condition that requires, as determined and declared by CAISO or the Transmission Provider, 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. “Tax Credits” means the PTC, ITC and any other state, local or federal production tax credit, depreciation benefit, tax deduction or investment tax credit with respect to the storage of energy by, or the operation or the ownership of, the Facility or any part thereof. “Terminated Transaction” has the meaning set forth in Section 11.2(a). “Termination Payment” has the meaning set forth in Section 11.3(b). “Trade Measure Amendment Notice” shall have the meaning set forth in Section 2.7. “Trade Measure Amendment Notice Review Period” shall have the meaning set forth in Section 2.7.
“Transmission Delays” has the meaning set forth in Exhibit B. “Transmission Provider” means any entity that owns, operates and maintains transmission or distribution lines and associated facilities and/or has entitlements to use certain 22 transmission or distribution lines and associated facilities for the purpose of transmitting or transporting the Facility Energy from the Delivery Point. “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.
“Transmission System Outage” means an outage on the Transmission System, other than a System Emergency, that is not caused by Seller’s actions or inactions and that prevents Buyer or the CAISO (as applicable) from receiving Facility Energy onto the Transmission System. “Ultimate Parent” means NextEra Energy, Inc.
“Uninstructed Imbalance Energy” has the meaning set forth in the CAISO Tariff. “ZP-26” means the Existing Zone Generation Trading Hub for Existing Zone region ZP26 as set forth in the CAISO Tariff.
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 Article, 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 shall mean 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 terms “include” and “including” mean “include or including (as applicable) without limitation” and any list of examples following such term shall in no way restrict or limit the generality of the word or provision in respect of which such examples are provided;
23 (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 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) the expression “and/or” when used as a conjunction shall connote “any or all of”;
(l) 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
(m) 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; EXTENSIONS
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 set forth herein (“Contract Term”); provided, Buyer’s obligations to pay for and/or accept any Product, are subject to Seller’s completion of the conditions precedent pursuant to Section 2.4.
(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 shall remain in full force and effect for two (2) years following the termination of this Agreement, and all indemnity and audit rights shall remain in full force and effect for one (1) year following the termination of this Agreement.
2.2 Seller’s Condition Precedent. From the Effective Date through and including the Facility’s Commercial Operation Date, Buyer shall provide written Notice to Seller, within ten (10) Business Days, of Buyer’s receipt of any notice of election to withdraw from Buyer provided by (a) the City of Irvine and/or (b) each of (i) the City of Buena Park, and (ii) the City of Fullerton 24 (with such Notice under this subsection (b) to be provided by Buyer to Seller within ten (10) Business Day of Buyer’s receipt of the second such entity’s notice of election to withdraw from Buyer). Seller shall have the right to terminate this Agreement upon receipt of any Notice under this Section 2.2.
Seller’s exercise of such termination under this Section 2.2 shall require that Seller provide Notice of such termination to Buyer, signed by a duly-authorized officer of Seller, which provides that Seller is exercising its right to terminate this Agreement in total pursuant to this Section 2.2 of the Agreement. Neither Party shall have any liability to the other Party as a result of any termination of this Agreement under this Section 2.2, and Seller shall be entitled to return of its Development Security and Buyer shall be entitled to return of any Buyer’s Credit Support, as applicable.
2.3 Intentionally Omitted.
2.4 Other Conditions Precedent.
The Delivery Term shall not commence until Seller completes or Buyer waives each of the following conditions:
(a) Seller shall have delivered to Buyer (i) a completion certificate from a Licensed Professional Engineer substantially in the form of Exhibit H, and (ii) a certificate from a Licensed Professional Engineer substantially in the form of Exhibit I-1 setting forth the Installed Storage Capacity and the Installed Capacity on the Commercial Operation Date; (b) A Participating Generator Agreement and one (1) or more meter service agreements or metering plans, as applicable, between Seller and CAISO shall have been executed and delivered and be in full force and effect, and a copy of the same delivered to Buyer; (c) An Interconnection Agreement for the Facility between Seller (or its Affiliate) and the Transmission Provider shall have been executed and delivered and be in full force and effect and a copy of the Interconnection Agreement delivered to Buyer; (d) All applicable permits and government approvals required for the operation of the Facility have been obtained;
(e) Intentionally omitted;
(f) Intentionally omitted;
(g) Intentionally omitted;
(h) Seller has obtained CAISO Certification for the Storage Facility other than for Ancillary Services, which shall not be required to achieve the Commercial Operation Date or the start of the Delivery Term;
(i) Seller has satisfied the applicable insurance requirements in Article 17; and 25 (j) Seller has delivered the Performance Security to Buyer in accordance with Section 8.8.
2.5 Development; Construction; Progress Reports.
(a) 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 agree to a quarterly or monthly (as applicable) meeting between representatives of Buyer and Seller within five (5) Business Days of receipt by Seller of Buyer’s request for a meeting to review the Progress Reports and discuss Seller’s construction progress.
(b) The form of the Progress Report is 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 Interim Milestones within ten (10) Business Days of receipt of such request by Seller. Seller is solely responsible for the design and construction of the Facility, including the location of the Site, the Facility layout, and the selection and procurement of the equipment comprising the Facility.
2.6 Remedial Action Plan. If Seller misses an Interim Milestone by more than thirty (30) days, except as the result of Force Majeure Event or Buyer Default, Seller shall submit to Buyer, within ten (10) Business Days of the end of such thirty (30)-day period following the Interim Milestone completion date, a remedial action plan (“Remedial Action Plan”), which will describe in detail any delays (actual or anticipated) beyond the scheduled Interim 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 detailed description of its proposed course of action to achieve the missed Interim Milestones and all subsequent Interim Milestones by the Guaranteed Commercial Operation Date (as may be extended in accordance with Section 4 of Exhibit B); provided, delivery of any Remedial Action Plan shall not relieve Seller of its obligation to provide Remedial Action Plans with respect to any subsequent Interim Milestones and to achieve the Guaranteed Commercial Operation Date (as may be extended in accordance with Section 4 of Exhibit B) in accordance with the terms of this Agreement. Subject to the provisions of Exhibit B, so long as Seller complies with its obligations under this Section 2.6, Seller shall not be considered in default of its obligations under this Agreement solely as a result of missing any Interim Milestone.
2.7 New Trade Measure Events.
(a) Seller may suspend development and construction of the Facility during, and shall receive a day-for-day extension of the Guaranteed Commercial Operation Date and other applicable Milestones for, each day of any New Trade Measure Event through the end date of such New Trade Measure Event plus any period afterward as is reasonably necessary to accommodate any Seller or industry supply chain mobilization or remobilization or other Seller impact from such New Trade Measure Event. Notwithstanding the foregoing, if the foregoing suspension continues for a period in excess of and Seller has not delivered to Buyer a Trade Measure Amendment Notice within such period, then unless otherwise agreed by Buyer, 26 Buyer will have the right to terminate this Agreement upon thirty (30) day written notice to Seller.
Neither Party shall have any liability to the other Party as a result of any termination of this Agreement under this Section 2.7(a).
(b) Seller may also, in its sole discretion at any time prior to ninety (90) days after the later of (A) occurrence or cessation, as applicable, of any New Trade Measure Event or (B) importation clearance by U.S. Customs and Border Protection of the final item of imported Equipment impacted by such New Trade Measure Event, provide written notice to Buyer of an increase to the Contract Price and extension of the Guaranteed Commercial Operation Date and all other Milestones to keep Seller whole with respect to any cost increases or procurement delays that Seller reasonably expects to incur (including, for clarification purposes, for reasonable mitigation steps taken in anticipation of such New Trade Measure Event), including under any replacement supply arrangements, as a result of such New Trade Measure Event (a “Trade Measure Amendment Notice”). In connection with any Trade Measure Amendment Notice, Seller shall, upon request, provide Buyer with a written report from an Independent Evaluator evidencing the impact to the Seller’s costs and the project schedule. Such report shall preserve the confidentiality of Seller’s commercially sensitive information. Buyer shall have Sixty (60) days to review the Trade Measure Amendment Notice and any related report from the Independent Evaluator (the “Trade Measure Amendment Notice Review Period”). The Parties agree that the Independent Evaluator’s final written determinations shall be binding on the Parties and not subject to dispute. The Agreement shall be deemed automatically amended on the first day following the Trade Measure Amendment Notice Review Period to incorporate any increase to the Contract Price or extension to the Guaranteed Commercial Operation Date or other Milestones as set forth in the Trade Measure Amendment Notice, subject to any adjustments or corrections in the Independent Evaluator’s final written determinations, as applicable. Notwithstanding the foregoing, unless Buyer agrees otherwise in writing: (1) any increase to the Contract Price under this Section 2.7 shall not exceed ; and (2) any extension of the Guaranteed Commercial Operation Date or any other Milestone under this subsection shall not exceed provided further, that if Seller’s Trade Measure Amendment Notice sets forth (for implementation) an increase to the Contract Price or extension of the Guaranteed Commercial Operation Date or any other Milestone that exceeds the increase or extension limitations in clauses (1) or (2) above (collectively, the “Trade Measure Amendment Limitations”). If Buyer does not accept increases or extensions in excess of the Trade Measure Amendment Limitations in writing, then Seller shall have the right to terminate this Agreement upon written notice to Buyer within thirty (30) days after the last day of the Trade Measure Amendment Notice Review Period.
If Seller does not terminate within such period, then this Agreement will remain in full force and effect subject only to increases and extensions set forth in the Trade Measure Amendment Notice that are within the Trade Measure Amendment Limitations. Neither Party shall have any liability to the other Party as a result of any termination of this Agreement under this Section 2.7(b), and Seller shall be entitled to return of its Development Security and Buyer shall be entitled to return of any Buyer’s Credit Support, as applicable.
“New Trade Measure Event” means any of the following events occurring on or after the Effective Date, including, as applicable, the period during which the applicable ruling request, inquiry, rulemaking, adjudication, order, detention, or other filing, proceeding, or action remains 27 pending, ongoing, or subject to appeal, as applicable, before the DOC or other applicable Governmental Authority:
i. Filing or initiation of any rulemakings, adjudications, or other proceedings or actions to increase, extend, or expand application of, or impose any new, tariffs, duties (including but not limited to AD/CVD or an anti-circumvention investigation), or other trade measures (including Import Restraints), or issuance of any related determinations, orders, tariffs, duties, or trade measures, on Equipment; or ii. Enactment, adoption, promulgation, modification, or repeal of any law, rule, regulation, or order impacting or related to importation, transportation, installation (including interconnection to the electrical grid), or use of any Equipment (including country-of-origin or for clarification purposes identity of Equipment supplier determinations or measures regarding eligibility for tax incentives based on country of origin or the identity of the Equipment supplier); or
iii. Any action (including any detention of Equipment) of a Governmental Authority under any New Trade Measure Event under clauses (i) or (ii), above or under any Import Restraint.
For the avoidance of doubt, and notwithstanding anything to the contrary herein, the Parties acknowledge that the following constitute New Trade Measure Events: (a) the Applicable Tariff Orders; (b) the Critical Minerals Proceeding; and the (c) the One Big Beautiful Bill Act of 2025.
2.8 Seller’s Termination for Convenience Right. Notwithstanding anything to the contrary in this Agreement, and without limiting Seller’s rights to terminate for other reasons set forth in this the Agreement, Seller shall have the right to terminate this Agreement, for convenience, (a) at any time prior to February 28, 2026, in exchange for payment to Buyer, and (b) at any time after February 28,
2026 until the Expected Construction Start Date, in exchange for payment The exercise of such termination right by Seller will be pursuant to a written notice of exercise from Seller to Buyer which specifically provides that Seller is exercising its right to terminate this Agreement, for Seller’s convenience and specifically provides that such termination is being made pursuant to this Section 2.8(a) or (b) of the Agreement, as applicable. Such option may only be exercised once prior to 5:00 p.m. Pacific Standard Time on the applicable date set forth above, and following a proper and effective exercise, this Agreement will automatically be terminated. Such applicable payment shall be due to Buyer within ten (10) Business Days of such Seller’s written notice of exercise. Upon such termination under this Section 2.8, Buyer shall be entitled to return of any Buyer’s Credit Support, as applicable, and following the applicable payment by Seller set forth above in this Section 2.8, Seller shall be entitled to return of its Development Security.
28 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 shall purchase all the Product produced by or associated with the Facility at the Contract Price and in accordance with Exhibit C, and Seller shall supply and deliver to Buyer all the Product produced by or associated with the Facility. At its sole discretion, Buyer may during the Delivery Term re-sell or use for another purpose all or a portion of the Product, provided that no such re-sale or use shall relieve Buyer of any obligations hereunder. During the Delivery Term, Buyer shall have exclusive rights to offer, bid, or otherwise submit the Product, and/or any component thereof, from the Facility after the Delivery Point for resale in the market, and retain and receive any and all related revenues.
3.2 Intentionally omitted.
3.3 RTD Imbalance Energy. Buyer and Seller recognize that in any given Settlement Period the amount of Charging Energy, and/or Discharging Energy received or delivered by the Storage Facility may deviate from the amounts thereof scheduled with the CAISO. Following the Commercial Operation Date, to the extent there are such deviations, any costs, liabilities or revenues from such imbalances shall be solely for the account of Buyer, except as otherwise expressly set forth in this Agreement.
3.4 Ownership of Incentives. Seller shall have all right, title and interest in and to all Incentives. Buyer acknowledges that any Incentives belong to Seller. If any Incentives, or values representing the same, are initially credited or paid to Buyer, Buyer shall cause such Incentives or values relating to same to be assigned or transferred to Seller without delay. Buyer shall reasonably cooperate with Seller, at Seller’s sole expense, in Seller’s efforts to meet the requirements for any certification, registration, or reporting program relating to Incentives.
3.5 Intentionally omitted.
3.6 Intentionally omitted.
3.7 Capacity Attributes. As between Buyer and Seller, Seller shall be responsible for the cost and installation of any Network Upgrades associated with obtaining Full Capacity Deliverability Status.
(a) Throughout the Delivery Term and subject to Section 3.13, Seller grants, pledges, assigns and otherwise commits to Buyer all the Capacity Attributes from the Storage Facility.
(b) Throughout the Delivery Term and subject to Section 3.13, Seller shall maintain eligibility for, as applicable, Full Capacity Deliverability Status for the Storage Facility from the CAISO and shall perform all actions necessary to ensure that the Storage Facility qualifies to provide all Resource Adequacy Benefits to Buyer. Throughout the Delivery Term, and subject to Section 3.13, Seller hereby covenants and agrees to transfer all Resource Adequacy Benefits to Buyer.
29 (c) For the duration of the Delivery Term, and subject to Section 3.13, Seller shall comply with all applicable registration and reporting requirements, and execute all documents or instruments necessary to enable Buyer to use all of the Capacity Attributes committed by Seller to Buyer pursuant to this Agreement.
3.8 Resource Adequacy Failure.
(a) RA Deficiency Determination. For each RA Shortfall Month after the RA Guarantee Date, Seller shall pay to Buyer the applicable RA Deficiency Amount as liquidated damages and/or provide Replacement RA, as set forth in Section 3.8(c), as the sole remedy for the Capacity Attributes that Seller failed to convey to Buyer. “RA Shortfall Month” means any Showing Month in which there is an RA Shortfall. “RA Shortfall” means the positive difference, if any, between (i) the Qualifying Capacity of the Guaranteed Storage Capacity during the RA Shortfall Month minus (ii) the Net Qualifying Capacity of the Storage Facility for such month able to be shown on Buyer’s monthly RA Plan to the CAISO and CPUC and counted as Resource Adequacy for System RA, and, if applicable, Local RA.
(b) RA Deficiency Amount Calculation. The “RA Deficiency Amount” for an RA Shortfall Month shall equal the product of:
(i) the applicable RA Shortfall in MW multiplied by
(ii) the lower of:
(A) ; or
(B) the sum of (1) any penalty actually imposed on Buyer by the CPUC (expressed in dollars per kW-month) for failure to meet the CPUC’s resource adequacy requirements as a direct result of the RA Deficiency Amount, which penalty shall be reasonably documented by Buyer, and (2) the
(c) Replacement RA. Seller may, as an alternative to paying RA Deficiency Amounts, provide Replacement RA in amounts up to the RA Shortfall; provided that any Replacement RA capacity is communicated by Seller to Buyer with Replacement RA product information in a Notice to Buyer at least five (5) Business Days before the deadline that a Scheduling Coordinator must meet to submit its monthly resource adequacy plan, as established by CAISO or any other Governmental Authority.
(d) RA Deficiency Amounts True-Up. If Seller owes an RA Deficiency Amount for any Showing Month and an Availability Adjustment of less than one hundred percent (100%) applies to the Monthly Capacity Payment due hereunder with respect to the calendar month corresponding to such Showing Month, then to the extent (i) the actual mechanical or operational unavailability of the Facility in such calendar month is directly correlated with any NQC reduction for purposes of determining the RA Deficiency Amount arising out of the corresponding Showing Month, and (ii) such actual mechanical or operational unavailability of the Facility corresponds to the Availability Adjustment of less than one hundred percent (100%) being applied to the Monthly Capacity Payment owed to Seller hereunder, then Seller shall owe either the applicable RA 30 Deficiency Amount calculated hereunder for such Showing Month, or the applicable reduction to the Monthly Capacity Payment due hereunder, whichever is larger, but not both, and the payments shall be adjusted accordingly.
(e) NQC Reduction. Notwithstanding anything to the contrary in this Agreement, if the Net Qualifying Capacity of the Facility or any similar calculation is reduced as a result of a Change in Law, including (i) any change in the CPUC’s or the CAISO’s resource counting rules, (ii) any change in the CAISO’s deliverability assessment methodology for all solar or storage facilities as a resource class, (iii) any replacement or modification of Net Qualifying Capacity as the value used to measure the qualifying capacity of the Facility, including any replacement with a value such as unforced capacity, or the utilization of any successor value as a supplemental means of measuring the qualifying value of the Facility along with Net Qualifying Capacity, or (iv) a change in electric system conditions beyond the control of Seller that causes the application of the CAISO’s existing deliverability methodology to effect the Net Qualifying Capacity of the Storage Facility (each an “NQC Reduction”), then the NQC Reduction shall be added to the then current Net Qualifying Capacity of the Facility able to be shown on Buyer’s monthly or annual RA Plan to the CAISO and CPUC and counted as Resource Adequacy for System RA, and, if applicable, Local RA, and the total shall be used as the value in subsection (ii) in the calculation of any RA Shortfall (i.e., the value set forth in 3.8(a)(ii)).
3.9 Intentionally omitted.
3.10 Intentionally omitted.
3.11 Intentionally omitted.
3.12 Intentionally omitted.
3.13 Compliance Expenditure Cap. If a Change in Law occurring after the Effective Date has increased Seller’s cost to comply with Seller’s obligations under this Agreement that are made subject to this Section 3.13, including with respect to obtaining, maintaining, conveying or effectuating Buyer’s use of Capacity Attributes, then the Parties agree that the maximum aggregate amount of costs and expenses Seller shall be required to bear during the Contract Term to comply with all of such obligations shall be capped at
(“Compliance Expenditure Cap”).
(a) Any actions required for Seller to comply with its obligations set forth in the first paragraph above, the cost of which will be included in the Compliance Expenditure Cap, shall be referred to collectively as the “Compliance Actions.” (b) If Seller reasonably anticipates the need to incur costs and expenses in excess of the Compliance Expenditure Cap in order to take any Compliance Action Seller shall provide Notice to Buyer of such anticipated cost and expenses. (c) Buyer will have sixty (60) days to evaluate such Notice (during which time period Seller is not obligated to take any Compliance Actions described in the Notice) and shall, within such time, either (1) agree to reimburse Seller for all or some portion of the costs and expenses that exceed the Compliance Expenditure Cap (such Buyer-agreed upon costs, the 31 “Accepted Compliance Costs”), or (2) waive Seller’s obligation to take such Compliance Actions, or any part thereof for which Buyer has not agreed to reimburse Seller. If Buyer does not respond to a Notice given by Seller under this Section 3.13 within sixty (60) days after Buyer’s receipt of same, or if Buyer does not pay the costs and expenses in excess of the Compliance Expenditure Cap, Buyer shall be deemed to have waived its rights to require Seller to take the Compliance Actions that are the subject of the Notice, and Seller shall have no further obligation to take, and no liability or obligation under this Agreement for any failure to take, such Compliance Actions until such time as Buyer agrees to pay such Accepted Compliance Costs. (d) If Buyer agrees to reimburse Seller for the Accepted Compliance Costs, then Seller shall take the Compliance Actions covered by the Accepted Compliance Costs as agreed upon by the Parties and Buyer shall reimburse Seller for Seller’s actual costs and expenses to effect the Compliance Actions, not to exceed the Accepted Compliance Costs, within sixty (60) days from the time that Buyer receives an invoice and documentation of such costs and expenses from Seller.
(e) If a Change in Law prevents Seller from complying with its obligations under this Agreement with respect to obtaining, maintaining, conveying or effectuating Buyer’s use of (as applicable) any Product pursuant to Sections 3.1, 3.4, 3.7, or 3.8, and it is not possible to overcome the Change in Law through Compliance Actions or the expenditure of money, then (i) Seller shall provide Notice to Buyer of such Change in Law and the consequences for Seller’s performance hereunder, and (ii) Seller shall be excused from the affected compliance and delivery obligations hereunder to the extent arising from the Change in Law (including, if applicable, the obligation to pay RA Deficiency Amounts with respect to RA Shortfalls). (f) For avoidance of doubt, Buyer shall continue to pay Seller under this Agreement without any reduction in revenues that otherwise would result from any such Change in Law.
3.14 Project Configuration. In order to optimize the benefits of the Facility, Buyer and Seller each agree that if requested by the other Party, then Buyer and Seller will discuss in good faith potential reconfiguration of the Facility or Interconnection Facilities; provided that neither Party shall be obligated to agree to any changes under this Agreement, or to incur any expense in connection with such changes, except under terms mutually acceptable to both Parties (and Seller’s Lenders, to the extent applicable) as set forth in a written agreement.
ARTICLE 4
OBLIGATIONS AND DELIVERIES
4.1 Delivery.
(a) Energy. Subject to the provisions of this Agreement, commencing on the Commercial Operation Date through the end of the Delivery Term, Seller shall supply and deliver the Product to Buyer at the Delivery Point, and Buyer shall take delivery of such Product at the Delivery Point in accordance with the terms of this Agreement. Seller shall be responsible for paying or satisfying when due any costs or charges imposed in connection with the delivery of Facility Energy to the Delivery Point, including any operation and maintenance charges imposed 32 by the Transmission Provider directly relating to the Facility’s operations. Buyer shall be responsible for all costs, charges and penalties, if any, imposed in connection with the delivery of Facility Energy at and after the Delivery Point, including without limitation transmission costs and transmission line losses and RTD Imbalance Energy charges except as otherwise set forth in this Agreement. The Charging Energy and Discharging Energy will be scheduled with the CAISO by Seller (or Seller’s designated Scheduling Coordinator) in accordance with Section 4.3 and Exhibit D.
(b) Intentionally omitted.
(c) Energy Products. If, at any time during the Contract Term, Buyer requests Seller to provide any new or different Energy-related products or Ancillary Services that may become recognized from time to time in the CAISO market and that are not expressly listed in Exhibit Q (including, for example, reactive power), and Seller is able to provide any such product from the Facility without material adverse effect (including any obligation to incur more than de minimis costs or liabilities) on Seller or the Facility or Seller’s obligations or liabilities under this Agreement, then Seller shall use commercially reasonable efforts to coordinate with Buyer to provide such product. If provision of any such new product would have a material adverse effect (including any obligation to incur more than de minimis costs or liabilities) on Seller or the Facility or Seller’s obligations or liabilities under this Agreement, then Seller shall be obligated to provide such product only if the Parties first execute an amendment to this Agreement with respect to such product that is mutually acceptable to both Parties.
