1 CITY OF COLTON
City Hall, Council Chambers
650 N. La Cadena Drive
Colton, CA 92324
Website: www.coltonca.gov
Mayor Frank J. Navarro
Council Members:
David J. Toro – District 1
Kelly J. Chastain – District 2
Dr. Luis S. Gonzalez – District 3
John R. Echevarria – District 4
City Treasurer Aurelio De La Torre
City Manager William R. Smith
City Attorney Carlos Campos
Chief Deputy City Clerk Stephanie M. Vargas
AGENDA
CITY COUNCIL,
COLTON UTILITY AUTHORITY, COLTON PUBLIC FINANCING AUTHORITY,
COLTON HOUSING AUTHORITY
REGULAR MEETING
TUESDAY, OCTOBER 15, 2024 – 5:00 P.M.
CITY HALL, COUNCIL CHAMBERS
CLOSED SESSION - 5:00 p.m.
CLOSED SESSION CALLED TO ORDER
ROLL CALL
PUBLIC COMMENT - Closed Session
This is the portion of the meeting specifically set aside to invite your comments regarding Closed Session items and other general comments about matters not on the agenda; however, any matter that requires action will be referred to staff for investigation and report at a subsequent Council meeting. The Council is prohibited by law from discussing or taking immediate action on items during this public comment period.
Persons desiring to submit paperwork to the City Council Members shall provide a copy of any paperwork to the City Clerk for the Official Record.
Speakers will be limited to 3 minutes; provided, however, that the presiding officer shall have certain discretion to extend or limit time as provided for in the City Council Manual of Procedure.
Please state your name and your City of Residence before providing your comment.
2 A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS
Property: APNs 0163-086-02-0000, 0163-086-03-0000, 0163- 086-04-0000, 0163-086-06-0000, 0163-086-07-0000, 0163-086- 08-0000,
0163-086-09-0000, 0163-086-10-0000, 0163-086-11- 0000,
0163-086-12-0000, 0163-086-15-0000, 0163-087-01- 0000,
0163-087-02-0000 and 0163-087-04-0000
Agency Negotiator(s): William R. Smith, City Manager and Thomas Welch, Economic Development Manager Negotiating Parties: Jose Olivares
Under Negotiation: Price and Terms of Payment
CITY ATTORNEY ORAL REPORT ON CLOSED SESSION ACTIONS
RULES OF DECORUM
To help conduct the business of the City Council in an orderly fashion, the City Council has adopted rules pertaining to decorum and order, as provided for in the City Council Manual of Procedure. The City Council will strictly enforce these rules in order to allow full expression of ideas and opinions by councilmembers, staff and the public. Generally, the City's rules of decorum prohibit comments or actions which willfully disrupt the meeting. All remarks and questions shall be addressed to the Council as a whole and not to any particular member. No individual Councilmember or member of the City staff shall be questioned without first obtaining permission from the Presiding Officer. The City Council asks that all persons - including councilmembers, staff and the public - act and speak respectfully.
OPEN SESSION
6:00 P.M.
OPEN SESSION CALLED TO ORDER
INVOCATION Pastor Peter Tasaka - The Vineyard Church
FLAG SALUTE Veterans of Foreign Wars (VFW) Vietnam Veteran Tom Leon
ROLL CALL
CEREMONIAL MATTERS
Presentations, Awards, Proclamations
Business Focus - Serrano Nursery
Recognition - 2024 Volunteer of the Year
MAYOR AND COUNCIL ITEMS
3 GIFT DISCLOSURES
Prior to rendering a decision in any proceeding involving a license, permit, contract or other entitlement pending before the City Council, any Council Member who has received been promised a gift or gifts aggregating $50.00 or more in value within the preceding twelve months from a party or participant in the proceeding shall disclose that fact either orally or in writing during open session. This disclosure shall be made part of the official public record of the proceeding, either as part of the minutes of the meeting or as a separate writing filed with the city. (CMC Section 2.04.030) AB 1234 ORAL REPORTS
Members of the City Council shall provide brief reports on meetings attended at the expense of the city. ( GC Section 53232.3(d))
APPOINTMENTS
MAYOR AND COUNCIL DISCUSSION ITEMS
PUBLIC HEARINGS
There are no Public Hearing items.
BUSINESS ITEMS
To speak on business items, it is requested that you obtain a card from the City Clerk and complete it by noting the agenda item number, as well as whether you are in favor, opposition or neither, and give it to the City Clerk. The applicant will be allowed 5 minutes to address the Council and all other persons will be allowed 3 minutes; provided, however, that the presiding officer shall have certain discretion to extend or limit time as provided for in the City Council Manual of Procedure.
(1) 2024 Revised City Rules and Regulations - Waive Full Reading, Read by Title Only, and Pass First Reading of an Ordinance and Approve and Adopt a Resolution for the 2024 City Rules and Regulations, ORDINANCE NO. O-16-24 & RESOLUTION NO. R-104-24.
[Staff Person: Tom Cody]
PUBLIC COMMENT Limit 3 Minutes
This is the portion of the meeting specifically set aside to invite your comme nts regarding Consent Calendar items and other general comments about matters not on the agenda; however, any matter that requires action will be referred to staff for investigation and report at a subsequent Council meeting. The Council is prohibited by law from discussing or taking immediate action on items during this public comment period.
Persons desiring to submit paperwork to the City Council Members shall provide a copy of any paperwork to the City Clerk for the Official Record.
Speakers will be limited to 3 minutes; provided, however, that the presiding officer shall have certain discretion to extend or limit time as provided for in the City Council Manual of Procedure.
Please state your name and your City of Residence before providing your comment.
4 CONSENT CALENDAR
All matters listed under the Consent Calendar are considered by the City Council to be routine and will all be enacted by one motion. There will be no separate discussion of these items prior to the time the City Council votes on the motion, unless councilmembers, staff or the public request that specific items be discussed and/or removed for separate discussions or action.
(2) Minutes - Approval of Minutes for the City Council Regular Meeting held on October 1, 2024. [Staff Person: Stephanie M. Vargas]
(3) City Treasurer's Report - Receive and File City Treasurer's Report for July 2024. [Staff Person: Aurelio De La Torre]
(4) Warrants - Approve US Bank voucher dated 08/21/24 and totaling $57,009.54; replacement checks 214788 to 214789 totaling $1,118.00; voucher numbers 214790 to 214916 dated 09/12/2024 and totaling $624,165.70; wires dated 09/16/2024 and totaling $9,373,812.35; vouchers numbers 214917 to 215075 dated 09/19/2024 and totaling $1,523,945.81; and payroll disbursement listing dated 08/17/2024 to 08/30/2024 and totaling $1,156,503.06.
[Staff Person: Stacey Dabbs]
(5) Agreement - SCPPA - Approve and Adopt a Resolution Authorizing Power Sales Agreement for Renewable Solar Energy with the Southern California Public Power Authority (SCPPA), RESOLUTION NO. R-109-24. [Staff Person: Charles Berry]
(6) Bid Rejection - La Loma Reservoir Project - Reject All Bids for the La Loma Reservoir Project. [Staff Person: Victor Ortiz]
(7) Contract Amendment - New Image Flooring - Approve 2nd Amendment to Contract with New Image Commercial Flooring for Development Services Flooring Project. [Staff Person: Victor Ortiz]
(8) Contract Award - CSR Air Conditioning - Approve Contract Award to CSR Air Conditioning for Exhaust Fans at the Gonzales Center Pool.
[Staff Person: Victor Ortiz]
(9) Contract Award - Ellis Equipment/Performance Construction - Award Contracts to Ellis Equipment Inc. and Performance Construction & Painting for K-Rails and Fencing to Secure the Property of the Colton Eco- Friendly Park with Community Sports Fields.
[Staff Person: Deb Farrar]
(10) Contract Award - Performance Construction & Painting - Award Contract to Performance Construction & Painting for the ARPA Funded Pool Deck Project.
[Staff Person: Victor Ortiz]
(11) Contract Award - Prestige Paving Company - Approve and Adopt a Resolution to Approve Award of Contract to Prestige Paving Company for the Corporate Yard Paving Project, and Corresponding Budget Resolution, RESOLUTION NO. R-110-24.
[Staff Person: Victor Ortiz]
(12) Contract Award - Robert DeLoach - Approve and Adopt a Resolution to Approve a Contract Award to Robert DeLoach for Services as Interim Director of Public Works & Utility Services, RESOLUTION NO. R-108-
24. [Staff Person: Bill Smith]
(13) Contract Award - Unlimited Environmental Inc. - Approve Contract Award for the Concrete Tank Foundation Demolition Project to Unlimited Environmental Inc. [Staff Person: Victor Ortiz]
5 (14) Easement - 1790 E. Washington - Accept and Approve Easement at 1790 E. Washington for the Electric Utility.
[Staff Person: Charles Berry]
(15) Easement - Holly Avenue Sidewalk Dedication - Approve Right-of-Way Easement for Sidewalk Purposes along Holly Avenue.
[Staff Person: Victor Ortiz]
(16) Elected Official Benefit Adjustment - Approve and Adopt a Resolution to Index the City's Contribution to Elected Officials' Monthly Health Benefit to the Executive Group Employees, RESOLUTION NO. R-107-24. [Staff Person: Tom Cody]
(17) Ongoing Emergency - AMPP - Affirm Ongoing Emergency at Agua Mansa Power Plant. [Staff Person: Charles Berry]
(18) Purchase - National Auto Fleet Group - Approve Purchase of a 2025 FORD F-750 Service Body Truck from National Auto Fleet Group.
[Staff Person: Bassam Alzammar]
(19) Resolution - Uniform Public Construction Cost Accounting Act - Approve and Adopt a Resolution Electing to Become Subject to the Uniform Public Construction Cost Accounting Act (Public Contract Code Section 22000 ET SEQ.), RESOLUTION NO. R-105-24.
[Staff Person: Victor Ortiz]
(20) Second Reading of Ordinance No. O-12-24 - Approve Second Reading of an Ordinance of the City Council of the City of Colton, Approving an Amendment to the Reche Canyon Specific Plan to Change the Land Use Designation From Estate Density (Residential) to Commercial (File Index No: Dap-001-453). ORDINANCE NO. O-12-24.
[Staff Person: Stephanie M. Vargas]
(21) Second Reading of Ordinance No. O-15-24 - Approve Second Reading of an Ordinance of the City Council of the City of Colton, to Amend Section 18.06.020 (Official Zoning Map) Changing Parcels 0163-172-48 from C-2 (General Commercial) to M-U-D (Mixed-Use Downtown) of Title 18 of the Colton Municipal Code (File Index No. Dap-001-453), ORDINANCE NO. O-15-24.
[Staff Person: Stephanie M. Vargas]
MAYOR AND COUNCIL ORAL REPORTS AND COMMENTS
Comments from Mayor and Council on various issues and activities throughout the community. Comments shall be limited to 5 Minutes per speaker.
CITY MANAGER'S REPORTS
ADJOURNMENT
6 I, Stephanie Vargas, the Deputy City Clerk, hereby certify that a true and correct, accurate copy of the foregoing agenda was posted , at least seventy-two (72) hours prior to the meeting per Government Code 54954(a), at the following locations:
City of Colton City Hall 650 N. La Cadena Drive
City of Colton Website, www.coltonca.gov <http://www.coltonca.gov>
PROCEDURES FOR ADDRESSING CITY COUNCIL
For the Official Record, it is requested that you obtain a card from the Deputy City Clerk and complete it by noting a specific item number on the Agenda, if applicable, or you can identify the subject that you wish to address under the Public Comment portion of the Agenda. The City Council encourages public input on all City issues within the Rules of Decorum. Speakers will be limited to the time periods provid ed on the Agenda; provided, however, that the presiding officer shall have certain discretion to extend or limit time as provided for in the City Council Manual of Procedure.
RULES OF DECORUM
To help conduct the business of the City Council in an orderly fashion, the City Council has adopted rules pertaining to decorum and order, as provided for in the City Council Manual of Procedure. The City Council will strictly enforce these rules in order to allow full expression of ideas and opinions by councilmem bers, staff and the public. Generally, the City's rules of decorum prohibit comments or actions which willfully disrupt the meeting. All remarks and questions shall be addressed to the Council as a whole and not to any particular member. No individual Councilmember or member of the City staff shall be questioned without first obtaining permission from the Presiding Officer. The City Council asks that all persons - including councilmembers, staff and the public - act and speak respectfully.
NOTICE TO PUBLIC
Staff reports or other written documentation relating to each item referred to, on the Agenda, are available for public inspection at the following locations: Office of the City Clerk, 650 N. La Cadena Drive, Colton, CA; City of Colton Public Librar y, 656 9 th St., Colton, CA; or the City of Colton Internet Website, www.coltonca.gov. Any person having questions concerning any item on the Agenda may call the City Clerk at 370 -5191 to make inquiry concerning the nature of the item described on the Agenda. The City Clerk shall direct inquiries to the appropriate office.
All matters listed under the Consent Calendar are considered by the City Council to be routine and will all be enacted by one motion. There will b e no separate discussion of these items prior to the time the City Council votes on the motion, unless councilmembers, staff or the public request that specific items be discussed and/or removed for separate discussions or action.
7 In compliance with the A merican with Disabilities Act, if you need special assistance to participate in a City Meeting, please contact the City Clerk’s Office at 909 -370-5001. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensu re accessibility to this meeting.
LEGAL CHALLENGES
If you challenge in court any discussion or action taken concerning an item on this Agenda, you may be limited to raising only those issues you or someone else raised during the meeting or in written correspondence delivered to the City at or prior to the City's consideration of the item at the meeting.
MANUAL OF PROCEDURE
The City Council adopted its Manual of Procedure pursuant to Resolution No. R-41-18. Copies are available in the Office of the City Clerk.
ITEM NO. 1
STAFF REPORT
DATE: OCTOBER 15, 2024
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: BILL SMITH, CITY MANAGER
PREPARED BY: TOM CODY, HUMAN RESOURCES DIRECTOR
SUBJECT: WAIVE FULL READING, READ BY TITLE ONLY, AND PASS
FIRST READING OF AN ORDINANCE AND APPROVE AND
ADOPT A RESOLUTION FOR THE 2024 CITY RULES AND
REGULATIONS, ORDINANCE NO. O-16-24 & RESOLUTION NO. R-
104-24.
RECOMMENDED ACTION
Staff recommends that the City Council take the following action:
Approve the 2024 City Rules and Regulations, Ordinance O-16-24, and Resolution R-104-24.
BACKGROUND
The City of Colton last revised its City Rules and Regulations twenty-four (24) years ago on March 7, 2000. These Rules and Regulations need to be revised, and they are presented in thi s staff report. Working closely with the City’s Personnel/Employment Law Attorney for more than a year, a ttached are Ordinance O -16-24 ( Attachment One) and Resolution R -104-24 (Attachment Two), which will accomplish this task of providing an update and revised 2024 City of Colton Rules and Regulations.
ISSUES/ANALYSIS
The City’s R-15-00 Rules and Regulations were last revised in 2000 (Attachment Three). These rules were embedded with seven (7) ordinances and thirty -four (34) resolutions . These rules have grown organically since the City’s incorporation and were amended by ordinances and resolutions. Since the year 2000, they have not changed and needed an update to 1) be compliant with current laws and 2) to be completed in a manner that the next time an update or revision is needed, it will not be such a challenging task. The embedded ordinances and resolutions have 1 Packet Pg. 8
Staff Report to the Mayor and City Council
2024 Revised City Rules and Regulations
October 15, 2024
been removed from the revised 2024 Rules and Regulations by Ordinance O-16-24, which supersedes them.
The City Attorney drafted Ordinance O-16-24 allows the ordinances and resolutions embedded in the R -15-00 Rules and Regulations to be superseded. It will make future opportunities to revise the rules and regulations a more straightforward task, which was probably why the rules haven’t be en touched in decades. Since MOU language with the Employee Associations supersedes the Rules and Regulations, a section of the proposed 2024 rules refers a reader to the individual MOUs for clarification on specific topics that are more current and MOUs change more frequently in individual MOUs. Conflicting working conditions/policies/language with the MOUs have been removed. Many reasons drove this project, but one was a requirement to keep our employment law insurance through our current insurance poo l; they requested that the City Council revise and adopt new rules by 12/30/24.
On August 21, 2024, th ese draft Rules and Regulations were sent out to the Cit y’s management team and the City’s nine (9) Employee Associations with an offer for their review/comments and suggested tweaks/revisions. The Associations were offered an opportunity to discuss/meet and confer over these proposed changes.
FISCAL IMPACTS
There is no fiscal impact associated with this action.
ALTERNATIVES
1. Provide alternative direction to staff.
ATTACHMENT
1. O-16-24 Colton 2024 Personnel Rules and Regulations 10-15-24
2. R-104-24 Personnel System Rules and Regulations 10-15-24 #2
3. Personnel system rules and regulations R-15-00
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ORDINANCE NO. O-16-24
ORDINANCE AMENDING RESOLUTION R-15-00 ON PERSONNEL RULES AND
REGULATIONS FOR THE CITY OF COLTON AND REPEALING IN ITS ENTIRETY
ORDINANCES AND RESOLUTIONS PREVIOUSLY REFERENCED IN RESOLUTION R-15-00
WHEREAS, the City of Colton , California (“City”) is a general law city and municipal corporation, duly organized under the California Constitution and laws of the State of California; and
WHEREAS, the Personnel Rules and Regulations for the City , found under Resolution R -15-00, have not been amended since 2000 and included references to several resolutions and ordinances enacted by the City since 1976; and
WHEREAS, by adoption of this Ordinance, the City Council for the City of Colton desires to update and modernize its Personnel Rules and Regulations to reflect updates in the law and legal requirements and to remove unnecessary references to the City’s prior enacted resolutions and ordinances that are now incorporated into the Personnel Rules and Regulations itself; and
WHEREAS, City staff recommend that the City repeal several resolutions and ordinances enacted throughout the years by the City , as set forth herein, to make effective a new set of stand -alone Personnel Rules and Regulations which do not require reference to prior enacted resolutions and ordinances.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF COLTON DOES HEREBY ORDAIN AS FOLLOWS:
1. Section 1. Recitals. The above recitals are true and correct and are hereby incorporated into this Ordinance.
2. Section 2. Personnel Rules and Regulations for the City of Colton Amended.
Resolution R-15-00 is hereby amended and restated as set forth in Exhibit __ of this Ordinance, which is incorporated by this reference as if set forth in full at this point.
3. Section 3. Parentheticals. Parenthetical references of a historical nature are not a substantive part of this Ordinance and may be deleted and modified as necessary.
4. Section 4. Repeal of Ordinance s. Each of the following ordinances previously enacted by the City and previously referenced in Resolution R -15-00 are hereby repealed in its entirety:
Ordinance Nos. 1122 and 1962, Amended by O-08-94 and O-19-98
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Attachment: O-16-24 Colton 2024 Personnel Rules and Regulations 10-15-24 (4706 : 2024 Revised City Rules and Regulations)
Ordinance No. 1653
Ordinance No. 1680
Ordinance No. O-25-88
5. Section 5. Repeal of Resolutions. Each of the following resolutions previously enacted by the City and previously referenced in Resolution R -15-00 are hereby repealed in its entirety:
Resolution No. 26-86
Resolution No. 29-92
Resolution No. 30-98
Resolution No. 30-99
Resolution No. 106-93
Resolution No. 108-90
Resolution No. 128-88
Resolution No. 129-88
Resolution No. 2240
Resolution No. 2274
Resolution No. 2280
Resolution No. 2313
Resolution No. 2509
Resolution No. 2895
Resolution No. 2987
Resolution No. 3095
Resolution No. 3344
Resolution No. 3358
Resolution No. 3359
Resolution No. 3368
Resolution No. 3567
Resolution No. 3642
Resolution No. 3727
Resolution No. 3856
Resolution No. 3871
Resolution No. 3920
Resolution No. 4198
Resolution No. 4307
Resolution No. 4375
Resolution No. 4434
Resolution No. 4608
6. Section 6. Severability. If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are severable. This City Council hereby declares that it would have adopted this Ordinance irrespective of the invalidity of any particular portion
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Attachment: O-16-24 Colton 2024 Personnel Rules and Regulations 10-15-24 (4706 : 2024 Revised City Rules and Regulations)
thereof and intends that the invalid portions should be severed and the balance of the Ordinance be enforced.
7. Section 7. Effective Date. This Ordinance shall take effect immediately upon its adoption. The repeal of the above-listed resolutions and ordinances shall go into effect immediately.
8. Section 8. No Reenactment for One Year . Pursuant to California Elections Code section 9241, the above repealed ordinances and resolutions, or any substantially similar act, shall not again be enacted by the City Council for a period of one year after the date of this repeal.