(d) Intentionally omitted.
4.2 Title and Risk of Loss.
(a) Energy. During the Delivery Term, title to and risk of loss related to the Facility Energy, shall pass and transfer from Seller to Buyer at the Delivery Point. Seller warrants that all Product delivered to Buyer is free and clear of all liens, security interests, claims and encumbrances of any kind.
(b) Intentionally omitted.
4.3 Scheduling, Forecasts, and Outages.
(a) Scheduling Coordinator Services.
(i) Seller, at its sole cost, shall provide (or cause to be provided) all required Scheduling Coordinator services for the Facility. (ii) Each Party shall use commercially reasonable efforts as necessary to facilitate the other Party’s efforts to meet its obligations under applicable CAISO, PTO, FERC, CEC, or other Governmental Authority requirements. (iii) Intentionally omitted.
(b) Managed Instructions.
33 (i) Managed Instructions. No later than six (6) months prior to the Expected Commercial Operation Date of the Facility, Seller shall provide Buyer with proposed instructions for bidding, scheduling, and operation of the Facility, including charging and discharging of the Storage Facility (the “Managed Instructions”). In accordance with this Section 4.3.(b) and Exhibit D, and no later than thirty (30) days prior to the Expected Commercial Operation Date of the Facility, Buyer shall issue initial Managed Instructions to Seller. The Managed Instructions shall be consistent with this Agreement, including but not limited to the Operating Restrictions and Seller’s obligations under the CAISO Tariff and Law, including compliance with the Availability Standard. Buyer and Seller acknowledge that this Agreement was adapted from a previously negotiated agreement that included both solar and storage, and that to the extent either Party identifies any error or inconsistency in this Agreement related to the fact that this Agreement only provides for battery storage, including this Section 4.3 and Exhibit D and Exhibit U, the Parties will work together in good faith to clarify same no later than the adoption of the Managed Instructions. (ii) Buyer may issue revised Managed Instructions to Seller at any time during the Delivery Term. Seller may object to the revised Managed Instructions in part or in whole if the Managed Instructions are not consistent with this Agreement, Operating Restrictions, Seller’s obligations under the CAISO Tariff, or Law. If Seller does not object within three (3) Business Days of receipt of the Managed Instructions, the Managed Instructions shall be deemed accepted, and Seller shall comply with the revised Managed Instructions. If Seller disputes the Managed Instructions, Seller shall continue to follow the prior Managed Instructions. Seller may propose reasonable changes to the Managed Instructions at any time and Buyer shall respond in a timely manner provided that Buyer shall not be required to make any change that would have an adverse impact on Buyer’s use of Product in compliance with all applicable Laws including without limitation the CAISO Tariff and in compliance with all other provisions of this Agreement including without limitation the Operating Restrictions set forth in Exhibit Q. The Parties shall cooperate in good faith to reach agreement in a timely manner on changes to the revised Managed Instructions. (iii) Intentionally omitted.
(iv) Intentionally omitted.
(c) Intentionally omitted.
(d) Intentionally omitted.
(e) CAISO Costs and Revenues.
(i) Seller shall be responsible for:
(A) Fifty percent (50%) of any Uninstructed Imbalance Energy charges (for avoidance of doubt, Buyer shall be responsible for the other fifty percent (50%) of any Uninstructed Imbalance Energy charges) and one-hundred percent (100%) of any other CAISO charges, costs, and penalties resulting from (1) the unavailability of the Facility, (2) Seller’s failure to notify 34 CAISO of outages in a timely manner (in accordance with the CAISO Tariff and as set forth herein), (3) any other failure by Seller to abide by the CAISO Tariff, this Agreement, or with any Dispatch Instruction or Curtailment Order, or the Forced Outages notice provision in Section 4.6(b), and (4) penalties related to non-performance with respect to Ancillary Services and Residual Unit Commitment awards due to conditions within Seller’s control. Notwithstanding the foregoing, Buyer shall be responsible for all costs, charges, expenses, penalties, and obligations under the Availability Standard due to any acts or omissions of Buyer as Scheduling Coordinator, if applicable (i.e., to the extent if the Agreement were to be amended to change the Scheduling Coordinator from Seller to Buyer), that are not in accordance with this Agreement and the CAISO Tariff.
(B) If during the Delivery Term, the CAISO implements or has implemented any sanction or penalty related to scheduling, outage reporting, or generator operation, and any such sanctions or penalties are imposed upon Seller or the Facility due to the actions or inactions of Seller, the cost of the sanctions or penalties shall be Seller’s responsibility.
(C) Seller shall be responsible for all CAISO fees, charges, and penalties imposed as a result of deviations between RTD Scheduled Energy and Facility Energy during any Settlement Interval due solely to real-time uninstructed Energy, except for those charges caused by Buyer.
(D) Subject to the foregoing (A) – (C), Seller shall pass through to Buyer all CAISO costs and revenues associated with the
Facility, which shall be reflected as a credit on the monthly invoices provided to Buyer in accordance with the invoicing and payment provisions of Article 8, including the netting provisions of Section 8.6.
(ii) Buyer shall receive all CAISO net revenues, credits, and other payments (such as Bid Cost Recovery) associated with the Facility for each Settlement Period and shall be responsible for all other CAISO costs, fees, and charges, but excluding (1) any Availability Incentive Payments (as defined in the CAISO Tariff) which are for the benefit of the Seller and for Seller’s account and any Non-Availability Charges (as defined in the CAISO Tariff) which are the responsibility of the Seller and for Seller’s account (except as set forth in the following sentence), (2) those set forth in Section 4.3(e)(i) (“Net Buyer CAISO Settlements”), and (3) as identified in Exhibit U. Any Non-Availability Charges which are not due to Seller’s failure to satisfy the obligations of this Agreement will be the responsibility of Buyer.
35 (iii) Exhibit U sets forth an initial allocation of responsibility for Charge Codes consistent with this Section 4.3(e). Following the Effective Date, the Parties shall cooperate to prepare and mutually agree upon a written protocol (the “Net Buyer CAISO Settlements Protocol”) to set forth appropriate administrative details to carry out the calculation and allocation of CAISO costs and CAISO revenues described in this Section
4.3(e). In the event that the Charge Codes agreed to by the Parties in the Net Buyer CAISO Settlements Protocol are amended or deleted or new CAISO charges, costs, revenues, penalties, or fees are implemented, Seller in its role as SC shall promptly notify Buyer and the Parties shall mutually agree upon adjustments to the Net Buyer CAISO Settlements Protocol as necessary to allocate the new or amended CAISO costs and revenues in a manner that is consistent with the intent of this Section 4.3(e).
(f) Intentionally omitted.
(g) CAISO Charges. Each Party shall use commercially reasonable efforts to cooperate with the other Party to allow that Party to comply with any obligations, and minimize any potential liability, it may have under the CAISO Tariff in relation to Product under this Agreement.
(h) Intentionally omitted.
(i) Intentionally omitted.
(j) Reserved.
(k) Reserved.
(l) Curtailment. Seller shall reduce delivery amounts as directed by the Reliability Coordinator, CAISO, PTO, or any successor thereto pursuant to a Curtailment Order.
4.4 Dispatch Down/Curtailment.
(a) General. Seller agrees to reduce the amount of Discharging Energy produced by the Facility, by the amount and for the period set forth in any Curtailment Order; provided, Seller is not required to reduce such amount to the extent the reduction is or would be inconsistent with the limitations of the Facility set out in the Operating Restrictions. In the event the Facility is curtailed: (i) due to a System Emergency or any Force Majeure Event, Seller shall not be liable for failure to deliver such curtailed Energy; and (ii) by the CAISO or the Transmission Owner, Seller shall not be liable for failure to deliver such curtailed Energy. (b) Intentionally omitted.
(c) Failure to Comply. If Seller fails to comply with a Curtailment Order, then, for each MWh of Facility Energy that is delivered by the Facility to the Delivery Point in contradiction of the Curtailment Order, Seller shall pay Buyer for each such MWh at an amount equal to the sum of (A) + (B) + (C), where: (A) is the amount, if any, actually paid to Seller by Buyer for delivery of such excess MWh and (B) is the sum, for all Settlement Intervals with a Negative LMP during the period of such Curtailment Order, of the absolute value of the product 36 of such excess MWh in each Settlement Interval and the Negative LMP for such Settlement Interval, and (C) is any penalties assessed by the CAISO or other charges assessed by the CAISO resulting from Seller’s failure to comply with the Curtailment Order. (d) Seller Equipment Required for Operating Instruction Communications.
Seller shall acquire, install, and maintain such facilities, communications links and other equipment, and implement such protocols and practices, as necessary to respond to and follow operating instructions from the CAISO and Buyer, including an electronic signal conveying real time and intra-day instructions, to operate the Facility as directed by Buyer from time to time in accordance with this Agreement and/or a Governmental Authority, including to implement a Curtailment Order in accordance with the then-current methodology used to transmit such instructions as it may change from time to time. If at any time during the Delivery Term, Seller’s facilities, communications links or other equipment, protocols or practices are not in compliance with then-current methodologies, Seller shall take the steps necessary to become compliant as soon as reasonably possible. Seller shall be liable pursuant to Section 4.4(c) for failure to comply with a Curtailment Order, during the time that Seller’s facilities, communications links or other equipment, protocols or practices are not in compliance with then-current methodologies. For the avoidance of doubt, a Curtailment Order communication via such systems and facilities shall have the same force and effect on Seller as any other form of communication.
4.5 Charging and Discharging Energy. The provisions of this Section 4.5 shall apply commencing on the Commercial Operation Date.
(a) Charging Generally. Upon receipt of a valid Charging Instruction, Seller shall take any and all action necessary to deliver the energy from the CAISO Grid to be used as Charging Energy to the Storage Facility in order to deliver the Product in accordance with the terms of this Agreement, including maintenance, repair or replacement of equipment in Seller’s possession or control used to deliver the Charging Energy from the Delivery Point to the Storage Facility. Except as otherwise expressly set forth in this Agreement, Buyer shall be responsible for all costs, charges and penalties, if any, imposed in connection with the delivery of energy from the CAISO Grid to the Delivery Point to be used as Charging Energy (including the cost of the energy from the CAISO Grid to be used as Charging Energy itself). (b) Charging Instructions. Subject to compliance with the CAISO Tariff and other applicable Laws, Operating Restrictions, and the Applicable Instructions in Exhibit D, Buyer will have the right to charge the Storage Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), by causing Charging Instructions to be issued, subject to the requirements and limitations set forth in this Agreement, including the Operating Restrictions.
Each Charging Instruction issued in accordance with this Agreement will be effective unless and until Buyer, through the Applicable Instructions, or the CAISO modifies such Charging Instruction by providing Seller with an updated Charging Instruction. (c) No Unauthorized Charging. Subject to the Applicable Instructions in Exhibit D, Seller shall not charge the Storage Facility during the Delivery Term other than pursuant to a valid Charging Instruction (it being understood that Seller may adjust a Charging Instruction to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility maintenance or a Storage Capacity Test), or pursuant 37 to a notice from the CAISO, Transmission Provider or Governmental Authority. If, during the Delivery Term, Seller charges the Storage Facility (i) to a Stored Energy Level greater than the Stored Energy Level provided for in a Charging Instruction, or (ii) in violation of the first sentence of this Section 4.5(c), then (x) Seller shall pay Buyer the cost of such Energy associated with such charging of the Storage Facility, and (y) Buyer shall be entitled to discharge such Energy and entitled to all of the CAISO revenues and benefits (including Product) associated with such discharge.
(d) No Unauthorized Discharging. Seller shall not discharge the Storage Facility during the Delivery Term other than pursuant to a valid Discharging Instruction (it being understood that Seller may adjust a Discharging Instruction to the extent necessary to maintain compliance with the Operating Restrictions), or in connection with a Seller Initiated Test (including Facility maintenance or a Storage Capacity Test), or pursuant to a notice from the CAISO, Transmission Provider or Governmental Authority. Through the Applicable Instructions, Buyer will have the right to discharge the Storage Facility seven (7) days per week and twenty-four (24) hours per day (including holidays), subject to the requirements and limitations set forth in this Agreement.
(e) Curtailments. Notwithstanding anything in this Agreement to the contrary, during any Settlement Interval, Curtailment Orders applicable to such Settlement Interval shall have priority over any Charging Instructions or Discharging Instructions applicable to such Settlement Interval, and Seller shall have no liability for violation of this Section 4.5(c) or any Charging Instruction or Discharging Instruction if and to the extent such violation is caused by Seller’s compliance with any Curtailment Order or other instruction or direction from Buyer or a Governmental Authority or the Transmission Provider.
(f) Unauthorized Charges and Discharges. If Seller or any third party charges, discharges or otherwise uses the Storage Facility other than as permitted hereunder or as expressly addressed in Section 4.5(g), Seller shall hold Buyer harmless from, and indemnify Buyer against, all actual costs or losses associated therewith, and be responsible to Buyer for any damages arising therefrom.
(g) CAISO Dispatches. During the Delivery Term, CAISO Dispatches that are not the result of Applicable Instructions shall have priority over any Charging Instruction or Discharging Instruction that are the result of Applicable Instructions, and Seller shall have no liability for violation of this Section 4.5(c) or any Charging Instructions or Discharging Instruction if and to the extent such violation is caused by Seller’s compliance with any CAISO Dispatch.
During any time interval during the Delivery Term in which the Storage Facility is capable of responding to a CAISO Dispatch, but the Storage Facility deviates from a CAISO Dispatch, Seller shall be responsible for one hundred percent (100%) of Uninstructed Imbalance Energy charges and penalties resulting from such deviation; provided, however, that such deviation is not due to incorrect information received from the CAISO or if Seller’s compliance with any CAISO Dispatch is otherwise inconsistent with the Operating Restrictions or the Master File. To the extent the Storage Facility is unable to respond to Automated Dispatch Signals during any Calculation Interval, then the exclusive remedies shall be as set forth in Section 4.3(e)(A) and such Calculation Interval shall be deemed UNAVAILHRSy as such term is defined in Exhibit P. 38 (h) Pre-Commercial Operation Date Period Use and Charging and Discharging.
Prior to the Commercial Operation Date, Buyer shall have no rights to issue or cause to be issued Charging Instructions or Discharging Instructions, and Seller shall have exclusive rights to charge and discharge the Storage Facility; provided, prior to the Commercial Operation Date Seller shall only charge and discharge the Storage Facility in connection with installation, commissioning and testing of the Storage Facility and Seller shall be entitled to all CAISO revenues and other amounts paid by CAISO. Prior to the Commercial Operation Date, Seller shall be responsible for all costs, charges and penalties, if any, imposed in connection with the delivery of energy from the CAISO Grid to be used as Charging Energy (including the cost of the energy from the CAISO Grid to be used as Charging Energy itself). Upon the Commercial Operation Date, Buyer shall have exclusive rights to issue or cause to be issued Charging Instructions or Discharging Instructions, and shall use commercially reasonable efforts to assist Seller’s efforts to complete any post-Commercial Operation Date installation, commissioning and testing activities of the Storage Facility.
(i) Station Use. Seller is responsible for providing and all Energy to serve Station Use (including paying the cost of any Energy procured and used to serve Station Use except for Energy that originates as Charging Energy that serves the Storage Facility solely when it is charging or discharging, and is included in the Efficiency Rate). The supply of Station Use from the Storage Facility that is accomplished in accordance with the applicable tariff of the local utility providing retail service to the Site shall not be deemed a violation of this Agreement, including Sections 4.5(c), (d), and (f); provided that Station Use may not be supplied from the Facility during idle periods when the Storage Facility is not charging or discharging. In no event will Buyer pay for any Energy that is supplied for Station Use except for Energy that originates as Charging Energy that serves the Storage Facility solely when it is charging or discharging, and is included in the Efficiency Rate..
4.6 Reduction in Energy Delivery Obligation.
(a) Facility Maintenance.
(i) Seller shall provide to Buyer written schedules for Planned Outages by September 15th of each Contract Year for the following Contract Year or no later than thirty (30) days prior to the date set forth by the CAISO pursuant to CAISO Tariff section 9.3.6.2, or its successor. Buyer may provide comments no later than twenty (20) days after receiving any such schedule, and Seller shall in good faith take into account any such comments. Seller shall deliver to Buyer the final updated schedule of Planned Outages no later than ten (10) days after receiving Buyer’s comments. Seller shall be permitted to reduce deliveries of Product during any period of such Planned Outages.
(ii) If reasonably required in accordance with Prudent Operating Practices, Seller may perform maintenance at a different time than maintenance scheduled pursuant to Section 4.6(a)(i) or by providing at least ten (10) days’ notice subject to consent by Buyer not to be unreasonably withheld, conditioned or delayed. Seller shall provide Notice to Buyer within the time period determined by the CAISO for the Storage Facility, as a Resource Adequacy Resource that is subject to the Availability Standard, to qualify for an “Approved 39 Maintenance Outage” under the CAISO Tariff (or such shorter period as may be reasonably acceptable to Buyer based on the likelihood of dispatch by Buyer). (iii) Seller shall not during the months of June through October inclusive schedule any non-emergency maintenance unless (A) such outage is required to avoid damage to the Facility, (B) such maintenance is necessary to maintain equipment warranties and cannot be scheduled outside the months of June through October, (C) such outage is required in accordance with Prudent Operating Practices, (D) the Parties agree otherwise in writing or if none of (A) – (D) apply, than (E) Seller shall be permitted to perform non-emergency maintenance, however, Seller shall be responsible for any direct damages actually incurred by Buyer that are not duplicative of any other damages/amounts payable to Buyer under this Agreement including without limitation RA Shortfall and Availability Adjustment amounts. Section 4.6 shall not apply to Short-Notice Opportunity RA Outages approved by the CAISO.
(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) System Emergencies and other Interconnection Events. Seller shall be permitted to reduce deliveries of Product during any period of System Emergency, Transmission System Outage, or upon notice of a Curtailment Order pursuant to the terms of this Agreement, the Interconnection Agreement or applicable tariff.
(d) Force Majeure Event. Seller shall be permitted to reduce deliveries of Product during any Force Majeure Event to the extent such Force Majeure Event requires or results in such reduction.
(e) Health and Safety. Seller shall be permitted to reduce deliveries of Product as necessary to maintain health and safety pursuant to Section 6.2.
4.7 Intentionally omitted.
4.8 Storage Availability and Efficiency.
(a) During the Delivery Term, the Storage Facility shall maintain an Annual Storage Availability of no less than (the “Guaranteed Storage Availability”), which Annual Storage Availability shall be calculated in accordance with Exhibit P. If Seller fails to achieve the Guaranteed Storage Availability, then Buyer’s payment for the Product for such Contract Year shall be calculated by reference to the Availability Adjustment (as determined in accordance with Exhibit P with such determination to be made within thirty (30) days of the end of the prior Contract Year), which, except as set forth in Section 11.1(b)(iv), shall be Buyer’s sole and exclusive remedy in connection with Seller’s failure to meet the Guaranteed Storage Availability.
(b) If during any month during the Delivery Term, the Efficiency Rate for such month is less than the Guaranteed Efficiency Rate, Seller shall owe liquidated damages to Buyer, as calculated pursuant to Section (b)(6) of Exhibit C. Payment of such liquidated damages shall 40 be Buyer’s sole and exclusive remedy for an Efficiency Rate that is less than the Guaranteed Efficiency Rate.
4.9 Storage Facility Testing.
(a) Storage Capacity Tests. Prior to the Commercial Operation Date, Seller shall schedule and complete a Commercial Operation Storage Capacity Test in accordance with Exhibit O. Thereafter, Seller and Buyer shall have the right to run additional Storage Capacity Tests in accordance with Exhibit O.
(i) Buyer shall have the right to send one or more representative(s) to witness all Storage Capacity Tests.
(ii) Following each Storage Capacity Test, Seller shall submit a testing report in accordance with Exhibit O. If the actual capacity determined pursuant to a Storage Capacity Test varies from the then-current Effective Storage Capacity then the actual capacity determined pursuant to such Storage Capacity Test shall become the new Effective Storage Capacity at the beginning of the day following the completion of the test for all purposes under this Agreement.
(b) Additional Testing. Seller shall, at times and for durations reasonably agreed to by Buyer, conduct necessary testing to ensure the Storage Facility is functioning properly and the Storage Facility is able to respond to Buyer or CAISO Dispatches. (c) Buyer or Seller Initiated Tests. Any testing of the Storage Facility requested by Buyer after the Commercial Operation Storage Capacity Tests and all required annual tests pursuant to Section B of Exhibit O shall be deemed Buyer-instructed dispatches of the Facility (“Buyer Dispatched Test”). Any test of the Storage Facility that is not a Buyer Dispatched Test (including all tests conducted prior to Commercial Operation, any Commercial Operation Storage Capacity Tests, any Storage Capacity Test conducted if the Effective Storage Capacity immediately prior to such Storage Capacity Test is
, any test required by CAISO (including any test required to obtain or maintain CAISO Certification), and other Seller-requested discretionary tests or dispatches, at times and for durations reasonably agreed to by Buyer, that Seller deems necessary for purposes of reliably operating or maintaining the Storage Facility (including for avoidance of doubt rebalancing inverters) or for re-performing a required test within a reasonable number of days of the initial required test (considering the circumstances that led to the need for a retest)) shall be deemed a “Seller Initiated Test”.
(iii) For any Seller Initiated Test, other than Storage Capacity Tests required by Exhibit O for which there is a stated notice requirement, Seller shall notify Buyer no later than twenty-four (24) hours prior thereto (or any shorter period reasonably acceptable to Buyer consistent with Prudent Operating Practices); provided, however, when these requests occur during Off-Peak Hours, notice by Seller to Buyer is reduced to seventy-five (75) minutes and Buyer’s cooperation for Seller to perform such tests shall not be unreasonably withheld. (iv) No Charging Instructions or Discharging Instructions shall be issued during any Seller Initiated Test or Buyer Dispatched Test except as reasonably requested by Seller 41 or Buyer to implement the applicable test. Periods during which Buyer Dispatched Tests render the Storage Facility (or any portion thereof, as applicable) unavailable shall be excluded for purposes of calculating the Annual Storage Capacity Availability. The Storage Facility will be deemed unavailable during any Seller Initiated Test, and Buyer shall not dispatch or otherwise schedule the Storage Facility during such Seller Initiated Test. (d) Testing Costs and Revenues.
(i) For all Buyer Dispatched Tests, Buyer shall direct only Charging Energy to be used to charge the Storage Facility and Buyer shall be entitled to all CAISO revenues associated with a Storage Facility discharge during a Buyer Dispatched Test. For all Seller Initiated Tests, (1) Seller shall reimburse Buyer the amount of Buyer’s payment of the Charging Energy for such Seller Initiated Test, and (2) Seller shall be entitled to all CAISO revenues associated with the discharge of such Energy. Seller shall retain, in the month following Seller’s receipt of such CAISO revenues and otherwise in accordance with Exhibit C, all applicable CAISO revenues received by Seller and associated with the discharge Energy associated with such Seller Initiated Test.
(ii) Buyer shall be responsible for all costs, expenses and fees payable or reimbursable to its representative(s) witnessing any Facility test. (iii) Except as set forth in Sections 4.10(d)(i) and (ii), all other costs of any testing of the Storage Facility shall be borne by Seller. Any such representative(s) of Buyer shall adhere to the safety and security procedures of Seller, which shall be provided by Seller to Buyer in writing. Buyer shall indemnify and hold Seller harmless for any losses or claims for personal injury, death or property damage to the Facility or Site solely to the extent caused by Buyer, its authorized agents, employees, and inspectors, during any such access.
4.10 Intentionally omitted.
ARTICLE 5
TAXES
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 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 to evidence such exemption or exclusion within thirty (30) days after the date Buyer makes such claim. Buyer shall indemnify, defend, and hold Seller harmless from any liability with respect to Taxes for which Buyer is responsible hereunder and from which Buyer claims it is exempt. 42 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, 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.
ARTICLE 6
MAINTENANCE OF THE FACILITY
6.1 Maintenance of the Facility. Seller shall, as between Seller and Buyer, be solely responsible for the operation and maintenance of the Facility and the delivery of the Product and shall comply with Law and Prudent Operating Practice relating to the operation and maintenance of the Facility and the sale of Product.
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, reasonable action to prevent such damage or injury and shall give Buyer’s emergency contact identified in Exhibit N Notice of such condition. Such action may include disconnecting and removing all or a portion of the Facility, or suspending the supply of Facility Energy to the Delivery Point.
6.3 Dedicated Interconnection Capacity. Seller shall ensure that throughout the Delivery Term that: (a) subject to Section 6.4, the Facility will have rights under an Interconnection Agreement providing for interconnection capacity available or allocable to the Facility that is no less than the Interconnection Capacity Limit; and (b) subject to Section 6.4, Seller shall have sufficient interconnection capacity and rights under such Interconnection Agreement to interconnect the Facility with the CAISO-Controlled Grid, to fulfill Seller’s obligations under the Agreement, including with respect to Resource Adequacy, and to allow dispatch of the Facility to be fully reflected in the CAISO’s market optimization in accordance with the Applicable Instructions and not result in CAISO market awards that are not physically feasible (collectively, the “Dedicated Interconnection Capacity”). For avoidance of doubt, the Dedicated Interconnection Capacity shall not exceed the Interconnection Capacity Limit. Seller shall hold Buyer harmless from any penalties, RTD Imbalance Energy charges, or other costs from CAISO or under the Agreement resulting from Seller’s inability to provide, or any third party use of, the Dedicated Interconnection Capacity.
6.4 Shared Facilities. The Parties acknowledge and agree that certain of the Shared Facilities and Interconnection Facilities, and Seller’s rights and obligations under the Interconnection Agreement, may be subject to certain shared facilities and/or co-tenancy agreements to be entered into among Seller, the Transmission Provider, Seller’s Affiliates, and/or third parties pursuant to which certain Interconnection Facilities may be subject to joint ownership and shared maintenance and operation arrangements, including through shared ownership of an Affiliate or other entity that is the party to and interconnection customer under the Interconnection Agreement; provided, such agreements shall (a) permit Seller to perform or satisfy, and shall not 43 purport to limit, its obligations hereunder, and (b) provide for separate metering of the Facility.
ARTICLE 7
METERING
7.1 Metering.
(a) Seller shall measure the Charging Energy and the Discharging Energy using the Storage Facility Meter(s). Seller shall separately meter all Station Use for the Storage Facility using the Storage Facility Meter during periods when the Storage Facility is idle. All meters will be operated pursuant to applicable CAISO-approved calculation methodologies and maintained as Seller’s cost. If Seller elects to submit a SQMD Plan for the Facility, then all Facility Meters will be programmed, operated and maintained pursuant to the applicable CAISO-approved SQMD Plan for the Facility at Seller’s sole cost, throughout the period to which the SQMD Plan applies. Seller shall promptly provide to Buyer a copy of any CAISO-approved SQMD Plan and any modifications thereto and notice of any termination or withdrawal thereof. Subject to meeting any applicable CAISO requirements, the meters shall be programmed to adjust for all losses from such meter to the Delivery Point in a manner subject to Buyer’s prior written approval, not to be unreasonably withheld. Metering will be consistent with the Metering Diagram set forth as Exhibit R, as may be revised to be consistent with any CAISO-approved Plan. Each meter shall be kept under seal, such seals to be broken only when the meters are to be tested, adjusted, modified or relocated. In the event Seller breaks a seal, Seller shall notify Buyer as soon as practicable. In addition, Seller hereby agrees to provide all meter data to Buyer in a form reasonably acceptable to Buyer, and consents to Buyer obtaining from CAISO the CAISO meter data directly relating to the Facility and all inspection, testing and calibration data and reports, to the extent such meter data and related meters are not the subject of a CAISO-approved SQMD Plan for the Facility.
Seller, any Seller designated SC, and Buyer, shall cooperate to allow both Parties to retrieve the meter reads from the CAISO Operational Meter Analysis and Reporting (OMAR) web or the CAISO Market Results Interface – Settlements (MRI-S) (or their successors) and/or directly from the CAISO meter(s) at the Facility, to the extent such meter data and related meters are not the subject of a CAISO-approved SQMD Plan for the Facility. (b) Section 7.1(a) is based on the Parties’ mutual understanding as of the Effective Date that (i) the CAISO requires the configuration of the Facility to include, as the sole meters for the Facility and the Storage Facility Meter, (ii) the CAISO requires the Storage Facility Meter to be programmed for Electrical Losses as set forth in the definition of Electrical Losses in this Agreement, and (iii) the automatic adjustments to Charging Instructions and Discharging Instructions as set forth in the definitions of Charging Instruction and Discharging Instruction in this Agreement will not result in Seller violating, or incurring any costs, penalties or charges under, the CAISO Tariff. If any of the foregoing mutual understandings in (i), (ii), or (iii) between the Parties become incorrect during the Delivery Term, the Parties shall cooperate in good faith to make any amendments and modifications to the Facility and this Agreement as are reasonably necessary to conform this Agreement to the CAISO Tariff and avoid, to the maximum extent practicable, any CAISO charges, costs or penalties that may be imposed on either Party due to non-conformance with the CAISO Tariff, such agreement not to be unreasonably delayed, conditioned or withheld.
44 7.2 Meter Verification. Annually, if Seller has reason to believe there may be a meter malfunction, or upon Buyer’s reasonable request, Seller shall test the applicable 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. If a meter is inaccurate by more than one percent (1%) and it is not known when the meter inaccuracy commenced (if such evidence exists such date will be used to adjust prior invoices), then the invoices covering the period of time since the last meter test shall be adjusted for the amount of the inaccuracy on the assumption that the inaccuracy persisted during one-half of such period so long as such adjustments are accepted by CAISO; provided, such period may not exceed twelve (12) months.
ARTICLE 8
INVOICING AND PAYMENT; CREDIT
8.1 Invoicing.
(a) Seller shall use commercially reasonable efforts to deliver an invoice to Buyer no later than the tenth (10th) day of each month for the previous calendar month for all Product amounts. Each invoice shall: (a) reflect records of metered data, including CAISO metering and transaction data sufficient to document and verify the amount of Product delivered by the Facility for any Settlement Period during the preceding month, and for other amounts due to or from Seller hereunder as set forth in Exhibit C; and (b) be in a format reasonably acceptable to Buyer, covering the Product provided in the preceding month determined in accordance with the applicable provisions of this Agreement.
8.2 Payment. Buyer shall make payment to Seller for the Product and for any other amounts due to Seller hereunder as set forth in Exhibit C 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; provided, however, that changes to invoice, payment, wire transfer and other banking information must be made in writing and delivered via certified mail or next-Business Day delivery by reputable courier service and shall include contact information for an authorized person who is available by telephone to verify the authenticity of such requested changes. Buyer shall pay undisputed invoiced amounts within thirty (30) days after the invoice date; provided, 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 under this Agreement 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 an annual Interest Rate equal to the prime rate 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 (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.
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 two (2) years or as otherwise required by Law. Upon 45 fifteen (15) days’ Notice to the other Party, either Party shall be granted reasonable 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.
8.4 Payment Adjustments; Billing Errors. Payment adjustments shall be made if Buyer or Seller discovers there have been good faith inaccuracies in invoicing that are not otherwise disputed under Section 8.5 or an adjustment to an amount previously invoiced or paid is required due to a correction of data by the CAISO, or there is determined to have been a meter inaccuracy sufficient to require a payment adjustment. If the required adjustment is in favor of Buyer, Buyer’s next monthly payment shall be credited in an amount equal to the adjustment. If the required adjustment is in favor of Seller, Seller shall add the adjustment amount to Buyer’s next monthly invoice. Adjustments in favor of either Buyer or Seller shall bear interest, until settled in full, in accordance with Section 8.2, accruing from the date on which the adjusted amount should have been due.
8.5 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 8.4. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 8.5 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-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.
8.6 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 Exhibits B and P and any relevant items in Exhibit C, 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.
8.7 Seller’s Development Security. To secure its obligations under this Agreement, Seller shall deliver the Storage Development Security to Buyer within thirty (30) days after the Effective Date. Seller shall maintain the Development Security in full force and effect until the earlier of (a) Seller’s delivery of the Performance Security, or (b) sixty (60) days after termination of this Agreement, at which time Buyer shall return the Development Security to Seller, less any amounts drawn in accordance with this Agreement. Subject to this Section 8.7 and the other terms 46 of this Agreement governing Seller’s Development Security requirements, Seller may change the type and/or issuer (as applicable) of the Development Security from time to time and at any time.
For avoidance of doubt, Seller shall have no replenishment obligation with respect to the Development Security.
8.8 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 of Guaranty set forth in Exhibit S. Seller shall maintain the Performance Security in full force and effect until the following have occurred: (a) the Delivery Term has expired or terminated early; and (b) all payment obligations of Seller due and payable under this Agreement 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. Subject to this Section 8.8 and the other terms of this Agreement governing Seller’s Performance Security requirements, Seller may change the type and/or issuer (as applicable) of the Performance Security from time to time and at any time. For avoidance of doubt, Seller shall have no replenishment obligation with respect to the Performance Security.
8.9 Buyer’s Financial Statements. From the Effective Date throughout the Contract Term, unless such financial statements are available on the internet at https://www.ocpower.org/resources/key-documents/, Buyer shall provide to Seller unaudited quarterly financial statements within sixty (60) days of the end of each of Buyer’s fiscal quarters, and audited annual financial statements within one hundred fifty (150) days after the end of each of Buyer’s fiscal years. Buyer’s fiscal year is from July 1 to June 30. Buyer’s financial statements shall have been prepared in accordance with generally accepted accounting principles as adopted by the Governmental Accounting Standards Board.
8.10 Buyer’s Financial Covenants and Buyer Credit Support. (a) Within thirty (30) days after each calendar quarter, commencing with the fiscal quarter ended September 30, 2025, and for each fiscal quarter of Buyer ended thereafter for the Contract Term, Buyer shall provide Seller a statement by either Buyer’s Chief Executive Officer or Chief Financial Officer certifying that Buyer remains in compliance with, and in good standing under, Buyer’s Bank Agreements (“Buyer Bank Agreement Compliance Certificate”). The provisions of this Section 8.10(a) shall not apply for so long as Buyer maintains a Required Credit Rating or to the extent that all outstanding obligations under Bank Agreements have been paid in full and any credit facilities issued thereunder have been terminated (excluding a termination for default).
(b) Buyer shall notify Seller within five (5) Business Days of acquiring knowledge thereof, of (i) any notice of default or event of default, if not timely cured by Buyer within the applicable cure period (if any), under a Bank Agreement of which Buyer has knowledge, setting forth the details of such default or event of default and the action which Buyer has taken and proposes to take with respect thereto (any such default or event of default by Buyer under any Bank Agreement, a “Buyer Bank Agreement Default”). Buyer shall thereafter promptly provide Seller written Notice of any change in status of such Buyer Bank Agreement Default, including without limitation any cure thereof or any material change in or termination of such Buyer Bank 47 Agreement, as well as respond to any Seller inquiries with respect thereto, each within five (5) days of any such occurrence.
(c) Buyer shall meet the following financial covenants during the Contract Term (collectively, “Buyer Financial Covenants”): For each fiscal year (including for avoidance of doubt each calendar quarter within each such fiscal year), Buyer shall demonstrate to Seller that Buyer has
(d) Buyer Financial Covenants will be calculated as follows:
(i) Buyer’s “Adjusted Days of Liquidity on Hand” shall be calculated as follows:
((𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑢𝑛𝑟𝑒𝑠𝑡𝑟𝑖𝑐𝑡𝑒𝑑 𝑐𝑎𝑠ℎ 𝑎𝑛𝑑 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡𝑠) + (𝑐𝑜𝑚𝑚𝑖𝑡𝑡𝑒𝑑 𝑢𝑛𝑢𝑠𝑒𝑑 𝑏𝑎𝑛𝑘 𝑙𝑖𝑛𝑒)) ∗ 365 𝑑𝑎𝑦𝑠 𝑎𝑛𝑛𝑢𝑎𝑙 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠
(ii) Buyer’s “Equity to Assets Ratio” shall be calculated as follows:
𝑇𝑜𝑡𝑎𝑙 𝑁𝑒𝑡 𝑃𝑜𝑠𝑖𝑡𝑖𝑜𝑛 (𝐸𝑞𝑢𝑖𝑡𝑦)
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
(e) Throughout the Contract Term, subject to Section 8.10(f), beginning with Buyer audited financial statements for the fiscal year ending June 30, 2025, no later than one hundred fifty (150) days after the end of each fiscal year of Buyer and within sixty (60) days of each calendar quarter within each such fiscal year (other than the quarter ending June 30), Buyer shall determine and provide to Seller a Notice in the form attached hereto as Exhibit V (“Credit Notice”) certifying (A) Buyer’s determination of Buyer’s Adjusted Days of Liquidity on Hand and Equity to Assets Ratio as of the end of the prior fiscal year of Buyer or end of the most recent calendar quarter, as applicable, which shall be determined based on Buyer’s most recent quarterly financials for the quarters ending March 31, September 30 and December 31 or audited fiscal year end financials for the quarter ending June 30, as applicable, (B) the applicable financial statements have been prepared in accordance with GAAP and are true and correct to Buyer’s knowledge, and (C) whether Buyer is in compliance with the Buyer Financial Covenants. For avoidance of doubt, (i) for the purpose of calculating the Adjusted Days of Liquidity on Hand, annual operating expenses are for the twelve (12) months ended on such most recent quarterly or annual, as applicable, financial statement end date, and (ii) the Equity to Assets Ratio shall be calculated as of the most recent financial statement end date. To the extent not available as set forth in Section
8.9, Buyer shall include with the Credit Notice a true and correct copy of the applicable annual audited or quarterly unaudited financial statements, used in determining the Adjusted Day of Liquidity on Hand and the Equity to Assets Ratio. If Buyer does not timely provide a Credit Notice and thereafter fails to provide the Credit Notice within five (5) Business Days of a request for the Credit Notice from Seller, or fails at any time to meet any Buyer Financial Covenant in whole or in part, including if based on any Credit Notice or on Seller’s review of the audited or unaudited financial statements, then Buyer shall provide credit support to Seller in the form of a Letter of Credit (or cash if consented to in advance in a separate writing by Seller in Seller’s sole discretion) in the amount of of Guaranteed Capacity with respect to the 48 period of time from the Effective Date through Contract Year 10 and of Installed Capacity with respect to the remainder of the Delivery Term (“Buyer Credit Support”). Buyer shall deliver the required Buyer Credit Support to Seller within ten (10) Business Days after the date that the applicable Credit Notice is due, or within ten (10) Business Days after Seller’s request for Buyer Credit Support based on Seller’s review of Buyer’s audited or unaudited financial statements. Buyer shall maintain the Buyer Credit Support in full force and effect, and Buyer shall within five (5) Business Days after any draw thereon replenish the Buyer Credit Support in the event Seller collects or draws down any portion of the Buyer Credit Support for any reason permitted under this Agreement other than to satisfy a Termination Payment, until the following have occurred: (1) the Delivery Term has expired or terminated early; and (2) all payment obligations of Buyer due and payable under this Agreement, including compensation for penalties, any Termination Payment, indemnification payments, or other damages are paid in full (whether directly or indirectly such as through set-off or netting); provided, however, that if after posting the Buyer Credit Support, Buyer demonstrates compliance with all Buyer Financial Covenants, then Buyer shall no longer be required to post the Buyer Credit Support and Seller shall return the Buyer Credit Support to Buyer less any amounts drawn by Seller in accordance with this Agreement. Return of any Buyer Credit Support shall not prejudice or diminish Seller’s rights or Buyer’s obligations with respect to any subsequent failure by Buyer to demonstrate compliance with the Buyer Financial Covenants, which subsequent failure shall trigger the requirement for Buyer to repost the Buyer Credit Support in accordance with the terms of this Section 8.10(e). Following the occurrence of both of the events in subsections (1) and (2) of this Section 8.10(e) above, Seller shall promptly return to Buyer the unused portion of any Buyer Credit Support then held by Seller.
(f) The Buyer Financial Covenants and Buyer’s obligation to deliver Buyer Credit Support to Seller (i) shall not apply during any period in which Buyer maintains a Required Credit Rating, and (ii) shall apply during all periods when Buyer has not yet obtained, or no longer maintains, a Required Credit Rating. If Buyer obtains a Required Credit Rating, then Seller shall return any posted Buyer Credit Support to Buyer within fifteen (15) days following Notice thereof from Buyer. If Buyer subsequently loses or otherwise fails to maintain a Required Credit Rating, then Buyer’s obligation to meet the Buyer Financial Covenants shall apply, and if Buyer does not then meet any Buyer Financial Covenant, then Buyer shall post the Buyer Credit Support within fifteen (15) days following loss of a Required Credit Rating. (g) Intentionally omitted.
(h) Buyer agrees to establish rates and charges to its customers that are sufficient to provide revenues necessary, taking into account available reserves, to enable Buyer to pay its obligations under this Agreement and all of Buyer’s payment obligations under its other contracts for the purchase of energy and related products. (i) Buyer acknowledges and agrees that the obligations and covenants set forth in this Section 8.10 shall be subject to the default provisions of Section 11.1(a)(vii), (viii) and
11.1(c), as applicable.
8.11 Intentionally Omitted.
49 8.12 First Priority Security Interest in Cash or Cash Equivalent Collateral. To secure its obligations under this Agreement, and until released as provided herein, each Party hereby grants to the other Party 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, and Buyer Credit Support (collectively, “Party Security”) posted as cash pursuant to Sections 8.7, 8.8, 8.10 and 8.12, 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 such other Party. Each Party agrees to take all action as the other Party reasonably requires in order to perfect such other Party’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, an Early Termination Date resulting from an Event of Default, or an occasion provided for in this Agreement where a Party is authorized to retain all or a portion of the Development Security, Performance Security, or Buyer Credit Support, the Party holding the Party Security may do any one or more of the following (in each case subject to the final sentence of this Section 8.12), subject to any other limitations set forth in this Agreement):
(a) Exercise any of its rights and remedies with respect to the Party 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 such Party as Party Security; and
(c) Liquidate all Party Security then held by or for the benefit of such Party free from any claim or right of any nature whatsoever of the posting Party, including any equity or right of purchase or redemption.
The Party holding the Party Security shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce the posting Party’s obligations under this Agreement (such posting Party remains liable for any amounts owing to the Party holding the Party Security after such application, subject to any limitations set forth elsewhere in this Agreement), subject to the obligation of the Party holding the Party Security to return any surplus proceeds remaining after such 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 in 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 as follows: (a) if sent by a reputable courier service for next Business Day delivery with delivery fees either prepaid or an arrangement with such courier service made for the payment of such fees, the next Business Day after the same is delivered by the sending Party to such courier service; (b) if 50 sent by electronic communication (including electronic mail or other electronic means) at the time indicated by the time stamp upon delivery and, if after 5 pm prevailing Pacific Time, on the next Business Day, provided that notice by electronic communication will not be deemed effective until confirmed by return electronic communication from the recipient; or (c) if delivered in person, upon receipt by the receiving Party. Notwithstanding the foregoing, Notices of outages or other scheduling or dispatch information or requests, may be sent by electronic communication and shall be considered delivered upon successful completion of such transmission.
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 shall include: an act of God or the elements, such as flooding, lightning, hurricanes, tornadoes, or ice storms; explosion; fire; volcanic eruption; flood; epidemic; pandemic (including COVID-19), landslide; mudslide; sabotage; terrorism; earthquake; or other cataclysmic events; an act of public enemy; war; blockade; civil insurrection; riot; civil disturbance; strikes or other labor difficulties caused or suffered by a Party or any third party; any temporary restraint or restriction imposed by applicable Law or any directive from a governmental authority; a material change or reimplementation of rules, regulations, or requirements after the Effective Date related to COVID-19; and a one-time failure of the final step-up transformer used by the Facility so long as it is maintained by Seller in accordance with Prudent Operating Practice. (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 Storage Rate unprofitable or otherwise uneconomic (including Buyer’s ability to buy the Product at a lower price, or Seller’s ability to sell Product at a higher price, than the Storage Rate); (ii) Seller’s inability to obtain permits or approvals of any type for the construction, operation, or maintenance of the Storage Facility; (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 that disables physical or electronic facilities necessary to transfer funds to the payee Party; (iv) a Curtailment Period, except to the extent such Curtailment Period is caused by a Force Majeure Event; (v) Seller’s inability to obtain sufficient labor, equipment, materials, or other resources to build or operate the Storage Facility except to the extent such inability is caused by a Force Majeure Event; (vi) a strike, work stoppage or labor dispute limited only to any one or more of Seller, Seller’s affiliates, Seller’s contractors, their 51 subcontractors thereof or any other third party employed by Seller to work on the Storage Facility; or (vii) any equipment failure except if such equipment failure is caused by a Force Majeure Event, and except for a one-time failure of the final step-up transformer used by the Facility so long as it is maintained by Seller in accordance with Prudent Operating Practice.
10.2 No Liability If a Force Majeure Event Occurs. Neither Seller nor Buyer shall be liable to the other Party in the event it is prevented from performing its obligations hereunder in whole or in part due to a Force Majeure Event. The Party rendered unable to fulfill any obligation by reason of a Force Majeure Event shall take reasonable actions necessary to remove such inability with due speed and diligence. The suspension of performance due to a claim of Force Majeure Event shall include any reasonable time period for mobilization/re-mobilization. The obligation to use due speed and diligence shall not be interpreted to require resolution of labor disputes by acceding to demands of the opposition when such course is inadvisable in the discretion of the Party having such difficulty. Neither Party shall be considered in breach or default of this Agreement if and to the extent that any failure or delay in the Party’s performance of one or more of its obligations hereunder is caused by a Force Majeure Event. The occurrence and continuation of a Force Majeure Event shall not suspend or excuse the obligation of a Party to make any payments due hereunder. Notwithstanding any provision in this Agreement to the contrary, the occurrence and continuation of a Force Majeure Event shall not (a) suspend or excuse the obligation of Seller to achieve the Guaranteed Commercial Operation Date beyond the extensions provided in Exhibit B, or (b) subject to Section 4 of Exhibit B and Seller’s payment of Commercial Operation Delay Damages under Section 2 of Exhibit B, limit Buyer’s right to declare an Event of Default pursuant to Section 11.1(b)(ii) and receive a Damage Payment upon exercise of Buyer’s remedies pursuant to Sections 11.2 and 11.3.
10.3 Notice. Within five (5) Business Days of commencement of a Force Majeure Event (or, if later, the date when the non-performing Party became aware of the Force Majeure Event), the non-performing Party shall provide the other Party with oral notice of the Force Majeure Event, and within two (2) weeks of the commencement of the Force Majeure Event (or, if later, the date when the non-performing Party became aware of the Force Majeure Event), the non-performing Party shall provide the other Party with Notice in the form of a letter describing in detail the particulars of the occurrence giving rise to the Force Majeure Event claim; provided, however, that a Party’s failure to give timely Notice shall not affect such Party’s ability to assert that a Force Majeure Event has occurred unless the delay in giving Notice materially prejudices the other Party.