PASSED AND ADOPTED by the City Council of the City of Colton at a regular public meeting this 15 day of October, 2024, by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
________________________________
FRANK J. NAVARRO
MAYOR
ATTEST:
By:______________________________________
STEPHANIE VARGAS
CHIEF DEPUTY CITY CLERK
CITY OF COLTON
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Attachment: O-16-24 Colton 2024 Personnel Rules and Regulations 10-15-24 (4706 : 2024 Revised City Rules and Regulations)
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RESOLUTION NO R-104-24
PERSONNEL SYSTEM RULES AND REGULATIONS FOR
THE CITY OF COLTON
BE IT RESOLVED by the City Council of the City of Colton, California that Resolution No. R-104-24 and sections of Ordinance O-16-24 pertaining to the Personnel System Rules and Regulations (“Personnel Rules” ) are hereby consolidated and amended as follows and shall be effective upon execution;
RESOLVED, that the City Council of the City of Colton does hereby adopt the following rules:
PERSONNEL RULES AND REGULATIONS
TABLE OF CONTENTS
RULE I - DEFINITION OF TERMS.............................................................................................. 5 RULE II - GENERAL PROVISIONS ............................................................................................ 8 SECTION 1: APPLICABILITY OF PERSONNEL SYSTEM RULES
AND REGULATIONS ................................................................... 8 SECTION 2: CONFLICTS ................................................................................... 9 SECTION 3: EQUAL EMPLOYMENT OPPORTUNITY POLICY .................. 9 SECTION 4: VIOLATION OF RULES ............................................................... 9 SECTION 5: AMENDMENT AND REVISION OF RULES .............................. 9 SECTION 6: ADOPTION OF RULES .............................................................. 10 SECTION 7: COMPETITIVE SERVICE .......................................................... 10 RULE III - CLASSIFICATION ................................................................................................... 11 SECTION 1: PREPARATION OF PLAN .......................................................... 11 SECTION 2: ADOPTION OF PLAN ................................................................. 11 SECTION 3: ALLOCATION OF POSITIONS ................................................. 12 SECTION 4: NEW POSITIONS ........................................................................ 12 SECTION 5: RECLASSIFICATION ................................................................. 12 SECTION 6: AMENDING THE CLASSIFICATION PLAN ........................... 12
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Attachment: R-104-24 Personnel System Rules and Regulations 10-15-24 #2 (4706 : 2024 Revised City Rules and Regulations)
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RULE IV - COMPENSATION .................................................................................................... 12 SECTION 1: PREPARATION OF PLAN .......................................................... 12 SECTION 2: ADOPTION OF PLAN ................................................................. 13 RULE V - APPLICATIONS FOR APPLICANTS ....................................................................... 13 SECTION 1: ANNOUNCEMENTS ................................................................... 13 SECTION 2: APPLICATION FORMS .............................................................. 13 SECTION 3: QUALIFICATION AND DISQUALIFICATION ....................... 14 RULE VI – EXAMINATIONS .................................................................................................... 14 SECTION 1: NATURE AND TYPES OF EXAMINATIONS .......................... 14 SECTION 2: PROMOTIONAL EXAMINATIONS .......................................... 15 SECTION 3: CONDUCT OF EXAMINATIONS .............................................. 15 SECTION 4: SCORING EXAMINATIONS AND QUALIFYING
SCORES ........................................................................................ 16 SECTION 4a: VETERANS’ PREFERENCE ...................................................... 16 SECTION 5: NOTIFICATION OF EXAMINATION RESULTS ..................... 16 SECTION 6: REVIEW OF PAPERS ................................................................. 16 RULE VII - EMPLOYMENT LISTS ........................................................................................... 17 SECTION 1: EMPLOYMENT LISTS ............................................................... 17 SECTION 2: DURATION OF EMPLOYMENT LISTS ................................... 17 SECTION 3: RE-EMPLOYMENT LISTS ......................................................... 17 SECTION 4: REMOVAL OF NAMES FROM LISTS ...................................... 17 SECTION 5: LATERAL ENTRY, POLICE OFFICER ..................................... 18 RULE VIII - METHOD OF FILLING VACANCIES ................................................................. 18 SECTION 1: TYPES OF APPOINTMENT ....................................................... 18 SECTION 2: APPOINTMENTS ........................................................................ 18 SECTION 3: PROVISIONAL APPOINTMENT ............................................... 20 SECTION 4: EMERGENCY APPOINTMENTS .............................................. 20 SECTION 5: NOTICE TO HUMAN RESOURCE DIRECTOR ....................... 20
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Attachment: R-104-24 Personnel System Rules and Regulations 10-15-24 #2 (4706 : 2024 Revised City Rules and Regulations)
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SECTION 6: CERTIFICATION OF ELIGIBLES ............................................. 20 SECTION 7: ORDER OF CERTIFICATION .................................................... 21 SECTION 8: NEPOTISM ................................................................................... 21 RULE IX – PROBATIONARY PERIOD .................................................................................... 23 SECTION 1: LENGTH OF PROBATIONARY PERIOD ................................. 23 SECTION 2: OBJECTIVE OF PROBATIONARY PERIOD............................ 24 SECTION 3: REJECTION OF A PROBATIONER .......................................... 24 SECTION 4: REJECTION FOLLOWING PROMOTION ................................ 24 SECTION 5: PROBATIONARY PERIOD ........................................................ 25 SECTION 6: STATUS OF PRESENT EMPLOYEES ....................................... 25 RULE X – ATTENDANCE AND LEAVES ............................................................................... 26 SECTION 1: VACATION .................................................................................. 26 SECTION 2: LEAVE .......................................................................................... 26 SECTION 3: SICK LEAVE REPORTS ............................................................. 26 SECTION 4: MILITARY LEAVE ..................................................................... 26 SECTION 5: LEAVE OF ABSENCE WITHOUT PAY .................................... 26 SECTION 6: ATTENDANCE ............................................................................ 27 SECTION 7: CITY HOLIDAYS ........................................................................ 27 SECTION 8: CONVERSION OF LEAVE ......................................................... 27 SECTION 9: INCOMPATIBLE EMPLOYMENT ............................................ 28 SECTION 10: APPLICABILITY OF RULES TO CERTAIN EXEMPT
POSITIONS .................................................................................. 28 RULE XI - PAY ADJUSTMENTS .............................................................................................. 28 SECTION 1: APPLICATION OF RATES ......................................................... 28 SECTION 2: ADVANCEMENT ........................................................................ 29 SECTION 3: REDUCTION ................................................................................ 29
RULE XII - TRANSFER, PROMOTION, DEMOTION, SUSPENSION AND REINSTATEMENT ...................................................................................................................... 29 SECTION 1: TRANSFERS ................................................................................ 29
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Attachment: R-104-24 Personnel System Rules and Regulations 10-15-24 #2 (4706 : 2024 Revised City Rules and Regulations)
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SECTION 2: PROMOTION ............................................................................... 29 SECTION 3: DEMOTION ................................................................................. 30 SECTION 4: SUSPENSION .............................................................................. 30 SECTION 5: REINSTATEMENT ...................................................................... 31 RULE XIII - SEPARATION FROM THE SERVICE ................................................................. 31 SECTION 1: DISCHARGE ................................................................................ 31 SECTION 2: LAY-OFF ...................................................................................... 31 SECTION 3: ABOLITION OF POSITION ........................................................ 32 SECTION 4: RESIGNATION ............................................................................ 32 RULE XIV - APPEALS AND HEARINGS ................................................................................. 33 SECTION 1: COMPLAINTS ............................................................................. 33 SECTION 2: INVESTIGATION AND HEARING ........................................... 33 SECTION 3: NOTIFICATION OF HEARINGS ............................................... 33 SECTION 4: PERSONAL APPEARANCE AT HEARINGS ........................... 33 SECTION 5: FINDINGS .................................................................................... 34 SECTION 6: DEFERRED HEARINGS ............................................................. 34 RULE XV - TRAINING OF EMPLOYEES ................................................................................ 34 SECTION 1: RESPONSIBILITY FOR TRAINING .......................................... 34 SECTION 2: CREDIT FOR TRAINING ........................................................... 35 RULE XVI - REPORTS AND RECORDS .................................................................................. 35 SECTION 1: ROSTER CARDS ......................................................................... 35 SECTION 2: CHANGE-OF-STATUS REPORT ............................................... 35 SECTION 3: DESTRUCTION OF RECORDS ................................................. 35
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Attachment: R-104-24 Personnel System Rules and Regulations 10-15-24 #2 (4706 : 2024 Revised City Rules and Regulations)
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RULE I - DEFINITION OF TERMS
The following terms, whenever used in these Personnel Rules, shall be construed as follows:
SECTION 1: ADVANCEMENT: A salary increase of one or more steps within the limits of the pay range established for a class.
SECTION 2: ALLOCATION: The assignment of a single position to its proper class in accordance with the duties performed, and the authority and responsibilities exercised.
SECTION 3: APPOINTMENT: The designation of a person by due authority to become an employee in a position and the signing of the proper forms to properly record that designation and the acceptance by the person of the position and conditions included as provided in these Personnel Rules and the State law.
SECTION 4: AT-WILL EMPLOYEE: An at-will employee is one who serves at the pleasure of the appointing authority, has no property right in continued employment, and has no right to any pre- or post-disciplinary procedural due process or evidentiary appeal.
SECTION 5: BOARD: The Civil Service Board established in pursuance of the ordinance creating a personnel system for the City.
SECTION 6: CLASS: All positions sufficiently similar in duties, authority, resp onsibility and working conditions to permit grouping under a common title and the application with equity of common standards of selection, transfer, promotion and salary.
SECTION 7: CIVIL SERVICE ORDINANCE : An Ordinance which creates a personnel system for the City.
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SECTION 8: COMPETITIVE SERVICE: The positions and employments which are included or which may hereafter be included under the personnel system by resolution.
SECTION 9: CONTINUOUS SERVICE : The continuing service of a regular employee in a continuing payroll status without interruption except for authorized leave of absence.
SECTION 10: DEMOTION: The movement of an employee and corresponding change in their employment status from one class to another class having a lower maximum rate of pay.
SECTION 11: ELIGIBLE: A person whose name is on an employment list, a re-employment list or promotional list and who is not ineligible for appointment for any reason.
SECTION 12: EMPLOYMENT LIST: A list of names of persons who have taken an examination for a class in the competitive service and passed, and are ranked on the list in the order of the score received.
SECTION 13: EXAMINATION:
a. Assembled examination : An exa mination conducted at a specified time and place at which applicants are required to appear for competitive examination under the supervision of an examiner.
b. Unassembled examination : An examination consisting of an appraisal of training, experience, work history, or any other means for evaluation of relative qualifications of applicants without the necessity for their personal appearance at a specified place.
SECTION 14: FULL-TIME EMPLOYEE: An employee regularly working forty hours or more per week.
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SECTION 15: PART-TIME EMPLOYEE: An employee regularly working less than full time.
SECTION 16: PERMANENT EMPLOYEE : A regular employee who has completed the probationary period in their position and has been retained as hereafter provided in these Personnel Rules.
SECTION 17: PROBATIONARY PERIOD: A working test period during which an employee is required to demonstrate their fitness for the duties to which the employee is appointed by actual performance of the duties of the position.
SECTION 18: PROMOTION: The movement of an employee and corresponding change in their employment status from one class to another class with a higher maximum rate of pay.
SECTION 19: PROMOTIONAL EXAMINATION : An examination for a particular class, admission to the examination being limited to regular employees in the competitive service.
SECTION 20: PROMOTIONAL LIST : An employment list resulting from a promotional examination.
SECTION 21: PROVISIONAL APPOINTMENT : An appointment acquired by a person who possesses the minimum qualifications established for a particular class and who has been appointed to a position in that class in the absence of available eligibles.
SECTION 22: REDUCTION: A salary decrease within the limits of the pay range established for a class.
SECTION 23: REGULAR EMPLOYEE: The holder of a position established on a continuing basis, as distinct from a seasonal or temporary employee.
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SECTION 24: REINSTATEMENT: The re -employment without exami nation of a former permanent employee within two years following their resignation from the City service.
SECTION 25: SEASONAL EMPLOYEE: An employee whose employment is not continuous, but is regularly recurrent in the same capacity because of particular functions which occurs periodically each year.
SECTION 26: SUSPENSION: The temporary separation from the service of an employee without pay, for disciplinary purposes.
SECTION 27: TEMPORARY APPOINTMENT : An appointment of a person to a position of limited duration.
SECTION 28: TEMPORARY EMPLOYEE : An employee who is not a regular or seasonal employee.
SECTION 29: TRANSFER: A change of an employee from one position to another position in the same class or another class having essentially the same maximum s alary limits, involving the performance of similar duties and requiring substantially the same basic qualifications.
RULE II - GENERAL PROVISIONS
SECTION 1: APPLICABILITY OF PERSONNEL SYSTEM RULES AND REGULATIONS :
The provisions of the Personnel Rules shall appl y only to employees in the c ompetitive service unless otherwise specifically provided.
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SECTION 2: CONFLICTS: If there is any conflict between the Personnel Rules & Regulations and/or any current, applicable Memorandum of Understanding (MOU) with a recognized bargaining unit, the MOU shall take precedence.
SECTION 3: EQUAL EMPLOYMENT OPPORTUNITY POLICY : The City of Colton affords equal employment opportunity for all qualified employees and applicants as to all terms of employment, including comp ensation, hiring, training, promotion, transfer, discipline and termination. The City of Colton prohibits discrimination against employees or applicants for employment on the basis of race, religious creed, color, national origin, citizenship, ancestry, physical disability, mental disability, medical condition, pregnancy, genetic information, marital status, sex, gender, gender identity, gender expression, age (40 and over), sexual orientation, or military and veteran status or any other characteristic protected by law. (Gov. Code § 12940(a).) Employees, volunteers, or applicants who believe they have experienced any form of employment discrimination or abusive conduct are encouraged to report the conduct immediately by using the complaint procedures provid ed in these Policies, or by contacting the U.S. Equal Employment Opportunity Commission, or the California Department of Fair Employment and Housing /Civil Rights Department.
SECTION 4: VIOLATION OF RULES : Willful violation of the provisions of these Personnel Rules shall be grounds for dismissal, rejection or suspension.
SECTION 5: AMENDMENT AND REVISION OF RULES : Recommendations for amendment and revisions of these Personnel Rules may be made by the Human Resource Director. Prior to consideration, any amendment or revision shall be publicly posted at such places as the City Council shall prescribe, for at least five consecutive days together with notice of the time, place and date of hearings by the City Council. At the time of consideration, any interested person may appear and be heard. Amendments and revisions shall become effective upon adoption by the City Council following such hearing.
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SECTION 6: ADOPTION OF RULES : Personnel rules, prepared by the Human Resource Director, shall be adopted, and may be amended from time to time, by resolution of the City Council.
The rules shall establish specific procedures and regulations governing the following phases of the personnel system.
a. Preparation, installation, revision, and maintenance of a position classification plan covering all positions in the competitive service, including employment standards and qualifications for each class.
b. Preparation, revision and administration of a plan of compensation directly correlated with the position classification plan, providing a rate or range of pay for each class. c. Preparation of examination announcements and the acceptance of applications for employment.
d. Preparation and conduct of tests and the establishment and use of resulting employment lists containing names of persons eligible for appointment. e. Certification and appointment of persons from employment lists, and the making of provisional appointments.
f. Evaluation of employees during the probationary period. g. Transfer, promotion, demotion and reinstatement of em ployees in the competitive service.
h. Separation of employees from the City service through lay-off, suspension and dismissal. i. Standardization of hours of work, attendance and leave regulations, working conditions and the development of employee morale, welfare and training. j. Suitable provision for orderly and equitable presentation to the City Manager and to the City Council by employees relating to general conditions of employment.
SECTION 7: COMPETITIVE SERVICE: The provision shall apply to all official po sitions and employment in the service of the City except:
a. Elective Officers.
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b. Members of appointive boards, commissions and committees. c. Persons engaged under contract to supply expert, technical or professional services for a definite period of time, unless specifically included in the competitive service by the Board.
d. Volunteer personnel, such as volunteer Firefighters and Police Reserves, who receive no regular compensation from the City.
e. The position of City Manager.
f. Part-time and temporary, hourly paid employees.
g. Executive employees employed pursuant to an employment contract and any other fixed term temporary employment or limited tenure assignment , unless specifically included in the competitive service by the Board.
RULE III - CLASSIFICATION
SECTION 1: PREPARATION OF PLAN: The Human Resource Director, or a person or agency employed for that purpose shall ascertain and record the duties and responsibilities of all positions in the competitive service, and after consultation with appointing authorities and heads of departments affected, shall recommend a classification plan for such positions. The classification plan shall consist of classes of positions in the competitive service defined by class specifications, including title, a description of typical duties and responsibilities of positions in each class, a statement of the training, experience and other qualifications to be required of applicants for positions in each class. The classification plan shall be so developed and maintained that all positions substantially similar with respect to duties, responsibilities, authority and character of work are included within the same class, and that the same schedules of compensation may be made to apply with equity under like working conditions to all positions in the same class.
SECTION 2: ADOPTION OF PLAN : Before the classification plan, or any part thereof, shall become effective, it shall first be approved in whole or in part by the City Council. Upon adoption by the Council, the provisions of the classification plan shall be observed in the handling of all
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personnel actions and activities. The classification plan shall be amended or revised as occasion requires in the same manner as originally established.
SECTION 3: ALLOCATION OF POSITIONS: Following the adoption of the classification plan, the Human Resource Director shall allocate every position in the competitive service to one of the classes established by the plan.
SECTION 4: NEW POSITIONS: When a new position is created, before the same m ay be filled, the Department Head shall notify the Human Resource Director, and except as otherwise provided by resolution or these Personnel Rules, no person shall be permanently employed to fill any such position until the classification plan shall have been amended to provide therefore and an appropriate employment list has been established for such position.
SECTION 5: RECLASSIFICATION: Positions, the duties of which have changed materially so as to necessitate reclassification, shall be allocated by t he Human Resource Director to a more appropriate class, whether new or already created, in the same manner as originally classified and allocated. Reclassifications shall not be used for the purpose of avoiding restrictions surrounding demotions and promotions.
SECTION 6: AMENDING THE CLASSIFICATION PLAN : The City Council may create new classes and the Human Resource Director may revise or abolish existing classes, providing there are no salary changes.
RULE IV - COMPENSATION
SECTION 1: PREPARATION OF PLAN: The Human Resource Director or the person or agency employed for that purpose shall prepare a pay plan covering all classes of positions in the competitive service, showing the minimum and maximum rates of pay. In arriving at such salary ranges, consideration shall be given to prevailing rates of pay for comparable work in other public
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and in private employment, including consideration of conditions of work as well as basic pay, to current costs of living, to suggestions of Department Heads, and to the City's financial condition and policies. The Human Resource Director or the person or agency employed for that purpose shall thereafter make such further studies of the compensation plan as may be requested by the City Council.
SECTION 2: ADOPTION OF PLAN : The Human Resource Director shall submit the proposed pay plan to the City Council. The Council shall adopt or amend the proposed plan. Thereafter, no position shall be assigned a salary higher than the maximum or lower than the minimum salary provided for that class or position unless the salary schedule for the class is amended in the same manner as herein provided for its adoption.
RULE V - APPLICATIONS FOR APPLICANTS
SECTION 1: ANNOUNCEMENTS: All examinations for classes in the competitive service shall be published by posting announcements in the City Hall on official bulletin boards and in other places as the Human Resource Director deems advisable. The announcements shall specify the title and pay range of the class for which the examination is ann ounced; the nature of the work to be performed; preparation desirable for the performance of the work of the class; minimum qualifications for the class; the dates, time, place and manner of making applications; the general scope of examination and relativ e weights to be given to its several parts; and other pertinent information.
SECTION 2: APPLICATION FORMS: Applications shall be made on online forms provided by the Human Resource Director. Such forms shall require information covering training, experience, and other pertinent information, and may include certificates of one or more examining physicians, references and fingerprinting. All applications must be signed by the person applying.
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SECTION 3: QUALIFICATION AND DISQUALIFICATION : On approva l of application, applicant may be admitted to the examination. The Human Resource Director may reject any application, which is not properly completed, incomplete or defective; received after the application deadline; or which indicates on its face that t he applicant does not possess the minimum qualifications required by the announcement for the position or required for the position.
Applications shall be rejected if the applicant is not authorized to work in the United States, has made any false statement of any material fact, or practices, or attempted to practice, any deception or fraud in their application. Whenever an application is rejected, notice of said rejection with statement of reason shall be mailed to the applicant by the Human Resource Dire ctor or designee.
Defective applications may be returned to the applicant with notice to amend the same, providing the time limit for receiving applications has not expired. Rejected applications resubmitted and received before the expiration of the time l imit for receiving applications, may subsequently be accepted on a showing that the applicant does possess the necessary qualifications.
RULE VI – EXAMINATIONS
SECTION 1: NATURE AND TYPES OF EXAMINATIONS : Assembled examinations shall consist of written and/or oral tests and shall consist of the following parts:
a. Special Subject: This part shall constitute that portion of the examination which deals with the duties of a position, and may be an oral test, a written short answer test, a written free answer test or a combination of any of these; but must be designed to test the ability of an individual to perform said duties.
b. Educational: This part shall consist of penmanship, spelling, composition, civics, city information, or any or all of these, as well as other subjects to test the basic training which would logically form the groundwork for performing the duties of the position and advancement in the service.
c. Training and Experience: Training shall consist of a statement of schooling and studies.
Experience shall consist of a statement of all past activities that would tend to fit candidates for the positions they seek and may include a statement of the names of former
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employers, nature of work and references . A record based on references, investigation, character of past employment, and general standing in the community may be included as a part of this subject.
d. Physical or Medical : A physical or medical examination may be a part of any examination.
e. Oral Inte rview: Personality and appearance may be counted as a factor in an examination, or the applicant may be questioned on the duties of the position, training and experience, nature of work performed, and other reasonable questions to determine the applicant’s fitness for the position.
SECTION 2: PROMOTIONAL EXAMINATIONS: Promotional examinations may be conducted whenever the needs of the service is required. Promotional examinations may include any of the selection techniques mentioned in section 1 of this ru le, or any combination of them. Only permanent employees who meet the requirements set forth in the promotional examination announcements may compete in promotional examinations.
Promotional examinations need not be advertised in a newspaper. An examination may be given for both promotional and outside candidates. In such a combined examination, the city -service of the promotional candidates shall be considered in assigning scores to candidates.
SECTION 3: CONDUCT OF EXAMINATIONS : The Human Resource Direc tor shall be responsible for the manner and methods and by whom examinations shall be prepared and administered. The City Manager upon recommendation of the Human Resource Director, may contract with any competent agency or individual for the performance by such agency or individual of the responsibility for preparing and administering examinations. In the absence of such a contract, Human Resource Director shall perform such duties. The Human Resource Director shall arrange for the use of public buildings and equipment for the conduct of examinations and shall render such assistance as shall be required with respect thereto. An appl icant with a disability may request
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accommodation in an examination process. Following receipt of a request for accommodation, the Human Resource Director may require additional information, such as reasonable documentation of the existence of a disability.
SECTION 4: SCORING EXAMINATIONS AND QUALIFYING SCORES: A candidate’s score in a given examination shall be the average of their scores on each competitive part of the examination, weighted as shown in the examination announcement. Failure in one part o f the examination may be grounds for declaring such applicants as failing in the entire examination or as disqualified for subsequent parts of an examination.
SECTION 4a: VETERANS’ PREFERENCE: In any examination in which City employees do not compete, a qualified veteran who successfully passes the examination may have a 5% preference bonus added to his final score. A qualified veteran means a veteran who prior to the examination has been honorably discharged after service in the Armed Forces of the United States during time of armed conflict including states of national emergency as declared by the President of the United States and also including service in armed conflict activities of United States units for the United Nations. Eligibility for this preference requires furnishing the Human Resource Director with proof of honorable discharge.
SECTION 5: NOTIFICATION OF EXAMINATION RESULTS : Each candidate on an open examination shall be given written notice if they passed or failed the examination. Each ca ndidate in a promotional examination shall be given written notice of the results thereof, and if successful, of their final earned score and rank on the employment list.
SECTION 6: REVIEW OF PAPERS : Any candidate shall have the right to inspect their own examination papers within ten days after the notices of examination results were mailed, except that candidates shall be prohibited from reviewing standardized written examinations when contractual arrangements with testing services so stipulate. Any err or in computation, if called to the attention
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of the Human Resource Director within this period, shall be corrected. Such corrections shall not, however, invalidate appointments previously made.
RULE VII - EMPLOYMENT LISTS
SECTION 1: EMPLOYMENT LISTS: As soon as possible after the completion of an examination, the Human Resource Director shall prepare and keep available an employment list consisting of the names and candidates who qualified in the examination, arranged in order of final scores, from the highest to lowest qualifying score.
SECTION 2: DURATION OF EMPLOYMENT LISTS: Employment lists shall remain effective one year, unless sooner exhausted, and may be extended, prior to their expiration dates, by action of the Human Resource Director for additional six -month periods, but in no event shall an employment list remain in effect for more than two years.
SECTION 3: RE-EMPLOYMENT LISTS: The names of probationary and permanent employees who have been laid off shall be placed on appropriate r e-employment lists in the order of their competency, from highest to lowest. Such names shall remain thereon for a period of one year unless such persons are sooner re-employed.
When a re-employment list is to be used to fill vacancies, the Human Resource Director shall certify from the top of such list the number of names equal to the number of vacancies to be filled, and the Human Resource Director shall appoint such persons to fill the vacancies.
SECTION 4: REMOVAL OF NAMES FROM LISTS : The name of any person appearing on an employment, re-employment or promotional list shall be removed by the Human Resource Director if the eligible person requests in writing that their name be removed, if they fail to respond to notice of certification mailed to their last known address, if they have been certified for appointment three times and have not been appointed, has been convicted of a felony or misdemeanor involving moral
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turpitude, on proof of fraud or false statement; for failure to appear fo r work after notification or if an appointment has been declined for unsatisfactory reasons.
SECTION 5: LATERAL ENTRY, POLICE OFFICER : Any person who possesses a Basic Certificate issued by Peace Officer Standards and Training, State of California, or an y person who has successfully completed a Basic Academy certified by Peace Officer Standards and Training, State of California, may be considered for employment without examination. Such consideration is dependent upon their meeting the minimum requirements of the class and concurrence of appointing authority and Human Resource Director. For purposes of these Personnel Rules, such applicants shall be treated as applicants for a transfer for a police officer class only.
RULE VIII - METHOD OF FILLING VACANCIES
SECTION 1: TYPES OF APPOINTMENT: All vacancies in the competitive service shall be filled by re -employment, reinstatement, transfer, demotion, or from eligibles certified by the Human Resource Director from an appropriate employment or promotional list, if available. In the absence of persons eligible for appointment in these ways, provisional appointments may be permitted in accordance with the Personnel Rules.
SECTION 2: APPOINTMENTS: Appointments to vacant positions in the competitive service shall be made in accordance with the Personnel Rules. Appointments and promotions shall be based on merit and fitness to be ascertained so far as practicable by competitive assembled or unassembled examinations. Examinations shall be used to aid in the selectio n of qualified employees, and shall consist of such recognized selection techniques as achievement, aptitude, and other written tests, personal interview, performance tests, evaluation of daily work performance, work samples, background appraisal, or any combination of these which will in the opinion of the Human Resource Director test fairly the qualifications of candidates. Physical and medical tests may be given as part of any examination.
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In any examination the Human Resource Director may include, in a ddition to competitive tests, a qualifying test, or tests, and set minimum standards therefor.
When appointment is to be made to a vacancy in the competitive service, the Human Resource Director shall transmit to the Department Head concerned, the top thr ee names of candidates appearing on the appropriate certified employment or promotional list, in the order in which they appear on the list. If there are multiple vacancies one additional person will be provided for each additional opening from the promotional list.
In the absence of appropriate employment lists a provisional appointment may be made in accordance with the Personnel Rules.