10.4 Termination of the Agreement 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 in any material respect, and the impacted Party has claimed and received relief from performance of its obligations for a consecutive twelve (12) month period, then either Party may terminate this Agreement upon Notice to the other Party, neither Party shall have any liability to the other Party in connection with such termination, and Seller shall be entitled to return of its Performance Security and Buyer shall be entitled to return of any Buyer’s Credit Support, each as applicable. 52 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 (or such longer additional period, not to exceed an additional sixty (60) days, if such Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts); (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 except for (A) failure to provide Capacity Attributes, the exclusive remedies for which are set forth in Section 3.8, (B) failures to comply with Curtailment Orders, the exclusivity remedies for which are set forth in Section 4.4(c), (C) failures related to the Monthly Storage Capacity Availability that do not trigger the provisions of Section 11.1(b)(iv), the exclusive remedies for which are set forth in Section 4.8; (D) failures related to the Guaranteed Efficiency Rate, the exclusive remedies for which are set forth in Section (c)(6) of Exhibit C); and (E) failures related to any Uninstructed Imbalance Energy including related to CAISO Dispatches, the exclusive remedies for which are set forth in Sections 4.3(e)(A) and 4.5(g)); and any such failure is not remedied within thirty (30) days after Notice thereof (or such longer additional period, not to exceed an additional ninety (90) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30)-day period despite exercising commercially reasonable efforts);
(iv) such Party becomes Bankrupt;
(v) such Party assigns this Agreement or any of its rights hereunder other than in compliance with Article 14, if applicable; (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, other than in compliance with other provisions of this Agreement; (vii) with respect to Buyer only, failure by Buyer to satisfy the requirements of Section 8.9. or the requirements of Section 8.10; or 53 (viii) with respect to any outstanding Letter of Credit provided for the benefit of a Party that is not then required under this Agreement to be canceled or returned, the failure by such Party required to post such Letter of Credit to provide for the benefit of the other Party either (a) if Seller, (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, or (b) if Buyer, a substitute Letter of Credit from a different issuer meeting the criteria set forth in the definition of Letter of Credit (or cash if consented to in advance in a separate writing by Seller in Seller’s sole discretion), in each case, in the amount required hereunder within fifteen (15) Business Days after the Party providing the Letter of Credit 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
(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) the Party required to maintain such Letter of Credit 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 no event less than sixty (60) days prior to the expiration of the outstanding Letter of Credit. (b) with respect to Seller as the Defaulting Party, the occurrence of any of the following:
(i) Intentionally omitted;
(ii) the failure by Seller to achieve Commercial Operation within after the Guaranteed Commercial Operation Date (as may be extended pursuant to Section 4 of Exhibit B);
(iii) Intentionally omitted;
(iv) if, in any Performance Measurement Period during the Delivery Term, the average Annual Storage Availability is, in each Contract Year, less than ;
54 (v) Reserved
(vi) Intentionally omitted;
(vii) if Seller fails to maintain a Storage Capacity equal to at least of the Effective Storage Capacity for longer than
consecutive days during the Delivery Term.
(viii) failure by Seller to satisfy the collateral requirements pursuant to Sections 8.7 or 8.8 within fifteen (15) Business Days after Notice from Buyer; (ix) with respect to any Guaranty provided for the benefit of Buyer, the failure by Seller to provide for the benefit of Buyer either (1) cash or (2) a replacement Letter of Credit from an 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) if any representation or warranty made by the Guarantor in connection with this Agreement is false or misleading in any material respect when made or when deemed made or repeated;
(B) the failure of the Guarantor to make any payment required or to perform any other material covenant or obligation in any Guaranty; (C) the Guarantor becomes Bankrupt;
(D) the Guarantor shall fail to meet the criteria for an acceptable Guarantor as set forth in the definition of Guarantor;
(E) the failure of the Guaranty to be in full force and effect (other than in accordance with its terms) prior to the indefeasible satisfaction of all obligations of Seller hereunder; or
(F) the Guarantor shall repudiate, disaffirm, disclaim, or reject, in whole or in part, or challenge the validity of any Guaranty; (c) with respect to Buyer as the Defaulting Party, the occurrence of any of the following:
(i) the failure of Buyer to provide a Buyer Bank Agreement Compliance Certificate; or
(ii) a Buyer Bank Agreement Default not timely cured by Buyer under the applicable Bank Agreement.
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:
55 (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 (1) the Damage Payment (in the case of an Event of Default occurring before the Commercial Operation Date, including a Seller Event of Default under Section 11.1(b)(ii)), or (2) the Termination Payment (in the case of any other Event of Default by either Party), as applicable, in each case calculated in accordance with Section 11.3 below; (c) to withhold any payments due to the Defaulting Party under this Agreement pending declaration of an Early Termination Date under Section 11.2(a); (d) to suspend performance pending declaration of an Early Termination Date under Section 11.2(a); and
(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, 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 remedy for any Terminated Transaction and the Event of Default related thereto.
11.3 Damage Payment; Termination Payment. If an Early Termination Date has been declared, the Non-Defaulting Party shall calculate, in a commercially reasonable manner, the Damage Payment or Termination Payment, as applicable, in accordance with this Section 11.3. (a) Damage Payment Prior to Commercial Operation Date. If the Early Termination Date occurs before the Commercial Operation Date, then the Damage Payment shall be calculated in accordance with this Section 11.3(a).
(i) If Seller is the Defaulting Party, then the Damage Payment shall be owed to Buyer. Notwithstanding anything to the contrary in this Agreement, in no event shall Seller’s pre-Commercial Operation Date liability hereunder, including for any Commercial Operation Delay Damages, exceed in aggregate the amount of the Damage Payment less (i) any amounts paid by Seller including Commercial Operation Delay Damages, and less (ii) any amounts which Buyer has drawn from the Development Security). Subject to the foregoing, Buyer shall be entitled to immediately retain for its own benefit those funds held as Development Security and any interest accrued thereon, and any amount of Development Security that Seller has not yet posted with Buyer but was required to have been posted by Seller as of such Early Termination Date (if any) shall be immediately due and payable by Seller to Buyer. The Parties agree that Buyer’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Seller’s default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(i) are a 56 reasonable approximation of Buyer’s harm or loss. Following any recovery by Buyer of the Damage Payment under this Agreement, Buyer shall return within ten (10) Business Days any Development Security held by Buyer which did not comprise a portion of the Damage Payment.
Buyer is the Defaulting Party, then the Damage Payment shall be owed to Seller and shall be
The Parties agree that Seller’s damages in the event of an Early Termination Date prior to the Commercial Operation Date caused by Buyer’s default would be difficult or impossible to determine and that the damages set forth in this Section 11.3(a)(ii) are a reasonable approximation of Seller’s harm or loss.
(b) Termination Payment On or After the Commercial Operation Date. The payment owed by the Defaulting Party to the Non-Defaulting Party for a Terminated Transaction occurring on or after the Commercial Operation Date (“Termination Payment”) shall be the aggregate of all Settlement Amounts plus any and 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 (i) 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, (ii) the Termination Payment described in this Section 11.3(b) is a reasonable and appropriate approximation of such damages, and (iii) the Termination Payment described in this Section 11.3(b) is the exclusive 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 or Damage Payment. As soon as practicable after a Terminated Transaction, but in no event later than sixty (60) days after the Early Termination Date, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Damage Payment or Termination Payment, as applicable, and whether the 57 Termination Payment or Damage Payment, as applicable, 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 or Damage Payment, as applicable, 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 or Damage Payment. If the Defaulting Party disputes the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, in whole or in part, the Defaulting Party shall, within ten (10) Business Days of receipt of the Non-Defaulting Party’s calculation of the Termination Payment or Damage Payment, as applicable, provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute. Disputes regarding the Termination Payment or Damage Payment, as applicable, shall be determined in accordance with Article 15.
11.6 Seller Pre-COD Liability Limitation. Notwithstanding any other provision of this Agreement, Seller’s aggregate liability under or arising out of this Agreement prior to the Commercial Operation Date shall not exceed an amount equal to the Damage Payment.
11.7 Rights And Remedies Are Cumulative. Except where liquidated damages or other remedy are explicitly provided as the exclusive remedy, 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.
11.8 Mitigation. Any Non-Defaulting Party shall be obligated to use commercially reasonable efforts to mitigate its Costs, Losses and damages resulting from any Event of Default of the other Party under this Agreement.
ARTICLE 12
LIMITATION OF LIABILITY AND EXCLUSION OF WARRANTIES.
12.1 No Consequential Damages. EXCEPT TO THE EXTENT PART OF (A) AN EXPRESS REMEDY OR MEASURE OF DAMAGES HEREIN, (B) AN ARTICLE 16
INDEMNITY CLAIM, OR (C) INCLUDED IN A LIQUIDATED DAMAGES CALCULATION,
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, BY STATUTE, IN TORT OR CONTRACT.
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 58 CONSEQUENTIAL DAMAGES, SHALL APPLY EVEN IF THE REMEDIES FOR BREACH 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.
IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR’S LIABILITY SHALL BE LIMITED TO DIRECT DAMAGES ONLY. THE
VALUE OF ANY TAX CREDITS, DETERMINED ON AN AFTER-TAX BASIS, LOST DUE TO BUYER’S DEFAULT (WHICH SELLER HAS NOT BEEN ABLE TO MITIGATE AFTER
USE OF REASONABLE EFFORTS) AND AMOUNTS DUE IN CONNECTION WITH THE
RECAPTURE OF ANY INCENTIVES, IF ANY, SHALL BE DEEMED TO BE DIRECT DAMAGES.
FURTHERMORE, ANY REGULATORY FINES OR PENALTIES, EACH TO THE EXTENT
DIRECTLY ATTRIBTUABLE TO RESOURCE ADEQUACY REQUIREMENTS, WHICH ARE IMPOSED ON BUYER DUE TO SELLER’S DEFAULT (WHICH BUYER HAS NOT
BEEN ABLE TO MITIGATE AFTER USE OF REASONABLE EFFORTS), FOR WHICH
BUYER HAS NOT ALREADY BEEN COMPENSANTED FOR BY SELLER INCLUDING WITHOUT LIMITATION BY SELLER’S PAYMENT OF ANY RA DEFICIENCY AMOUNTS, SHALL BE DEEMED TO BE DIRECT DAMAGES; PROVIDED, HOWEVER, THAT SELLER’S LIABILITY FOR ANY SUCH REGULATORY FINES OR PENALTIES SHALL
NOT EXCEED IN
THE AGGREGATE (“COMPENSABLE PENALTIES”).
TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, INCLUDING UNDER SECTIONS 2.8, 3.8, 4.4(c), 4.9, 11.2, 11.3 AND 11.6,
AND AS PROVIDED IN EXHIBIT B, EXHIBIT C, EXHBIT D, AND EXHIBIT P, 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 59 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; ADDITIONAL COVENANTS
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 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 (subject to potential management, board, or board committee approvals regarding the performance of obligations and liabilities contemplated herein) perform this Agreement and is not prohibited from entering into this Agreement or discharging and (subject to the foregoing parenthetical) 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 Seller’s performance under this Agreement. The execution, delivery and (subject to the foregoing parenthetical) performance of this Agreement by Seller has 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. Notwithstanding the foregoing, Seller’s failure to obtain the approvals set forth in the parenthetical in the first two sentences above (i) shall not suspend or excuse Seller’s failure to perform its obligations under this Agreement, including the obligation of Seller to achieve the Guaranteed Commercial Operation Date beyond the extensions provided in Exhibit B, and (ii) shall not limit Buyer’s right to declare an Event of Default pursuant to Section 11.1(b)(ii) and receive a Damage Payment upon exercise of Buyer’s default rights pursuant to Section 11.2. (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.
13.2 Buyer’s Representations and Warranties. As of the Effective Date, Buyer represents and warrants as follows:
60 (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.
(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, including but not limited to community choice aggregation, the Joint Powers Act, competitive bidding, public notice, open meetings, election, referendum, or prior appropriation requirements, 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, (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.
(f) Buyer is a “local public entity” as defined in Section 900.4 of the Government Code of the State of California.
(g) Buyer cannot assert sovereign immunity as a defense to the enforcement of its obligations under this Agreement.
13.3 General Covenants. Each Party covenants that commencing on the Effective Date and continuing throughout the Contract Term:
61 (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 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.
13.4 Additional Seller Commitments.
(a) Seller (or its Affiliate) shall maintain Site Control throughout the Delivery Term.
(b) Seller covenants that commencing on the Effective Date and continuing throughout the Contract Term, Seller shall comply with all applicable federal, state and local Laws, and applicable orders and decrees of any courts or administrative bodies or tribunals, including applicable employment discrimination laws and prevailing wage laws.
ARTICLE 14
ASSIGNMENT
14.1 General Prohibition on Assignments. Except as provided below in this Article 14, 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. Notwithstanding the foregoing, Seller may without the prior written consent of Buyer: (a) assign this Agreement to an Affiliate of Seller, including to NEOP, NEP and NEECH; (b) assign, collaterally assign, or pledge its interest hereunder and/or in the Facility to a financing party in accordance with Section 14.3; or (c) assign this Agreement in any Permitted Transfer.
14.2 Change of Control. Any Change of Control of Seller (whether voluntary or by operation of law) will be deemed an assignment and will require the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that: (a) a direct or indirect Change of Control of NEOP or NEP will not require the prior written consent of Buyer; and (b) a Change of Control of Seller shall not require Buyer’s consent if the entity that is the Seller at the conclusion of the Change of Control is a Permitted Transferee. Any assignment made without the required written consent (if applicable), or in violation of the conditions to assignment set out below, shall be null and void. Seller shall be responsible for Buyer’s reasonable costs associated with the preparation, review, execution and delivery of documents in connection with any assignment of this Agreement by Seller, including without limitation reasonable attorneys’ fees. For avoidance of doubt, a Change of Control shall not be deemed to have occurred as a result of a Permitted Transfer, as no consent is required under this Agreement with respect to a Permitted Transfer.
62 14.3 Collateral Assignment. Subject to the provisions of this Section 14.3, 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, Buyer shall in good faith work with Seller and Lender to agree upon a consent to collateral assignment of this Agreement in substantially the form attached as Exhibit T (“Consent to Collateral Assignment”). Seller shall reimburse Buyer for Buyer’s out of pocket expenses, including reasonable attorneys’ fees, incurred to provide consents, estoppels, or other required documentation in connection with Seller’s financing for the Facility. Buyer shall cooperate in good faith with Seller to agree upon, and subsequently shall execute and deliver, any certifications, consents, opinions, estoppels, direct agreements, amendments and other documents as may be reasonably requested by Seller or the financing party or its agent in connection with any financing or refinancing involving the Facility, including financings and refinancings in which an affiliate of Seller is the borrower; provided, that 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.
14.4 Shared Facilities; Portfolio Financing. Buyer agrees and acknowledges that Seller may elect to finance all or any portion of the Facility or the Interconnection Facilities or the Shared Facilities (1) utilizing tax equity investment, and/or (2) through a Portfolio Financing, which may include cross-collateralization or similar arrangements. In connection with any financing or refinancing of the Facility, the Interconnection Facilities or the Shared Facilities by Seller or any Portfolio Financing, Buyer, Seller, Portfolio Financing Entity (if any), and Lender shall execute and deliver such further consents, approvals and acknowledgments as may be reasonable and necessary to facilitate such transactions; provided, Buyer shall not be required to agree to any terms or conditions which are reasonably expected to have a material adverse effect on Buyer’s rights, benefits, risks or obligations under this Agreement and all reasonable attorney’s fees incurred by Buyer in connection therewith shall be borne by Seller.
14.5 Accommodation of Lenders. Buyer will, as soon as reasonably practicable after request, cooperate reasonably with Seller and any Lender to provide such consents to assignments, estoppels, certifications, representations, information or other documents as may be reasonably requested by Seller or such Lender in connection with any financing or assignment involving the Facility or this Agreement, including any financing in which an Affiliate of Seller is the borrower.
Notwithstanding anything to the contrary in the foregoing, Buyer agrees that: (i) Buyer will provide the Lenders with notice of any Event of Default by Seller; (ii) for a period of thirty (30) days following the expiration of any cure period for a monetary Event of Default by Seller and ninety (90) days following the expiration of any cure period for a non-monetary Event of Default by Seller, such Lenders, or their designees, will have the right, but not the obligation, to perform any act required to be performed by Seller under this Agreement to prevent or cure the Event of Default and such act performed by the Lenders, or their designees will be as effective to prevent or cure an Event of Default as if done by Seller; and (iii) Buyer will not terminate this Agreement if any Lenders have provided notice to Buyer that they must foreclose on the Facility prior to preventing or curing any Event of Default by Seller giving rise to such termination.
14.6 Special Financing Arrangements. Buyer has informed Seller that it intends to negotiate a financing arrangement for some or all of its payment obligations under this Agreement pursuant to which Buyer would prepay its obligations for all or a portion of the term of this Agreement (the “Prepay Period”) to a third party financial intermediary, which intermediary would 63 then assume (i) the right to take delivery of some or all Product during the Prepay Period; and (ii) the obligation to make payments to Seller during the Prepay Period (subject to Buyer’s obligation to timely make any payments not made by such third party financial intermediary). Actual scheduling and delivery of Product pursuant to this Confirmation would remain unchanged and no additional risks or obligations will be placed on Seller. It is further understood that the third party financial intermediary will have an Required Credit Rating or provide a guaranty from an Required Credit Rated parent. Buyer understands that Seller has evaluated similar arrangements with other buyers who operate community choice aggregation programs and that Seller conducts a thorough review of (i) the financial and contractual risk of each such arrangement including the form of any such proposed limited assignment agreement, (ii) the third party financial intermediary, which will include such third party financial intermediary successfully completing Seller’s KYC process and (iii) such other items as Seller reasonably deems appropriate. Seller reserves the right, in its sole discretion, to approve any such arrangement. Seller agrees to consider an arrangement as described herein, provided, however, that Buyer understands and acknowledges that Seller’s approval is not guaranteed.
14.7 Option No later than February 28, 2026, Buyer will have the option to reduce the amount of Storage Facility capacity contracted pursuant to this Agreement from 115 MW to an amount that is no less than 30 MW of Storage Facility capacity. The exercise of such option by Buyer will be pursuant to a written notice of exercise from Buyer to Seller specifying the amount of Storage Facility capacity that will be retained by Buyer. Such option may only be exercised by Buyer once prior to 5:00 p.m. Pacific Standard Time on the date set forth above and following a proper and effective exercise, this Agreement will automatically be amended to reflect the reduced Storage Facility capacity and related Product to be purchased by Buyer, the Guaranteed Storage Capacity, the reduction of the amount of the Development Security and any Buyer Credit Support, as well as any other required adjustments corresponding thereto. Any such Storage Facility capacity released by Buyer pursuant to the exercise of this option may thereafter be contracted by Seller to another entity.
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. [STC 17].
15.2 Dispute Resolution. In the event of any dispute arising under this Agreement, within ten (10) Business Days following the receipt of a written notice from either Party identifying such dispute, the authorized members of the Parties’ senior management 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 thirty (30) days of initiating such discussions, or within forty (40) days after notice of the dispute, 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. 64 15.3 Attorneys’ Fees. In any proceeding brought to enforce this Agreement or because of the breach by any Party of any covenant or condition herein contained, the prevailing Party shall be entitled to reasonable attorneys’ fees (including reasonably allocated fees of in-house counsel) in addition to court costs and any and all other costs recoverable in said action.
15.4 Venue. 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 Orange County, California.
ARTICLE 16
INDEMNIFICATION
16.1 Indemnification.
(a) Each Party (the “Indemnifying Party”) agrees to indemnify, defend and hold harmless the other Party and its Affiliates, directors, officers, employees and agents (collectively, the “Indemnified Party”) from and against all third party claims, demands, losses, liabilities, penalties, and expenses (including reasonable attorneys’ fees) for personal injury or death to Persons and damage to the property of any third party to the extent arising out of, resulting from, or caused by the negligent acts or willful misconduct of the Indemnifying Party, its Affiliates, or its directors, officers, employees, or agents.
(b) Nothing in this Section 16.1 shall enlarge or relieve a Party of any liability to the other for any breach of this Agreement. Neither Party shall be indemnified for its damages resulting from its sole 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 Claims. Promptly after receipt by a Party of any claim or Notice of the commencement of any action, administrative, or legal proceeding, or investigation as to which the indemnity provided for in this Article 16 may apply, the Indemnified Party shall notify the Indemnifying Party in writing of such fact. The Indemnifying Party shall assume the defense thereof with counsel designated by the Indemnifying Party and satisfactory to the Indemnified Party, provided, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to, or inconsistent with, those available to the Indemnifying Party, the Indemnified Party shall have the right to select and be represented by separate counsel, at the Indemnifying Party’s expense, unless a liability insurer is willing to pay such costs. If the Indemnifying Party fails to assume the defense of a claim meriting indemnification, the Indemnified Party may at the expense of the Indemnifying Party contest, settle, or pay such claim, provided that settlement or full payment of any such claim may be made only following consent of the Indemnifying Party or, absent such consent, written opinion of the Indemnified Party’s counsel that such claim is meritorious or warrants settlement. Except as otherwise provided in this Article 16, in the event that a Party is obligated to indemnify and hold the other Party and its successors and assigns harmless under this Article 16, the amount owing to the Indemnified Party will be the amount of the Indemnified Party’s damages net of any insurance 65 proceeds received by the Indemnified Party following a reasonable effort by the Indemnified Party to obtain such insurance proceeds.
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 per occurrence, and an annual aggregate of not less than 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 in a minimum limit of liability of per occurrence and in aggregate.
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. The amount of insurance required above may be satisfied by any combination of primary and excess insurance.
(b) Employer’s Liability Insurance. Employers’ Liability insurance shall not be less than for injury or death occurring as a result of each accident. With regard to bodily injury by disease, the 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 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 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) Builder’s All-Risk Insurance. Seller shall maintain or cause to be maintained during the construction of the Facility prior to the Commercial Operation Date, builder’s all-risk insurance covering the Facility during such construction periods. (f) Subcontractor Insurance. Seller shall require all of its subcontractors to carry: (i) comprehensive general liability insurance with a combined single limit of coverage not less than (ii) workers’ compensation insurance and employers’ liability coverage in accordance with applicable requirements of Law; and (iii) business auto insurance for bodily injury and property damage with limits of per occurrence. All subcontractors shall name Seller as an additional insured to insurance carried pursuant to clauses (f)(i) and (f)(iii). All subcontractors shall provide a primary endorsement and a waiver of subrogation to Seller for the required coverage pursuant to this Section 17.1(f). 66 (g) Evidence of Insurance. Within fifteen (15) Business Days after written request by Buyer, Seller shall deliver to Buyer certificates of insurance evidencing such coverage.
Such certificates shall specify that Buyer shall be given at least thirty (30) days prior Notice by Seller in the event of any material modification, 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.
(h) Failure to Comply with Insurance Requirements. If Seller fails to comply with any of the provisions of this Article 17, Seller, among other things and without restricting Buyer’s remedies under the Law or otherwise, shall, at its own cost and expense, act as an insurer and self-insure in accordance with the terms and conditions above. With respect to the required general liability, umbrella liability and business automobile liability insurance, Seller shall provide a current, full and complete defense to Buyer, its subsidiaries and Affiliates, and their respective officers, directors, shareholders, agents, employees, assigns, and successors in interest, in response to a third-party claim in the same manner that an insurer would have, had the insurance been maintained in accordance with the terms and conditions set forth above. In addition, alleged violations of the provisions of this Article 17 means that Seller has the initial burden of proof regarding any legal justification for refusing or withholding coverage and Seller shall face the same liability and damages as an insurer for wrongfully refusing or withholding coverage in accordance with the laws of California.