No special credit shall be allowed in meeting any qualifications or in the giving of any test or the establishment of any employment or promotional lists, for service rendered under a provisional appointment to a full-time position.
During the period of suspension of any employee or pending final action on proceedings to review suspension, demotion or dismissal of an employee, such vacancy may be filled by the City Manager, subject to the Personnel Rules.
After interview and investigation, the Department Head shall make recommendations from among those certified and shall immediately notify the Human Resource Director of the person or persons recommended. The Human Resource Director shall thereupon notify the person appointed and if the applicant accepts the appointment and presents themselves for duty within such period of time as the appointing authority shall prescri be, the applicant shall be deemed to be appointed, otherwise, they shall be deemed to have declined the appointment.
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SECTION 3: PROVISIONAL APPOINTMENT: In the absence of appropriate employment lists, a provisional appointment may be made by the City Manager of a person meeting the minimum training and experience qualifications for the position. An employment list shall be established within six months for any permanent position filled by provisional appointment. The City Manager may extend the period of provisional appointment beyond six months , up to and including twelve months.
No special credit shall be allowed in meeting any qualification or in the giving of any test of the establishment of any employment or promotional lists, for service rendered under a provisional appointment.
SECTION 4: EMERGENCY APPOINTMENTS : To meet the immediate requirements of an emergency condition, such as extraordinary fi re, flood, earthquake, or pandemic which threatens public life or property, any legally competent officer or employee may employ such persons as may be needed for the duration of the emergency without regard to the Personnel Rules affecting appointments. As soon as possible, such appointments shall be reported to the Human Resource Director.
SECTION 5: NOTICE TO HUMAN RESOURCE DIRECTOR : Whenever a vacancy in the competitive service is to be filled, the Department Head shall notify the Human Resource Director.
The Human Resource Director shall advise the Department Head as to the availability of employees for re-employment, reinstatement, requests for transfer, or demotion and of eligibles on employment or promotional lists for the class.
SECTION 6: CERTIFICATION OF ELIGIBLES: The Department Head shall indicate whether it is desired to fill the vacancy by re -employment, reinstatement, transfer, or demotion, or whether certification from a promotional or employment list is preferred. If appointment is to be made from
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an employment or promotional list, the names of all persons willing to accept appointment shall be certified.
SECTION 7: ORDER OF CERTIFICATION : Whenever certification is to be made, the employment lists, if each exists, shall be used in t he following order: promotional list, re - employment list, open competitive list. The top three names of persons appearing on the appropriate certified employment or promotional list, in the order in which they appear on the list. If there are multiple vacancies one additional person will be provided for each additional opening from the promotional list. Whenever there are fewer than three names on a promotional list or an open competitive list, the Human Resource Director may make an appointment from among such eligibles or may establish a new list. If a new list is to be established, the Human Resource Director shall hold a new examination and establish a new employment list.
SECTION 8: NEPOTISM: It is the policy of the City of Colton to hire and to promote employees on the basis of merit. Nepotism is defined as the practice of an employee using their influence or power to hire, transfer, or promote an applicant or employee. Nepotism does not align with the City’s policy and practice of making employment decisions based solely on the City’s needs, merit- based processes, and individual qualifications, skills, knowledge, abilities and performance. The City Council directs that there shall be no favoritism in hiring , transfer , reclassif ication, or promotion due to a person’s personal relationships.
For purposes of this section, “personal relationships” shall include , but is not limited to, relatives, domestic partners and persons living in the same household. For purposes of this section “relative” is defined as persons related by blood , adoption or marriage , including, but not limited to the following: parent, step-parent, parent-in-law, legal guardian, foster parent, grandparent, grandchild, brother, brother -in-law, step -brother, sister, sister -in-law, step -sister, spouse, domestic partner, child, step -child, foster child, adopted children, son -in-law, daughter -in-law, first cousin, niece, nephew, aunt, and uncle. For purposes of this section 'immediate family' includes the applicant or
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employee's spouse and any lineal descendants of the applicant or employee or of the applicant or employee's spouse, whether natural or legally adopted. For purposes of this section, “immediate family” is defined as the applicant's or employee's spouse and any lineal descendants of the applicant or employee or of the applicant's or employee's spouse, whether natural or legally adopted.
Employees shall not be involved in an employment decision affecting an applicant or employee with whom they have a personal relationship. For purposes of this section, “employment decisions” shall mean decisions concerning the hiring, transfer, promotion , reclassification, or discipline of an applicant or employee.
Applicants will not be hired, and employees will not be promoted, reclassified, or transferred, to any position whenever such person’s relative already holds a position with the City, if the result would be:
The applicant or employee would supervise, be supervised by, or be in the chain of command of, a person with whom they have a personal relationship.
The employee would p articipate in making, or advising on, employment decisions concerning a person with whom they have a personal relationship.
The applicant or employee would be employed in the same department as another employee with whom a personal relationship exists, if, for reasons of supervision, morale, safety or security, it is determined that the work involves potential conflicts of interest.
The applicant or employee would have a member of the ir immediate family in one of the following positions: City Manager, Department Head or member of the City Council.
The applicant or employee would be in one of the following positions: City Manager, Department Head or member of the City Council.
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Relatives of City employees, officers, or officials shall not be favored whatsoever. Supervision of employees with whom a personal relationship exists must be promptly reported by the supervisory level employee to the Human Resource Department. Since employees cannot supervise related persons, Human Resource, to the greatest extent feasible , shall remove the conflict based on operational needs and necessity. The Human Resource Director will take necessary steps to resolve the conflict. If, for operational reasons, Human Resource cannot remove the conflict, they shall formulate a management plan to address the supervisory relationship while minimizing impact on the employees involved. At a minimum, all management plans must address reporting relationships, supervision, and evaluation to ensure a supervisor does not participate in employment decisions regarding a related person, as prohibited by this policy.
The City Manager is directed to report to the City Council at its next regular meeting in open session upon being contacted by any City employee, officer or official in a manner which appears to be for the purpose of causing the City Manager to violate the policy stated herein.
RULE IX – PROBATIONARY PERIOD
SECTION 1: LENGTH OF PROBATIONARY PERIO D: All regular and promotional appointments shall be tentative and subject to a probationary period of eighteen months for police officers, one year for police officers with Basic Post Certificates who are hired laterally from another law enforcement agency, one year for police dispatchers and firefighters, and six months for other employees. In each case, the appointee shall be informed of the length of the probationary period before they begin service.
Prior to exp iration of an employee’s probationary period, the employee’s supervisor, with the approval of the Department Head, shall recommend to the Human Resource Director that one of the following actions be taken:
1. Grant the employee permanent status.
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2. Extend the probationary period for a period not to exceed six months.
3. Terminate the employee because of unsatisfactory performance.
Employees, whose probationary period has been extended, shall have their salary anniversary date extended by the appropriate period of time.
Notification to the Human Resource Director of the recommended action shall be accompanied by a performance evaluation report on the employee, completed within the 30-day period immediately preceding the date when the employee’s probationary period is due to expire.
SECTION 2: OBJECTIVE OF PROBATIONARY PERIOD: The probationary period is a part of the examination process and shall be utilized for closely observing the employee’s work and for securing the most effective adjustment of a new employee to their position.
SECTION 3: REJECTION OF A PROBATIONER: During the probationary period, an employee may be rejected by the Department Head without cause and without the right of appeal or hearing.
Notification of rejection in writing shall be served on the probationer and a copy filed with the Human Resource Director.
SECTION 4: REJECTION FOLLOWING PROMOTION : An employee in the competitive service, rejected during or at the expiration of a probationary pe riod following a promotional appointment, shall be reinstated to the position from which they were promoted unless charges are filed and they are discharged in the manner provided in the Personnel Rules for positions in the competitive service.
An employee in the competitive service, promoted or transferred to a position not included in the competitive service, shall be reinstated to the position from which they were promoted or transferred if, within six months after such promotion or transfer, action is taken to reject or dismiss the
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employee, unless they were discharged in the manner provided for positions in the competitive service.
SECTION 5: PROBATIONARY PERIOD : All regular and promotional appointments shall be tentative and subject to a probationar y period of eighteen months for Police Officers, one year for police officers with Basic Post Certificates who are hired laterally from another law enforcement agency, twelve months for Firefighters and police dispatchers, and six months for other employees.
An employee rejected during the probationary period from a position to which they have been promoted shall be reinstated to the position from which they were promoted, unless the employee is dismissed from the City service as provided by the rules, regulations, and/or other policies of the City.
An employee in the competitive service promoted or transferred to a position not included in the competitive service shall be reinstated to the position from which they were promoted or transferred if, within six months after such promotion or transfer, action is taken to reject or dismiss them, unless the employee is discharged in the manner provided in the Personnel Rules for positions in the competitive service.
SECTION 6: STATUS OF PRESENT EMPLOYEES: Any person holding a regular appointment after successfully completing the probationary period for their job classification , including any extensions to said probationary period, shall assume regular status in that job classification, without qualifying test, and shall thereafter be subject in all respects to the Personnel Rules.
Any other persons holding positions in the competitive service shall be regarded as probationers who are serving out the balance of their probationary periods as prescribed in the Personnel Rules before obtaining regular status. The probationary period shall be computed from the date of appointment or employment.
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RULE X – ATTENDANCE AND LEAVES
SECTION 1: VACATION: Employees should refer to their respective MOUs, Resolutions or standalone policies, as applicable.
SECTION 2: LEAVE: The City shall provide leave as required by law. Employees should refer to their respective MOUs, Resolutions or standalone policies, as applicable.
SECTION 3: SICK LEAVE REPORTS : In order to receive compensation while absent on sick leave, the employee shall notify his immediate superior or the Human Resource Department prior to or within four hours after the time set for beginning his daily duties or as may be specified by the head of the department. When absence is for more than three workdays, the employee shall file a physician's certificate or a personal affidavit with the Human Resource Director, stating the cause of the absence.
SECTION 4: MILITARY LEAVE : Military leave shall be granted in accordance with the provisions of state law. All employees entitled to military leave shall give the appointing power an opportunity within the limits of military regulations to determine when such leave shall be taken.
SECTION 5: LEAVE OF ABSENCE WITHOUT PAY: The City Manager may grant a permanent employee a leave of absence without pay for a period not to exceed six months. Any request for a leave longer than six months may be granted only by the City Manager. No such leave shall be granted except upon written request of the employee. Approval shall be in writing and a copy filed with the Human Resource Director. Upon expiration of a regularly approved leave, or within a reasonable period of time after notice to return to duty, the employee shall be reinstated in the position held at the time the leave was granted. Failure on the part of an employee on leave to report promptly at its expiration, or within a reasonable time after notice to return to duty, shall be cause for discharge. No absence or leave will be granted when the purpose of the employee is to enter the services of another employer.
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SECTION 6: ATTENDANCE: Employees shall be in attendance at their work in accordance with rules regarding hours of work, holi days and leaves. All departments shall keep daily attendance records of employees, which shall be reported to the Finance Department/Payroll Division, on the provided form and on the dates, the Department Head shall specify. Failure on the part of the employee absent without leave, to return to duty within 24 hours after notice to return shall be cause for immediate discharge, and such employee automatically waives all rights under the Personnel Rules. All personnel, who are subject to emergency and standby duty, shall respond to emergency calls in a reasonable period of time.
SECTION 7: CITY HOLIDAYS
a. Municipal offices shall be closed to the public on the following legal holidays: Saturdays; Sundays; New Year's Day; Martin Luther King Jr’s Birthday; President’s Day; Memorial Day; Independence Day; Labor Day; Columbus Day; Veteran's Day; Thanksgiving Day; Christmas Eve, Christmas Day; New Year’s Eve; every day appointed by the President or Governor for a public fast, thanksgiving or holiday , as facilit ated thru the meet and confer process . When a holiday falls on Friday, the preceding Thursday shall be observed. When a holiday falls on a Saturday, ten (10) hours shall be added to the employees floating holiday bank. When a holiday falls on Sunday, the following Monday shall be observed.
b. All employees who work 2080 hours per year (excluding Fire) will observe two floating holidays for a total of 14 holidays annually.
c. All regular full -time and provisional full -time employees shall be eligible for holiday pay. Employees should refer to their respective MOUs, Resolutions or standalone policies, as applicable for a list of paid holidays.
SECTION 8: CONVERSION OF LEAVE : A formula for converting attendance and leave regulations to employees working unusual shifts, such as firemen, shall be recommended by the
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appropriate Department Head and ordered by the City Manager, subject to the approval of the City Council.
SECTION 9: INCOMPATIBLE EMPLOYMENT: Any permanent employee desiring to accept employment in addition to their City employment shall secure the approval of the Department Head and the City Manager. No such approval shall be given if the employment is incompatible with their City responsibilities. The incompatibility may arise from either the time of work on the outside and its possible effect upon availability’s for City employment; from the nature of the work on the outside which might give rise to possible conflict of interest or to a public belief that a conflict of interest would exist; or from the nature of outside employment sufficiently fatiguing or hazardous as to reduce the prospects of availability for City employment when and as needed and in proper physical condition to perform the duties required. In interpreting this incompatibility, it shall be recognized that many City positions require the availability of employees at times additional to their normal hours of employment.
SECTION 10: APPLICABILITY OF RULES TO CERTAIN EXEMPT POS ITIONS: The provisions of the Personnel Rules related to attendance and leaves shall apply to the incumbents of full-time exempt positions.
RULE XI - PAY ADJUSTMENTS
SECTION 1: APPLICATION OF RATES : Employees occupying a position in the competitive service shall be paid a salary or wage within the range established for the position's class under the pay plan as provided by Rule IV. The minimum rate for the class generally shall apply to employees upon original appointment. However, the City Manager may, w hen circumstances warrant it, appoint at other than the first step. Officers and employees re-employed after lay-off shall receive a rate within the range established for the class and agreed upon by the appointing power and the employee concerned. Transfers shall not affect an employee's salary rate.
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SECTION 2: ADVANCEMENT: No salary advancement shall be made so as to exceed the maximum rate established in the pay plan for the class to which the advanced employee's position is allocated. Advancements shall not be automatic but shall depend upon increased service value of an employee to the City as exemplified by recommendations of the supervising official, length of service, performance record, special training undertaken, or other pertinent evidence. No advancement in salary shall be made to a temporary employee.
SECTION 3: REDUCTION: Salary reductions may be made as a result of an employee's diminished service value. No reduction shall be made below the minimum rate established in the classification plan for the class to which the reduced employee's position is allocated. Written notice of the reduction shall be given to the employee before the effective date of the reduction and a copy filed with the Personnel Officer.
RULE XII - TRANSFER, PROMOTION, DEMOTION, SUSPENSION AND
REINSTATEMENT
SECTION 1: TRANSFERS: An employee may be transferred by the City Manager at any time from one position to another position in the same or comparable class. If the transfer involves a change from the jurisdiction of one supervising official to another, both must consent thereto unless the City Council orders the transfer for purposes of economy or efficiency. Transfer shall not be used to effectuate a promotion, demotion, advancement or reduction, each of which may be accomplished only as provided in the Personnel Rules. No person shall be transferred to a position for which they do not possess the minimum qualifications.
SECTION 2: PROMOTION: Insofar as practicable and consistent with the best interests of the service, all vacancies in the competitive service shall be filled by promotion from within the competitive service, after a promotional examination has been given and a promotional list established.
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If, in the opinion of the Department Head, a vacancy in the posi tion could be filled better by an open, competitive examination instead of a closed, promotion examination, then the Department Head may request the Human Resource Director to call for applications for the vacancy and arrange for an open, competitive examination and for the preparation and certification of an eligibility list.
SECTION 3: DEMOTION: The Department Head may demote an employee whose ability to perform the required duties fall below standard, or for disciplinary purposes. Upon request of the employee and with consent of the prospective supervising official, demotion may be made to a vacant position as a substitution for lay-off. No employee shall be demoted to a position for which they do not possess the minimum qualifications. Written notice of the demotion shall be given to the employee before the effective date of the demotion and a copy filed with the Human Resource Director.
SECTION 4: SUSPENSION: An employee may be suspended from their position at any time for the good of the service, for a disciplinary purpose, or for other just cause. An employee shall be provided an opportunity for a pre -disciplinary hearing for any proposed discipline of a one-day suspension or more. All requests fo r a pre -disciplinary hearing must be received by the Office of Human Resource within five calendar days of the notice of intent to discipline. Suspension without pay shall not exceed thirty days nor shall any employee be penalized by suspension for more th an thirty days in any fiscal year. Department Heads may suspend a subordinate employee without right of appeal for not more than three working days at any one time and not more frequently than one such suspension in a thirty -day period. Any suspension to b e made for a period longer than three days must be made by the City Manager upon recommendation of the Department Head concerned and the suspended employee shall have the right of appeal. In any case where the suspended employee is found to have been unjus tly suspended and is subsequently reinstated, such employee shall be entitled to receive all pay lost during the period of suspension. Any suspension shall be reported immediately to the Human Resource Director. An employee may not use paid leave to substitute for suspension time.
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Any person holding a position or employment in the competitive service shall be subject to disciplinary suspension without right of appeal by the Department Head provided that the suspension is for a period not to exceed three da ys. Any suspension which is to exceed three days must be made by the City Man ager and the suspended employee shall have the right of appeal.
Suspensions shall not exceed thirty days in any fiscal year. Any Department Head not having power of appointment may make disciplinary suspensions in accordance with the rules.
SECTION 5: REINSTATEMENT: With the approval of the appointing power, an employee who has resigned with a good record may be reinstated within two years to their former position, if vacant, or to a vacant position in the same or comparable class.
RULE XIII - SEPARATION FROM THE SERVICE
SECTION 1: DISCHARGE: An employee in the competitive service may be discharged at any time by the City Manager for cause. Such discharge shall be made by the Cit y Manager upon recommendation of the Department Head concerned. Any employee who has been discharged shall be entitled to receive a written statement of the reasons for such action and to a hearing if they so request, as provided in the Personnel Rules.
SECTION 2: LAY-OFF: The City Manager may lay -off an employee in the competitive service because of material change in duties or organization or shortage of work or funds. Ten working days before the effective date of a lay-off, the Department Head shall notify the Human Resource Director of the intended action with reasons therefor, and a statement certifying whether or not the services of the employee have been satisfactory. A copy of such notice shall be given the employee affected.
If certified as having given satisfactory service, the name of the employee laid off shall be placed on the appropriate employment list as provided by these Personnel Rules. If not certified as having given satisfactory service, the employee laid off may interpret the action as a discharge and request a hearing as provided by the Personnel Rules.
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SECTION 3: ABOLITION OF POSITION : Whenever in the judgment of the City Manager it becomes necessary in the interest of economy or because the necessity for the position or employment no longer exists the City Manager may recommend to the Council the abolition of any position or employment in the competitive service. Upon approval of the City Council, the City Manager may then lay-off, demote or transfer any employee holding such positi on or employment without filing charges and without right of appeal for the so-affected employee.
Seniority and competency shall be used as the basis for affecting such reduction in personnel.
Competency of a person shall be determined by the head of the department in which such person works. For the purpose of determining seniority, total cumulative time shall include time served on military leave of absence.
The names of probationary and permanent employees laid off shall be placed upon re -employment lists for classes which, in the opinion of the Human Resource Director, require basically the same qualifications and duties and responsibilities of those of the class of positions from which lay -off was made. Names of persons laid off shall be placed upon re-employment lists in order of their competency and shall remain on such lists for a period of one year unless re-employed sooner.
SECTION 4: RESIGNATION: An employee wishing to leave the competitive service in good standing shall file with the supervisi ng official at least two weeks before leaving the service, a written resignation stating the effective date and reasons for leaving.
The resignation shall be forwarded to the Human Resource Director with a statement by the appointing power or Department Head as to the resigned employee’s service performance and other pertinent information concerning the cause of resignation. Failure to comply with this rule shall be entered on the service record of the employee and may be cause for denying future employment by
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the City. The resignation of an employee who fails to give notice shall be reported to the Human Resource Director by the Department Head immediately.
RULE XIV - APPEALS AND HEARINGS
SECTION 1: COMPLAINTS: Any unrepresented employee in the competitive service shall have the right to appeal any disciplinary action which exceeds a three (3) day suspension , dismissal, demotion, or alleged violation of the Personnel Rules, except in instances where the right of appeal is prohibited by the Personnel Rules. The employee may file a complaint in writing with the Human Resource Director. Such a complaint shall be filed within three (3) days after receipt of notice or three (3) days after the action or alleged violation, whichever is later. It shall be the duty of the Human Resource Director to inform each of the Department Head or other persons complained against of the filing of the complaint. Represented employees should refer to their respective MOUs for applicable procedures related to disciplinary actions.
SECTION 2: INVESTIGATION AND HEARING: Upon the making of any complaint, the Civil Service Board shall make such investigation as it may deem necessary. The hearing authorized by the Personnel Rules shall be held within twenty (20) days after the request for the hearing was made.
In all hearings, the applicable provisions of the Personnel Rules shall apply.
SECTION 3: NOTIFICATION OF HEARINGS : Whenever a hearing on any complaint is to be held, the Human Resource Director shall notify the person requesting the hearing and the Department Head or other officer from whose action the appeal is being taken, of the date, time, and place of the hearing and shall publicly post at such places as the Civil Service Board shall prescribe, a notice of the date, time and place of the hearing.
SECTION 4: PERSONAL APPEARANCE AT HEARINGS : Unless incapacitated or during periods of quarantine , the person making the complaint shall appear personally before the Civil
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Service Board, or its designee, at the hearing, and the employee may be represented by any person or attorney the employee shall select.
SECTION 5: FINDINGS: Upon the conclusion of any investigation or hearing, the Civil Service Board shall cause its findin gs and recommendations to be prepared in writing and shall certify the same within twenty (20) days following the conclusion of any investigation or hearing. Such findings shall be countersigned and filed as a permanent record by the Human Resource Directo r.
The Human Resource Director shall deliver a certified copy of such findings and recommendations to the City Council and to any other officer or employee affected by such findings and recommendations or from whose action the appeal was taken.
Any member of the Civil Service Board may submit a minority or supplemental report which shall be filed as a permanent record by the Human Resource Director.
SECTION 6: DEFERRED HEARINGS : If, due to the absence from the City, or the illness or disability of a majority of the Civil Service Board, any employee would be deprived of the right of a hearing by the Civil Service Board, in the event the employee were laid off, demoted, reduced, or discharged, the Human Resource Director shall defer action until the Board is able to function.
RULE XV - TRAINING OF EMPLOYEES
SECTION 1: RESPONSIBILITY FOR TRAINING : Responsibility for developing training programs for employees shall be assumed jointly by the City Manager, the Human Resource Director and Department Heads. Such training programs may include lecture courses, demonstrations, assignment of reading matter or such other devices as may be available for the purpose of improving the effectiveness and broadening the knowledge of municipal officers and employees in the performance of their respective duties.
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SECTION 2: CREDIT FOR TRAINING : Participation in and successful completion of special training courses may be considered in making advancements and promotions. Evidence of such activity shall be filed by the employee with the Human Resource Director.
RULE XVI - REPORTS AND RECORDS
SECTION 1: ROSTER CARDS: The Human Resource Director shall maintain a service or roster card for each employee in the service of the City showing the name, title of position held, the department to which assigned, salary, changes in employment status, disciplinary actions, attendance, sick leave and vacation accrued and taken, and such other information as may be considered pertinent.
SECTION 2: CHANGE-OF-STATUS REPORT : Every appointment, tra nsfer, promotion, demotion, change in salary rate, and any other temporary or permanent change in status of employee shall be reported to the Human Resource Director and recorded by said Director in such manner as may be prescribed by these Personnel Rules.
SECTION 3: DESTRUCTION OF RECORDS : Roster and payroll records shall be kept in accordance with the City’s Retention Schedule . All other records relating to personnel, including correspondence, applications, examinations and reports shall be retained and destroyed in accordance with the City’s Retention Schedule , as required by law . Any temporary record may be destroyed at any time by the Human Resource Director with the consent of the City Attorney.
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BE IT FURTHER RESOLVED that the provisions provided herein shall be effective as of 15th day of October, 2024 contingent upon signature of the City’s representative.
PASS, APPROVED AND ADOPTED this 15th day of October, 2024.