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. The Party receiving Confidential Information (the “Receiving Party”) from the other Party (the “Disclosing Party”) shall not disclose Confidential Information to a third party (other than to the employees, lenders (including bona fide prospective lenders), counsel, accountants, directors or advisors, or representatives of a Party or its Affiliates who has a need to know such information and has agreed to keep such terms confidential) except in order to comply with any applicable Law, regulation, or any exchange, control area or independent system operator rule or in connection with any court or regulatory proceeding applicable to such Party or any of its Affiliates; provided, each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The Parties shall be entitled 67 to all remedies available at law or in equity to enforce, or seek relief in connection with, this confidentiality obligation. The Parties agree and acknowledge that nothing in this Section 18.2 prohibits a Party from disclosing any one or more of the commercial terms of a transaction (other than the name of the other Party unless otherwise agreed to in writing by the Parties) to any industry price source for the purpose of aggregating and reporting such information in the form of a published energy price index.
The Parties acknowledge and agree that the Agreement and any transactions entered into in connection herewith are subject to the requirements of the California Public Records Act (Government Code Section 6250 et seq.). In order to designate information as confidential, the Disclosing Party must clearly stamp and identify the specific portion of the material designated with the word “Confidential.” The Parties agree not to over-designate material as Confidential Information. Over-designation includes stamping whole agreements, entire pages or series of pages as “Confidential” that clearly contain information that is not Confidential Information.
Upon request or demand of any third person or entity not a Party hereto to Buyer pursuant to the California Public Records Act for production, inspection and/or copying of Confidential Information (“Requested Confidential Information”), Buyer shall as soon as practical notify Seller in writing via email that such request has been made. Seller shall be solely responsible for taking at its sole expense whatever legal steps are necessary to prevent release of the Requested Confidential Information to the third party by Buyer. If Seller takes no such action after receiving the foregoing notice from Buyer, Buyer shall, at its discretion, be permitted to comply with the third party’s request or demand and is not required to defend against it. If Seller does take or attempt to take such action, Buyer shall provide timely and reasonable cooperation to Seller, if requested by Seller, and Seller agrees to indemnify and hold harmless Buyer, its officers, employees and agents (“Buyer’s Indemnified Parties”), from any claims, liability, award of attorneys’ fees, or damages, and to defend any action, claim or lawsuit brought against any of Buyer’s Indemnified Parties for Buyer’s refusal to disclose any Requested Confidential Information.
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 except as otherwise limited under this Agreement, 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 Further Permitted Disclosure. Notwithstanding anything to the contrary in this Article 18, Confidential Information may be disclosed by the Receiving Party to any of its agents, consultants, contractors, trustees, or actual or potential financing parties who has a need to know such information (including, in the case of Seller, its Lender(s)), so long as such Person to whom Confidential Information is disclosed agrees in writing to be bound by confidentiality provisions that are at least as restrictive as this Article 18 to the same extent as if it were a Party. 68 18.5 Press Releases. Neither Party shall issue (or cause its Affiliates to issue) a press release regarding the transactions contemplated by this Agreement unless both Parties have agreed upon the contents of any such public statement.
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. This Agreement shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
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, 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) and/or, to the extent set forth herein, any Lender and/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 to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any 69 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 electronic format (including portable document format (.pdf)) delivery of the signature page of a counterpart to the other Party.
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 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 Change in Electric Market Design. If a change in the CAISO Tariff renders this Agreement or any provisions hereof incapable of being performed or administered, then any Party may request that Buyer and Seller enter into negotiations to make the minimum changes to this Agreement necessary to make this Agreement capable of being performed and administered, while attempting to preserve to the maximum extent possible the benefits, burdens, and obligations set forth in this Agreement as of the Effective Date. Upon delivery of such a request, Buyer and Seller shall engage in such negotiations in good faith. If Buyer and Seller are unable, within sixty (60) days after delivery of such request, to agree upon changes to this Agreement or to resolve issues relating to changes to this Agreement, then any Party may submit issues pertaining to changes to this Agreement to the dispute resolution process set forth in Article 15. Notwithstanding the foregoing, (i) a change in cost shall not in and of itself be deemed to render this Agreement or any 70 of the provisions hereof incapable of being performed or administered, and (ii) all of the unaffected provisions of this Agreement shall remain in full force and effect during any period of such negotiation or dispute resolution.
19.13 Further Assurances. Each of the Parties hereto agrees 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]
CONFIDENTIAL
Execution Version
[Signature Page to Energy Storage Agreement]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the Effective Date.
LOCK ENERGY CENTER, LLC, a
Delaware limited liability company
By:
Name:
Title:
ORANGE COUNTY POWER
AUTHORITY, a California joint powers
authority
By:
Name:
Title:
Exhibit A - 1
EXHIBIT A
FACILITY DESCRIPTION
Site Name: Lock Energy Center – OCPA 115 MW Storage Facility Site includes all or some of the following APNs: Seller to provide at least thirty (30) days prior to Commercial Operation Date
County: Fresno County, CA
Type of Storage Facility: Electrochemical battery energy storage facility Operating Characteristics of Storage Facility:
Maximum Stored Energy Level (MWh) at COD: 460 MWh
Minimum Stored Energy Level (MWh) at COD: 0 MWh
Maximum Charging Capacity at COD: 115 MW
Minimum Charging Capacity at COD: 0 MW
Maximum Discharging Capacity at COD: 115 MW
Minimum Discharging Capacity at COD: 0 MW
Maximum State of Charge at COD: 100%
Minimum State of Charge at COD: 0%
Operating Restrictions of Storage Facility: See Exhibit Q Guaranteed Capacity: See definition in Section 1.1
Effective Storage Capacity: See definition in Section 1.1 Maximum Output: 115 MW AC
Delivery Point: Facility PNode on the CAISO-Controlled Grid.
Storage Facility Meter Points: See Exhibit R
Facility Interconnection Point: PG&E Gates 500 kV substation in Fresno County, CA.
Facility PNode: To be established prior to the Commercial Operation Date. Seller shall promptly notify Buyer following establishment of the PNode.
Participating Transmission Owner: Pacific Gas & Electric Exhibit B - 1
EXHIBIT B
FACILITY CONSTRUCTION AND COMMERCIAL OPERATION
1) Construction of the Facility. “Construction Start” will occur upon Seller’s execution of an engineering, procurement, and construction contract (or similar agreement) and issuance thereunder of a notice to proceed that authorizes the contractor to mobilize to Site and begin physical construction 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 J hereto, and the date certified therein shall be the “Construction Start Date.”
2) Commercial Operation.
a) “Commercial Operation” means the condition existing when Seller has fulfilled all of the conditions precedent in Section 2.4 of the Agreement. b) Subject to the other terms of this Agreement, Seller shall cause Commercial Operation to occur by the Guaranteed Commercial Operation Date (as may be extended pursuant to Section 4 of this Exhibit B). Seller shall notify Buyer that it intends to achieve Commercial Operation at least thirty (30) days before the anticipated Commercial Operation Date.
c) If Seller does not achieve Commercial Operation by the Guaranteed Commercial Operation Date (as may be extended pursuant to Section 4 of this Exhibit B), Seller shall pay Commercial Operation Delay Damages to Buyer for each day after the Guaranteed Commercial Operation Date until the Commercial Operation Date, not to exceed a total of On or before the tenth (10th)
day of each month, Buyer shall invoice Seller for Commercial Operation Delay Damages, if any, accrued during the prior month. Within fifteen (15) Business Days following Seller’s receipt of such invoice, Seller shall pay Buyer the amount of Commercial Operation Delay Damages set forth in such invoice subject to Section 8.5.
3) Termination for Failure to Timely Achieve Commercial Operation. If Seller has not achieved Commercial Operation by the deadline specified in Section 11.1(b)(ii), either Party may elect to terminate this Agreement within of the expiration of the last such deadline; provided, however, unless excused by some other provision of this Agreement, upon such termination of this Agreement Buyer shall be entitled to the Damage Payment.
4) Extension of the Guaranteed Commercial Operation Date. a) The Guaranteed Commercial Operation Date shall be automatically extended:
(i) on a day-for-day basis for the duration of any Development Cure Period; and (ii) in connection with any New Trade Measure for the amount of time specified by Seller in accordance with Section 2.7 of the Agreement (the “New Trade Measure Extensions”).
Exhibit B - 2
b) The Guaranteed Commercial Operation Date shall be automatically extended on a day-for-day basis for the duration of any and all delays arising out of the following circumstances to the extent the following circumstances are not the result of Seller’s failure to take all commercially reasonable actions to meet its requirements and deadlines, such as timely filing and prosecution of applications for permit, approvals and interconnections (all of the following permitted extensions collectively are the “Development Cure Period”):
i) the occurrence of any one more Force Majeure Events; or ii) any delay in the completion of Interconnection Facilities, Shared Facilities, or transmission upgrades for the Facility that are caused by the transmission provider (e.g., the CAISO) or the transmission owner (e.g., PG&E) and are outside of the reasonable control of Seller (“Transmission Delays”); or iii) Seller has not acquired by the Expected Construction Start Date all material permits, consents, licenses, approvals, or authorizations from any Governmental Authority required for Seller to own, construct, interconnect, operate or maintain the Facility (including for avoidance of doubt any Interconnection Facilities or Shared Facilities) and to permit Seller and the Facility to make available and sell Product.
c) Any Development Cure Period shall extend the Guaranteed Commercial Operation Date. The Development Cure Period shall be no longer than or the Commercial Operation Date. Any delays in the Commercial Operation that may occur as a result of any New Trade Measures Extensions in accordance with Section 4(a) of this Exhibit B shall be separate from, and in addition to, any Development Cure Period.
5) Failure to Reach Guaranteed Storage Capacity.
a) If, at Commercial Operation, the Installed Storage Capacity is less than one hundred percent (100%) of the Guaranteed Storage Capacity, Seller shall have after the Commercial Operation Date to install additional capacity such that the Installed Storage Capacity is equal to (but not greater than) one hundred percent (100%) of the Guaranteed Storage Capacity, and Seller shall provide to Buyer a new certificate substantially in the form attached as Exhibit I-1 hereto specifying the new Installed Storage Capacity. If Seller fails to construct the Guaranteed Storage Capacity by such date, Seller shall pay “Storage Capacity Damages” to Buyer, in an amount equal to
for each MW that the Guaranteed Storage Capacity exceeds the total Installed Storage Capacity, and the Guaranteed Storage Capacity and other applicable portions of the Agreement shall be adjusted accordingly. b) Storage Capacity Damages shall not be offset or reduced by the payment of Development Security, Performance Security, Commercial Operation Delay Damages, or any other form of liquidated damages under this Agreement.
Exhibit B - 3
6) Buyer’s Right to Draw on Development Security. If Seller fails to pay any Commercial Operation Delay Damages within thirty (30) days of the date of Seller’s receipt of the invoice from Buyer, Buyer may draw upon the Development Security to satisfy Seller’s payment obligation thereof; provided, however, notwithstanding anything to the contrary in this Agreement, Seller’s liability for the period prior to Commercial Operation, including without limitation for the failure to achieve Commercial Operation by the deadline specified in Section 11.1(b)(ii) shall be limited to the Damage Payment.
Exhibit C - 1
EXHIBIT C
COMPENSATION
Compensation under this Agreement shall be in accordance with this Exhibit C. The payment required under the invoices required by Section 8.1 of this Agreement will be an amount equal to the summation of the following in such month, as applicable:
During the Delivery Term, Buyer shall pay Seller for:
(1) Monthly Capacity Payment. Each month of the Delivery Term (and pro-rated for the first and last month of the Delivery Term if the Delivery Term does not start on the first day of a calendar month), Buyer shall pay Seller a Monthly Capacity Payment equal to the Storage Rate x one thousand (1,000) x Effective Storage Capacity x Availability Adjustment for all Product, with the Availability Adjustment determined under Exhibit P. If the Effective Storage Capacity is adjusted pursuant to a Storage Capacity Test other than the first day of calendar month, payment shall be calculated separately for each portion of the month in which the different Effective Storage Capacity is applicable; minus (2) Liquidated Damages for Failure to Achieve Guaranteed Efficiency Rate. If during any month during the Delivery Term, the Efficiency Rate for such month is less than the Guaranteed Efficiency Rate, Seller shall owe liquidated damages to Buyer, which damages shall be calculated by multiplying (i) the total Charging Energy for such month, by (ii) the percentage amount by which the Efficiency Rate is less than the Guaranteed Efficiency Rate, by (iii) a rate equal to the average of the highest thirty-three percent (33%) of the Day-Ahead Market locational marginal prices for all the hours in which Charging Energy was provided in the applicable month, as published by the CAISO, for the Delivery Point, which amount Seller shall set off against amounts payable by Buyer in the applicable monthly invoice; minus (3) RA Deficiency Amount, if any, set forth in section 3.8(b); plus (4) Net Buyer CAISO Settlements, as required by section 4.3(e) and set forth in Exhibit U.
Pre-Commercial Operation Date Costs and Revenues: Consistent with Section 4.5(h), Seller shall be responsible for, and entitled to, any costs or revenues, including CAISO costs and CAISO revenues, attributable to the Facility prior to the Commercial Operation Date.
Tax Credits. The Parties agree that the Storage Rate is not subject to adjustment or amendment if Seller fails to receive any Tax Credits, or if any Tax Credits expire, are repealed or otherwise cease to apply to Seller or the Facility in whole or in part, or Seller or its investors are unable to benefit from any Tax Credits. Seller shall bear all risks, financial and otherwise, throughout the Contract Term, associated with Seller’s or the Facility’s eligibility to receive Tax Credits or to qualify for accelerated depreciation for Seller’s accounting, reporting or Tax purposes. The obligations of the Parties hereunder, including those obligations set forth herein regarding the purchase and price for and Seller’s obligation to deliver Facility Energy and Product, shall be effective regardless of
Exhibit C - 2
whether construction of the Facility (or any portion thereof) or the sale of Facility Energy is eligible for, or receives Tax Credits during the Contract Term.
Exhibit E - 1
EXHIBIT D
SCHEDULING COORDINATOR RESPONSIBILITIES; MANAGED INSTRUCTIONS Scheduling Coordinator Responsibilities:
(a) Seller as Scheduling Coordinator for the Facility. Upon Initial Synchronization of the Facility to the CAISO Grid and thereafter, Seller shall be the Scheduling Coordinator or designate a qualified third party to provide Scheduling Coordinator services with the CAISO for the Facility for testing purposes and for the delivery of the Product, as applicable, at the Delivery Point and for the purposes of conducting Storage Capacity Tests. As determined by Buyer, Seller (as the Facility’s SC) shall submit Economic Bids and Self-Schedules to the CAISO in accordance with this Agreement and the applicable CAISO Tariff, Business Practices, and Operating Procedures in the DAM, FMN, and RTM.
(b) Notices. Seller (as the Facility’s SC) shall use a web-based system through which Seller shall submit to CAISO all notices and updates required under the CAISO Tariff regarding the Facility’s status, including, but not limited to, all outage requests, forced outages, forced outage reports, clearance requests, or must offer waiver forms. Seller will cooperate with Buyer to provide Buyer access to such notices and updates. If the web-based system is not available, Seller shall promptly submit such information to the CAISO and Buyer (in order of preference) telephonically, by electronic mail, or other transmission to the personnel designated to receive such information. (c) CAISO Settlements. Seller (as the Facility’s SC) shall be responsible for all settlement functions with the CAISO related to the Facility.
(e) Dispute Costs. Seller (as the Facility’s SC) may be required to dispute CAISO settlements in respect of the Facility. If Buyer has directed Seller to dispute a CAISO settlement, Buyer agrees to pay Seller’s costs and expenses (including reasonable attorneys’ fees) associated with its involvement with such CAISO disputes to the extent they relate to CAISO charges payable by Buyer with respect to the Facility.
(f) Master Data File and Resource Data Template. Seller shall provide the data to the CAISO (and to Buyer) that is required for the CAISO’s Master Data File and Resource Data Template (or successor data systems) for the Facility consistent with this Agreement. Seller shall not change such data without providing Buyer with Notice.
(g) NERC Reliability Standards. Seller (as Scheduling Coordinator) shall comply with NERC reliability standards.
Exhibit C - 2
Managed Instructions:
Managed Instructions General Principles
1. Seller, as the SC or through its designee to provide SC services, shall develop, maintain, and implement offer strategy algorithms (“Offer Strategies”). The Offer Strategies intend to optimize Facility revenues consistent with complying with any Operating Restrictions, other restrictions under this Agreement, the Law, and the CAISO Tariff, including, but not limited to any Resource Adequacy must-offer obligations. In addition to seeking to optimize Facility revenues, the Offer Strategies may, among other considerations, provide for the recovery of any Federal Investment Tax Credit (“ITC”) or Federal Production Tax Credit (“PTC”) value for the Storage Facility, while accounting for market participant offer parameters, site derates and outages and nodal market prices, among other things.
The Offer Strategies will generate valid CAISO market offer parameters for the Facility. Buyer will not have access to the underlying optimization logic used by the Offer Strategies to generate the Economic Bids or Self-Schedules for the Facility, but Buyer, in coordination with Seller, will develop and implement Managed Instructions to guide the Facility’s performance objectives and their prioritization, including, but not limited to, specifying Ancillary Service product offerings, as allowed in this Agreement.
2. Seller shall use commercially reasonable efforts and cooperate in good faith to ensure Buyer has sufficient data and other information to monitor the performance of the Offer Strategies, including development of benchmarks, e.g., full DAM participation to determine incremental revenue, if any, from Energy and Ancillary Service products resulting from the Offer Strategies. Seller shall also be obligated to provide Buyer with a demonstration of software platforms, if any, including any application programming interface, used by Seller to implement the Offer Strategies.
Managed Instructions Protocol
1. The Managed Instructions, including the form and format of the Managed Instructions and the communications methods and timing between Parties, shall be developed through good faith discussions between the Parties in accordance with Section 4.3 of this Agreement and this Exhibit D. The principles set forth herein reflect the mutual understanding of the Parties regarding how the Managed Instructions shall be developed and periodically revised over time.
2. Each Party shall cooperate with the other to implement Managed Instructions that allow for full participation in each CAISO market stage and for all products allowed by CAISO rules as specified in the Agreement and the Buyer.
3. Parties shall confer from time to time as CAISO Tariff language and Business Practice Manual language is being considered and refined through Stakeholder Initiatives, to anticipate and implement changes that will be necessary to the Managed Instructions.
4. Additional parameters made available to resources like the Storage Facility that support improved operation beyond the current price-quantity Economic Bid or Self-Scheduling rules shall be incorporated into the Managed Instructions upon CAISO implementation.
5. The Managed Instructions shall at all times ensure continuity of
Exhibit C - 3
bidding/scheduling/operations of the Facility in the CAISO markets that are compliant and feasible, by including terms that shall become effective upon a failure in communications between the Parties which would make the otherwise effective Managed Instructions or Applicable Instructions infeasible.
6. Parties shall work collaboratively to determine the appropriate algorithm to implement under the Managed Instructions to mitigate communication points of failure, as more information is gained, and market rules are finalized.
7. General Description of NextEra 360 Energy Management Platform. Buyer and Seller agree that Seller will make use of the NextEra 360 Energy Management platform (the “360 Platform”) in connection with this Exhibit D, including:
Exhibit C - 4
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 toward meeting each of the Interim 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 (a) about the progress relative to Seller’s Interim Milestones, including whether Seller has met or is on target to meet the Interim Milestones, (b) identifying any missed Seller’s Interim Milestones and the cause of the delay and providing a detailed description of Seller’s corrective actions to achieve the missed Seller’s Interim Milestones and all subsequent Seller’s Interim Milestones by the Guaranteed Commercial Operation Date.
9. List of issues that are reasonably likely to affect Seller’s Interim Milestones.
10. A status report of start-up activities including a forecast of activities ongoing and after start-up, a report on Facility performance including performance projections for the next twelve (12) months.
11. Progress and schedule of all material agreements, contracts, permits, approvals, technical studies, financing agreements and major equipment purchase orders showing the start dates, completion dates, and completion percentages.
12. 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.
13. Workforce Development or Supplier Diversity Reporting (if applicable).
14. Any other documentation reasonably requested by Buyer.
Exhibit F-1-1
EXHIBIT F-1
Intentionally omitted
Exhibit F-2-1
EXHIBIT F-2
Intentionally omitted
Exhibit F-3-1
EXHIBIT F-3
MONTHLY EXPECTED AVAILABLE EFFECTIVE STORAGE CAPACITY
[MW Per Hour] – [Insert Month]
1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
The foregoing table is provided for informational purposes only, and it shall not constitute, or be deemed to constitute, an obligation of any of the Parties to this Agreement.
Exhibit F-4-1
EXHIBIT F-4
MONTHLY AVAILABLE STORAGE CAPABILITY
[MWh Per Hour] – [Insert Month]
1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 24:00 Day 1
Day 2
Day 3
Day 4
Day 5
[insert additional rows for each day in the month]
Day
29 Day
30 Day
31 The foregoing table is provided for informational purposes only, and it shall not constitute, or be deemed to constitute, an obligation of any of the Parties to this Agreement.
Exhibit G - 1
EXHIBIT G
Intentionally omitted
Exhibit H - 1
EXHIBIT H
FORM OF COMMERCIAL OPERATION DATE CERTIFICATE
This certification (“Certification”) of Commercial Operation is delivered by _______[licensed professional engineer] (“Engineer”) to Orange County Power Authority, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated _______ (“Agreement”) by and between Lock Energy Center, LLC, a Delaware limited liability company (“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. Seller has installed equipment for the Storage Facility with an Installed Storage Capacity of no less than of the Guaranteed Storage Capacity.
2. Authorization to parallel the Facility was obtained by the Transmission Provider, [Name of Transmission Provider as appropriate] on___[DATE]____.
3. The Storage Facility is fully capable of charging, storing and discharging energy up to no less than of the Effective Storage Capacity and receiving instructions to charge, store and discharge energy, all within the operational constraints and subject to the applicable Operating Restrictions.
4. The Storage Facility is fully operational, reliable and interconnected, fully integrated and synchronized with the Transmission System.
5. 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.
6. Authorization to parallel the Facility was obtained from the Participating Transmission Owner on [date].
7. The CAISO has provided notification supporting Commercial Operation, in accordance with the CAISO Tariff on [date].
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Exhibit H - 2
Its:
Date:
Exhibit I-1-1
EXHIBIT I-1
FORM OF INSTALLED CAPACITY CERTIFICATE
This certification (“Certification”) of Installed Capacity and related characteristics of the Facility is delivered by [licensed professional engineer] (“Engineer”) to Orange County Power Authority, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated __________ (“Agreement”) by and between Lock Energy Center, LLC, a Delaware limited liability company, 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:
(a) The Commercial Operation Storage Capacity Test conducted on [Date] demonstrated a maximum dependable operating capability to discharge electric energy of __ MW AC to the Delivery Point at four (4) hours of continuous discharge, in accordance with the testing procedures, requirements and protocols set forth in Section 4.10 and Exhibit O (the “Installed Storage Capacity” or the “Installed Capacity”);
(b) Such Commercial Operation Storage Capacity Test demonstrated an Efficiency Rate of __%, each in accordance with the testing procedures, requirements and protocols set forth in Section 4.10 and Exhibit O.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
Exhibit I-2-1
EXHIBIT I-2
FORM OF EFFECTIVE STORAGE CAPACITY CERTIFICATE
This certification (“Certification”) of Effective Storage Capacity and related characteristics of the Facility is delivered by [licensed professional engineer] (“Engineer”) to Orange County Power Authority, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Energy Storage Agreement dated __________ (“Agreement”) by and between Lock Energy Center, LLC, a Delaware limited liability company, 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:
(a) The Storage Capacity Test conducted on [Date] demonstrated a maximum dependable operating capability to discharge electric energy of __ MW AC to the Delivery Point at four (4) hours of continuous discharge, in accordance with the testing procedures, requirements and protocols set forth in Section 4.10 and Exhibit O of the Agreement (the “Effective Storage Capacity”); and
(b) Such Storage Capacity Test demonstrated an Efficiency Rate of __%, each in accordance with the testing procedures, requirements and protocols set forth in Section 4.10 and Exhibit O.