FRANK J. NAVARRO
MAYOR
ATTEST:
STEPHANIE VARGAS
CHIEF DEPUTY CITY CLERK
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RESOLUTION NO R-15-00
PERSONNEL SYSTEM RULES AND REGULATIONS FOR
THE CITY OF COLTON
BE IT RESOLVED by the City Council of the City of Colton, California that Resolution No. 2240 and sections of Ordinance 1122 pertaining to the Personnel System Rules and Regulations are hereby consolidated and amended as follows and shall be effective upon execution; RESOLVED, that the City Council of the City of Colton does hereby adopt the following rules:
PERSONNEL RULES AND REGULATIONS
TABLE OF CONTENTS
RULE I – Definition of Terms ........................................................................................................... 6-9 RULE II - General Provisions
Section 1: Disclosure Of Race, Marital Status, Amount Of Children, Religious Or Political Affiliations .......................................................................................................................... 9 Section 2: Violation Of Rules......................................................................................................... 10 Section 3: Amendment And Revision Of Rules ............................................................................. 10 Section 4: Adoption Of Rules......................................................................................................... 10 Section 5: Competitive Service ...................................................................................................... 11 RULE III - Classification
Section 1: Preparation Of Plan ....................................................................................................... 11 Section 2: Adoption Of Plan .......................................................................................................... 12 Section 3: Allocation Of Positions ................................................................................................. 12 Section 4: New Positions ................................................................................................................ 12 Section 5: Reclassification ....................................................................................................... 12-13 Section 6: Amending The Classification Plan ................................................................................ 13
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RULE IV - Compensation
Section 1: Preparation Of Plan ....................................................................................................... 13 Section 2: Adoption Of Plan .......................................................................................................... 13 RULE V - Applications For Applicants
Section 1: Announcements ............................................................................................................. 14 Section 2: Application Forms ......................................................................................................... 14 Section 3: Qualification And Disqualification ................................................................................ 14 RULE VI - Examinations
Section 1: Nature And Types Of Examinations .............................................................................. 15 Section 2: Promotional Examinations ............................................................................................ 15 Section 3: Conduct Of Examinations ............................................................................................. 16 Section 4: Scoring Examinations And Qualifying Scores .............................................................. 16 Section 4a: Veteran’s Preference.................................................................................................... 16 Section 5: Notification Of Examination Results ............................................................................. 17 Section 6: Review Of Papers .......................................................................................................... 17 RULE VII - Employment Lists
Section 1: Employment Lists .......................................................................................................... 17 Section 2: Duration Of Employment Lists...................................................................................... 17 Section 3: Re-Employment Lists .............................................................................................. 17-18 Section 4: Removal Of Names From Lists ..................................................................................... 18 Section 5: Lateral Entry, Police Officer ......................................................................................... 18 RULE VIII - Method Of Filling Vacancies
Section 1: Types Of Appointment .................................................................................................. 19 Section 2: Appointments .......................................................................................................... 19-20 Section 4: Provisional Appointment ............................................................................................... 20 Section 5: Emergency Appointments ............................................................................................. 21 Section 6: Notice To Human Resource Director ............................................................................ 21
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Section 7: Certification Of Eligibles ...................................................................................................... 21 Section 8: Order Of Certification .......................................................................................................... 21 Section 9: Residence ............................................................................................................................. 22 Section 10: Nepotism ............................................................................................................................ 22 RULE IX - Probationary Period
Section 1: Length Of Probationary Period ............................................................................................. 22 Section 2: Objective Of Probationary Period ........................................................................................ 23 Section 3: Rejection Of A Probationer .................................................................................................. 23 Section 4: Rejection Following Promotion ............................................................................................ 23 Section 5: Probationary Period ........................................................................................................ 23-24 Section 6: Status Of Present Employees ................................................................................................ 24 RULE X - Attendance And Leaves
Section 1: Vacation ............................................................................................................................... 25 Section 2: Scheduling Annual Leave ..................................................................................................... 27 Section 3: Deferring Annual Leave ....................................................................................................... 28 Section 4: Holidays During Annual Leave ............................................................................................ 28 Section 5: Annual Leave Upon Termination ......................................................................................... 28 Section 6: Sick Leave ............................................................................................................................ 28 Section 6a: Accum. Sick Leave At Term. Of Employee ....................................................................... 29 Section 7: Sick Leave Reports ............................................................................................................... 30 Section 8: Military Leave ...................................................................................................................... 31 Section 9: Leave Of Absence Without Pay............................................................................................ 31 Section 10: Attendance .......................................................................................................................... 31 Section 11: City Holidays ...................................................................................................................... 32 Section 12: Conversion Of Leave .......................................................................................................... 32 Section 13: Incompatible Employment ............................................................................................ 32-33 Section 14: App. Of Rules To Certain Exempt Positions ...................................................................... 33 RULE XI - Pay Adjustments
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Section 1: Application Of Rates ............................................................................................................ 33 Section 2: Advancement ........................................................................................................................ 33 Section 3: Reduction ............................................................................................................................. 34 RULE XII – Transfer/Prom./Demotion/Susp. & Reinstatement Section 1: Transfers ............................................................................................................................... 34 Section 2: Promotion ............................................................................................................................. 34 Section 3: Demotion .............................................................................................................................. 35 Section 4: Suspension ............................................................................................................................ 35 Section 5: Reinstatement ....................................................................................................................... 36 RULE XIII - Separation From The Service
Section 1: Discharge .............................................................................................................................. 36 Section 2: Lay-Off ................................................................................................................................. 36 Section 3: Abolition Of Position ........................................................................................................... 36 Section 4: Resignation ........................................................................................................................... 37 RULE XIV - Appeals And Hearings
Section 1: Complaints ...................................................................................................................... 37-38 Section 2: Investigation And Hearing .................................................................................................... 38 Section 3: Notification Of Hearings ...................................................................................................... 38 Section 4: Personal Appearance At Hearings ........................................................................................ 38 Section 5: Findings .......................................................................................................................... 38-39 Section 6: Deferred Hearings ................................................................................................................ 39 RULE XV - Training Of Employees
Section 1: Responsibility For Training .................................................................................................. 39 Section 2: Credit For Training ............................................................................................................... 39
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RULE XVI - Reports And Records
Section 1: Roster Cards ......................................................................................................................... 39 Section 2: Change-Of-Status Report ...................................................................................................... 40 Section 3: Destruction of Records ......................................................................................................... 40 Council Adoption ................................................................................................................................... 40
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RULE I - DEFINITION OF TERMS
(As amended by Resolution No. 3344)
The following terms, whenever used in these rules, shall be construed as follows:
SECTION 1: ADVANCEMENT A salary increase of one or more steps within the limits of the pay range established for a class.
SECTION 2: ALLOCATION The assignment of a single position to its proper class in accordance with the duties performed, and the authority and responsibilities exercised.
SECTION 3: APPOINTMENT The designation of a person by due authority to become an employee in a position and the signing of the proper forms to properly record that designation and the acceptance by the person of the position and conditions included as provided in these rules and the State law. (Added by Resolution No. 2274)
SECTION 4: BOARD The Civil Service Board established in pursuance of the ordinance creating a personnel system for the City.
SECTION 5: CLASS All positions sufficiently similar in duties, authority, responsibility and working conditions to permit grouping under a common title and the application with equity of common standards of selection, transfer, promotion and salary.
SECTION 6: CIVIL SERVICE ORDINANCE An Ordinance which creates a personnel system for the City.
SECTION 7: COMPETITIVE SERVICE The positions and employments which are included or which may hereafter be included under the personnel system by ordinance.
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SECTION 8: CONTINUOUS SERVICE The continuing service of a regular employee in a continuing payroll status without interruption except for authorized leave of absence.
SECTION 9: DEMOTION The movement of an employee and corresponding change in his employment status from one class to another class having a lower maximum rate of pay. (Added by Resolution No. 2274)
SECTION l0: ELIGIBLE A person whose name is on an employment list, a re-employment list or promotional list and who is not ineligible for appointment for any reason. (Amended by Resolution No. 2274)
SECTION 11: EMPLOYMENT LIST A list of names of persons who have taken an examination for a class in the competitive service and passed, and are ranked on the list in the order of the score received.
SECTION 12: EXAMINATION
a. Assembled examination: An examination conducted at a specified time and place at which applicants are required to appear for competitive examination under the supervision of an examiner.
b. Unassembled examination: An examination consisting of an appraisal of training, experience, work history, or any other means for evaluation of relative qualifications of applicants without the necessity for their personal appearance at a specified place.
SECTION 13: FULL-TIME EMPLOYEE An employee regularly working forty hours or more per week.
SECTION 14: HALF-TIME EMPLOYEE Twenty hours per week.
SECTION 15: PART-TIME EMPLOYEE An employee regularly working less than full time.
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SECTION 16: PERMANENT EMPLOYEE A regular employee who has completed the probationary period in his position and has been retained as hereafter provided in these rules.
SECTION 17: PROBATIONARY PERIOD A working test period during which an employee is required to demonstrate his fitness for the duties to which he is appointed by actual performance of the duties of his position.
SECTION 18: PROMOTION The movement of an employee and corresponding change in his employment status from one class to another class with a higher maximum rate of pay. (Amended by Resolution No. 2274)
SECTION 19: PROMOTIONAL EXAMINATION An examination for a particular class, admission to the examination being limited to regular employees in the competitive service.
SECTION 20: PROMOTIONAL LIST An employment list resulting from a promotional examination.
SECTION 21: PROVISIONAL APPOINTMENT An appointment acquired by a person who possesses the minimum qualifications established for a particular class and who has been appointed to a position in that class in the absence of available eligibles.
SECTION 22: REDUCTION A salary decrease within the limits of the pay range established for a class.
SECTION 23: REGULAR EMPLOYEE The holder of a position established on a continuing basis, as distinct from a seasonal or temporary employee.
SECTION 24: REINSTATEMENT The re-employment without examination of a former permanent
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employee within two years following his resignation from the City service.
SECTION 25: SEASONAL EMPLOYEE An employee whose employment is not continuous, but is regularly recurrent in the same capacity because of particular functions which occurs periodically each year.
SECTION 26: SUSPENSION The temporary separation from the service of an employee without pay, for disciplinary purposes.
SECTION 27: TEMPORARY APPOINTMENT An appointment of a person to a position of limited duration.
SECTION 28: TEMPORARY EMPLOYEE An employee who is not a regular or seasonal employee.
SECTION 29: TRANSFER A change of an employee from one position to another position in the same class or another class having essentially the same maximum salary limits, involving the performance of similar duties and requiring substantially the same basic qualifications.
RULE II - GENERAL PROVISIONS
SECTION 1: DISCLOSURE OF RACE, MARITAL STATUS, AMOUNT OF CHILDREN, RELIGIOUS OR POLITICAL AFFILIATIONS No question in any test, in any application form, or in any other personnel proceedings, or by an appointing authority, shall be so framed as to attempt to elicit information concerning race, marital status, amount of children, political or religious opinions or affiliations of an applicant or employee. No appointment to or removal from a position in the competitive service shall be affected or influenced in any manner by any race, marital status, number of children, political or religious opinion or affiliation.
SECTION 2: VIOLATION OF RULES Willful violation of the provisions of these rules shall be
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grounds for dismissal, rejection or suspension.
SECTION 3: AMENDMENT AND REVISION OF RULES Recommendations for amendment and revisions of these rules may be made by the Human Resource Director. Prior to consideration, any amendment or revision shall be publicly posted at such places as the City Council shall prescribe, for at least five consecutive days together with notice of the time, place and date of hearings by the City Council.
At the time of consideration, any interested person may appear and be heard. Amendments and revisions shall become effective upon adoption by the City Council following such hearing.
SECTION 4: ADOPTION OF RULES (Moved from Ordinance No. 1122, 1962) Personnel rules, prepared by the Human Resource Director, shall be adopted, and may be amended from time to time, by resolution of the Council. The rules shall establish specific procedures and regulations governing the following phases of the personnel system.
a. Preparation, installation, revision, and maintenance of a position classification plan covering all positions in the competitive service, including employment standards and qualifications for each class.
b. Preparation, revision and administration of a plan of compensation directly correlated with the position classification plan, providing a rate or range of pay for each class.
c. Preparation of examination announcements and the acceptance of applications for employment.
d. Preparation and conduct of tests and the establishment and use of resulting employment lists containing names of persons eligible for appointment. e. Certification and appointment of persons from employment lists, and the making of provisional appointments.
f. Evaluation of employees during the probationary period. g. Transfer, promotion, demotion and reinstatement of employees in the competitive service.
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h. Separation of employees from the City service through lay-off, suspension and dismissal.
i. Standardization of hours of work, attendance and leave regulations, working conditions and the development of employee morale, welfare and training. j. Suitable provision for orderly and equitable presentation to the City Manager and to the City Council by employees relating to general conditions of employment.
SECTION 5: COMPETITIVE SERVICE The provision shall apply to all official positions and employment in the service of the City except: (Moved from Ordinance No, 1122, 1962, Amended by O- 08-94 and O-19-98)
a. Elective Officers.
b. Members of appointive boards, commissions and committees. c. Persons engaged under contract to supply expert, technical or professional services for a definite period of time.
d. Volunteer personnel, such as volunteer Firefighters and Police Reserves, who receive no regular compensation from the City.
e. The position of City Manager. (Amended by Ordinance No. 1680 and Ordinance No. 0-25-88)
f. Part-time and temporary, hourly paid employees.
RULE III - CLASSIFICATION
SECTION 1: PREPARATION OF PLAN The Human Resource Director, or a person or agency employed for that purpose shall ascertain and record the duties and responsibilities of all positions in the competitive service, and after consultation with appointing authorities and heads of departments affected, shall recommend a classification plan for such positions. The Classification plan shall consist of classes of positions in the competitive service defined by class specifications, including title, a description of typical duties and responsibilities of positions in each class, a statement of the training, experience and other qualifications to be required of applicants for positions in each class. The classification plan shall be so
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developed and maintained that all positions substantially similar with respect to duties, responsibilities, authority and character of work are included within the same class, and that the same schedules of compensation may be made to apply with equity under like working conditions to all positions in the same class.
SECTION 2: ADOPTION OF PLAN Before the classification plan, or any part thereof, shall become effective, it shall first be approved in whole or in part by the City Council. Upon adoption by the Council, the provisions of the classification plan shall be observed in the handling of all personnel actions and activities. The classification plan shall be amended or revised as occasion requires in the same manner as originally established. (Amended by Resolution No. R-l29-88)
SECTION 3: ALLOCATION OF POSITIONS Following the adoption of the Classification plan, the Human Resource Director shall allocate every position in the competitive service to one of the classes established by the plan.
SECTION 4: NEW POSITIONS When a new position is created, before the same may be filled, the Department Head shall notify the Human Resource Director, and except as otherwise provided by ordinance or these rules, no person shall be permanently employed to fill any such position until the classification plan shall have been amended to provide therefore and an appropriate employment list has been established for such position.
SECTION 5: RECLASSIFICATION Positions, the duties of which have changed materially so as to necessitate reclassification, shall be allocated by the Human Resource Director to a more appropriate class, whether new or already created, in the same manner as originally classified and allocated.
Reclassifications shall not be used for the purpose of avoiding restrictions surrounding demotions and promotions.
SECTION 6: AMENDING THE CLASSIFICATION PLAN The City Council may create new
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classes and the Human Resource Director may revise or abolish existing classes, providing there are no salary changes. (Amended by Resolution 30-98)
RULE IV - COMPENSATION
SECTION 1: PREPARATION OF PLAN The Human Resource Director or the person or agency employed for that purpose shall prepare a pay plan covering all classes of positions in the competitive service, showing the minimum and maximum rates of pay. In arriving at such salary ranges, consideration shall be given to prevailing rates of pay for comparable work in other public and in private employment, including consideration of conditions of work as well as basic pay, to current costs of living, to suggestions of Department Heads, and to the City's financial condition and policies. The Human Resource Director or the person or agency employed for that purpose shall thereafter make such further studies of the compensation plan as may be requested by the City Council.
SECTION 2: ADOPTION OF PLAN The Human Resource Director shall submit the proposed pay plan to the City Council. The Council shall adopt or amend the proposed plan. Thereafter, no position shall be assigned a salary higher than the maximum or lower than the minimum salary provided for that class or position unless the salary schedule for the class is amended in the same manner as herein provided for its adoption.
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RULE V - APPLICATIONS FOR APPLICANTS
SECTION 1: ANNOUNCEMENTS All examinations for classes in the competitive service shall be published by posting announcements in the City Hall on official bulletin boards and in other places as the Civil Service Board deems advisable. The announcements shall specify the title and pay range of the class for which the examination is announced; the nature of the work to be performed; preparation desirable for the performance of the work of the class; minimum qualifications for the class; the dates, time, place and manner of making applications; the general scope of examination and relative weights to be given to its several parts; and other pertinent information. (Amended by Resolution No. 2274)
SECTION 2: APPLICATION FORMS Applications shall be made on forms provided by the Human Resource Director. Such forms shall require information covering training, experience, and other pertinent information, and may include certificates of one or more examining physicians, references and fingerprinting. All applications must be signed by the person applying.
SECTION 3: QUALIFICATION AND DISQUALIFICATION On approval of application, applicant may be admitted to the examination. The Human Resource Director may reject any application, which indicates on its face that the applicant does not possess the minimum qualifications required by the announcement for the position or required for the position. Applications shall be rejected if the applicant is not a citizen of the United States, is physically unfit for the performance of duties of the position to which he seeks appointment, is addicted to the habitual excessive use of drugs or intoxication liquor, has been recently convicted of a crime involving moral turpitude, has made any false statement of any material fact, or practices, or attempted to practice, any deception or fraud in his application. Whenever an application is rejected, notice of said rejection with statement of reason shall be mailed to the applicant by the Human Resource Director. Defective applications may be returned to the applicant with notice to amend the same, providing the time limit for receiving applications has not expired. Rejected applications may subsequently be accepted on a showing that the applicant does possess the necessary qualifications. (Amended by Resolution No. 2274)
RULE VI - EXAMINATIONS
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SECTION 1: NATURE AND TYPES OF EXAMINATIONS Assembled examinations shall consist of written and oral tests and shall consist of the following parts:
a. Special Subject: This part shall constitute that portion of the examination which deals with the duties of a position, and may be an oral test, a written short answer test, a written free answer test or a combination of any of these; but must be designed to test the ability of an individual to perform said duties.
b. Educational: This part shall consist of penmanship, spelling, composition, civics, city information, or any or all of these, as well as other subjects to test the basic training which would logically form the ground work for performing the duties of the position and advancement in the service.
c. Training and Experience: Training shall consist of a statement of schooling and studies.
Experience shall consist of a statement of all past activities that would tend to fit candidates for the positions they seek and may include a statement of the names of former employers, nature of work and references. A record based on references, investigation, character of past employment, sobriety and general standing in the community may be included as a part of this subject.
d. Physical or Medical: A physical or medical examination may be a part of any examination. e. Oral Interview: Personality and appearance may be counted as a factor in an examination, or the applicant may be questioned on the duties of the position, training and experience, nature of work performed, and other reasonable questions to determine his fitness for the position.
SECTION 2: PROMOTIONAL EXAMINATIONS Promotional examinations may be conducted whenever, the needs of the service is required. Promotional examinations may include any of the selection techniques mentioned in section 1 of this rule, or any combination of them. Only permanent employees who meet the requirements set forth in the promotional examination announcements may compete in promotional examinations.
Promotional examinations need not be advertised in a newspaper. An examination may be given for both
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promotional and outside candidates. In such a combined examination, the city-service of the promotional candidates shall be considered in assigning scores to candidates.
SECTION 3: CONDUCT OF EXAMINATIONS The Human Resource Director shall be responsible for the manner and methods and by whom examinations shall be prepared and administered. The City Council, upon recommendation of the Human Resource Director, may contract with any competent agency or individual for the performance by such agency or individual of the responsibility for preparing and administering examinations. In the absence of such a contract, City Manager or Human Resource Director shall perform such duties. The Human Resource Director shall arrange for the use of public buildings and equipment for the conduct of examinations and shall render such assistance as shall be required with respect thereto.
SECTION 4: SCORING EXAMINATIONS AND QUALIFYING SCORES A candidate’s score in a given examination shall be the average of his scores on each competitive part of the examination, weighted as shown in the examination announcement. Failure in one part of the examination may be grounds for declaring such applicants as failing in the entire examination or as disqualified for subsequent parts of an examination.
SECTION 4a: VETERAN’S PREFERENCE In any examination in which City employees do not compete, a qualified veteran who successfully passes the examination may have a 5% preference bonus added to his final score. A qualified veteran means a veteran who prior to the examination has been honorably discharged after service in the Armed Forces of the United States during time of armed conflict including states of national emergency as declared by the President of the United States and also including service in armed conflict activities of United States units for the United Nations. Eligibility for this preference requires furnishing the Human Resource Director with proof of honorable discharge. (Added by Resolution No. 2313)
SECTION 5: NOTIFICATION OF EXAMINATION RESULTS Each candidate on an open
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examination shall be given written notice if he/she passed or failed the examination. Each candidate in a promotional examination shall be given written notice of the results thereof, and if successful, of his/her final earned score and rank on the employment list. (Amended by Resolution No. 106-93)
SECTION 6: REVIEW OF PAPERS Any candidate shall have the right to inspect his own examination papers within ten days after the notices of examination results were mailed, except that candidates shall be prohibited from reviewing standardized written examinations when contractual arrangements with testing services so stipulate. Any error in computation, if called to the attention of the Human Resource Director within this period, shall be corrected. Such corrections shall not, however, invalidate appointments previously made. (Amended by Resolution No. 3358)
RULE VII - EMPLOYMENT LISTS
SECTION 1: EMPLOYMENT LISTS As soon as possible after the completion of an examination, the Human Resource Director shall prepare and keep available an employment list consisting of the names and candidates who qualified in the examination, arranged in order of final scores, from the highest to lowest qualifying score.
SECTION 2: DURATION OF EMPLOYMENT LISTS Employment lists shall remain effective one year, unless sooner exhausted, and may be extended, prior to their expiration dates, by action of the Civil Service Board for additional six-month periods, but in no event shall an employment list remain in effect for more than two years.
SECTION 3: RE-EMPLOYMENT LISTS The names of probationary and permanent employees who have been laid off shall be placed on appropriate re-employment lists in the order of their competency, from highest to lowest. Such names shall remain thereon for a period of one year unless such persons are sooner re-employed.
When a re-employment list is to be used to fill vacancies, the Human Resource Director shall certify from
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the top of such list the number of names equal to the number of vacancies to be filled, and the Human Resource Director shall appoint such persons to fill the vacancies.
SECTION 4: REMOVAL OF NAMES FROM LISTS The name of any person appearing on an employment, re-employment or promotional list shall be removed by the Human Resource Director if the eligible person requests in writing that his name be removed, if he fails to respond to notice of certification mailed to his last known address, if he has been certified for appointment three times and has not been appointed, has been convicted of a felony or misdemeanor involving moral turpitude, on proof of fraud or false statement; for failure to appear for work after notification or if an appointment has been declined for unsatisfactory reasons. (Amended by Resolution No. 2274)
SECTION 5: LATERAL ENTRY, POLICE OFFICER Any person who possesses a Basic Certificate issued by Peace Officer Standards and Training, State of California, or any person who has successfully completed a Basic Academy certified by Peace Officer Standards and Training, State of California, may be considered for employment without examination. Such consideration is dependent upon their meeting the minimum requirements of the class and concurrence of appointing authority and Human Resource Director. For purposes of these rules, such applicants shall be treated as applicants for a transfer for a police officer class only. (Amended by Resolution No. 3920)
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RULE VIII - METHOD OF FILLING VACANCIES
SECTION 1: TYPES OF APPOINTMENT All vacancies in the competitive service shall be filled by re-employment, reinstatement, transfer, demotion, permanent part-time, or from eligibles certified by the Human Resource Director from an appropriate employment or promotional list, if available. The appointment of permanent part-time employees is limited to only entry-level positions and employees who have worked a minimum of 780 hours. Permanent part-time employees appointed to a full-time position will receive a minimum of a 5% increase in salary and will serve a six month probationary period. In the absence of persons eligible for appointment in these ways, provisional appointments may be permitted in accordance with the Personnel Ordinance and these rules. (Amended by Resolution No. 128-88)
SECTION 2: APPOINTMENTS Appointments to vacant positions in the competitive service shall be made in accordance with the personnel rules. Appointments and promotions shall be based on merit and fitness to be ascertained so far as practicable by competitive assembled or unassembled examinations.