EXECUTED by [LICENSED PROFESSIONAL ENGINEER]
this ________ day of _____________, 20__.
[LICENSED PROFESSIONAL ENGINEER]
By:
Its:
Date:
Exhibit J - 1
EXHIBIT J
FORM OF CONSTRUCTION START DATE CERTIFICATE
This certification of Construction Start Date (“Certification”) is delivered by Lock Energy Center, LLC, a Delaware limited liability company (“Seller”) to Orange County Power Authority, 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 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 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 Site on which the Facility is located is:
_____________________________________________________________________ (such description shall amend the description of the Site in Exhibit A of the Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Certification on behalf of Seller as of the ___ day of ________.
[SELLER ENTITY]
By:
Its:
Date:
Exhibit K - 1
EXHIBIT K
FORM OF LETTER OF CREDIT
(issued on behalf of Seller for the benefit of Buyer)
[Issuing Bank Letterhead and Address]
IRREVOCABLE STANDBY LETTER OF CREDIT NO. [XXXXXXX]
Date:
Bank Ref.:
Amount: US$[XXXXXXXX]
Beneficiary:
Orange County Power Authority,
a California joint powers authority
349 Michelson Dr Ste. 200
Irvine, CA, 92612-8881
Ladies and Gentlemen:
By the order of NextEra Energy Capital Holdings, Inc. on behalf of Lock Energy Center, LLC, 700 Universe Blvd, Juno Beach, Florida 33408 (“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 Orange County Power Authority, a California joint powers authority (“Beneficiary”), 349 Michelson Dr. Ste. 200, Irvine, CA, 92612-8881, for an amount not to exceed the aggregate sum of U.S. $[XXXXXX] (United States Dollars [XXXXX] and 00/100) (the “Available Amount”), 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 be of no further force or effect at 5:00 p.m., California time, on [Date] or, if such day is not a Business Day (as hereinafter defined), on the next Business Day (as may be extended pursuant to the terms of this Letter of Credit, the “Expiration Date”).
For the purposes hereof, “Business Day” shall mean any day on which commercial banks are not authorized or required to close in California.
Funds under this Letter of Credit are available to Beneficiary by valid presentation on or before 5:00 p.m. New York time, on or before the Expiration Date of a copy of this Letter of Credit No. [XXXXXXX] and all amendments accompanied by Beneficiary’s dated statement purportedly signed by Beneficiary’s duly authorized officer, in the form attached hereto as Exhibit A, containing one of the two alternative paragraphs set forth in paragraph 2 therein.
Any full or partial drawing hereunder may be requested by transmitting copies of the requisite documents as described above to the Issuer by f electronic mail at [email address] or such other email address as specified from time-to-time by the Issuer.
The electronic transmittal shall be deemed delivered when received. Drawings made by electronic
Exhibit K - 2
transmittal are deemed to be the operative instrument without the need of originally signed documents.
Issuer hereby agrees that all drafts drawn under and in compliance with the terms of this Letter of Credit will be duly honored if presented to the Issuer before the Expiration Date. All correspondence and any drawings (other than those made by facsimile) hereunder are to be directed to [Issuer address/contact]. Issuer undertakes to make payment to Beneficiary under this Standby Letter of Credit within three (3) business days of receipt by Issuer of a properly presented Drawing Certificate. The Beneficiary shall receive payment from Issuer by wire transfer to the bank account of the Beneficiary designated in the 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; provided, the Available Amount shall be reduced by the amount of each such drawing.
It is a condition of this Letter of Credit that it shall be deemed automatically extended without an amendment for a one year period (or, if such period ends on a day that is not a Business Day, until the next Business Day thereafter) beginning on the present Expiration Date hereof and upon each anniversary for such date (or, if such period ends on a day that is not a Business Day, until the next Business Day thereafter), unless at least one hundred twenty (120) days prior to any such Expiration Date Issuer has sent Beneficiary written notice by overnight courier service at the address provided below that Issuer elects not to extend this Letter of Credit, in which case it will expire on its then-current Expiration Date. 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.
Except so far as otherwise stated, this Letter of Credit is subject to the International Standby Practices ISP98 (also known as ICC Publication No. 590), or revision currently in effect (the “ISP”). As to matters not covered by the ISP, the laws of the State of California, without regard to the principles of conflicts of laws thereunder, shall govern all matters with respect to this Letter of Credit.
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: Orange County Power Authority, a California joint powers authority, Attn: Tiffany Law, 349 Michelson Dr. Ste 200, Irvine, CA, 92612-8881. 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.
Exhibit K - 3
[Bank Name]
___________________________
[Insert officer name]
[Insert officer title]
Exhibit K - 4
EXHIBIT A
(DRAW REQUEST SHOULD BE ON BENEFICIARY’S LETTERHEAD)
Drawing Certificate
[Insert Bank Name and Address]
Ladies and Gentlemen:
The undersigned, a duly authorized officer of [ ], [ADDRESS], 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 Lock Energy Center, LLC (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 Beneficiary is entitled to a payment of liquidated damages from the Development Security for a delay as Applicant has failed to pay such liquidated damages within thirty (30) days of Applicant’s receipt of such an invoice from Beneficiary as set forth in the Agreement or a Seller Event of Default (as such term is defined in the Agreement) has occurred. or
Beneficiary is making a drawing under this Letter of Credit in the amount of U.S. $___________, which equals the full available amount under the Letter of Credit, because Applicant is required to maintain the Letter of Credit in force and effect beyond the expiration date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit or other acceptable instrument within thirty (30) days prior to such expiration date.
3. The undersigned is a duly authorized representative of [ ] and is authorized to execute and deliver this Drawing Certificate on behalf of Beneficiary.
You are hereby directed to make payment of the requested amount to [ ] by wire transfer in immediately available funds to the following account:
[Specify account information]
[ ]
_______________________________
Name and Title of Authorized Representative
Date___________________________
Exhibit L - 1
EXHIBIT L
FORM OF LETTER OF CREDIT
(issued on behalf of Buyer for the benefit of Seller)
DATE OF ISSUANCE:
[Date of issuance]
Lock Energy Center, LLC (“Beneficiary”)
700 Universe Blvd.
Juno Beach, FL 33408
Attention: Business Management
Re: [ISSUING BANK] Irrevocable Standby Letter of Credit No.________ Sirs/Mesdames:
We hereby establish in favor of Beneficiary (sometimes alternatively referred to herein as “you”) this Irrevocable Standby Letter of Credit No. _______ (the “Letter of Credit”) for the account of [[_______________________] on behalf of] Orange County Power Authority, located at 349 Michelson Dr. Ste. 200, Irvine, CA, 92612-8881 (“Applicant”), effective immediately and expiring on the date determined as specified in numbered paragraphs 5 and 6 below.
We have been informed that this Letter of Credit is issued pursuant to the terms of that certain Energy Storage Agreement dated as of [________________], as amended from time to time (the “Agreement”).
1. Stated Amount. The maximum amount available for drawing by you under this Letter of Credit shall be [written dollar amount] United States Dollars (US$[dollar amount]) (such maximum amount referred to as the “Stated Amount”).
2. Drawings. A drawing hereunder may be made by you on any Business Day on or prior to the date this Letter of Credit expires by delivering to [ISSUING BANK], at any time during its business hours on such Business Day, at [bank address] (or at such other address as may be designated by written notice delivered to you as contemplated by numbered paragraph 9 hereof), a copy of this Letter of Credit together with (i) a Draw Certificate executed by an authorized person substantially in the form of Attachment A hereto (the “Draw Certificate”), appropriately completed and signed by your authorized officer (signing as such) and (ii) your draft substantially in the form of Attachment B hereto (the “Draft”), appropriately completed and signed by your authorized officer (signed as such). Partial drawings and multiple presentations may be made under this Letter of Credit. Draw Certificates and Drafts under this Letter of Credit may be presented by Beneficiary by means of facsimile or original documents sent by overnight delivery or courier to [ISSUING BANK] at our address set forth above, Attention: ___________ (or at such other address as may be designated by written notice delivered to you as contemplated by numbered paragraph 9 below). If presentation is made by facsimile transmission, you must contact us at [insert phone number] to confirm our receipt of the transmission. In the event of a presentation by facsimile transmission, the original of such documents need not be sent to us.
3. Time and Method for Payment. We hereby agree to honor a drawing hereunder made in compliance with this Letter of Credit by transferring in immediately available funds the amount specified
Exhibit L - 2
in the Draft delivered to us in connection with such drawing to such account at such bank in the United States as you may specify in your Draw Certificate. If the Draw Certificate is presented to us at such address by 12:00 noon, [_______] time on any Business Day, payment will be made not later than our close of business on third succeeding business day and if such Draw Certificate is so presented to us after 12:00 noon, [_______] time on any Business Day, payment will be made on the fourth succeeding Business Day.
In clarification, we agree to honor the Draw Certificate as specified in the preceding sentences, without regard to the truth or falsity of the assertions made therein.
4. Non-Conforming Demands. If a demand for payment made by you hereunder does not, in any instance, conform to the terms and conditions of this Letter of Credit, we shall give you prompt notice that the demand for payment was not effectuated in accordance with the terms and conditions of this Letter of Credit, stating the reasons therefor and that we will upon your instructions hold any documents at your disposal or return the same to you. Upon being notified that the demand for payment was not effectuated in conformity with this Letter of Credit, you may correct any such non-conforming demand.
5. Expiration. This Letter of Credit shall automatically expire at the close of business on the date on which we receive a Cancellation Certificate in the form of Attachment C hereto executed by your authorized officer and sent along with the original of this Letter of Credit and all amendments (if any).
6. Initial Period and Automatic Rollover. The initial period of this Letter of Credit shall terminate on [one year from the issuance date] (the “Initial Expiration Date”). The Letter of Credit shall be automatically extended without amendment for one (1) year periods from the Initial Expiration Date or any future expiration date, unless at least sixty (60) days prior to any such expiration date we send you notice by registered mail or courier at your address first shown (or such other address as may be designated by you as contemplated by numbered paragraph 9) that we elect not to consider this Letter of Credit extended for any such additional one year period.
7. Business Day. As used herein, “Business Day” shall mean any day on which commercial banks are not authorized or required to close in the State of New York, and inter-bank payments can be effected on the Fedwire system.
8. Governing Law. THIS LETTER OF CREDIT IS GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND, EXCEPT AS
OTHERWISE EXPRESSLY STATED HEREIN, TO THE INTERNATIONAL STANDBY PRACTICES, ICC PUBLICATION NO. 590 (THE “ISP98”), AND IN THE EVENT OF ANY CONFLICT, THE LAWS
OF THE STATE OF NEW YORK WILL CONTROL, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
9. Notices. All communications to you in respect of this Letter of Credit shall be in writing and shall be delivered to the address first shown for you above or such other address as may from time to time be designated by you in a written notice to us. All documents to be presented to us hereunder and all other communications to us in respect of this Letter of Credit, which other communications shall be in writing, shall be delivered to the address for us indicated above, or such other address as may from time to time be designated by us in a written notice to you.
10. Irrevocability. This Letter of Credit is irrevocable.
11. Complete Agreement. This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein, except for the ISP98 and Attachment A, Attachment B and Attachment C hereto and the notices referred to herein and any such reference shall not be deemed to
Exhibit L - 3
incorporate herein by reference any document, instrument or agreement except as set forth above.
Sincerely,
[ISSUING BANK]
____________________________
By: ________________________
Title: _______________________
Address:
Exhibit L - 4
ATTACHMENT A
FORM OF DRAW CERTIFICATE
The undersigned hereby certifies to [ISSUING BANK] (“Issuer”), with reference to Irrevocable Letter of Credit No. ________________ (the “Letter of Credit”) issued by Issuer in favor of the undersigned (“Beneficiary”), as follows:
(1) The undersigned is the ____________ of Beneficiary and is duly authorized by Beneficiary to execute and deliver this Certificate on behalf of Beneficiary. (2) Beneficiary hereby makes demand against the Letter of Credit by Beneficiary’s presentation of the draft accompanying this Certificate, for payment of _______________________ U.S. dollars (US$__________), which amount, when aggregated together with any additional amount that has not been drawn under the Letter of Credit, is not in excess of the Stated Amount (as in effect of the date hereof).
(3) Beneficiary and Orange County Power Authority (“Applicant”) are parties to that certain Energy Storage Agreement dated as of [________________], as amended from time to time (the “Agreement”).
(3) Beneficiary is making a drawing under this Letter of Credit because a Buyer Event of Default (as such term is defined in the Agreement) has occurred.
Or
Beneficiary is making a drawing under this Letter of Credit because Applicant is required to maintain the Letter of Credit in force and effect beyond the expiration date of the Letter of Credit but has failed to provide Beneficiary with a replacement Letter of Credit instrument within thirty (30) days prior to such expiration date.
(4) You are hereby directed to make payment of the requested drawing to: (insert wire instructions) Beneficiary Name and Address:
By:
Title:
Date:
(5) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Letter of Credit.
Lock Energy Center, LLC
By:
Exhibit L - 5
Title:
Date:
Exhibit L - 6
ATTACHMENT B
DRAWING UNDER IRREVOCABLE LETTER OF CREDIT NO. _________________ Date:
PAY TO: Lock Energy Center, LLC
U.S.$ ___________________
FOR VALUE RECEIVED AND CHARGE TO THE ACCOUNT OF LETTER OF CREDIT NO. __________________.
Lock Energy Center, LLC
By:
Title:
Date:
Exhibit L - 7
ATTACHMENT C
CANCELLATION CERTIFICATE
Irrevocable Letter of Credit No. _______________
The undersigned, being authorized by the undersigned (“Beneficiary”), hereby certifies on behalf of Beneficiary to [ISSUING BANK] (“Issuer”), with reference to Irrevocable Letter of Credit No. ______________ issued by Issuer to Beneficiary (the “Letter of Credit”), that all obligations of Orange County Power Authority (“Applicant”), under the that certain Energy Storage Agreement dated as of [________________], as amended from time to time (the “Agreement”) have been fulfilled.
Pursuant to Section 5 thereof, the Letter of Credit shall expire upon Issuer’s receipt of this certificate.
Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Letter of Credit.
Lock Energy Center, LLC
By:
Title:
Date:
Exhibit M - 1
EXHIBIT M
FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by Lock Energy Center, LLC, a Delaware limited liability company (“Seller”) to Orange County Power Authority, 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 3.8 of the Agreement, Seller hereby provides the below Replacement RA product information:
Exhibit M - 2
Lock Energy Center, LLC
By:
Its:
Date:
Exhibit N - 1
EXHIBIT N
NOTICES
Lock Energy Center, LLC, a Delaware
limited liability company
(“Seller”)
ORANGE COUNTY POWER AUTHORITY, a
California joint powers authority (“Buyer”)
All Notices:
Street: 700 Universe Blvd.
City: Juno Beach, FL 33408
Attn: Business Management
Phone: 561-691-7723 (Office)
561-301-4685 (Mobile)
Email: [email protected] and
[email protected]
and
[email protected]
All Notices:
Orange County Power Authority
P. O. Box 54283
Irvine, CA 92619
Attn: Joseph M. Mosca
Interim Chief Executive Officer
Phone: (949) 767-8700
Email: [email protected]
Emergencies:
Street: 700 Universe Blvd.
City: Juno Beach, FL 33408
Attn: Business Management
Phone: 561-694-3636
Email: [email protected]
and
[email protected]
Emergencies:
Orange County Power Authority
P. O. Box 54283
Irvine, CA 92619
Attn: Joseph M. Mosca
Interim Chief Executive Officer
Phone: (949) 767-8700
Email: [email protected]
Reference Numbers:
Duns: To be provided separately
Federal Tax ID Number: To be provided
separately
Reference Numbers:
Exhibit N - 2
Lock Energy Center, LLC, a Delaware
limited liability company
(“Seller”)
ORANGE COUNTY POWER AUTHORITY, a
California joint powers authority (“Buyer”)
Invoices:
Attn: Business Management
Phone: 561-691-7723 (Office)
561-301-4685 (Mobile)
E-mail: [email protected] and
[email protected]
Invoices:
Attn: Tiffany Law
Phone: (949) 767-8708
Email: [email protected]
Scheduling:
Attn: Day-Ahead – Christin Neff; Real-Time –
PMI RT desk
Phone: Day-Ahead - 561-304-6053; Real-Time
– 561-625-7100
Email: [email protected]
and
[email protected]
Scheduling:
TEA CAISO Scheduling Coordinator
405 114th Ave SE #100,
Bellevue, WA 98004
Phone: (425) 460-1118
Email: [email protected]
Confirmations:
Attn: Confirmation
Email: [email protected]
Confirmations:
Attn: Tiffany Law
Phone: (949) 767-8708
Email: [email protected]
Payments:
Attn: Business Management
Phone: (561) 694-4725
E-mail: [email protected] Payments:
Attn: Tiffany Law
Phone: (949) 767-8708
Email: [email protected]
Wire Transfer: Seller shall provide to Buyer
the information below at least 60 days prior to
the Commercial Operation Date.
BNK: [TBD]
ABA: [TBD]
ACCT: [TBD]
Wire Transfer:
BNK: To be provided
ABA: To be provided
ACCT: To be provided
Exhibit N - 3
Lock Energy Center, LLC, a Delaware
limited liability company
(“Seller”)
ORANGE COUNTY POWER AUTHORITY, a
California joint powers authority (“Buyer”)
Defaults:
Lock Energy Center, LLC
700 Universe Blvd.
Juno Beach, FL 33408
Attn: Emre Ergas and Dan Neville
Telephone: (561) 691-2866 & (415) 318-5904
E-mail: [email protected]
and
[email protected] and
[email protected]
With a simultaneous copy provided to:
Attn: General Counsel
E-mail: [email protected]
and
[email protected]
Defaults:
P. O. Box 54283
Irvine, CA 92619
Attn: Joseph Mosca, Interim Chief Executive Officer
Telephone: (949) 767-8700
Email: [email protected]
Additional notices of an Event of Default to:
Best Best & Krieger LLP
Attn: Nicholaus Norvell
Address: 18101 Von Karman Ave., Suite 1000
Irvine CA 92612
Phone: (619) 525-1380
Email: [email protected]
Exhibit O - 1
EXHIBIT O
STORAGE CAPACITY TESTS
Storage Capacity Test Notice and Frequency
A. Commercial Operation Storage Capacity Test(s). Upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Commercial Operation Storage Capacity Test (COSCT) prior to the Commercial Operation Date. Such initial COSCT (and any subsequent COSCT permitted in accordance with Exhibit B) shall be performed in accordance with this Exhibit O and shall establish the Installed Storage Capacity and initial Efficiency Rate hereunder based on the actual capacity and capabilities of the Storage Facility determined by such COSCT(s).
B. Subsequent Storage Capacity Tests. Following the COSCT, at least fifteen (15) days in advance of the start of each Contract Year, upon no less than ten (10) Business Days prior Notice to Buyer, Seller shall schedule and complete a Storage Capacity Test (SCT). In addition, Buyer shall have the right to require a retest of the SCT 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 then-current Effective Storage Capacity have varied materially from the results of the most recent prior SCT. Seller shall have the right to run a retest of any SCT at any time 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 Effective Storage Capacity. No later than ten (10) Business Days following the COSCT or any SCT, 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 Storage Facility. In accordance with Section 4.9(a)(ii) of the Agreement and Part II(I) below, after each COSCT or SCT, as applicable, the Effective Storage Capacity (up to, but not in excess of, the Installed Storage Capacity) determined pursuant to such COSCT or SCT, as applicable, shall become the new Effective Storage Capacity at the beginning of the day following the completion of the test for calculating the Contract Price and all other purposes under this Agreement.
D. Nomenclature. Except as otherwise stated, for purposes of Part I, Part II, and Part III of this Exhibit O, a SCT shall include the COSCT.
Capacity Test Procedures
PART I. GENERAL.
A Each SCT shall be conducted in accordance with Prudent Operating Practices, the Operating Restrictions, and the provisions of this Exhibit O. Buyer or its representative may be present for any SCT and may, for informational purposes only, use its own metering equipment (at Buyer’s sole cost).
Exhibit O - 2
B Conditions Prior to Testing.
(1) EMS Functionality. The EMS shall be successfully configured to receive data from the Battery Management System (BMS) and transfer data to the database server for the calculation, recording and archiving of data points. (2) Communications. The Remote Terminal Unit (RTU) testing should be successfully completed prior to any testing. The interface between Seller’s RTU and the SCADA System should be fully tested and functional prior to starting any testing, including verification of the data transmission pathway between the Seller’s RTU and Seller’s EMS interface and the ability to record SCADA System data.
(3) Commissioning Checklist. Commissioning shall be successfully completed per manufacturer guidance on all applicable installed Facility equipment, including verification that all controls, set points, and instruments of the EMS are configured.
PART II. REQUIREMENTS APPLICABLE TO ALL STORAGE CAPACITY TESTS.
A. Test Elements. Each SCT shall include at least the following individual test elements, which must be conducted in the order prescribed in Part III of this Exhibit O, unless the Parties mutually agree to deviations therefrom. The Parties acknowledge and agree that should Seller fall short of demonstrating one or more of the Test Elements as specified below, the SCT will still be deemed “complete,” and any adjustments necessary to the Effective Storage Capacity resulting from such SCT, if applicable, will be made in accordance with this Exhibit O. (1) Electrical output at maximum discharging level (MW) for four (4) continuous hours; and
(2) Electrical input at maximum charging level at the Storage Facility Meter (MW), as sustained until the SOC reaches at least continued by the electrical input at a rate up to the maximum charging level at the Storage Facility Meter (MW), as sustained until the SOC reaches 100%.
B. Parameters. During each CT, the following parameters shall be measured and recorded simultaneously for the Storage Facility, at two (2) second intervals:
(1) Time;
(2) The amount of Discharging Energy as measured by the Storage Facility Meter (kWh) (i.e., to each measurement device making up the Storage Facility Meter);
(3) The amount of Charging Energy as measured by the Storage Facility Meter (kWh) (i.e., from each measurement device making up the Storage Facility Meter);
Exhibit O - 3
(4) Stored Energy Level (MWh).
C. 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 Storage Facility; and
(3) Ambient air temperature (°F).
D. Test Showing. Each SCT shall record and report the following datapoints:
(1) That the SCT successfully started;
(2) The maximum sustained discharging level pursuant to A(1) above; (3) The maximum sustained charging level pursuant to A(2) above; (4) Amount of time between the Storage Facility’s electrical output going from 0 to the maximum sustained discharging level registered during the Test (for purposes of calculating the Ramp Rate);
(5) Amount of time between the Storage Facility’s electrical input going from 0 to the maximum sustained charging level registered during the Test (for purposes of calculating the Ramp Rate);
(6) Amount of Charging Energy to go from 0% SOC to 100% SOC (Energy In);
(7) Amount of Discharging Energy, to go from 100% SOC to 0% SOC (Energy Out).