Examinations shall be used to aid in the selection of qualified employees, and shall consist of such recognized selection techniques as achievement, aptitude, and other written tests, personal interview, performance tests, evaluation of daily work performance, work samples, background appraisal, or any combination of these which will in the opinion of the Human Resource Director test fairly the qualifications of candidates. Physical and medical tests may be given as part of any examination.
In any examination the Human Resource Director may include, in addition to competitive tests, a qualifying test, or tests, and set minimum standards therefor.
When appointment is to be made to a vacancy in the competitive service, the Human Resource Director shall transmit to the Department Head concerned, the names of all persons on the appropriate certified employment or promotional list, in the order in which they appear on the list. In the absence of appropriate employment lists a provisional appointment may be made in accordance with the personnel rules. (Moved from Ordinance 1122, 1962)
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No special credit shall be allowed in meeting any qualifications or in the giving of any test or the establishment of any employment or promotional lists, for service rendered under a provisional appointment to a full-time position.
During the period of suspension of any employee or pending final action on proceedings to review suspension, demotion or dismissal of an employee, such vacancy may be filled by the City Manager, subject to the personnel rules. (Moved from Ordinance No. 1122, 1962)
After interview and investigation, the Department Head shall make recommendations from among those certified and shall immediately notify the Human Resource Director of the person or persons recommended. The Human Resource Director shall thereupon notify the person appointed and if the applicant accepts the appointment and presents himself for duty within such period of time as the appointing authority shall prescribe, he shall be deemed to be appointed, otherwise, he shall be deemed to have declined the appointment
SECTION 4: PROVISIONAL APPOINTMENT In the absence of appropriate employment lists, a provisional appointment may be made by the City Manager of a person meeting the minimum training and experience qualifications for the position. An employment list shall be established within six months for any permanent position filled by provisional appointment. The City Council may, by a six-sevenths vote, extend beyond six months, the period for provisional appointment. When a provisional appointment is to be extended, the Council shall direct the City Clerk to record such action in the minutes of the meeting of the Council.
No special credit shall be allowed in meeting any qualification or in the giving of any test of the establishment of any employment or promotional lists, for service rendered under a provisional appointment.
SECTION 5: EMERGENCY APPOINTMENTS To meet the immediate requirements of an
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emergency condition, such as extraordinary fire, flood or earthquake, which threatens public life or property, any legally competent officer or employee may employ such persons as may be needed for the duration of the emergency without regard to the personnel ordinance or rules affecting appointments. As soon as possible, such appointments shall be reported to the Human Resource Director.
SECTION 6: NOTICE TO HUMAN RESOURCE DIRECTOR Whenever a vacancy in the competitive service is to be filled, the Department Head shall notify the Human Resource Director. The Human Resource Director shall advise the Department Head as to the availability of employees for re- employment, reinstatement, requests for transfer, or demotion and of eligibles on employment or promotional lists for the class.
SECTION 7: CERTIFICATION OF ELIGIBLES The Department Head shall indicate whether it is desired to fill the vacancy by re-employment, reinstatement, transfer, or demotion, or whether certification from a promotional or employment list is preferred. If appointment is to be made from an employment or promotional list, the names of all persons willing to accept appointment shall be certified.
SECTION 8: ORDER OF CERTIFICATION Whenever certification is to be made, the employment lists, if each exists, shall be used in the following order: promotional list, re-employment list, open competitive list. Whenever there are fewer than three names on a promotional list or an open competitive list, the Human Resource Director may make an appointment from among such eligibles or may establish a new list. If a new list is to be established, the Human Resource Director shall hold a new examination and establish a new employment list.
SECTION 9: RESIDENCE Residence requirement is hereby deleted in accordance with Section 50083 of the State of California Code which provides that no city or other local agency shall impose residence requirements on employees. (Amended by Resolutions 2274, 2895 and 3095)
SECTION 10: NEPOTISM It is the policy of the City of Colton to hire and to promote employees on
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the basis of merit. The City Council directs that there shall be no favoritism in hiring or promotion due to a person’s family relationships. Relatives of City employees, officers, or officials shall not be favored whatsoever. The City Manager is directed to report to the City Council at its next regular meeting in open session upon being contacted by any City employee, officer or official in a manner which appears to be for the purpose of causing the City Manager to violate the policy stated herein. (Amended by Resolution 4198)
RULE IX - PROBATIONARY PERIOD
SECTION 1: LENGTH OF PROBATIONARY PERIOD (Moved from Ordinance 1122, 1962) All regular and promotional appointments shall be tentative and subject to a probationary period of eighteen months for police officers, one year for police dispatchers, firefighters and department heads, and six months for other employees. In each case, the appointee shall be informed of the length of the probationary period before he begins service.
Prior to expiration of an employee’s probationary period, the employee’s supervisor, with the approval of his Department Head, shall recommend to the Human Resource Director that one of the following actions be taken:
1. Grant the employee permanent status.
2. Extend the probationary period for a period not to exceed six months.
3. Terminate the employee because of unsatisfactory performance.
Employees, whose probationary period has been extended, shall have their salary anniversary date extended by the appropriate period of time.
Notification to the Human Resource Director of the recommended action shall be accompanied by a performance evaluation report on the employee, completed within the 30-day period immediately proceeding the date when the employee’s probationary period is due to expire. (Amended by Resolution No. 108-90 and moved from Ordinance 1122, 1962)
SECTION 2: OBJECTIVE OF PROBATIONARY PERIOD The probationary period is a part of
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the examination process and shall be utilized for closely observing the employee’s work and for securing the most effective adjustment of a new employee to his position.
SECTION 3: REJECTION OF A PROBATIONER During the probationary period, an employee may be rejected by the Department Head without cause and without the right of appeal or hearing. With regard to the Public Safety Officers, there shall be no punitive action undertaken without providing the officer with opportunity for administrative appeal (Government Code 3304, b). Notification of rejection in writing shall be served on the probationer and a copy filed with the Human Resource Director.
SECTION 4: REJECTION FOLLOWING PROMOTION An employee in the competitive service, rejected during or at the expiration of a probationary period following a promotional appointment, shall be reinstated to the position from which he was promoted unless charges are filed and he is discharged in the manner provided in the Personnel Ordinance and these rules for positions in the competitive service.
An employee in the competitive service, promoted or transferred to a position not included in the competitive service, shall be reinstated to the position from which he was promoted or transferred if, within six months after such promotion or transfer, action is taken to reject or dismiss him, unless he is discharged in the manner provided for positions in the competitive service. (Amended by Resolution No. 4375 and 108-90)
SECTION 5: PROBATIONARY PERIOD All regular and promotional appointments shall be tentative and subject to a probationary period of eighteen months for Police Officers, one year for Firefighters and Department Heads, and six months for other employees. (Amended by Ordinance No. 1653 and moved from Ordinance 1122, 1962)
An employee rejected during the probationary period from a position to which he has been promoted shall be reinstated to the position from which he was promoted, unless he is dismissed from the City service as provided by the rules, regulations and other policies of the City.
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An employee in the competitive service promoted or transferred to a position not included in the competitive service shall be reinstated to the position from which he was promoted or transferred if, within six months after such promotion or transfer, action is taken to reject or dismiss him, unless he is discharged in the manner provided in the personnel rules for positions in the competitive service. (Moved from Ordinance No. 1122, 1962)
SECTION 6: STATUS OF PRESENT EMPLOYEES Any person holding a position included in the competitive service who shall have served continuously in such position for a period equal to the probationary period prescribed in the rules for his class shall assume regular status in the competitive service in the position held on such effective date without qualifying test, and shall thereafter be subject in all respects to the personnel rules.
Any other persons holding positions in the competitive service shall be regarded as probationers who are serving out the balance of their probationary periods as prescribed in the rules before obtaining regular status. The probationary period shall be computed from the date of appointment or employment. (Moved from Ordinance No. 1122, 1962)
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RULE X – ATTENDANCE AND LEAVES
(Amended by Resolution No. 29-92)
(See Administrative Policy 4.05 – LEAVE TIME for further information) SECTION 1: VACATION (As amended by Resolution No’s. 2280, 2509, 2987, 3344, 3359, 3642, 3727, and 3856)
a. Employees serving as full-time regular Police Safety Officers, Animal Control Officer or Police Dispatchers shall accrue vacation time expressed in working hours in accordance with the following:
b. Fire Department Safety employees working on a shift basis shall accrue vacation time in accordance with the following:
c. With the exception of all employees mentioned in a and b, employees occupying full-time regular positions shall accrue vacation time expressed in working hours in accordance with the following:
During Years of Hours Accrual Per Annual Maximum Accrual Continuous Service Month of Service Accrual Accumulation 1-5 6-2/3 80 160
6-7 8 96 192
8 8-2/3 104 208
9 9-1/3 112 224
10 10 120 240
11 10-2/3 128 256
12 11-1/3 136 272
13 12 144 288
14 12-2/3 152 304
15+ 13-1/3 160 320
During Years of Hours Accrual Per Annual Maximum Accrual Continuous Service Month of Service Accrual Accumulation 1-5 10 120 240
6-10 15 180 360
11 16 192 384
12 17 204 408
13 18 216 432
14 19 228 456
15+ 20 240 480
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During Years of Hours Accrual Per Annual Maximum Accrual Continuous Service Month of Service Accrual Accumulation 1-5 6-2/3 80 160
6-10 10 120 240
11 10-2/3 128 256
12 11-1/3 136 272
13 12 144 288
14 12-2/3 152 304
15+ 13-1/3 160 320
d. Notwithstanding anything in this section to the contrary, employees do not accrue vacation time during the first six months of employment. Vacation time shall be deemed credited during this period with accrual effected upon the employee’s monthly anniversary date in accordance with a, b, or c of this section as applicable.
e. Vacation accrual may be accumulated to not more than the appropriate maximum accumulation except upon the written request of the affected employee and approval of the City Manager. In this event, an employee may be permitted to exceed the maximum accumulation by an amount not in excess of his accrual for a four month period.
f. Use of Vacation Time
1) It is the intent that vacation time be used in time increments sufficiently long to permit the employee an adequate period of rest. The use of vacation time in less than weekly increments is to be discouraged. In no event may vacation be taken in increments of less than one-hour nor for a period exceeding the number of accrued whole days, except upon the recommendation of a Department Head. The City Manager may authorize an eligible employee to incur a negative vacation balance of up to five days, or up to 2-1/2 shifts for Fire Department shift employees.
2) Safety employees may not take vacation time during the first year of service. For all other employees, no vacation shall be taken during the first six months of service. 3) Vacations shall be taken at times determined by the Department Head with due regard
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for the wishes of the employee and for the needs of the service. 4) No person whose employment is terminated before the completion of six calendar months of continuous service shall be entitled to any vacation or pay in lieu thereof. 5) An employee who terminates after six months or more of continuous employment shall be paid for all credited or accrued vacation.
6) No person shall be permitted to work for compensation for the City during his vacation except with prior approval of the City Manager.
7) In the event one or more City holidays fall within an annual vacation leave, such holidays shall not be charged as vacation leave and the vacation leave shall be extended accordingly.
8) Previous City employment periods, during which vacation was accrued, may be considered as continuous service for the purpose of computing vacation rate upon the written request of the appointing authority and approval of the City Manager. 9) Partial day vacation time leave for exempt employees is allowed for personal reasons or because of illness or injury of less than one work-day.
SECTION 2: SCHEDULING ANNUAL LEAVE An employee’s vacation may be taken any time during the calendar year (the year beginning in January). The specific time shall be determined by the Department Head with due regard for the wishes of the employee and particular regard for the needs of the service. Specifically, this means that after one full year in service an employee may be granted his vacation prior to his anniversary date. The three weeks vacation may be scheduled any time following ten years of service. If the requirements of the service are such that an employee must defer part of all of his annual vacation in a particular calendar year, the appointing authority may permit the employee to take such deferred vacation during the following calendar year. (Amended by Resolution 2280, 2509 and 2987)
SECTION 3: DEFERRING ANNUAL LEAVE Any eligible employee, with the consent of the head of his department, may defer one calendar week of his annual vacation to the succeeding calendar
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year, subject to the other provisions of this rule. A written report of each deferred vacation, signed by the proper Department Head, noting the details, shall be kept on file with Human Resource Director. (Amended by Resolution No’s. 2274 and 2280)
SECTION 4: HOLIDAYS DURING ANNUAL LEAVE In the event one or more municipal holidays fall within an annual vacation leave, such holidays shall not be charged as vacation leave, and the vacation leave shall be extended accordingly. (Amended by Resolution No. 2280)
SECTION 5: ANNUAL LEAVE UPON TERMINATION Employees who terminate employment shall have their total vacation earned and their total vacation taken, computed. In the event accrued vacation leave earned remains, such employee shall be paid in a lump sum. In the event vacation taken exceeds vacation earned, the difference shall be deducted from the final payment. No such payment shall be made for vacation accumulated contrary to the provisions of these rules (Amended by Resolution No. 2280)
SECTION 6: SICK LEAVE Sick Leave with pay shall be granted by the appointing authority at the rate of one work day for each calendar month of service. Sick leave shall not be considered as a privilege which an employee may use at his discretion, but shall be allowed only in case of necessity and actual sickness or disability except that up to five days sick leave may be allowed in case of death or emergency of the eligible employees father, father-in-law, mother, mother-in-law, brother, brother-in-law, sister, sister-in-law, wife, husband, child, grandparent, grandchild, or domestic partner. Unused sick leave shall be accumulated at the rate of twelve days a year. There shall be no limit on the amount which can be accumulated. (Amended by Resolution No. 3344)
SECTION 6a: ACCUMULATED SICK LEAVE AT TERMINATION OF EMPLOYEE Except as otherwise herein stated, accumulated sick leave is lost when the employee is terminated. In no event shall employees who have not worked for the City as regular salaried employees for more than five years be entitled to use sick leave to defer termination of their employment by the City nor shall they be
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compensated for sick leave upon such termination for any reason including but not limited to retirement.
An employee who is permanently disabled from performing the duties of the position shall be retired upon that fact being established. In the event such employee applies for and consents to such retirement, then upon the retirement being accomplished, the employee shall be compensated for his accumulated unused sick leave (if and only if he has five years of regular paid City service) by payment in a lump sum. That sum is determined as follows:
The number of hours of sick leave accrued, multiplied by his hourly rate earnings at the time of termination multiplied by a percentage as follows:
If employed more than five years, but less than ten 10% If employed more than ten years, but less than fifteen 25% If employed more than fifteen years 50%
Police and Fire personnel who by state law are entitled to up to one year of salary while temporarily disabled due to job incurred injuries shall not be entitled to use sick leave to defer their retirement for disability. Such personnel are not entitled to use sick leave for job-incurred injuries. With regard to such personnel they shall be retired as soon as it is determined that they are permanently disabled from performing the duties of their position. Upon it being determined that such a person is permanently so disabled, if he immediately applies for and consents to his retirement then, and only then, shall he be entitled to payment for accumulated sick leave. Such payment shall be computed as follows:
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Five to ten years employment 10%
Ten to fifteen years employment 25%
Over fifteen years of employment 50%
A regular salaried employee who has worked for the City at least five years and has accumulated sick leave who terminates his employment for any reason shall be paid as full compensation for such sick leave as computed in the above paragraph.
The City shall provide members of the Electric Unit, General Unit and Management and Confidential Unit, who are granted a service retirement (rather than disability retirement), a sum equal to the cash value of seventy-five percent (75%) of the employee's accumulated sick leave after thirty (30) cumulative years of service with the City. The cash value shall be computed at the employee's hourly rate in existence at the time the monies are disbursed.
The City shall provide members of the Dispatcher Records Clerk Unit, Police Unit, Police Management Unit, Fire Unit, Fire Management Employees, and Department Heads, who are granted a service retirement (rather than a disability retirement), a sum equal to the cash value of seventy-five percent (75%) of the employee's accumulated sick leave, after twenty (20) cumulative years of service with the City. The cash value shall be computed at the employee's hourly rate in existence at the time the monies are disbursed. (Amended by Resolution No’s. 4307, 4608 and 4434)
Partial day sick leave for exempt employees is allowed for personal reasons or because of illness or injury of less than one work-day. (Amended by Resolution No. 30-99)
SECTION 7: SICK LEAVE REPORTS In order to receive compensation while absent on sick leave, the employee shall notify his immediate superior or the Human Resource Department prior to or within four hours after the time set for beginning his daily duties or as may be specified by the head of the
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department. When absence is for more than three workdays, the employee shall file a physician's certificate or a personal affidavit with the Human Resource Director, stating the cause of the absence. (Amended by Resolution No. 3344)
SECTION 8: MILITARY LEAVE Military leave shall be granted in accordance with the provisions of state law. All employees entitled to military leave shall give the appointing power an opportunity within the limits of military regulations to determine when such leave shall be taken. (As amended by Resolution No. 3344)
SECTION 9: LEAVE OF ABSENCE WITHOUT PAY The City Manager may grant a permanent employee a leave of absence without pay for a period not to exceed six months. Any request for a leave longer than six months may be granted only by the City Council. No such leave shall be granted except upon written request of the employee. Approval shall be in writing and a copy filed with the Human Resource Director. Upon expiration of a regularly approved leave, or within a reasonable period of time after notice to return to duty, the employee shall be reinstated in the position held at the time the leave was granted. Failure on the part of an employee on leave to report promptly at its expiration, or within a reasonable time after notice to return to duty, shall be cause for discharge. No absence or leave will be granted when the purpose of the employee is to enter the services of another employer. (Amended by Resolution No. 3344)
SECTION 10: ATTENDANCE Employees shall be in attendance at their work in accordance with rules regarding hours of work, holidays and leaves. All departments shall keep daily attendance records of employees, which shall be reported to the Finance Department/Payroll Division, on the provided form and on the dates, the City Manager shall specify. Failure on the part of the employee absent without leave, to return to duty within 24 hours after notice to return shall be cause for immediate discharge, and such employee automatically waives all rights under the Personnel Ordinance and Rules. All personnel, who are subject to emergency and standby duty, shall respond to emergency calls in a reasonable period of time. (Amended by Resolution No. 3095)
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SECTION 11: CITY HOLIDAYS
a. Municipal offices shall be closed on the following legal holidays: Saturdays; Sundays; New Year's Day; Martin Luther King Jr’s Birthday; Lincoln's Birthday; Washington's Birthday; Memorial Day; Independence Day; Labor Day; Columbus Day; Veteran's Day; Thanksgiving Day; the day after Thanksgiving; Christmas Day; every day appointed by the President or Governor for a public fast, thanksgiving or holiday. When a holiday falls on Saturday, the preceding Friday shall be observed. When a holiday falls on Sunday, the following Monday shall be observed. (Amended by Resolution No’s. 2274, 3368, 3567, 3871 and 4434) b. General employees will observe two floating holidays for a total of 14 holidays annually.
Members of the Police Management and Police Rank & File Units will observe one floating holiday for a total of 13 holidays annually. (Amended by Resolution No’s. 26-86, 4307, 4434, and 3871)
c. All regular full-time and provisional full-time employees shall be eligible for holiday pay.
Fire personnel on a 24-hour shift schedule shall accrue holiday time at a rate of 144 hours (6 shifts) annually. (Amended by Resolution No’s. 3871, 4307 and 4434)
SECTION 12: CONVERSION OF LEAVE A formula for converting attendance and leave regulations to employees working unusual shifts, such as firemen, shall be recommended by the appropriate Department Head and ordered by the City Manager, subject to the approval of the City Council.
SECTION l3: INCOMPATIBLE EMPLOYMENT Any permanent employee desiring to accept employment in addition to his City employment shall secure the approval of the Department Head and the City Manager. No such approval shall be given if the employment is incompatible with his City responsibilities. The incompatibility may arise from either the time of work on the outside and its possible effect upon availability’s for City employment; from the nature of the work on the outside which might give rise to possible conflict of interest or to a public belief that a conflict of interest would exist; or from
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the nature of outside employment sufficiently fatiguing or hazardous as to reduce the prospects of availability for City employment when and as needed and in proper physical condition to perform the duties required. In interpreting this incompatibility, it shall be recognized that many City positions require the availability of employees at times additional to their normal hours of employment. (Added by Resolution No. 2274)
SECTION 14: APPLICABILITY OF RULES TO CERTAIN EXEMPT POSITIONS The provisions of the Personnel Rules related to attendance and leaves shall apply to the incumbents of full-time exempt positions. (Moved from Ordinance No. 1122, 1962)
RULE XI - PAY ADJUSTMENTS
SECTION 1: APPLICATION OF RATES Employees occupying a position in the competitive service shall be paid a salary or wage within the range established for the position's class under the pay plan as provided by Rule V. The minimum rate for the class generally shall apply to employees upon original appointment. However, the City Manager may, when circumstances warrant it, appoint at other than the first step. Officers and employees re-employed after lay-off shall receive a rate within the range established for the class and agreed upon by the appointing power and the employee concerned. Transfers shall not affect an employee's salary rate.
SECTION 2: ADVANCEMENT No salary advancement shall be made so as to exceed the maximum rate established in the pay plan for the class to which the advanced employee's position is allocated. Advancements shall not be automatic but shall depend upon increased service value of an employee to the City as exemplified by recommendations of his supervising official, length of service, performance record, special training undertaken, or other pertinent evidence. No advancement in salary shall be made to a temporary employee.
SECTION 3: REDUCTION Salary reductions may be made as a result of an employee's diminished service value. No reduction shall be made below the minimum rate established in the classification plan
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for the class to which the reduced employee's position is allocated. Written notice of the reduction shall be given the employee before or within three days after the effective date of the reduction and a copy filed with the Personnel Officer.
RULE XII - TRANSFER, PROMOTION, DEMOTION, SUSPENSION AND REINSTATEMENT SECTION 1: TRANSFERS An employee may be transferred by the City Manager at any time from one position to another position in the same or comparable class. If the transfer involves a change from the jurisdiction of one supervising official to another, both must consent thereto unless the City Council orders the transfer for purposes of economy or efficiency. Transfer shall not be used to effectuate a promotion, demotion, advancement or reduction, each of which may be accomplished only as provided in the Personnel Ordinance and in these rules. No person shall be transferred to a position for which he does not possess the minimum qualifications.
SECTION 2: PROMOTION Insofar as practicable and consistent with the best interests of the service, all vacancies in the competitive service shall be filled by promotion from within the competitive service, after a promotional examination has been given and a promotional list established.
If, in the opinion of the Department Head, a vacancy in the position could be filled better by an open, competitive examination instead of a closed, promotion examination, then the Department Head may request the Human Resource Director to call for applications for the vacancy and arrange for an open, competitive examination and for the preparation and certification of an eligibility list.
SECTION 3: DEMOTION The Department Head may demote an employee whose ability to perform his required duties falls below standard, or for disciplinary purposes. Upon request of the employee and with consent of the prospective supervising official, demotion may be made to a vacant position as a substitution for lay-off. No employee shall be demoted to a position for which he does not possess the minimum qualifications. Written notice of the demotion shall be given the employee before or within three days after the effective date of the demotion and a copy filed with the Human Resource
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Director.
SECTION 4: SUSPENSION An employee may be suspended from his position at any time for the good of the service, for a disciplinary purpose, or for other just cause. Suspension without pay shall not exceed thirty days nor shall any employee be penalized by suspension for more than thirty days in any fiscal year. Department Heads may suspend a subordinate employee without right of appeal for not more than three working days at any one time and not more frequently than one such suspension in a thirty-day period. Any suspension to be made for a period longer than three days must be made by the City Manager upon recommendation of the Department Head concerned and the suspended employee shall have the right of appeal. In any case where the suspended employee is found to have been unjustly suspended and is subsequently reinstated, such employee shall be entitled to receive all pay lost during the period of suspension. Any suspension shall be reported immediately to the Human Resource Director. An employee may not use paid leave to substitute for suspension time.
Any person holding a position or employment in the competitive service shall be subject to disciplinary suspension without right of appeal by the Department Head provided that the suspension is for a period not to exceed three days. Any suspension which is to exceed three days must be made by the City Manger and the suspended employee shall have the right of appeal. Suspensions shall not exceed thirty days in any fiscal year. Any Department Head not having power of appointment may make disciplinary suspensions in accordance with the rules. (Moved from Ordinance No. 1122, 1962)
SECTION 5: REINSTATEMENT With the approval of the appointing power, an employee who has resigned with a good record may be reinstated within two years to his former position, if vacant, or to a vacant position in the same or comparable class.
RULE XIII - SEPARATION FROM THE SERVICE
SECTION 1: DISCHARGE An employee in the competitive service may be discharged at any time by the City Manager for cause. Such discharge shall be made by the City Manager upon recommendation
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of the Department Head concerned. Any employee who has been discharged shall be entitled to receive a written statement of the reasons for such action and to a hearing if he so requests, as provided in the personnel ordinance and these rules. (Amended by Resolution No. 2274)
SECTION 2: LAY-OFF The City Manager may lay-off an employee in the competitive service because of material change in duties or organization or shortage of work or funds. Ten working days before the effective date of a lay-off, the Department Head shall notify the Human Resource Director of the intended action with reasons therefor, and a statement certifying whether or not the services of the employee have been satisfactory. A copy of such notice shall be given the employee affected. If certified as having given satisfactory service, the name of the employee laid off shall be placed on the appropriate employment list as provided by these rules. If not certified as having given satisfactory service, the employee laid off may interpret the action as a discharge and request a hearing as provided by the Personnel Ordinance and these rules.
SECTION 3: ABOLITION OF POSITION (Moved from Ordinance 1122, 1962) Whenever in the judgment of the City Manager it becomes necessary in the interest of economy or because the necessity for the position or employment no longer exists the City Manager may recommend to the Council the abolition of any position or employment in the competitive service. Upon approval of six-sevenths of the Council, the City Manager may then lay-off, demote or transfer any employee holding such position or employment without filing charges and without right of appeal for the so-affected employee.
Seniority and competency shall be used as the basis for affecting such reduction in personnel.
Competency of a person shall be determined by the head of the department in which such person works.
For the purpose of determining seniority, total cumulative time shall include time served on military leave of absence.
The names of probationary and permanent employees laid off shall be placed upon re-employment lists for classes which, in the opinion of the Human Resource Director, require basically the same qualifications
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and duties and responsibilities of those of the class of positions from which lay-off was made. Names of persons laid off shall be placed upon re-employment lists in order of their competency, and shall remain on such lists for a period of one year unless re-employed sooner.
SECTION 4: RESIGNATION An employee wishing to leave the competitive service in good standing shall file with the supervising official at least two weeks before leaving the service, a written resignation stating the effective date and reasons for leaving.
The resignation shall be forwarded to the Human Resource Director with a statement by the appointing power or Department Head as to the resigned employee’s service performance and other pertinent information concerning the cause of resignation. Failure to comply with this rule shall be entered on the service record of the employee and may be cause for denying future employment by the City. The resignation of an employee who fails to give notice shall be reported to the Human Resource Director by the Department Head immediately.
RULE XIV - APPEALS AND HEARINGS
SECTION 1: COMPLAINTS Any employee in the competitive service shall have the right to appeal to the Civil Service Board relative to any disciplinary action, dismissal, demotion, or alleged violation of the Personnel Ordinance or Rules, except in instances where the right of appeal is prohibited by the Personnel Ordinance or these Rules. The employee may file a complaint in writing with the Human Resource Director. Such a complaint shall be filed within three (3) days after receipt of notice or three (3) days after the action or alleged violation, whichever is later. It shall be the duty of the Human Resource Director to inform each of the Civil Service Board Members and the Department Head or other persons complained against of the filing of the complaint. (Amended by Resolution No. 2274)
SECTION 2: INVESTIGATION AND HEARING Upon the making of any complaint, the Civil Service Board shall make such investigation as it may deem necessary. The hearing authorized by the Personnel Ordinance shall be held within twenty (20) days after the request for the hearing was made. In
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all hearings, the applicable provisions of the Personnel Ordinance shall apply.
SECTION 3: NOTIFICATION OF HEARINGS Whenever a hearing on any complaint is to be held, the Human Resource Director shall notify the person requesting the hearing and the Department Head or other officer from whose action the appeal is being taken, of the date, time, and place of the hearing and shall publicly post at such places as the Civil Service Board shall prescribe, a notice of the date, time and place of the hearing.
SECTION 4: PERSONAL APPEARANCE AT HEARINGS Unless incapacitated, the person making the complaint shall appear personally before the Civil Service Board at the hearing, and he/she may be represented by any person or attorney he/she shall select.
SECTION 5: FINDINGS Upon the conclusion of any investigation or hearing, the Civil Service Board shall cause its findings and recommendations to be prepared in writing and shall certify the same within twenty (20) days following the conclusion of any investigation or hearing. Such findings shall be countersigned and filed as a permanent record by the Human Resource Director. The Human Resource Director shall deliver a certified copy of such findings and recommendations to the City Council and to any other officer or employee affected by such findings and recommendations or from whose action the appeal was taken.
Any member of the Civil Service Board may submit a minority or supplemental report which shall be filed as a permanent record by the Human Resource Director. (Amended by Resolution No. 2274)
SECTION 6: DEFERRED HEARINGS If, due to the absence from the City, or the illness or disability of a majority of the Civil Service Board, any employee would be deprived of the right of a hearing by the Civil Service Board, in the event he were laid off, demoted, reduced, or discharged, the Human Resource Director shall defer action until the Board is able to function.
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RULE XV - TRAINING OF EMPLOYEES
SECTION 1: RESPONSIBILITY FOR TRAINING Responsibility for developing training programs for employees shall be assumed jointly by the City Council, the Personnel Officer and Department Heads.
Such training programs may include lecture courses, demonstrations, assignment of reading matter or such other devices as may be available for the purpose of improving the effectiveness and broadening the knowledge of municipal officers and employees in the performance of their respective duties.
SECTION 2: CREDIT FOR TRAINING Participation in and successful completion of special training courses may be considered in making advancements and promotions. Evidence of such activity shall be filed by the employee with the Human Resource Director.
RULE XVI - REPORTS AND RECORDS
SECTION 1: ROSTER CARDS The Human Resource Director shall maintain a service or roster card for each employee in the service of the City showing the name, title of position held, the department to which assigned, salary, changes in employment status, disciplinary actions, attendance, sick leave and vacation accrued and taken, and such other information as may be considered pertinent.
SECTION 2: CHANGE-OF-STATUS REPORT Every appointment, transfer, promotion, demotion, change in salary rate, and any other temporary or permanent change in status of employee shall be reported to the Human Resource Director and recorded by said Director in such manner as may be prescribed by these rules and regulations.
SECTION 3: DESTRUCTION OF RECORDS Roster and payroll records shall be kept permanently. All other records relating to personnel, including correspondence, applications, examinations and reports may be destroyed after one year. Any temporary record may be destroyed at any time by the Human Resource Director with the consent of the City Council and the City Attorney.
BE IT FURTHER RESOLVED that the provisions provided herein shall be effective as of
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March 7, 2000 contingent upon signature of the City’s representative.
PASSED, APPROVED AND ADOPTED this 7th day of March, 2000.
Signature on file – HR Dept.
DEIRDRE H. BENNETT
MAYOR PRO TEMPORE
ATTEST:
Signature on file – HR Dept.
CAROLINA P. BARRERA, CITY CLERK
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ITEM NO. 2
STAFF REPORT
DATE: OCTOBER 15, 2024
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: BILL SMITH, CITY MANAGER
PREPARED BY: STEPHANIE VARGAS, CHIEF DEPUTY CITY CLERK
SUBJECT: APPROVAL OF MINUTES FOR THE CITY COUNCIL REGULAR MEETING HELD ON OCTOBER 1, 2024.
RECOMMENDED ACTION
Staff recommends that the City Council take the following action:
Approval of Minutes for the City Council Regular Meeting held on October 1, 2024.
BACKGROUND
Minutes for the City Council Regular Meeting held on October 1, 2024.
ISSUES/ANALYSIS
None
ATTACHMENT
1. 10-01-2024 Draft Agenda
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October 1, 2024 Regular City Council Meeting 1 -
CITY COUNCIL/COLTON UTILITY AUTHORITY/
COLTON PUBLIC FINANCING AUTHORITY AND COLTON HOUSING AUTHORITY
REGULAR MEETING MINUTES
October 01, 2024
Closed Session Meeting held on the above given date at 5:00 p.m., in the Council Chamber of City Hall, with Mayor Navarro presiding.
CITY COUNCIL ROLL CALL
Councilmembers present were Toro, González, Mayor Pro Tem Echevarria, and Mayor Navarro; Councilmember Chastain was absent.
STAFF PRESENT
City Manager Smith, City Attorney Campos, and Chief Deputy City Clerk Vargas
PUBLIC COMMENT
None
CLOSED SESSION
City Attorney Campos announced the City Council would meet in Closed Session to Discuss Items A and B.
A. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to Government Code Section 54956.9(d)(1)
Yasmin Mendoza v. City of Colton, et al.
San Bernardino County Superior Court, Case No. CIVSB 2218811 B. PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Title - City Manager
Council Member Chastain joined closed session at 5:01p.m..
Mayor Navarro adjourned the meeting to Closed Session at 5:01 p.m. and at 6:01 p.m. the meeting reconvened with all members being present.
City Attorney Reports/Reportable Action
City Attorney Campos announced that the City Council met in Closed Session and discussed Items A a nd B; direction was given, but there was no reportable action.
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October 1, 2024
Regular Meeting held on the above -given date at 6 :00 p.m. in the Council Chamber of City Hall, with Mayor Navarro presiding.
INVOCATION: Pastor Don Duenez – Echoes of Love Ministry FLAG SALUTE: Veterans of Foreign Wars (VFW) Commander Bernie Moyeda
CITY COUNCIL ROLL CALL
Council Members Present Staff Present
Frank J. Navarro, Mayor William R. Smith, City Manager David J. Toro Carlos Campos, City Attorney
Kelly J. Chastain Stephanie M. Vargas, Chief Deputy City Clerk Dr. Luis S. González
John R. Echevarria, MPT
Council Members Absent
None
CEREMONIAL MATTERS
Presentations, Awards, Proclamations
Recognition - Life Saving Actions
Battalion Chief, Luke Granger, presented a Life Saving Award to David Jiorn, for performing lifesaving actions during a medical emergency, which occurred on June 28, 2024. Granger explained the circumstances of the incident and praised Jiorn for his willingness to assist and determination to continue performing CPR until the paramedics arrived on scene. Granger acknowledged and recognized Dispatcher, Judy Jacobson, who guided and instructed Jiorn over the phone during the incident. Granger went on to recognized Paramedic Intern, Aaron Dane, with a Colton Fire Department Challenge Coin, for remaining calm and for providing the paramedic care that resulted in saving a life.
Proclamation - Public Power Week 2024
CM González presented a Proclamation declaring Public Power Week 2024 (October 6-12, 2024); accepted by Electric Utility Director, Charles Berry, and Environmental Conservative Supervisor, Jessica Sutorus.
Proclamation - Water Professionals Appreciation Week
CM Toro presented a Proclamation declaring Water Pr ofessionals Appreciation Week (October 5- 3, 2024); accepted by Water/ Wastewater Superintendent, Bassam Alzammar , and Senior Energy Services Specialist , Cecilia Griego.
MAYOR AND COUNCIL ITEMS
POSSIBLE CONFLICT OF INTEREST DISCLOSURES FOR THE COUNCIL MEETING OF OCTOBER 01, 2024.
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GIFT DISCLOSURES
Mayor Navarro asked the members present if there were any agenda items that were a conflict of interest pursuant to CMC Section 2.04.030. None disclosed.
AB 1234 ORAL REPORTS
Mayor Navarro asked the members p resent if there were any brief reports on meetings attended at the expense of the City. (GC Section 53232.3(d). None disclosed.
APPOINTMENTS
None
MAYOR AND COUNCIL DISCUSSION ITEMS
None
PUBLIC HEARINGS
Continued Public Hearing: Reche Canyon Commercial DAP-001-453 - TIME AND PLACE FIXED TO CONSIDER THE CONTINUED PUBLIC HEARING FROM SEPTEMBER 17, 2024, CERTIFYING THE ENVIRONMENTAL IMPACT REPORT (STATE CLEARINGHOUSE # 2019039115) FOR THE RECHE CANYON PROJECT; ADOPTING FINDINGS PURSUANT TO THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT AND ADOPTING A MITIGATION MONITORING AND REPORTING PROGRAM; FOR A REQUEST FOR AN AMENDMENT TO THE RECHE CANYON
SPECIFIC PLAN TO CHANGE THE ONSITE LAND USE DESIGNATION FROM ESTATE
DENSITY (RESIDENTIAL) TO COMMERCIAL, A CONDITIONAL USE PERMIT TO ALLOW A 24-HOUR, GASOLINE SERVICE STATION, DRIVE-THROUGH CAR WASH, AND
CONVENIENCE STORE, AND AN ARCHITECTURAL AND SITE PLAN REVIEW TO APPROVE
THE SITE PLAN, SITE IMPROVEMENTS, LANDSCAPING PLANS, AND ARCHITECTURAL
ELEVATIONS FOR THE PROPOSED RETAIL SALES (INDOORS), CONVENIENCE STORE,
AND GASOLINE SERVICE STATION WITH DRIVE-THROUGH CAR WASH ON PROPERTY MEASURING APPROXIMATELY 2.90 ACRES LOCATED AT 2501 RECHE CANYON ROAD;
AND FOR A GENERAL PLAN AMENDMENT TO CHANGE EXISTING LAND USE FROM GENERAL COMMERCIAL TO MIXED-USE DOWNTOWN AND CHANGE OF ZONE FROM C-2 (GENERAL COMMERCIAL) TO M-U-D (MIXED-USE DOWNTOWN) AT 645 S. 7TH STREET (FILE INDEX NUMBER DAP-001-453).
The Chief Deputy City Clerk Vargas submitted the Notice of Public Hearing (on file in the City Clerk’s Office) and there were 21 letters of objections and 45 letters of approval for its item.
Staff Presentation
Planning Manager, Mario Suarez, presented for Council an overview of the agenda item and requested approval of staff’s recommendation.
Applicant Presentation
Brent R. McManigal, Attorney speaking on behalf of the applicant, Fahim Tanios , presented for Council an overview of the Reche Canyon Development project.
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Public Comment
The following community members addressed the Counc il: Jill Sewell, Majella Van -Aken, John Staley, Debie Karr, Cathy Ludwig, Sylvie Wellhowsen, Amanda Werner, Richard Banasiak, Pricilla Gutierrez, Kayce Mago, Jamshid Zerafat, Heather Roman, Rand Friberg, Terry Newman, Brenda Castaneda, Lois Neese, Janelle Reid, Laura Lewis, Robert Lewis, Michelle Baughman, Freddie V an-Aken, Marisela Ortiz, Brian Langford, Muti Dandouch, Ziad Dandouch, Sam D., and Karen Scott.
Motion and Second by CM González/ CM Toro to close the public hearing.
Vote: Unanimous, Motion Passes
Council Discussion
Discernment and discussion between Mayor and Councilmembers present, with clarification provide by staff:
Planning Manager, Mario Suarez, City Attorney, Carlos Campos, Development Services Director, Heidi Duron, LSA Contract Traffic Engineer, Ambarish Mukherjee, representative of the Applicant/ Developer, David Mlynarski, Chief of Police, Anthony Vega, and Chief of Fire, Ray Bruno.
Motion and Second by MPT Echevarria/ CM Chastain to continue the public hearing until December 3, 2024, to allow staff to come back with more information on traffic mitigation.
Vote: Motion Failed with CM Toro, CM González, and Mayor Navarro voting no.
Motion and Second by CM Toro/ Mayor Navarro to approve the project by passing the first reading of O-12-24 and O-15-24, and to approve and adopt Resolution numbers R-93-24, R-94-24, and R-95-24.
Subsequent Motion by González to deny project by passing R-92-24.
Motion Failed with no second.
Motion and Second by CM Toro/ Mayor Navarro to approve the p roject by passing the first reading of O -12-24 and O-15-24, and to approve and adopt Resolution numbers R-93-24, R-94-24, and R-95-24.
Vote: Motion Passed with CM González voting no and MPT Echevarria voting to abstain.
BUSINESS ITEMS
None
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PUBLIC COMMENT
The following community members addressed the Council: Nick Zupkofska
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CONSENT CALENDAR
Mayor Navarro presents the Consent Calendar Items 2 through 9.
Motion and Second by MPT Echevarria/ CM González to approve consent calendar Items 2 through 9.
Vote: Unanimous, Motion Passes
(2) Minutes - Approval of Minutes for the City Council Regular Meeting held on September 17, 2024.
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(3) Warrants - Approve US Bank voucher dated 08/20/24 and totaling $67,523.96; voucher numbers 214264 to 214417 dated 08/15/2024 and totaling $810,591.57; vouchers numbers 214418 to 214486 dated 08/19/2024 and totaling $962,619.19; vouchers numbers 214487 to 214539 dated 08/21/2024 and totaling $936,797.85; vouchers numbers 214540 to 214620 dated 08/28/2024 and totaling $91,954.34; vouchers numbers 214621 to 214694 dated 08/29/2024 and totaling $1,206,564.56; vouchers numbers 214695 to 214787 dated 09/03/2024 and totaling $301,168.40; and payroll disbursement listing dated 08/03/2024 to 08/16/2024 and totaling $1,243,659.22.
(4) Contract Award - West Coast Arborist - Approve Contract Award to West Coast Arborist for Tree Trimming Maintenance Services.
(5) Notice of Completion - Police Department Restroom Project - Approve Recordation of Notice of Completion for Police Department Restroom Renovations.
(6) Ongoing Emergency - AMPP - Affirm Ongoing Emergency at Agua Mansa Power Plant.
(7) Second Reading of Ordinance No. O-13-24 - Approve Second Reading of an Ordinance of the City Council of the City of Colton Authorizing the Levy of Special Taxes in a Community Facilities District, Including Certain Annexation Territory Identified as Annexation No. 2, Into City of Colton Community Facilities District No. 2021-1 (Public Safety), ORDINANCE NO. O-13-24.
(8) Second Reading of Ordinance No. O-14-24 - Approve Second Reading of an Ordinance of the City Council of the City of Colton Authorizing the Levy of Special Taxes in a Community Facilities District, Including Certain Annexation Territory Identified as Annexation No. 2, into City of Colton Community Facilities District No. 2021-2 (Maintenance Services), ORDINANCE NO. O-14-24.
9) Second Reading of Ordinance No. O-10-24 - Approve Second Reading of an Ordinance of the City Council of the City of Colton to Amend Section In Chapters 18.04 and 18.06 Of Title 18 (Zoning) of the Colton Municipal Code Related to Definitions and Permitted Uses as Related to Automobile Impound Yards and Automobile Storage (File Index No. Dap24-0005), ORDINANCE NO. O-10-24.
MAYOR AND COUNCIL ORAL REPORTS AND COMMENTS
Comments from Mayor, Council and City Treasurer on various issues and activities throughout the community.
CITY MANAGER'S REPORTS
None
ADJOURNMENT
At 9:25 p.m. Mayor Navarro adjourned the Regular Council Meeting in memory of Colton residents, Ralph Mia Sr., who recently passed away. The Mayor called for a moment of silence in their honor.
__________________________
Stephanie M. Vargas, CMC, CPMC
Chief Deputy City Clerk
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Attachment: 10-01-2024 Draft Agenda (4704 : Draft Minutes 10/1/2024)
ITEM NO. 3
STAFF REPORT
DATE: OCTOBER 15, 2024
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: BILL SMITH, CITY MANAGER
PREPARED BY: AURELIO DE LA TORRE, CITY TREASURER
SUBJECT: RECEIVE AND FILE CITY TREASURER'S REPORT FOR JULY 2024.
RECOMMENDED ACTION
Staff recommends that the City Council take the following action:
Receive and File City Treasurer’s Report for July 2024.
ATTACHMENT
1. Treasurer's Report July 2024
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Attachment: Treasurer's Report July 2024 (4703 : Treasurer's Report)
ITEM NO. 4
STAFF REPORT
DATE: OCTOBER 15, 2024
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: BILL SMITH, CITY MANAGER
PREPARED BY: STACEY DABBS, FINANCE DIRECTOR
SUBJECT: APPROVE US BANK VOUCHER DATED 08/21/24 AND TOTALING $57,009.54; REPLACEMENT CHECKS 214788 TO 214789 TOTALING $1,118.00; VOUCHER NUMBERS 214790 TO 214916 DATED
09/12/2024 AND TOTALING $624,165.70; WIRES DATED 09/16/2024 AND TOTALING $9,373,812.35; VOUCHERS NUMBERS 214917 TO
215075 DATED 09/19/2024 AND TOTALING $1,523,945.81; AND PAYROLL DISBURSEMENT LISTING DATED 08/17/2024 TO
08/30/2024 AND TOTALING $1,156,503.06.
RECOMMENDED ACTION
Staff recommends that the City Council take the following action:
Approve US Bank voucher dated 08/21/24 and totaling $57,009.54; replacement checks 214788 to 214789 totaling $1,118.00; voucher numbers 214790 to 214916 dated 09/12/2024 and totaling $624,165.70; wires dated 09/16/2024 and totaling $9,373,812.35; vouchers numbers 214917 to 215075 dated 09/19/2024 and totaling $1,523,945.81; and payroll disbursement listing dated 08/17/2024 to 08/30/2024 and totaling $1,156,503.06.
BACKGROUND
The California Government Code requires that the legislative body ratify all vouchers issued in the course of conducting City business.
ISSUES/ANALYSIS
All vouchers and related backup documentation have been reviewed by the City Treasurer.
FISCAL IMPACTS
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Staff Report to the Mayor and City Council
Warrants - Accounts Payable
October 15, 2024
None.