E. Test Conditions.
(1) General. At all times during a SCT, the Storage Facility shall be operated in compliance with Prudent Operating Practices, the Operating Restrictions, and all operating protocols recommended, required or established by the manufacturer for the Storage Facility.
(2) Abnormal Conditions. If abnormal operating conditions that prevent the testing or 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
Exhibit O - 4
shall be calibrated in accordance with Prudent Operating Practice and, as applicable, the CAISO Tariff.
F. 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 without any modification to the Effective Storage Capacity pursuant to Section I below; (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 Transmission Provider, Seller shall be permitted to reconduct such SCT on dates and at times reasonably acceptable to the Parties.
G. Test Report. Within ten (10) 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 and calculated data for each parameter set forth in Part II.A through D, including copies of the raw data taken during the test; and (3) Seller’s statement of either Seller’s acceptance of the SCT or Seller’s rejection of the SCT results and reason(s) therefor.
Within five (5) 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.
H. Supplementary Storage Capacity Test Protocol. No later than sixty (60) days prior to Commercial Operation, Seller shall deliver to Buyer for its review and approval (such approval not to be unreasonably delayed or withheld) a supplement to this Exhibit O with additional and supplementary details, procedures and requirements applicable to SCTs based on the then-current design of the Storage 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 O.
I. Adjustment to Effective Storage Capacity. The Effective Storage Capacity shall be updated as follows:
Exhibit O - 5
The total amount of Discharging Energy delivered to the Delivery Point (expressed in MWh AC) during the first four (4) hours of discharge (up to, but not in excess of, the product of (i) (a) the Guaranteed Storage Capacity (in the case of a Commercial Operation Storage Capacity Test, including under Section 5 of Exhibit B) or (b) the Installed Storage Capacity (in the case of any other Storage Capacity Test)multiplied by (ii) four (4) hours), shall be divided by four (4) hours to determine the Effective Storage Capacity, which shall be expressed in MW AC, and shall be the new Effective Storage Capacity in accordance with Section 4.9(a)(ii) of the Agreement.
J. The total amount of Energy Out (as reported under Section II.D(7) above) divided by the total amount of Energy In (as reported under Section II.D(6) above), and expressed as a percentage, shall be recorded as the initial Efficiency Rate, and shall be used for the calculation in Exhibit C until updated after the first month of operations.
PART III. INITIAL STORAGE CAPACITY TEST PROTOCOL.
A. Effective Storage Capacity and Initial Efficiency Rate Test Procedure:
(1) System Starting State: The Storage Facility will be in the on-line state at 0% SOC.
(2) Record the initial value of the Storage Facility SOC. (3) Command a real power charge that results in an AC power of Storage Facility’s maximum charging level, and continue charging as sustained until the SOC reaches at least , continued by charging at a rate up to the maximum charging level at the Storage Facility Meter (MW), as sustained until the SOC reaches 100%.
(4) Reserved.
(5) Record and store the AC energy charged to the Storage Facility from 0% SOC to 100% SOC as measured at the Storage Facility Meter (Energy In). (6) Following an agreed-upon rest period, command a real power discharge that results in an AC power output of the Storage Facility’s maximum discharging level and maintain the discharging state until the earlier of (a) the Facility has discharged at the maximum discharging level for four (4) consecutive hours, (b) the Storage Facility has reached 0% SOC, or (c) the sustained discharging level is at least 2% less than the maximum discharging level.
Exhibit O - 6
(7) Record and store the Discharging Energy as measured at the Storage Facility Meter. Such data point shall be used for purposes of calculation the Effective Storage Capacity.
(8) If the Storage Facility has not reached 0% SOC pursuant to Section III.A.6, continue discharging the Storage Facility until it reaches a 0% SOC. (9) Record and store the Energy Out from the commencement of discharging pursuant to Part III.A.6 until the Storage Facility has reached a 0% SOC pursuant to either Part III.A.6 or Part III.A.9, as applicable. Test Results
(1) The resulting Effective Storage Capacity measurement is the Discharging Energy at the Storage Facility Meter pursuant to Part III.A(7) divided by four (4) hours.
(2) The resulting initial Efficiency Rate is calculated as the total amount of Energy Out (as reported under Section III.A(10) above) divided by the total amount of Energy In (as reported under Section III.A(5) above), and expressed as a percentage, and shall be used for the calculation in Exhibit C until updated following the first month of operations.
B. AGC Discharge Test
Purpose: This test will demonstrate the AGC discharge capability to achieve the Storage Facility’s maximum discharging level within 1 second. System starting state: The Storage Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow a predefined agreed-upon active power profile. Procedure:
(1) Record the Storage Facility active power level at the Storage Facility Meter. (2) Command the Storage Facility to follow a simulated CAISO RIG signal of Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Storage Facility active power response (in seconds). System end state: The Storage Facility will be in the on-line state and at a commanded active power level of 0 MW.
C. AGC Charge Test
Purpose: This test will demonstrate the AGC charge capability to achieve the Storage Facility’s full charging level within 1 second.
Exhibit O - 7
System starting state: The Storage Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Storage Facility control system will be configured to follow a predefined agreed-upon active power profile.
Procedure:
(1) Record the Storage Facility active power level at the Storage Facility Meter. (2) Command the Storage Facility to follow a simulated CAISO RIG signal of Pmax at .95 power factor for ten (10) minutes.
(3) Record and store the Storage Facility active power response (in seconds). System end state: The Storage Facility will be in the on-line state and at a commanded active power level of 0 MW.
D. Reactive Power Production Test
Purpose: This test will demonstrate the reactive power production capability of the Storage Facility.
System starting state: The Storage Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The EMS will be configured to follow an agreed-upon predefined reactive power profile. Procedure:
(1) Record the Storage Facility reactive power level at the Facility Meter. (2) Static MVAR Production Test: Step the Q setpoint in increments of 10MVAR until the MAXIMUM setpoint limits are reached. Hold for ten (10) minutes.
(3) Record and store the Storage Facility reactive power response. System end state: The Storage Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
E. Reactive Power Consumption Test
Purpose: This test will demonstrate the reactive power consumption capability of the Storage Facility.
System starting state: The Storage Facility will be in the on-line state at 50% SOC and at an initial active power level of 0 MW and reactive power level of 0 MVAR. The Storage Facility control system will be configured to follow an agreed-upon predefined reactive power profile.
Procedure:
Exhibit O - 8
(1) Record the Storage Facility reactive power level at the Facility Meter. (2) Static MVAR Production Test: Step the Q setpoint in increments of 10MVAR until the MAXIMUM setpoint limits are reached. Hold for ten (10) minutes.
(3) Record and store the Storage Facility reactive power response. System end state: The Storage Facility will be in the on-line state and at a commanded reactive power level of 0 MVAR.
Exhibit P - 1
EXHIBIT P
STORAGE FACILITY AVAILABILITY
Annual Storage Availability
(a) Calculation of Annual Storage Availability. Seller shall calculate the “Annual Storage Availability” in a given Contract Year using the formula set forth below:
Annual Storage Availability (%) =
[MNTHHRSy - UNAVAILHRSy]
[MNTHHRSy]
where:
y = relevant Contract Year “y” in which availability is calculated; MNTHHRSy is the total number of On-Peak Hours for the Contract Year; UNAVAILHRSy, is the total number of On-Peak Hours in the Contract Year during which the Storage Facility was unavailable to deliver Product for any reason other than the occurrence of any of the following (each, an “Excused Event”): a Force Majeure Event; System Emergency; Curtailment Periods, Event of Default by Buyer, Storage Capacity Tests; Planned Outages and scheduled maintenance up to per Contract Year plus an additional for augmentation years; or the Operating Restrictions in Exhibit Q. To be clear, hours of unavailability caused by any Excused Event will not be included in UNAVAILHRSy for such Contract Year. Any other event that results in unavailability of the Storage Facility for less than a full hour will count as an equivalent percentage of the applicable hour(s) for this calculation. Additionally, if during any applicable hour the Storage Facility is available, but for less than the full amount of the then Effective Storage Capacity, the UNAVAILHRSy for such hour shall be calculated as an equivalent percentage of such hour in proportion to the amount of available Effective Storage Capacity. Notwithstanding anything to the contrary set forth elsewhere in this Appendix P or in this Agreement, to the extent the Storage Facility is unable to provide Ancillary Services for any reason not excused under this Agreement during any Settlement Interval that is not otherwise deemed Excused Event, but the Storage Facility is able to charge and discharge Energy between the Storage Facility and the Point of Delivery, then such impact on UNAVAILHRS shall be reduced by 75% (i.e., the Storage Facility shall be considered 75% available, and 25% unavailable).
If the Storage Facility or any component thereof was previously deemed unavailable for an hour or part of an hour, and Seller provides a revised Notice indicating the Storage Facility is available for that hour or part of an hour by 5:00 a.m. of the morning Seller or its SC schedules or bids the Storage Facility in the Day-Ahead Market, the Storage Facility will be deemed to be available to the extent set forth in the revised Notice.
Exhibit P - 2
If the Storage Facility or any component thereof was previously deemed unavailable for an hour or part of an hour and Seller provides a revised Notice indicating the Storage Facility is available for that hour or part of an hour at least sixty (60) minutes prior to the time the Seller or its SC is required to schedule or bid the Storage Facility in the Real-Time Market, and the Storage Facility is dispatched in the Real-Time Market, the Storage Facility will be deemed to be available to the extent set forth in the revised Notice.
Availability Adjustment
The applicable “Availability Adjustment” or “AA” is calculated as follows:
(A) If the Annual Storage Availability is greater than or equal to the Guaranteed Storage Availability, then:
AA = 100%
(B) If the Annual Storage Availability is less than the Guaranteed Storage Availability, but greater than or equal to then:
AA = 100%
(C) If the Annual Storage Availability is less than but greater than or equal to then:
AA = 100% -
(D)If the Annual Storage Availability is less than then:
AA = 0
Exhibit R – 1
EXHIBIT Q
OPERATING RESTRICTIONS
The Parties will develop and finalize the Operating Restrictions prior to the Commercial Operation Date; provided, the Operating Restrictions (i) may not be materially more restrictive of the operation of the Storage Facility than as set forth below, unless agreed to by Buyer in writing, (ii) will, at a minimum, include the rules, requirements and procedures set forth in this Exhibit Q, (iii) will include protocols and parameters for Seller’s operation of the Storage Facility in the absence of Charging Instructions, Discharging Instructions or other similar instructions including the Applicable Instructions from Buyer relating to the use of the Storage Facility, and (iv) may include Storage Facility Scheduling, Operating Restrictions and Communications Protocols.
I. STORAGE FACILITY OPERATING RESTRICTIONS*
File Update Date: [XX/XX/20XX]
Technology: Lithium Ion Batteries
A. Contract Capacity
Guaranteed Storage Capacity (MW): 115
Effective Storage Capacity (MW): 115
B. Total Unit Dispatchable Range Information
Interconnect Voltage (kV) 500
Maximum Storage Level (MWh): 460
Minimum Storage Level (MWh): 0
Stored energy capability (MWh): 460
Maximum Discharge (MW): 115
Maximum Charge (MW): 115
Guaranteed Efficiency Rate:
Maximum energy throughput (BET) (MWh/year): 167,900 (365 cycles) Maximum energy throughput (BET) (MWh/day): 920 (2 cycles) C. Charge and Discharge Rates
Mode Maximum/
Minimum
(MW)
Ramp Rate (MW/min) Description
Energy (Charge) 115/0 230, unless otherwise required by the CAISO
Energy (Discharge) 115/0 230, unless otherwise required by the CAISO
Exhibit P - 2
D. Ancillary Services
Frequency regulation is included: Yes
Spin is included: Yes
* Subject to Section 2.3
1. Maximum annual average State of Charge (SOC) of
2. The Charge Rate may be limited above SOC when constant voltage charging occurs
Exhibit P - 2
EXHIBIT R
METERING DIAGRAM
To be updated by Seller prior to the Commercial Operation Date
Exhibit S - 1
EXHIBIT S
FORM OF GUARANTY
This Guaranty (this “Guaranty”) is entered into as of [_____] (the “Effective Date”) by and between NextEra Energy Capital Holdings, Inc., a Delaware corporation (“Guarantor”), and Orange County Power Authority, a California joint powers authority (together with its successors and permitted assigns, “Buyer”).
Recitals
A. Buyer and Lock Energy Center, LLC, a Delaware limited liability company (“Seller”), entered into that certain Energy Storage Agreement (as amended, restated or otherwise modified from time to time, the “ESA”) dated as of [____], 2025.
B. Guarantor is entering into this Guaranty as Performance Security to secure Seller’s obligations under the ESA, as required by Section 8.8 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, and subject to the terms and conditions hereof, Guarantor does hereby unconditionally, absolutely and irrevocably guarantee, as primary obligor and not as a surety, to Buyer the 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 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 Agreement. If Seller fails to pay any Guaranteed Amount as required pursuant to
Exhibit S - 2
the ESA for ten (10) 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 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 ten (10) 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), and the Delivery Term has expired or terminated early, (y) the date that is twelve (12) months after the last day of the Delivery Term, or (z) 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
Exhibit S - 3
the ESA, or (C) Seller’s inability to pay any Guaranteed Amount or perform its obligations under the ESA, or
(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 are expressly waived under any provision of this Guaranty) in a subsequent action for recoupment, restitution, or reimbursement.
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) subject to Section 10, 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 Section 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 corporate or limited liability company 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
Exhibit S - 4
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, which would invalidate or materially impair Guarantor’s ability to perform its obligations under this Guaranty, (d) except as disclosed in reports filed with the Securities and Exchange Commission by Guarantor’s parent, NextEra Energy, Inc., there are no actions, suits or proceedings pending before any court, 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 in respect of, 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 next Business Day express delivery, and (ii) four Business Days after mailing if sent by certified, first class mail, return receipt requested. Any party may change its address to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 8.
If delivered to Buyer, to it at [____]
Attn: [____]
If delivered to Guarantor, to it at [____]
Attn: [____]
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 New York, excluding choice of law rules (other than Section 5-1401 and 5-1402 of the New York General Obligations Law), provided that, notwithstanding the foregoing, in no event shall such governing law prevent Buyer from complying with any obligations or from exercising any joint powers authority arising under the laws of the State of California. 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 Orange County, 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, which consent shall not be unreasonably withheld. This Guaranty is not assignable by Buyer without the prior written consent of Guarantor, which consent shall not be unreasonably withheld, except to the extent that the ESA is assigned in accordance with the terms
Exhibit S - 5
thereof. 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 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.
10. WAIVER OF JURY TRIAL; JUDICIAL REFERENCE.
(a) JURY WAIVER. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
(b) JUDICIAL REFERENCE. IN THE EVENT ANY LEGAL
PROCEEDING IS FILED IN A FEDERAL COURT OF THE STATE OF
CALIFORNIA, OR, TO THE EXTENT SUCH FEDERAL COURT LACKS
SUBJECT MATTER JURISDICTION, IN A STATE COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN
CONNECTION WITH ANY CONTROVERSY, DISPUTE OR CLAIM
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY)
(EACH, A “CLAIM”) AND THE WAIVER SET FORTH IN THE PRECEDING
PARAGRAPH IS NOT ENFORCEABLE IN SUCH ACTION OR PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:
(i) ANY CLAIM (INCLUDING BUT NOT LIMITED TO ALL DISCOVERY AND
LAW AND MOTION MATTERS, PRETRIAL MOTIONS, TRIAL MATTERS
AND POST-TRIAL MOTIONS) WILL BE DETERMINED BY A GENERAL
Exhibit S - 6
REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT
TO BE SPECIFICALLY ENFORCEABLE IN ACCORDANCE WITH
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638.
(ii) UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL
SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY MAY
REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).
(iii) THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN
A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE
DECIDED BY A REFEREE AND NOT BY A JURY.
[Signature on next page]
Exhibit S - 7
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:
NEXTERA ENERGY CAPITAL HOLDINGS,
INC.
By:______________________________
Printed Name:__________________
Title:____________________________
BUYER:
[_______]
By:______________________________
Printed Name:__________________
Title:____________________________
By:______________________________
Printed Name:__________________
Title:____________________________
Exhibit T - 1
EXHIBIT T
FORM OF CONSENT TO COLLATERAL ASSIGNMENT
This Consent to Collateral Assignment Agreement (this “Consent”) is entered into among (i) Orange County Power Authority, a California joint powers authority (“OCPA”), (ii) Lock Energy Center, LLC, a Delaware limited liability company (the “Project Company”), and (iii) [Name of Collateral Agent], a [Legal Status of Collateral Agent], as Collateral Agent for the secured parties under the Financing Documents referred to below (such secured parties together with their successors permitted under this Consent in such capacity, the “Secured Parties”, and, such agent, together with its successors in such capacity, the “Collateral Agent”). OCPA, Project Company and Collateral Agent are hereinafter sometimes referred to individually as a “Party” and jointly as the “Parties”. Capitalized terms used but not otherwise defined in this Consent shall have the meanings ascribed to them in the ESA (as defined below).
RECITALS
The Parties enter into this Consent with reference to the following facts:
A. Project Company and OCPA have entered into that certain Energy Storage Agreement, dated as of [Date] [List all amendments as contemplated by Section 3.4] (“ESA”), pursuant to which Project Company will develop, construct, commission, test and operate the Facility and sell the Product to OCPA, and OCPA will purchase the Product from Project Company;
B. As collateral for Project Company’s obligations under the ESA, Project Company has agreed to provide to OCPA certain collateral, which may include Performance Security and Development Security and other collateral described in the ESA (collectively, the “ESA Collateral”);
C. Project Company has entered into that certain [Insert description of financing arrangements with Lender], dated as of [Date], among Project Company, the Lenders party thereto and the Collateral Agent (the “Financing Agreement”), pursuant to which, among other things, the Lenders have extended commitments to make loans to Project Company or its upstream owners;
D. As collateral security for Project Company’s obligations under the Financing Agreement and related agreements (collectively, the “Financing Documents”), Project Company has, among other things, assigned all of its right, title and interest in, to and under the ESA and Project’s Company’s owners have pledged their ownership interest in Project Company (collectively, the “Assigned Interest”) to the Collateral Agent pursuant to the Financing Documents; and
Exhibit T - 2
E. It is a requirement under the Financing Agreement and the ESA that OCPA and the other Parties hereto shall have executed and delivered this Consent.
AGREEMENT
In consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties hereto hereby agree as follows:
SECTION 1. CONSENT TO ASSIGNMENT, ETC.
1.1 Consent and Agreement.
OCPA hereby acknowledges:
(a) Notice of and consents to the assignment as collateral security to Collateral Agent, for the benefit of the Secured Parties, of the Assigned Interest; and (b) The right (but not the obligation) of Collateral Agent in the exercise of its rights and remedies under the Financing Documents, to make all demands, give all notices, take all actions and exercise all rights of Project Company permitted under the ESA (subject to OCPA’s rights and defenses under the ESA and the terms of this Consent) and accepts any such exercise; provided, insofar as the Collateral Agent exercises any such rights under the ESA or makes any claims with respect to payments or other obligations under the ESA, the terms and conditions of the ESA applicable to such exercise of rights or claims shall apply to Collateral Agent to the same extent as to Project Company.
1.2 Project Company’s Acknowledgement.
Each of Project Company and Collateral Agent hereby acknowledges and agrees that, following the occurrence of a default by Project Company under the ESA, OCPA is authorized to act in accordance with Collateral Agent’s instructions and the terms of this Agreement, and that, other than arising due to the gross negligence or willful misconduct of OCPA, OCPA shall bear no liability to Project Company or Collateral Agent for acting in accordance therewith.
1.3 Right to Cure.
If Project Company defaults in the performance of any of its obligations under the ESA, or upon the occurrence or non-occurrence of any event or condition under the ESA which would immediately or with the passage of any applicable grace period or the giving of notice, or both, enable OCPA to terminate or suspend its performance under the ESA (a “ESA Default”), OCPA will not terminate or suspend its performance under the ESA until it first gives written notice of such ESA Default to Collateral Agent and affords Collateral Agent the right to cure such ESA Default within the applicable cure period under the ESA, which cure period shall run concurrently with that afforded Project Company under the ESA. In addition, if Collateral Agent gives OCPA written notice prior to the expiration of the applicable cure period under the ESA of Collateral Agent’s intention to cure such ESA Default (which notice shall include a reasonable description of the time during which it anticipates to cure such ESA Default) and is diligently proceeding to
Exhibit T - 3
cure such ESA Default, notwithstanding the applicable cure period under the ESA, Collateral Agent shall have a period of ninety (90) days (or, if such ESA Default is for failure by the Project Company to pay an amount to OCPA which is due and payable under the ESA other than to provide ESA Collateral, thirty (30) days, or, if such ESA Default is for failure by Project Company to provide ESA Collateral, ten (10) Business Days) from the Collateral Agent’s receipt of the notice of such ESA Default from OCPA to cure such ESA Default; provided, that, such additional cure period for the Collateral Agent shall commence on the later of (1) the end of the Project Company’s cure period under the ESA and (2) the date the Collateral Agent receives notice of the ESA Default; provided, further, (a) if possession of the Facility is necessary to cure any such non-monetary ESA Default and Collateral Agent has commenced foreclosure proceedings within sixty (60) days after notice of the ESA Default and is diligently pursuing such foreclosure proceedings, Collateral Agent will be allowed a reasonable time, not to exceed one hundred eighty (180) days after the notice of the ESA Default, to complete such proceedings and cure such ESA Default, and (b) if Collateral Agent is prohibited from curing any such ESA Default by any process, stay or injunction issued by any Governmental Authority or pursuant to any bankruptcy or insolvency proceeding or other similar proceeding involving Project Company, then the time periods specified herein for curing a ESA Default shall be extended for the period of such prohibition, so long as Collateral Agent has diligently pursued removal of such process, stay or injunction. Collateral Agent shall provide OCPA with reports concerning the status of efforts to cure a ESA Default upon OCPA’s reasonable request.
1.4 Substitute Owner.
Subject to Section 1.7, the Parties agree that if Collateral Agent notifies OCPA (such notice, a “Financing Document Default Notice”) that an event of default has occurred and is continuing under the Financing Documents (a “Financing Document Event of Default”) then, upon a judicial foreclosure sale, non-judicial foreclosure sale, deed in lieu of foreclosure or other transfer following a Financing Document Event of Default, Collateral Agent (or its designee) shall be substituted for Project Company (the “Substitute Owner”) under the ESA, and, subject to Sections
1.7(b) and 1.7(c) below, OCPA and Substitute Owner will recognize each other as counterparties under the ESA and will continue to perform their respective obligations (including those obligations accruing to OCPA and the Project Company prior to the existence of the Substitute Owner) under the ESA in favor of each other in accordance with the terms thereof; provided, before OCPA is required to recognize the Substitute Owner, the Substitute Owner must have demonstrated to OCPA’s reasonable satisfaction that the Substitute Owner meets the qualifications of a Permitted Transferee under the ESA (a “Permitted Transferee”). For purposes of the foregoing, OCPA shall be entitled to assume that any such purported exercise of rights by Collateral Agent that results in substitution of a Substitute Owner under the ESA is in accordance with the Financing Documents without independent investigation thereof but shall have the right to require that the Collateral Agent and its designee (if applicable) provide reasonable evidence demonstrating the same.