ALTERNATIVES
1. Provide alternative direction to staff.
ATTACHMENT
1. Fund Number and Title Legend
2. Voucher lists
3. Voucher lists.continued
4. Payroll Registers
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City of Colton
Fund Number and Title Legend
Fund Title Fund Title
100 GENERAL FUND 701 LLMD #2
150 TREASURERS ACCOUNT GROUP 702 LLMD #1
206 COMMUN ITY CHILD CARE 703 CFO 87-1 DEBT SERV ICE
209 DSF FLY CONSERVATION 704 CFO 87-1 CONSTRUCT ION
210 SPECIAL GAS TAX 707 CFO 88-1 DEBT SERV ICE
211 LIBRARY GRANT FUND 708 CFO 88-1 CONSTRUCTION
212 STATE TRAFFIC RELIEF FUND 709 DSF FLY CONSERVATION
213 S.Y.E.T .P. GRANT 722 STORM WATER
214 POLLUT ION REDUCT ION FUND 733 CFO 89-1 CONSTRUCT ION 215 COMMUNITY DEV ACT FUND 734 CFO 89-2 CONSTRUCT ION
216 CDBG HOUS ING REHAB FUND 744 CFO 89-1 DEBT SERV ICE 217 DRUG/GANG INTERVENTION 745 CFO 89-2 DEBT SERV ICE
218 MEASURE I FUND 750 AQUA MANSA CFO
219 STATE AID- CAPITAL PROJECTS 754 SB COUNTY HOSPITAL
220 Vi Tep 762 TRUST AND AGENCY
225 MISC GRANTS 766 DEFERRED COMPENSAT ION
240 HOST CITY FEES - CIP 781 CFO 90-1 DEBT SERVICE
247 Quimby In Lieu Fees 782 CFO 90-1 CONSTRUCT ION
248 PARK DEVELOPMENT FUND 850 Redeve lopment Obligation Retirement Fund 249 TRAFF IC IMPACT FUND 851 Successor Agency Administration 250 NEW FAC ILITIES DEVELOPMENT FEE 855 Hous ing Auth - RM PARK DEVELOPMENT 251 CIVIC CENTER DEVELOPMENT FEE 856 Housing Auth - RANCHO MED BOND PROCEEDS 252 FIRE FAC ILITY DEVELOPMENT FEE 857 LMI Asset Fund
253 POLICE FACILITY DEVELOPMENT FEE 864 Housing Auth - LOW/MOD BOND PROCEEDS 261 ASSET FORFEITURE 865 Housing Auth - RANCHO MED CHFA 326 AD 94-1 DEBT SERVICE 866 ECONOM IC DEVELOPMENT
332 1971 SEWER BONDS, A & C 867 Consolidation Proj_08 -09 350 PFA Debt Fund 870 Housing Auth - RM PARK OPERAT IONS 357 POB-Non Enterprise 871 Successor Agcy-RANCHO/M ILL PROJECT AREA 358 PENS ION OBLIGATION DEBT SERV ICE 872 Succe ssor Agcy-RANCHO/MILL DEBT SERV ICE 359 CORP YARD DEBT SERV ICE 873 Successor Agcy-RDA II PROJECT FUND 363 1978-2 ASSESSMENT DIST . 874 Housing Auth - LOW/MOD DEBT SERV ICE 364 WATER IMPRVMNT DIST A 875 Housing Auth - LOW/MOD BOND PROCEEDS 379 AD 1979-1 DEBT SERV ICE 876 Successor Agcy-SANTA ANA RIV BND PROCEED 427 AD 94-1 CONSTRUCT ION 877 Successor Agcy-SANTA ANA RIVER CIP 450 Capita l Improvement Project s 878 RDA FIXED ASSETS GROUP 451 Colton Crossing Fund 879 Successor Agcy-WEST VALLEY CIP 453 STREET IMPROVEMENTS PRGM 881 Successor Agcy-MT VERNON BOND PROCEEDS 457 CAP ITAL IMPROVEMENT 882 Successo r Agcy-MT VERNON CIP 469 EQU IPMENT REPLACEMENT 885 Successor Agcy -MT VERNON DEBT SERV ICE 520 ELECTR IC UTILITY 886 RDA ADM INISTRAT ION
521 WATER UTILITY 887 COOLEY RANCH - now 894
522 WAS TEWATER UTILITY 888 MT VERNON - now 882
523 SOLID WASTE 889 WEST VALLEY - now 879
524 CEMETERY 890 Successor Agcy-RDA - LONG TERM DEBT GRP 525 RECYCLING 891 Successo r Agcy-RDA I DEBT SERV ICE FUND 526 PUBLIC BENEFIT FUND 892 Successor Agcy-RDA I - CAP ITAL PROJECTS 527 WASTEWATER UTILITY - GRAND TERRACE 893 Successor Agcy -RDA II DEBT SERV ICE FUND 551 WATER DEVELOPMENT 894 Successor Agcy -COOLEY RANCH PRO JECT 552 SEWER DEVELOPMENT 895 Successor Agcy-COOLEY RANCH DEBT SERV 560 CEMETARY ENDOWMENT CARE 896 SANTA ANA RIVER - now 877 605 Facility & Equipment Maintenance Fund 897 Successor Agcy-SANTA ANA RIVER DEBT SVC 606 INFORMATION SERV ICES FUND 898 Housing Auth - LOW/MOD CAPITAL PROJECTS 607 INSURANCE FUND 899 Successor Agcy-WEST VALLEY PRJ - DBT SV 608 AUTOMOT IVE SHOP 941 GENERAL LONG -TERM DEBT
610 AUTOMOT IVE SHOPS 958 GENERAL FIXED ASSETS
990 GASB 34
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ITEM NO. 5
STAFF REPORT
DATE: OCTOBER 15, 2024
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: BILL SMITH, CITY MANAGER
PREPARED BY: CHARLES BERRY, ELECTRIC UTILITY DIRECTOR
SUBJECT: APPROVE AND ADOPT A RESOLUTION AUTHORIZING POWER
SALES AGREEMENT FOR RENEWABLE SOLAR ENERGY WITH
THE SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
(SCPPA), RESOLUTION NO. R-109-24.
RECOMMENDED ACTION
Staff recommends that the City Council take the following action:
1. Approve Resolution R -109-24, authorizing the partici pation in the Southern California Public Power Authority (SCPPA) Power Purchase Agreement (PPA) for 20 MW of renewable solar energy with Grace Solar Orchard III, LLC (Grace); and
2. Authorize the City Manager or his designee to execute and deliver the Renewa ble Solar Power Sales Agreement (Agreement) between SCPPA and the City of Colton (Colton) for the Grace Orchard Solar Project (Project) in the approximated annual sum of $2.6 million for a twenty -year term and take all actions as are necessary or advisable to implement and administer the Agreement and other related documents as a matter of administration.
BACKGROUND
SCPPA is a Joint Powers Authority, formed in 1980 under the Joint Exercise Powers Act of the California Legislature. Colton is one of eleven municipal utilities and one irrigation district that make up the SCPPA members. SCPPA manages power supply needs for its various members to help maximize economies of scale and reduce risk among other responsibilities.
On February 7, 2023, SCPPA publish ed and administered a Request for Proposals (RFP) for renewable energy resources and energy storage solutions on behalf of its member utilities. 5 Packet Pg. 199
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October 15, 2024
Proposals were due on June 29, 2023. SCPPA received 13 renewable project proposals from 7 respondents. The RFP solicited competitive proposals for renewable energy projects or products consistent with the California Renewable Energy Resources Program ( Public Resources Code Section 25740, et seq .) and the California Renewables Portfolio Standard Program ( Public Utilities Code Section 399.11, et seq.).
As part of the SCPPA RFP procurement process, NextEra Energy Resources Development, LLC, on behalf of Grace Solar, LLC, (Grace) submitted a solar energy proposal. The Project is a 500 megawatt (MW) solar facility loca ted in Blythe, Riverside County, California with a Point of Delivery at the Colorado River Substation and an expected commercial operation date of December 1, 2027.
ISSUES/ANALYSIS
City staff reviewed and evaluated the renewable energy resource proposal s received by SCPPA.
SCPPA will function as partial off taker for 170 MW for the energy produced from the Project., The cities of Anaheim, Colton, and Pasadena selected the Project with Anaheim contracting for 100 megawatts (MW), Colton 20 MW, and Pasadena 50 MW for a total of 170 MW of solar energy. The Agreement includes an annual generation guarantee of 80% of the annual contract quantity. If the Project falls short of the annual generation guarantee, Grace is responsible for delivering replacement produ ct or paying shortfall damages. The Project will include all renewable energy attributes consistent with California’s Renewable Portfolio Standard (RPS) compliance goals.
Table 1 – SCPPA Participant Project Share
SCPPA Member Solar MW Project Share
Anaheim 100 58.8%
Colton 20 11.8%
Pasadena 50 29.4%
Total 170 100%
California’s RPS requires utilities to achieve a 60% renewable energy target by 2030, establishing a resource mix comprised of sustainable renewable energy resources. The passage of Senate Bill (SB) 100 in 2022 affirmed state policy that 100% of retail sales of electricity be sourced from carbon -free resources by 2045. Colton actively pursues eligible renewable energy resources to help fulfill the State mandated RPS target and continue its path towards a more sustainable power supply mix on behalf of its customers. This Project will assist Colton in meeting RPS compliance requirements.
The term for the Project is twenty (20) years, with a base price of $43.71 per MWh. Prior to the construction start date, the Project may notify SCPPA of a one -time price increase up to $3.75 per MWh not-to-exceed $47.46 per MWh due to a trade event. The price increase is intended to 5 Packet Pg. 200
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reflect the potential for increased photovoltaic (PV) panel prices attribut able to new trade measures or restrictions. Any request by the Project to increase the contract price due to such trade measures or restrictions will be verified by an independent evaluator’s report, which will true-up to the PV module delivery date. In co mparison to Colton’s existing SCPPA solar projects, this Project will be the lowest cost solar resources because it does not have resource adequacy capacity attributes. This project provides energy and renewable energy credits (RECs) attributes only, which helps Colton meet RPS compliance requirements.
Table 2 – Colton’s SCPPA Power Sales Agreement Solar Prices
Project Name
Colton Share
(MW)
Total SCPPA Project
Share (Percentage)
Fixed Price (MWh)
Grace Orchard Solar 20 MW 11.8% $47.46
Astoria 2 Solar 7 MW 15.55 % $63.00
Kingbird Solar 3 MW 11.80% $68.75
The independent evaluators for the Project are Burns & McDonnell or Sargent & Lundy paid for at NextEra’s expense. The independent evaluators are responsible for providing a report that explains in reasonable details any actual PV panel cost increases from the applicable trade event.
After acceptance of the independent report, the Project will be a fixed price for the twenty -year term. Colton will not have any ownership in the project and therefo re, will not incur any capital expenditures. Colton will only pay for energy and RECs that are delivered at the fixed price.
On September 19, 2024, the SCPPA Board of Directors and SCPPA legal counsel approved the Power Purchase Agreement and the Power Sales Agreements for Anaheim, Colton, and Pasadena subject to review, consideration, and approval by each member ’s City Council. If approvals are not obtained on or before November 15, 2024, SCPPA is permitted to terminate the Project.
FISCAL IMPACTS
The Agreement will require expenditures of approximately $1.3 million during the first operational year that coincides with fiscal year 2027/28. Forward years of the agreement will require expenditures of approximately $2.6 million annually. Sufficient appropr iations will be proposed in each fiscal year during the term of the agreement, within the Electric Utility Purchased Power-Firm-Solar Account 520-8000-8006-2330-0555-540.
ALTERNATIVES
Provide alternative direction to staff.
ATTACHMENT
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October 15, 2024
1. Renewable Power Sales Agreement between Southern California Public Power Authority and the City of Colton
2. Resolution No. R-109-24
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EXECUTION VERSION
GRACE ORCHARD SOLAR PROJECT
POWER SALES AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
AND
CITY OF COLTON
Dated as of September 19, 2024
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TABLE OF CONTENTS
Page
i
1. PARTIES ................................................................................................................................. 1
2. RECITALS, CONSTRUCTION AND PRELIMINARY MATTERS............................... 1
3. AGREEMENT ........................................................................................................................ 2
4. DEFINITIONS ........................................................................................................................ 2
4.1 Agreement .................................................................................................................... 3
4.2 Effective Date .............................................................................................................. 3
4.3 Total Power Costs ........................................................................................................ 3
5. PURCHASE AND SALE OF FACILITY PRODUCTS AND THE
OBLIGATIONS OF SCPPA AND THE PURCHASER .................................................... 4
5.1 Purchase and Sale of Participant Facility Products Share ............................................ 4
5.2 Facility Products and Deliverables .............................................................................. 5
5.3 Project Manager ........................................................................................................... 5
5.4 Adoption of Annual Budget ......................................................................................... 5
5.5 Reports ......................................................................................................................... 6
5.6 Records and Accounts .................................................................................................. 6
5.7 Provide Information ..................................................................................................... 6
5.8 Consultants and Advisors Available ............................................................................ 6
5.9 Liquidated Damages .................................................................................................... 7
6. OPERATING AGENT AND PROJECT MANAGEMENT .............................................. 7
6.1 Operating Agent ........................................................................................................... 7
6.2 Operating Agent Responsibilities ................................................................................ 7
6.3 Management Decisions and the Role of Board of Directors ..................................... 10
6.4 Periodic Audits ........................................................................................................... 11
6.5 [Reserved] .................................................................................................................. 12
6.6 Costs of Consultants .................................................................................................. 12
6.7 [Reserved] .................................................................................................................. 12
7. CHARGES AND BILLINGS .............................................................................................. 12
7.1 Monthly Costs ............................................................................................................ 12
7.2 Billing Statement ....................................................................................................... 12
7.3 Adoption of Alternative Billing Statement Procedures ............................................. 13
7.4 Disputed Monthly Billing Statement ......................................................................... 13
7.5 Reconciliation of Monthly Costs ............................................................................... 13
7.6 Other or Additional Cost Reconciliation Mechanisms .............................................. 14
7.7 Prepayment of Monthly Costs ................................................................................... 14
8. UNCONDITIONAL PAYMENT OBLIGATIONS; RATE COVENANT;
AUTHORIZATIONS; CONFLICTS; LITIGATION ...................................................... 14
8.1 Unconditional Payment Obligation ............................................................................ 14
8.2 Source of Payments .................................................................................................... 14
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8.3 Rate Covenant ............................................................................................................ 14
8.4 Authorizations ............................................................................................................ 15
8.5 Conflicts ..................................................................................................................... 15
8.6 Litigation .................................................................................................................... 15
9. OTHER TERMS AND SERVICES .................................................................................... 15
9.1 Delivery Procedures ................................................................................................... 15
9.2 Other Services and Transmission From Point of Delivery ........................................ 15
9.3 Energy Services ......................................................................................................... 15
9.4 [Reserved] .................................................................................................................. 16
9.5 [Reserved] .................................................................................................................. 16
9.6 Transfer of Environmental Attributes to Purchaser ................................................... 16
10. PROJECT SPECIFIC MATTERS AND PURCHASER RIGHTS AND
OBLIGATIONS UNDER PROJECT AGREEMENTS ................................................... 16
10.1 Rights and Obligations under the Project Agreements .............................................. 16
10.2 Revision of Appendix B ............................................................................................. 17
11. NONPERFORMANCE AND PAYMENT DEFAULT ..................................................... 17
11.1 Nonperformance by Purchaser ................................................................................... 17
11.2 Notice of Payment Default ......................................................................................... 17
11.3 Cured Payment Default .............................................................................................. 17
11.4 Failure to Cure Payment Default ............................................................................... 17
11.5 Treatment of the Defaulting Purchaser’s Project Rights and Obligations upon its Payment Default .................................................................................................... 18
11.6 Elimination or Reduction of Payment Obligations .................................................... 19
11.7 Use of Reserve Funds ................................................................................................ 19
11.8 Step-Up Invoices ........................................................................................................ 19
11.9 Application of Moneys Received from Step-Up Invoices Relating to the Project ........................................................................................................................ 20
11.10 Application of Moneys Received from Default Invoices .......................................... 20
11.11 Application of Moneys Received from Compliance Payments ................................. 20
11.12 Application of Moneys Received from Sale of Facility Products.............................. 21
11.13 Purchaser Shall be Responsible for Purchaser’s Participant Facility Products Share ......................................................................................................................... 21
12. CHARACTER, CONTINUITY OF SERVICE ................................................................. 21
12.1 Outages, Interruptions and Curtailment of Energy Deliveries ................................... 21
12.2 Uncontrollable Forces ................................................................................................ 21
13. [RESERVED] ........................................................................................................................ 22
14. LIABILITY ........................................................................................................................... 22
14.1 Participants’ Obligations Several ............................................................................... 22
14.2 No Liability of SCPPA or Purchaser, Their Directors, Officers, Etc. ....................... 22
14.3 Extent of Exculpation; Enforcement of Rights .......................................................... 22
14.4 Indemnification for Claims of Retail Customer ......................................................... 22
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14.5 Determination or Enforcement of Rights ................................................................... 22
14.6 No Relief from Insurer’s Obligations ........................................................................ 23
14.7 SCPPA Directors, Officers, Employees, Agents Not Individually Liable; No General Liability of SCPPA ....................................................................................... 23
15. RESTRICTIONS ON DISPOSITION ................................................................................ 23
15.1 Assignment ................................................................................................................ 23
15.2 Restrictions on Elimination of Payment Obligations ................................................. 23
15.3 Restrictions on Disposition of Purchaser’s Entire System ......................................... 24
15.4 Successors and Assigns .............................................................................................. 24
16. EFFECTIVE DATE, TERM AND EXPIRATION ........................................................... 24
16.1 Effective Date; Execution in Counterparts ................................................................ 24
16.2 Termination Conditions ............................................................................................. 24
16.3 Expiration ................................................................................................................... 24
16.4 Termination of Agreement before Expiration Date ................................................... 24
17. SEVERABILITY .................................................................................................................. 25
18. REPRESENTATION AND GOVERNING LAW ............................................................. 25
19. ARBITRATION AND ATTORNEYS’ FEES .................................................................... 25
20. CONDITIONS TO TERMINATION OR AMENDMENT .............................................. 25
21. [RESERVED] ........................................................................................................................ 26
22. NOTICES .............................................................................................................................. 26
APPENDICES
A – DEFINITIONS ..................................................................................................................... A-1 B – SCHEDULE OF PARTICIPANTS FACILITY PRODUCTS SHARES,
PARTICIPANT FACILITY PRODUCTS COST SHARES................................................ B-1 C – POWER PURCHASE AGREEMENT ................................................................................. C-1
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1 GRACE ORCHARD SOLAR PROJECT
POWER SALES AGREEMENT
1. PARTIES. This Grace Orchard Solar Project Power Sales Agreement (this “Agreement”) is dated for convenience as of the September 19 , 2024, by and between the SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint powers agency and a public entity organized under the laws of the State of California, hereinafter designated as “SCPPA,” and the CITY OF COLTON, a municipal corporation organized and existing under the laws of the State of California. The CITY OF COLTON is also periodically designated in this Agreement as “COLTON” or as “Purchaser, ” or, depending upon the context as “SCPPA Participant”.
COLTON and SCPPA are also sometimes herein ref erred to individually as a “Party” and together as the “Parties.”
2. RECITALS, CONSTRUCTION AND PRELIMINARY MATTERS . The Recitals set forth herein and the facts, which follow, are incorporated into this Agreement by reference for all purposes. The facts and the circumstances of the Parties contained in the Recitals, among others, represent the background and framewor k for this Agreement, the aim and purpose of this Agreement and the inte nt of the Parties with respect thereto. This Agreement has been reviewed by attorneys for both Parties and shall not be interpreted with reference to the rules of construction providing for construction against a Party responsible for drafting or creating a particular provision or section but should instead be interpreted in a manner which broadly implements the goals and objectives of the Parties as expressed herein. References to “Sections,” and “Appendices,” shall be to Sections, and Appendices as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreemen t are included herein for conveni ence of reference only and shall not constitute a part of this Agreement for any other purpose or given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters th at fall within the broadest possible scope of such general statement, term or matter. This Agreement is made with reference to the following facts among others:
2.1 SCPPA was created pursuant to provisions contained in the Act, by its members, which are municipalities and an irrigation district that supply, among other things, electrical energy in the State of California, for the purpose of jointly and cooperatively undertaking the planning, financing, development, acquisition, construction, improvement, betterment, operation, and maintenance of projects for the generation or transmission of electric energy, including the development and implementation of systems and frameworks for the acquisition and delivery of secure, long -term reliable supplies of renewable electric energy.
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2 2.2 Pursuant to the terms of the Act, SCPPA has the power, for the purpose of promoting, maintaining and operating electric generation and transmission, to plan, develop, contract for, finance, acquire, design, undertake, own, construct, manage, operate, maintain and administer projects involving systems, methodologies and programs for the acquisition, supply, procurement and delivery of secure, long-term reliable supplies of renewable electric energy, including solar energy products, and to cause such projects to be planned, developed, contracted for, financed, acquired, designed, undertaken, constructed, managed, operated, maintained and administered and to provide by agreement for the performance and carrying out of any such activities.
2.3 Purchaser is a California municipality that provides electric energy to its citizens through its municipally owned electric power system. Purchaser is one of the parties to the SCPPA Joint Powers Agreement.
2.4 In pursuit of potential renewable electric resources to address SCPPA member renewable energy needs, SCPPA issued a request for proposals to acquire renewable energy resources and projects with energy storage capability. As a result of the response by NextEra Energy, Inc. on behalf of its affiliate, Grace Orchard Solar III, LLC (“Power Purchase Provider ”), SCPPA and three of its members, Purchaser and City of Anaheim and City of Pasadena, have identified and investigated the feasibility of a photovoltaic solar energy generation resource to be located in Riverside County, California. The facility known as the Grace Orchard Solar Project is to be developed by Grace Orchard Solar III, LLC.
2.5 SCPPA intends to enter into a Power Purchase Agreement with Grace Orchard Solar III, LLC for the purchase of electric output and related products from a solar photovoltaic facility at the Grace Orchard Solar Project (the “Project”, as further defined in Appendix A hereof).
2.6 Purchaser has a need for a percentage of the Facility Products and has determined to enter into this Agreement with SCPPA for the purpose of meeting such needs.
2.7 SCPPA is authorized to exercise the powers vested in SCPPA pursuant to the Act, its Joint Powers Agreement and this Agreement, as agent for Purchaser to fully implement Purchaser’s objectives in the Project as set forth herein.
3. AGREEMENT. For and in consideration of the pr omises and the mutual covenants and agreements hereinafter set forth, and in order to pay SCPPA for Purchaser’s share of SCPPA’s costs with respect to the Project, the Parties agree as herein set forth.
4. DEFINITIONS. Appendix A to this Agreement attached hereto and incorporated herein, sets forth definitions of certain terms used in this Agreement. Certain other capitalized terms used herein are defined in the Power Purchase Agreement and shall have the meaning ascribed therein. The terms defined in Appendix A, the Power Purchase Agreement and this Section 4, whether in the singular or plural, unless specifically provided otherwise, when used herein or in the Appendices hereto and initially capitalized, shall have the meaning ascribed thereto in said Appendix A, the Power Purchase Agreement or as set out below:
4.1 Agreement. This Agreement, as it may be amended, modified or supplemented from
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3 time to time.
4.2 Effective Date. The date described in Section 16.1 hereof.
4.3 Total Power Costs . Total Power Costs mean all of SCPPA’s costs resulting from SCPPA’s contracting for, providing for, accommodating, and faci litating the Project, including costs arising under any of the Power Purchase Agreement or other Project Agreements. SCPPA shall apply, as a credit against Total Power Costs, any receip ts, revenues and other moneys received by SCPPA (a) from surplus equipment, materials, supplies or assets relating to the Project sold prior to the date of Commercial Operation for the benefit of SCPPA, and (b) for such other a mounts to be applied as a credit against Total Power Costs pursuant to this Agreement. Total Power Costs shall consist of (i) the Delivery Output Cost Component (described in Section 4.3.1), (ii) the Power Purchase Agreement General and Administrative Cos t Component (described in Section 4.3.2), (iii) a Supplementary Services Cost Component to the extent SCPPA incurs such costs (described in Section 4.3.3), (iv) a Reserve Funds Cost Component (described in Section 4.3.4), and (v) a Power Purchase Agreement Cost Component (described in Section 4.3.5), and shall include, but not be limited to, the items of cost and expense referred to in the Power Purchase Agreement and this Section 4.3 that are accrued or paid by SCPPA during each Month of each Power Supply Year. In the event any Power Supply Year shall consist of fewer than twelve Months, the fraction set forth in Section 4.3.2 shall be adjusted accordingly and, in the event of any revision of the Annual Budget after the commencement of any Power Supply Year, the amount determined pursuant to Section 4.3.2 shall be appropriately adjusted so that any increase or decrease in the portion of the Annual Budget applicable to Section 4.3.2 shall be evenly apportioned over the remaining Months of such Power Supply Year.
4.3.1 The Delivery Output Cost Component of Total Power Costs for each Month shall consist of the costs paid by SCPPA to the Power Purchase Provider under the Power Purchase Agreement, as calculated in accordance with the Power Purchase Agreement.
4.3.2 The Power Purchase Agreement General and Administrative Cost Component of Total Power Costs for each Month shall consist of the administrative and general costs with respect to the Project, including (i) legal fees, costs relating to litigation (including disbursements and other amounts paid as a result of such litigation), insurance costs (including amounts to fund any self -insurance program), overhead costs, any taxes required to be paid by SCPPA with respect to the Project, (ii) all expenses incurred in enfo rcing the Power Purchase Agreement and other Project Agreements, and (iii) all costs related to the conducting of the business of SCPPA with respect to the Project, including the applicable portion of salaries, fees for legal, engineering, financial and other services, and costs of the Project Manager, as well as all other costs attributable to miscellaneous and incidental expenses in connection with the administration of the Project, and all other expenses properly related to the conduct of such affairs of SCPPA.
4.3.3 The Supplementary Services Cost Component of Total Power Costs for each Month shall consist of all costs incurred by SCPPA, if any, and to the extent
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4 not included in Section 4.3.1, in connection with services for transmission, dispatching, scheduling, tagging, firming, balancing, swapping, exchanging or delivering and for otherwise facilitating the disposition, movement, taking, receiving, crediting and accounting for Facility Pro ducts provided for under this Agreement. The Supplementary Services Cost Component of the Total Power Costs shall also entail all costs incurred by SCPPA, if any, which are necessary to move or otherwise handle delivery of any portion of Facility Products from the Point of Delivery to one or more specified delivery point(s) as determined by Purchaser pursuant to Section 9.2 and by other SCPPA Participating Members pursuant to the terms of their respective power sales agreements relating to the Project. Absent a request by Purchaser for SCPPA to provide Supplementary Services during a Month, no Supplementary Services cost component shall be included in Purchaser's Total Power Costs for such Month.
4.3.4 The Reserve Funds Cost Component of Total Power Costs for each Month shall consist of the amount for such Month necessary to establish and maintain the Reserve Funds at the level deemed prudent and appropriate by the Board of Directors.