1.5 Replacement Agreements.
Subject to Section 1.7, if the ESA is terminated, rejected or otherwise invalidated as a result of any bankruptcy, insolvency, reorganization or similar proceeding affecting Project Company, its owner(s) or guarantor(s), and if Collateral Agent or its designee directly or indirectly takes
Exhibit T - 4
possession of, or title to, the Facility (including possession by a receiver or title by foreclosure or deed in lieu of foreclosure) (“Replacement Owner”), OCPA shall, and Collateral Agent shall cause Replacement Owner to, enter into a new agreement with one another for the balance of the obligations under the ESA remaining to be performed having terms substantially the same as the terms of the ESA with respect to the remaining Term (“Replacement ESA”); provided, before OCPA is required to enter into a Replacement ESA, the Replacement Owner must have demonstrated to OCPA’s reasonable satisfaction that the Replacement Owner satisfies the requirements of a Permitted Transferee. For purposes of the foregoing, OCPA is entitled to assume that any such purported exercise of rights by Collateral Agent that results in a Replacement Owner is in accordance with the Financing Documents without independent investigation thereof but shall have the right to require that the Collateral Agent and its designee (if applicable) provide reasonable evidence demonstrating the same. Notwithstanding the execution and delivery of a Replacement ESA, to the extent OCPA is, or was otherwise prior to its termination as described in this Section 1.5, entitled under the ESA, OCPA may suspend performance of its obligations under such Replacement ESA, unless and until all ESA Defaults of Project Company under the ESA or Replacement ESA have been cured.
1.6 Transfer.
Subject to Section 1.7, a Substitute Owner or a Replacement Owner may assign all of its interest in the Facility and the ESA and a Replacement ESA to a natural person, corporation, trust, business trust, joint venture, joint stock company, association, company, limited liability company, partnership, Governmental Authority or other entity (a “Person”) to which the Facility is transferred; provided, the proposed transferee shall have demonstrated to OCPA’s reasonable satisfaction that such proposed transferee satisfies the requirements of a Permitted Transferee.
1.7 Assumption of Obligations.
(a) Transferee.
Any transferee under Section 1.6 shall expressly assume in a writing reasonably satisfactory to OCPA all of the obligations of Project Company, Substitute Owner or Replacement Owner under the ESA or Replacement ESA, as applicable, including posting and collateral assignment of the ESA Collateral. Upon such assignment and the cure of any outstanding ESA Default, and payment of all other amounts due and payable to OCPA in respect of the ESA or such Replacement ESA, the transferor shall be released from any further liability under the ESA or Replacement ESA, as applicable.
(b) Substitute Owner.
Subject to Section 1.7(c), any Substitute Owner pursuant to Section 1.4 shall be required to perform Project Company’s obligations under the ESA, including curing defaults, posting and collateral assignment of the ESA Collateral; provided, the obligations of such Substitute Owner shall be no more than those of Project Company under the ESA. (c) No Liability.
OCPA acknowledges and agrees that neither Collateral Agent nor any Secured Party shall have any liability or obligation under the ESA as a result of this Consent (except to the extent
Exhibit T - 5
Collateral Agent or a Secured Party is a Substitute Owner or Replacement Owner) nor shall Collateral Agent or any other Secured Party be obligated or required to (i) perform any of Project Company’s obligations under the ESA, except as provided in Sections 1.7(a) and 1.7(b) and to the extent Collateral Agent or a Secured Party is a Substitute Owner or Replacement Owner, or (ii) take any action to collect or enforce any claim for payment assigned under the Financing Documents. If Collateral Agent becomes a Substitute Owner pursuant to Section 1.4 or enters into a Replacement ESA, Collateral Agent shall not have any personal liability to OCPA under the ESA or Replacement ESA and the sole recourse of OCPA in seeking enforcement of such obligations against Collateral Agent shall be to the aggregate interest of the Secured Parties in the Facility; provided, such limited recourse shall not limit OCPA’s right to seek equitable or injunctive relief against Collateral Agent, or OCPA’s rights with respect to any offset rights expressly allowed under the ESA, a Replacement ESA or the ESA Collateral.
1.8 Delivery of Notices.
OCPA shall deliver to Collateral Agent, concurrently with the delivery thereof to Project Company, a copy of each notice, request or demand given by OCPA to Project Company pursuant to the ESA relating to (a) a ESA Default by Project Company under the ESA, (b) any claim regarding Force Majeure by OCPA under the ESA, (c) any notice of dispute under the ESA, (d) any notice of intent to terminate or any termination notice, and (e) any matter that would require the consent of Collateral Agent pursuant to Section 1.11 or any other provision of this Consent.
Collateral Agent acknowledges that delivery of such notice, request and demand shall satisfy OCPA’s obligation to give Collateral Agent a notice of ESA Default under Section 1.3. Collateral Agent shall deliver to OCPA, concurrently with delivery thereof to Project Company, a copy of each notice, request or demand given by Collateral Agent to Project Company pursuant to the Financing Documents relating to a default by Project Company under the Financing Documents.
1.9 Confirmations.
OCPA will, as and when reasonably requested by Collateral Agent from time to time, confirm in writing matters relating to the ESA (including the performance of same by Project Company); provided, such confirmation may be limited to matters of which OCPA is aware as of the time the confirmation is given and such confirmations shall be without prejudice to any rights of OCPA under the ESA as between OCPA and Project Company.
1.10 Exclusivity of Dealings.
Except as provided in Sections 1.3, 1.4, 1.8, 1.9 and 2.1, unless and until OCPA receives a Financing Document Default Notice, OCPA shall deal exclusively with Project Company in connection with the performance of OCPA’s obligations under the ESA. From and after such time as OCPA receives a Financing Document Default Notice and until a Substitute Owner is substituted for Project Company pursuant to Section 1.4, a Replacement ESA is entered into or the ESA is transferred to a Person to whom the Facility is transferred pursuant to Section 1.6, OCPA shall, until Collateral Agent confirms to OCPA in writing that all obligations under the Financing Documents are no longer outstanding, deal exclusively with Collateral Agent in connection with the performance of OCPA’s obligations under the ESA, and OCPA may irrevocably rely on instructions provided by Collateral Agent in accordance therewith to the exclusion of those
Exhibit T - 6
provided by any other Person.
1.11 No Amendments.
To the extent permitted by Laws, OCPA agrees that it will not, without the prior written consent of Collateral Agent (not to be unreasonably withheld, delayed or conditioned) (a) enter into any material supplement, restatement, novation, extension, amendment or modification of the ESA (b) terminate or suspend its performance under the ESA (except in accordance with Section 1.3) or (c) consent to or accept any termination or cancellation of the ESA by Project Company.
SECTION 2. PAYMENTS UNDER THE ESA
2.1 Payments.
Unless and until OCPA receives written notice to the contrary from Collateral Agent, OCPA will make all payments to be made by it to Project Company under or by reason of the ESA directly to Project Company. OCPA, Project Company, and Collateral Agent acknowledge that OCPA will be deemed to be in compliance with the payment terms of the ESA to the extent that OCPA makes payments in accordance with Collateral Agent’s instructions. [Collateral Agent may specify account information]
2.2 No Offset, Etc.
All payments required to be made by OCPA under the ESA shall be made without any offset, recoupment, abatement, withholding, reduction or defense whatsoever, other than that expressly allowed by the terms of the ESA.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF OCPA
OCPA makes the following representations and warranties as of the date hereof in favor of Collateral Agent:
3.1 Organization.
OCPA is a joint powers authority and community choice aggregator duly organized and validly existing 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 . OCPA has all requisite power and authority, corporate and otherwise, to enter into and to perform its obligations hereunder and under the ESA, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby.
3.2 Authorization.
The execution, delivery and performance by OCPA of this Consent and the ESA have been duly authorized by all necessary corporate or other action on the part of OCPA and do not require any approval or consent of any holder (or any trustee for any holder) of any indebtedness or other obligation of OCPA which, if not obtained, will prevent OCPA from performing its obligations hereunder or under the ESA except approvals or consents which have previously been obtained
Exhibit T - 7
and which are in full force and effect.
3.3 Execution and Delivery; Binding Agreements.
Each of this Consent and the ESA is in full force and effect, have been duly executed and delivered on behalf of OCPA by the appropriate officers of OCPA, and constitute the legal, valid and binding obligation of OCPA, enforceable against OCPA in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
3.4 No Default or Amendment.
Except as set forth in Schedule A attached hereto: (a) Neither OCPA nor, to OCPA’s actual knowledge, Project Company, is in default of any of its obligations under the ESA; (b) OCPA and, to OCPA’s actual knowledge, Project Company, has complied with all conditions precedent to the effectiveness of its obligations under the ESA; (c) to OCPA’s actual knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either OCPA or Project Company to terminate or suspend its obligations under the ESA; and (d) the ESA has not been amended, modified or supplemented in any manner except as set forth herein and in the recitals hereto.
3.5 No Previous Assignments.
OCPA has no notice of, and has not consented to, any previous assignment by Project Company of all or any part of its rights under the ESA, except as previously disclosed in writing and consented to by OCPA.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PROJECT COMPANY Project Company makes the following representations and warranties as of the date hereof in favor of the Collateral Agent and OCPA:
4.1 Organization.
Project Company is a limited liability company duly organized and validly existing under the laws of the state of its organization, and is duly qualified, authorized to do business and in good standing in every jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except where the failure to so qualify would not have a material adverse effect on its financial condition, its ability to own its properties or its ability to transact its business. Project Company has all requisite power and authority, corporate and otherwise, to enter into and to perform its obligations hereunder and under the ESA, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby.
4.2 Authorization.
The execution, delivery and performance of this Consent by Project Company, and Project Company’s assignment of its right, title and interest in, to and under the ESA to the Collateral
Exhibit T - 8
Agent pursuant to the Financing Documents, have been duly authorized by all necessary corporate or other action on the part of Project Company.
4.3 Execution and Delivery; Binding Agreement.
This Consent is in full force and effect, has been duly executed and delivered on behalf of Project Company by the appropriate officers of Project Company, and constitutes the legal, valid and binding obligation of Project Company, enforceable against Project Company in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a proceeding in equity or at law).
4.4 No Default or Amendment.
Except as set forth in Schedule B attached hereto: (a) neither Project Company nor, to Project Company’s actual knowledge, OCPA, is in default of any of its obligations thereunder; (b) Project Company and, to Project Company’s actual knowledge, OCPA, has complied with all conditions precedent to the effectiveness of its obligations under the ESA; (c) to Project Company’s actual knowledge, no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either OCPA or Project Company to terminate or suspend its obligations under the ESA; and (d) the ESA has not been amended, modified or supplemented in any manner except as set forth herein and in the recitals hereto.
4.5 No Previous Assignments.
Project Company has not previously assigned all or any part of its rights under the ESA.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF COLLATERAL AGENT Collateral Agent makes the following representations and warranties as of the date hereof in favor of OCPA and Project Company:
5.1 Authorization.
The execution, delivery and performance of this Consent by Collateral Agent have been duly authorized by all necessary corporate or other action on the part of Collateral Agent and Secured Parties.
5.2 Execution and Delivery; Binding Agreement.
This Consent is in full force and effect, has been duly executed and delivered on behalf of Collateral Agent by the appropriate officers of Collateral Agent, and constitutes the legal, valid and binding obligation of Collateral Agent as Collateral Agent for the Secured Parties, enforceable against Collateral Agent (and the Secured Parties to the extent applicable) in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application affecting the enforcement of creditors’ rights generally and (b) general equitable principles (whether considered in a
Exhibit T - 9
proceeding in equity or at law).
SECTION 6. MISCELLANEOUS
6.1 Notices.
All notices and other communications hereunder shall be in writing, shall be deemed given upon receipt thereof by the Party or Parties to whom such notice is addressed, shall refer on their face to the ESA (although failure to so refer shall not render any such notice or communication ineffective), shall be sent by first class mail, by personal delivery or by a nationally recognized courier service, and shall be directed (a) if to OCPA or Project Company, in accordance with [Notice Section of the ESA] of the ESA, (b) if to Collateral Agent, to [Collateral Agent Name], [Collateral Agent Address], Attn: [Collateral Agent Contact Information], Telephone: [___], Fax:
[___], and (c) to such other address or addressee as any such Party may designate by notice given pursuant hereto.
6.2 Governing Law; Submission to Jurisdiction.
(a) THIS CONSENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
THIS CONSENT AND ALL MATTERS ARISING OUT OF THIS CONSENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF CALIFORNIA WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PROVISIONS THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
(b) All disputes, claims or controversies arising out of, relating to, concerning or pertaining to the terms of this Consent shall be governed by the dispute resolution provisions of the ESA. Subject to the foregoing, any legal action or proceeding with respect to this Consent and any action for enforcement of any judgment in respect thereof may be brought in the courts of the State of California or of the United States of America for the Central District of California, and, by execution and delivery of this Consent, each Party hereby accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and appellate courts from any appeal thereof. Each Party further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to its notice address provided pursuant to Section 6.1 hereof. Each Party hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Consent brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of any Party to serve process in any other manner permitted by law.
6.3 Headings Descriptive.
The headings of the several sections and subsections of this Consent are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Consent.
6.4 Severability.
Exhibit T - 10
In case any provision in or obligation under this Consent shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
6.5 Amendment, Waiver.
Neither this Consent nor any of the terms hereof may (a) be terminated, amended, supplemented or modified, except by an instrument in writing signed by OCPA, Project Company and Collateral Agent or (b) waived, except by an instrument in writing signed by the waiving Party.
6.6 Termination.
Each Party’s obligations hereunder are absolute and unconditional, and no Party has any right, and shall have no right, to terminate this Consent or to be released, relieved or discharged from any obligation or liability hereunder until OCPA has been notified by Collateral Agent that all of the obligations under the Financing Documents shall have been satisfied in full (other than contingent indemnification obligations) or, with respect to the ESA or any Replacement ESA, its obligations under such ESA or Replacement ESA have been fully performed.
6.7 Successors and Assigns.
This Consent shall be binding upon each Party and its successors and assigns permitted under and in accordance with this Consent, and shall inure to the benefit of the other Parties and their respective successors and assignee permitted under and in accordance with this Consent. Each reference to a Person herein shall include such Person’s successors and assigns permitted under and in accordance with this Consent.
6.8 Further Assurances.
OCPA hereby agrees to execute and deliver all such instruments and take all such action as may be necessary to effectuate fully the purposes of this Consent.
6.9 Waiver of Trial by Jury.
TO THE EXTENT PERMITTED BY APPLICABLE LAWS, THE PARTIES HEREBY
IRREVOCABLY WAIVE ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS CONSENT OR ANY MATTER ARISING HEREUNDER. EACH PARTY FURTHER
WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
6.10 Entire Agreement.
This Consent and any agreement, document or instrument attached hereto or referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect to the subject matter hereof. In the event of any conflict
Exhibit T - 11
between the terms, conditions and provisions of this Consent and any such agreement, document or instrument, the terms, conditions and provisions of this Consent shall prevail.
6.11 Effective Date.
This Consent shall be deemed effective as of the date upon which the last Party executes this Consent.
6.12 Counterparts; Electronic Signatures.
This Consent may be executed in one or more counterparts, each of which will be deemed to be an original of this Consent and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Consent and of signature pages by facsimile transmission, Portable Document Format (i.e., PDF), or by other electronic means shall constitute effective execution and delivery of this Consent as to the Parties and may be used in lieu of the original Consent for all purposes.
[Remainder of Page Left Intentionally Blank.]
Exhibit T - 12
IN WITNESS WHEREOF, the Parties hereto have caused this Consent to be duly executed and delivered by their duly authorized officers on the dates indicated below their respective signatures.
LOCK ENERGY CENTER, LLC
a Delaware limited liability company.
ORANGE COUNTY POWER
AUTHORITY,
a California joint powers authority.
By:
[Name]
[Title]
Date:
By:
[Name]
[Title]
Date:
[NAME OF COLLATERAL AGENT],
[Legal Status of Collateral Agent].
By:
[Name]
[Title]
Date:
Exhibit T - 13
SCHEDULE A
[Describe any disclosures relevant to representations and warranties made in Section 3.4]
Exhibit V - 1
EXHIBIT U
CAISO CHARGE CODES
The following table sets forth an initial allocation of Charge Codes, which may represent credits (expressed as a negative amount) as well as charges (expressed as a positive amount), between Buyer and Seller as they exist as of the Effective Date. The Parties shall mutually agree upon a final allocation in the Net Buyer CAISO Settlements Protocol. With respect to Ancillary Services, Seller’s liability in the associated Charge Codes shall be limited to items within Seller’s control, including but not limited to Forced Outage and compliance with ramp rates on file with CAISO.
Charge
Code
Charge Code Description ESA Section Net Buyer
CAISO
Settlements
Net Seller
CAISO
Settlements
1487 Emergency Energy Exchange Program Neutrality
Adjustment
4.3(e)(i)(B) Excluded1Included1
1591 EP Penalty Charge due CAISO Trustee 4.3(e)(i)(B)
or 4.3(e)(ii),
as applicable
Excluded or
Included2
Included or
Excluded2
1592 EP Penalty Allocation Payment 4.3(e)(ii) Included Excluded 4515 GMC Bid Transaction Fee 4.3(e)(ii) Included Excluded 4560 GMC Market Services Charge 4.3(e)(ii) Included Excluded 4561 GMC System Operations Charge 4.3(e)(ii) Included Excluded 4575 GMC – Scheduling Coordinator Identification Charge 4.3(e)(ii) Included Excluded 6011 Day Ahead Energy, Congestion, Loss Settlement 4.3(e)(ii) Included Excluded 6100 Day Ahead Spinning Reserve Capacity Settlement 4.3(e)(ii) Included Excluded 6124 No Pay Spinning Reserve Settlement 4.3(e)(i)(B) Excluded3Included3 6170 Real Time Spinning Reserve Capacity Settlement 4.3(e)(ii) Included Excluded 6200 Day Ahead Non-Spinning Reserve Capacity
Settlement
4.3(e)(ii) Included Excluded
6224 No Pay Non-Spinning Reserve Settlement 4.3(e)(i)(B) Excluded3Included3 6270 Real Time Non-Spinning Reserve Capacity Settlement 4.3(e)(ii) Included Excluded 6460 FMM Instructed Imbalance Energy 4.3(e)(ii) Included Excluded 6470 Real Time Instructed Imbalance Energy Settlement 4.3(e)(ii) Included Excluded 6475 Real Time Uninstructed Imbalance Energy Settlement 4.3(e)(ii) Included4 Excluded4 6482 Real Time Excess Cost for Instructed Energy
Settlement
4.3(e)(ii) Included Excluded
6486 Real Time Excess Cost for Instructed Energy
Allocation
4.3(e)(i)(B) Excluded1Included1
6488 Exceptional Dispatch Uplift Settlement 4.3(e)(ii) Included Excluded 6500 Day Ahead Regulation Up Capacity Settlement 4.3(e)(ii) Included Excluded 6524 Non Compliance Regulation Up Settlement 4.3(e)(i)(B) Excluded3Included3 6570 Real Time Regulation Up Capacity Settlement 4.3(e)(ii) Included Excluded 6600 Day Ahead Regulation Down Capacity Settlement 4.3(e)(ii) Included Excluded 6620 RUC and RTM Bid Cost Recovery Settlement 4.3(e)(ii) Included Excluded 6624 Non Compliance Regulation Down Settlement 4.3(e)(i)(B) Excluded3 Included3
6630 IFM Bid Cost Recovery Settlement 4.3(e)(ii) Included Excluded
Exhibit V - 2
6636 IFM Bid Cost Recovery Tier 1 Allocation 4.3(e)(ii) Included Excluded 6670 Real Time Regulation Down Capacity Settlement 4.3(e)(ii) Included Excluded 6800 Day Ahead Residual Unit Commitment (RUC)
Availability Settlement
4.3(e)(ii) Included Excluded
6824 No Pay Residual Unit Commitment (RUC) Settlement 4.3(e)(i)(B) Excluded3Included3 7070 Flexible Ramp Forecast Movement Settlement 4.3(e)(ii) Included Excluded 7071 Daily Flexible Ramp Up Uncertainty Capacity
Settlement
4.3(e)(ii) Included Excluded
7077 Daily Flexible Ramp Up Uncertainty Award
Allocation
4.3(e)(i)(B) Excluded1Included1
7078 Monthly Flexible Ramp Up Uncertainty Award
Allocation
4.3(e)(i)(B) Excluded1Included1
7081 Daily Flexible Ramp Down Uncertainty Capacity
Settlement
4.3(e)(ii) Included Excluded
7087 Daily Flexible Ramp Down Uncertainty Award
Allocation
4.3(e)(i)(B) Excluded1Included1
7088 Monthly Flexible Ramp Down Uncertainty Award
Allocation
4.3(e)(i)(B) Excluded1Included1
7251 Regulation Up Mileage Payment 4.3(e)(ii) Included Excluded 7261 Regulation Down Mileage Payment 4.3(e)(ii) Included Excluded 7891 Monthly CPM Settlement 4.3(e)(ii) Included Excluded 7989 Invoice Deviation Interest Distribution 4.3(e)(ii) Included Excluded 7999 Invoice Deviation Interest Allocation 4.3(e)(ii) Included Excluded 8526 GIP Forfeited Deposit Allocation 4.3(e)(ii) Included Excluded 8830 Monthly Resource Adequacy Availability Incentive
Mechanism Settlement
3.6(c)
Excluded
Included
8831 Monthly Resource Adequacy Availability Incentive
Mechanism Allocation
3.6(c) Excluded Included
1Seller’s liability shall be limited to items within Seller’s control, including but not limited to Forced Outage and compliance with ramp rates on file with CAISO, pursuant to Section
4.3(e)(i)(B).
2Responsibility for the penalty should be assigned to the accountable Party. 3 Non-compliance and no-pay charges related to Ancillary Service awards shall be limited to items within Seller’s control, including but not limited to Force Outage and compliance with ramp rate on file with CAISO, pursuant to Section 4.3(e)(i)(B). 4 Responsibility of the Buyer per Section 4.3(e)(ii).
Exhibit V - 3
EXHIBIT V
FORM OF CREDIT NOTICE
This Credit Notice is given by Orange County Power Authority (“Buyer”) pursuant to Section
8.10(e) of that certain Energy Storage Agreement (as amended, restated or otherwise modified from time to time, the “ESA”) dated as of [_______], 2025. Initially capitalized terms used but not defined herein have the meaning set forth in the ESA.
I hereby certify, as of the date set forth in the signature block below, with respect to Buyer’s [most recent quarterly financial statements dated [Date] for the calendar quarter ended [Date]] / [most recent audited financial statements dated [Date] for the Fiscal Year ended [identify fiscal year], and the related notes to the financial statements] (the “Buyer Subject Financial Statements”) as follows:
1. I am the duly appointed and acting [signatory’s title] of Buyer, and I am authorized to provide this Credit Notice on behalf of Buyer.
2. A true and correct copy of the Buyer Subject Financial Statements is attached to this Credit Notice.
3. The Buyer Subject Financial Statements have been prepared in accordance with GAAP and are true and correct to Buyer’s knowledge.
4. Based on the Buyer Subject Financial Statements, Buyer’s Adjusted Days of Liquidity on Hand is ___ days.
5. Based on the Buyer Subject Financial Statements, Buyer’s Equity to Assets Ratio is ___ %.
6. For the purpose of calculating Adjusted Days of Liquidity on Hand, annual operating expenses are for the 12 months ended as of the end date of the Buyer Subject Financial Statements.
7. For the purpose of calculating the Equity to Assets Ratio, the Equity to Assets Ratio shall be calculated as of the end date of the Buyer Subject Financial Statements.
8. Based on the Buyer Subject Financial Statements, Buyer [is] [is not] in compliance with the Buyer Financial Covenants.
Orange County Power Authority
By: __________________
Name:
Title:
Date