4.3.5 The Power Purchase Agreement Cost Component of Total Power Costs for each Month shall consist of: the costs, without duplication, associated with the Power Purchase Agreement, including, to the extent not otherwise included in this Section 4.3, all costs for such Month of SCPPA in connection with i ts enforcement of the Power Purchase Agreement or the performance required of SCPPA under the Power Purchase Agreement or any Project Agreement and shall include, without duplication, SCPPA’s monthly payment of an y applicable associated ancillary costs under the Power Purchase Agreement, and any costs SCPPA is required to pay for the Facility Products.
5. PURCHASE AND SALE OF FACILITY PRODUCTS AND THE OBLIGATIONS OF SCPPA AND THE PURCHASER.
5.1 Purchase and Sale of Participant Facility Products Share. In accordance with the terms and conditions of this Agreement, commencing on the earliest of (i) the date SCPPA is obligated to pay any portion of the costs of the Project, (ii) the effective date of the Power Purchase Agreement, or (iii) the date of the first delivery of Energy to Purchaser pursuant to this Agreement, and continuing through the term of this Agreement, except as otherwise provided herein, SCPPA shall provide Purchaser its Participan t Facility Products Share of any and all products, rights, and benefits, whether tangible or intangible, received or obtained by SCPPA with respect to the Project, including without limitation the Facility Products, and Purchaser shall be responsible for and pay its Participant Facility Products Cost Share of any and all Total Power Costs associated with the acquisition of its Participant Facility Products Share and such associated products, rights, and benefits, as applicable, under the Power Purchase Agreement and any other applicable Project Agreement, including purchase or acquisition of any rights pursuant to the Power Purchase Agreement and any other applicable Project Agreement.
5.2 Facility Products and Deliverables. SCPPA shall provide and Purchaser shall purchase
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5 and receive Purchaser’s Participant Facility Products Share of the Facility Products pursuant to the terms of this Agreement. To the extent permitted by the Power Purchase Agreement, the applicable Project Agreements, or otherwise determined by the Board of Directors, SCPPA will endeavor to take such actions or implement such measures as may be necessary or desirable for the utilization, maintenance or preservation of the rights and interests of Purchaser in the Project including, if appropriate, such enfo rcement actions or other measures as the Board of Directors deems to be in the Purchaser’s best interests. To the extent such services are available and can be implemented in accordance with the Power Purchase Agreement or other applicable Project Agreements, SCPPA shall also provide such other services, as approved by the Board of Directors, as may be deemed necessary to secure the benefits and/or satisfy the obligations associated with the Power Purchase Agreement or other applicable Project Agreements. SCPPA shall use its best efforts, on behalf of Purchaser, to secure the benefits of the transactions contemplated under the Power Purchase Agreement or other applicable Project Agreements including the delivery of the Facility Products, as applicable, contemplated by this Agreement, and shall endeavor to maintain and secure the rights and benefits accruing to SCPPA through the Power Purchase Agreement and the other applicable Project Agreements. Upon request, the SCPPA Participants shall provide reasonable efforts to assist the Operating Agent, Project Manager, and/or SCPPA in the performance of their respective obligations under this Agreement.
5.3 Project Manager. SCPPA or its designee or designees shall act as Project Manager as provided in this Agreement to administer the Project, or cause the Project to be administered, as provided in this Agreement or pursuant to assignments, instructions or requests by the Board of Dire ctors, or through any project management or agency agreement, or contracts for services between SCPPA and a third party or in consultation with the Operating Agent in accordance with Section 6 of this Agreement . Prior to appointment of a Project Manager (other than SCPPA), SCPPA shall consult with the SCPPA Participant as to such appointment. The Project Manager may from time to time enter into project agreements or other agreements related to the Project as appropriate or otherwise authorized by the Board of Directors.
5.3.1 The Project Manager may establish, as needed, committees, subcommittees, or working groups to advise the Project Manager, including, but not limited to, auditing, legal, financial, engineering, mechanical, weather, diurnal, barometric, meteorological, operating, insurance, governmental relations, environmental and public information subcommittees.
5.4 Adoption of Annual Budget . The Annual Budget and any amendments to the Annual Budget shall be prepared and approved in accordance with Sections 5.4.1, 5.4.2 or 5.4.3, respectively.
5.4.1 SCPPA will prepare and submit to Purchaser a proposed Annual Budget at least sixty (60) Days prior to the beginning of each Power Supply Year. In connection with the preparation of the Annual Budget, SCPPA shall incorporate therein the Operating Budget fo r such Power Supply Year as prepared by the Project Manager and approved by the Board of Directors.
Purchaser may then submit to SCPPA, at any time until the Annual Budget is
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6 adopted, any matters or suggestions relating to the Annual Budget. SCPPA shall adopt the Annual Budget not less than thirty (30) nor more than sixty (60) Days prior to the beginning of such Power Supply Year and shall cause copies of such adopted Annual Budget to be delivered to the Purcha ser; provided, however, the Annual Budget for the first Power Supply Year shall be prepared, considered, adopted and delivered in the most practicable manner available prior to Commercial Operation of the Facility.
5.4.2 As required from time to time during any Power Supply Year , after seven (7) Days’ written notice to the Purchaser, SCPPA may, pursuant to the foregoing provisions for adopting the Annual Budget, adopt an amended Annual Budget for and applicable to such Power Supply Year for the remainder of such Power Supply Year. The Annual Budget shall establish the basis for monthly Billing Statements to be sent to each SCPPA Participant, as provided in Section 7 hereof.
5.4.3 Any adjustment, and any other or further mechanism for adjustment, as may be required to address the variability of costs of operation of the Project at any time during the Power Supply Year or the variability of or addition to any other Annual Budget comp onent, may be incorporated into the Annual Budget as provided above, or by any amendment to an Annual Budget at any time during any Power Supply Year upon the seven (7) Days’ written notice to the Purchaser as set forth in Section 5.4.2.
5.5 Reports. SCPPA will prepare and issue to Purchaser the following reports as soon as reasonably practicable after the end of each quarter of a Power Supply Year:
5.5.1 Financial and operating statement relating to the Project.
5.5.2 Variance report comparing the costs in the Annual Budget versus actual costs, and the status of other cost-related issues with respect to the Project.
5.6 Records and Accounts . SCPPA will keep, or cause to be kept, accurate records and accounts of each of the properties and facilities comprising the Project as well as of the operations relating to the Project, all in a manner similar to accepted accounting methodologies associated with similar projects. All transactions of SCPPA relating to the Project with respect to each Fiscal Year shall be subject to an annual audit.
Purchaser shall have the right at its own expense to examine and copy the records and accounts referred to above on reasonable notice during regular business hours.
5.7 Provide Information . Purchaser agrees to supply SCPPA, upon reasonable request during regular business hours, with such information, documentation, and certifications as SCPPA shall reasonably determine to be requisite to and necessary or desirable for the administration and ongoing activities of the Project, including information reasonably available to allow SCPPA to respond to requests for such information from any federal, state, or local regulatory body or other authority.
5.8 Consultants and Advisors Available . SCPPA shall make available to the Project Manager (if other than SCPPA) and to the SCPPA Participants all consultants and
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7 advisors that are retained by SCPPA, and such consultants and advisors shall be authorized to consult with and advise the Project Manager and SCPPA Participants on Project matters.
5.9 Liquidated Damages. Any amounts paid to SCPPA as and for Daily Delay Damages , GEP Shortfall Damages, PV Capacity Damages, the Damage Payment, or any other damages owed to SCPPA by the Power Purchase Provider as provided under the Power Purchase Agreement shall be remitted to the SCPPA Participants in accordance with their respective Participant Facility Products Shares.
6. OPERATING AGENT AND PROJECT MANAGEMENT.
6.1 Operating Agent . The City of Anaheim shall act as operating agent (“Operating Agent”) as provided in this Agreement to assist the Project Manager in the administration of the Project, as provided in this Agreement or pursuant to assignments, instructions, or requests by the Board of Directors.
6.2 Operating Agent Responsibilities. The Operating Agent shall have the following responsibilities:
6.2.1 Provide liaison between SCPPA and the SCPPA Participants at the management or other levels with respect to the ongoing administration of the Project and maintain a liaison between the SCPPA Participants and all other SCPPA members with respect to the Project, and where SCPPA deems it appropriate, maintain a liaison with the counterparties to any Project Agreements and with any other entities or utilities engaged in or in connection with the Project.
6.2.2 In consultation with SCPPA and the SCPPA Participants, review, develop, and discuss budgets and revisions thereof prepared and submitted by SCPPA or the Project Manager.
6.2.3 In consultation with SCPPA and the SCPPA Participants, review, develop, and discuss any systems or procedures for adjustment of the Annual Budget or any alternative methodologies for budgeting or billing as set forth in Section 5 and Section 7 of this Agreement.
6.2.4 In consultation with SCPPA and the SCPPA Participants, review, discuss and attempt to resolve any disputes among the SCPPA Participants or the parties to any Project Agreements including, without limitation, the Power Purchase Provider, the counterparty under the Power Purchase Agreement or any other counterparty with respect to any Project Agreement.
6.2.5 Make recommendations to SCPPA with respect to the ongoing administration of the Project.
6.2.6 In consultation with SCPPA and the SCPPA Participants, review, develop, and if appropriate, modify and approve rules, procedures , and protocols for the administration of the Project or Project Agreements, including rules,
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8 procedures, and protocols for the management of the costs of the scheduling, handling, tagging, dispatching , and crediting of Facility Products and the handling and crediting of Environmental Attributes associated with the Project.
6.2.7 In consultation with SCPPA and the SCPPA Participants , r eview, and, if appropriate, modify, approve or otherwise act upon the form or content of any written statistical, administrative, or operational reports, solar energy related data, electric generation information, solar energy production data , technical information, facility reliability data, transmission information, forecasting , scheduling, dispatching, tagging, parking, exchanging, balancing, movement, or other delivery information, climate and weat her related matters, regulatory matters or requirements, and other information and other similar records or matters pertaining to the Project which are furnished to the Project Manager, or by the counterparties to Project Agreements, experts, consultants or others.
6.2.8 In consultation with SCPPA and the SCPPA Participants and pursuant to any scheduling coordinator agreement, r eview, and, if appropriate, modify, approve, or otherwise act upon, practices and procedures as formulated by the Project Manager or, if applicable, the counterparty to any Project Agreement, to be followed by the SCPPA Participants for, among other things, the production, scheduling, tagging, transmission , delivery, balancing, exchanging, crediting, tracking, monitoring, remarketing, sale or disposition of Facility Products. For avoidance of doubt, upon SCPPA’s delivery and sale of Facility Products to Purchaser at the Point of Delivery, Purchaser shall have full unilateral rights to remarket, sell or otherwise dispose of such Facility Products.
6.2.9 In consultation with SCPPA and the SCPPA Participants, review, modify and approve, if appropriate, any activities with respect to the performance of any Project Agreement, including policies for selection and utilization of contractors and consultants included in the budgets with respect to the Project.
In approving such activities, consideration may be given, if possible, to each SCPPA Participant’s electric power system conditions, which may prevail during such planned activities.
6.2.10 In consultation with SCPPA and the SCPPA Participants , r eview, and, if appropriate, recommend, modify, approve or otherwise act with respect to the exercise of SCPPA’s rights under the Power Purchase Agreement or review, recommend, approve or otherwise act with respect to the procurement of resources in connection with the Power Purchase Agreement.
6.2.11 In consultation with SCPPA and the SCPPA Participants , r eview, modify, approve or otherwise act upon any proposed change, extension or modification of any date set forth in Appendix I of the Power Purchase Agreement of the milestone schedule or to any Milestone under the Power Purchase Agreement as the Project Manager shall deem to be desirable, appropriate or otherwise in SCPPA’s interest. The Project Manager may impose such other terms, conditions or qualifications upon any such action as the Project Manager shall deem appropriate.
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9 6.2.12 In consultation with SCPPA and SCPPA Participants, review and act upon any present, potential or possible future anticipated failure of Power Purchase Provider to deliver Guaranteed Generation (as defined in the Power Purchase Agreement) in such manner as the Project Manager shall deem appropriate.
6.2.13 In consultation with SCPPA and the SCPPA Participants , review, and if appropriate, recommend, modify or approve practices and procedures formulated by the Project Manager, or by any counterparty to any Project Agreements giving due recognition to the needs , rights and electric system requirements and capabilities of all SCPPA Participants.
6.2.14 In consultation with SCPPA and the SCPPA Participants, review and act upon any matters involving any of the Power Purchase Agreement, any guarantee or letter of credit delivered to or for the benefit of SCPPA by the Power Purchase Provider or any other counterparty to any Project Agreement in connection with the Project, and take such actions or make such recommendations as may be appropriate or desirable in connection therewith.
6.2.15 In consultation with SCPPA and the SCPPA Participants , review, modify or approve recommendations of the counterparties made pursuant to the provisions of any Project Agreement.
6.2.16 In consultation with SCPPA and the SCPPA Participants, review, modify and where appropriate, recommend or approve the implementation of metering technologies and methodologies appropriate for the delivery, accounting for, transferring and crediting of the Facility Products to the Point of Delivery or to other points or destinations, as applicable.
6.2.17 In consultation with SCPPA and the SCPPA Participants, review, modify and where appropriate, recommend approval of Consent Agreements.
6.2.18 In consultation with SCPPA and the SCPPA Participants , review, examine modify and where appropriate, recommend or approve the implementation of methods for addressing curtailments or other interruptions tending to cause deemed generated energy.
6.2.19 In consultation with SCPPA and the SCPPA Participants, review, modify and where appropriate, recommend the implementation of practices and procedures to implement the provisions of Section 9 herein, as may be applicable with respect to any of the SCPPA Participants.
6.2.20 In consultation with SCPPA and the SCPPA Participants, review and provide SCPPA with comments on adjustments to the Participant Facility Products Shares and the Participant Facility Products Cost Shares set forth in Appendix B of this Agreement when and as required by this Agreement; provided, that such resolution shall require the affirmative vote of the Board of Directors if such adjustment would change its Participant Facility Products Share and its Participant Facility Products Cost Share.
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10 6.2.21 Track the Operati ng Agent’s reasonable costs performing its responsibilities under this Agreement, and, in consultation with the SCPPA Participants and approval by SCPPA, seek and receive cost recovery from the SCPPA Participants in proportion to the Participant Facility Products Cost Share.
6.2.22 In consultation with SCPPA and the SCPPA Participants , perform such other functions and duties as may be provided for under this Agreement, the Power Purchase Agreement, or any other applicable Project Agreement or as may otherwise be appropriate or beneficial to the Project. Upon request, the SCPPA Participants shall provide reasonable efforts to assist the Operating Agent, the Project Manager, and/or SCPPA in the performance of their respective obligations of the Agreement.
6.3 Management Decisions and the Role of Board of Directors. To the extent not provided for under this Agreement, the rights and obligations of SCPPA under the Project Agreements shall be subject to the ultimate control at all times of the Board of Directors. Purchaser shall be entitled to participate in the dec isions of the Board of Directors with respect to SCPPA’s rights and interests with respect to the Project as provided in this Section 6.3 , provided that Purchaser shall disqualify its right to participate upon assuming the status of a Defaulting Purchaser as provided in Section 11 of this Agreement. SCPPA, through the Board of Directors shall have, in addition to the duties and responsibilities set forth elsewhere in this Agreement, the following duties and responsibilities, among others:
6.3.1 Dispute Resolution. The Board of Directors shall endeavor to review, discuss and attempt to resolve any disputes among SCPPA, the SCPPA Participants , the Operating Agent, and the counterparties under the Project Agreements relating to the Project, the operation and management of the Facility , and SCPPA’s rights and interests with respect to the Facility.
6.3.2 Scheduling Procedures. When recommended by the Project Manager, or when otherwise appropriate, the Board of Directors shall act upon and approve or modify the practices and procedures to be followed by the SCPPA Participants for scheduling, delivering, controlling and allocating the Facility Products.
6.3.3 Project Agreements . The Board of Directors shall have the authority to approve the Project Agreements , including agreements for scheduling coordinator services, if any, and to review , modify, and approve, as appropriate, all amendments, modifications and supplements to the Project Agreements.
6.3.4 Budgeting. The Board of Directors shall review, modify , and approve each Annual Budget and the revisions thereto in accordance with Section 5.4 of this Agreement.
6.3.5 Application of Certain Payments Under the Power Purchase Agreement . The Board of Directors shall review, modify, and approve recommendations of the Project Manager as to the application of any payments or amounts received by SCPPA from any source or as a result of a Default by the Power Purchase
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11 Provider under the Power Purchase Agreement or other non-compliance with the Power Purchase Agreement as provided therein ; provided that such payments and amounts shall be applied to one or more of the purposes set forth in Section 4.3 to the credit of Purchaser and the other SCPPA Participants in proportion to their respective Participant Facility Products Cost Share.
6.3.6 Other Matters. The Board of Directors is authorized to perform such other functions and duties, including oversight of those matters and responsibilities addressed by the Project Manager, as may be provided for under this Agreement and under the other Project Agreemen ts, or as may otherwise be appropriate.
6.3.7 Voting. Unless the Board of Directors shall otherwise determine to require a majority vote pursuant to the terms of the Joint Powers Agreement, all actions with respect to the Project taken by the SCPPA Board of Directors shall require an affirmative vote of at le ast eighty percent (80%) of the Project Votes (as defined in SCPPA’s Joint Powers Agreement, dated as of November 1, 1980, as amended from time to time) cast thereon.
6.4 Periodic Audits. The Board of Directors or SCPPA may arrange for the annual audit under Section 5.6 of this Agreement by certified accountants, selected by SCPPA and experienced in electric generation or electric utility accounting, of the books and accounting records of SCPPA, the Operating Agent (pertaining to the Operating Agent’s activities under this Agreement and the associated cost recovery) , and where deemed appropriate the Project Manager (if other than SCPPA), the Power Purchase Provider (to the extent provided under the Power Purchase Agreement) and any other counterparty under any Project Agreement to the extent allowable, and any cost reimbursable to a consultant or contractor relevant to the administration of the Project, and such audit shall be completed and submitted to SCPPA as soon as reasonably practicable after the close of the Fiscal Year. SCPPA shall promptly furnish to Purchaser copies of all audits. No more frequently than once every calendar year, the Purchaser may, at its sole cost and expense, audit or cause to be audited the books and cost records of SCPPA, the Project Manager (if other than SCPPA), the counterparty under any Project Agreement to the extent so provided in the applicable Project Agreement, and any cost reimbursabl e to a consultant or contractor relevant to the administration of the Project.
6.5 [Reserved.]
6.6 Costs of Consultants . Costs (or the applicable portion thereof) of consultants and others employed or appointed by the Board of Directors or SCPPA to perform the duties required hereunder shall be included in Total Power Costs, as appropriate, and shall be billed to SCPPA or the Project Manager (if other than SCPPA).
6.7 [Reserved.]
7. CHARGES AND BILLINGS.
7.1 Monthly Costs. The amount of monthly costs which shall be paid by Purchaser to
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12 SCPPA for a particular Month (“Monthly Costs”) shall be the sum of the following, as applicable, subject to any adjustments as provided in Section 12 hereof:
7.1.1 Purchaser’s Participant Facility Products Cost Share multiplied by the Delivery Output Cost Component of Total Power Costs (as provided in Section 4.3.1) for such Month.
7.1.2 Purchaser’s Participant Facility Products Cost Share multiplied by the Power Purchase Agreement General and Administrative Cost Component of Total Power Costs (as provided in Section 4.3.2 hereof) for such Month.
7.1.3 Purchaser’s share of the Supplementary Services Cost Component of Total Power Costs (as provided in Section 4.3.3 hereof) based on Purchaser’s allocated share of any such services procured by SCPPA on behalf of the Purchaser for such Month.
7.1.4 Purchaser’s Participant Facility Products Cost Share multiplied by the Reserve Funds Cost Component of Total Power Costs (as provided in Section 4.3.4 hereof) for such Month.
7.1.5 Purchaser’s Participant Facility Products Cost Share multiplied by the Power Purchase Agreement Cost Component of Total Power Costs (as provided in Section 4.3.5 hereof) for such Month.
7.2 Billing Statement. By the fifth Day of each Month during each Power Supply Year, SCPPA shall bill Purchaser for the amount of Monthly Costs to be paid by Purchaser for the current Month by providing Purchaser with a Billing Statement in accordance with the charges establi shed pursuant to the provisions of this Agreement; provided, however, that such Billing Statement, with respect to the cost of Facility Products provided by SCPPA to Purchaser under this Agreement, shall also include with respect to the pe rformance by SCPPA or the counterparty under and pursuant to applicable Project Agreements, any charge or credit to Purchaser with respect to the costs or revenues attributable to Purchaser pursuant to and under any applicable Project Agreement. Purchaser consents to the timely payment of the respective Participant Facility Products Costs Share of the Operating Agent’s reasonable costs as determined and provided in accordance with Section 6.2.21. Such Billing Statement shall detail the costs described in S ection 7.1 hereof and shall set forth, among other things, the amounts due for such Month by Purchaser with respect to the items of Monthly Costs set forth in Section 7.1, as such Monthly Costs may be adjusted from time to time in accordance with Section 5 and this Section 7. Such Billing Statement shall be paid by Purchaser on or before twenty (20) Days after receipt of such Billing Statement.
7.3 Adoption of Alternative Billing Statement Procedures . The Project Manager may recommend the adoption of an alternative Billing Statement billing methodology in connection with each SCPPA Participant’s Billing Statement with respect to the Total Power Costs and the costs associated with any Project Agreement. Such alternative Billing Statement procedures may be placed into effect with the approval of the same by resolution of the Board of Directors. Any such alternative Billing Statement billing methodology shall be fiscally prudent, financially sound and shall assure coverage of
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13 all potential and actual costs and obligations of SCPPA.
7.4 Disputed Monthly Billing Statement . In case any portion of any Billing Statement received by Purchaser from SCPPA shall be in bona fide dispute, Purchaser shall pay SCPPA the full amount of such Billing Statement and, upon determination of the correct amount, the difference between such c orrect amount and such full amount, if any, including interest at the rate received by SCPPA on any overpayment, will be credited to Purchaser by SCPPA after such determination; provided, however, that such interest shall not accrue on any overpayment that is acknowledged by SCPPA and returned to Purchaser by the fifth Day following the receipt by SCPPA of the disputed overpayment. In the event such Billing Statement is in dispute, SCPPA will give consideration to such dis pute and will advise Purchaser with regard to SCPPA’s position relative thereto within thirty (30) Days following receipt of written notification by Purchaser of such dispute.
7.5 Reconciliation of Monthly Costs. As soon as practicable after the end of each Power Supply Year, or more frequently if so determined by the Board of Directors, SCPPA will submit to Purchaser and each of the other SCPPA Participants a detailed statement of the actual aggregate Monthly Costs and other amounts payable hereunder, including any credits thereto, for all of the Months of such Power Supply Year, and the adjustments of the aggregate Monthly Costs and other amounts payable hereunder, if any, for any prior Power Supply Year, based on the annual audit of accounts provided for in Section 5.6. If, on the basis of the statement submitted as provided in this Section 7.5, the actual aggregate Monthly Costs and other amounts payable by the Purchaser for any Power Supply Year exceed the amount thereof which Purchaser has been billed, Purchaser shall pay SCPPA, within twenty ( 20) Days after receipt of SCPPA’s invoice, the amount to which SCPPA is entitled. If, on the basis of the statement submitted pursuant to this Section 7.5, the actual aggregate Monthly Costs or other amounts payable by the Purchaser for any Power Supply Year are less than the amount therefor which Purchaser has been billed, SCPPA shall, unless otherwise directed by Purchaser with respect to moneys owed to it, credit such excess against Purchaser’s next monthly Billing Statement.
7.6 Other or Additional Cost Reconciliation Mechanisms . The Board of Directors may, by resolution, authorize or prescribe other billing, payment, costing and cost reconciliation mechanisms to address such billing, payment, costing and cost reconciliation issues as may from time to time arise with respect to the Project.
7.7 Prepayment of Monthly Costs. Purchaser may, at any time, pay moneys to SCPPA or utilize any credits due or amounts owed by SCPPA to Purchaser with respect to the Project for the purpose of prepaying its monthly Billing Statement. Such moneys and amounts owed by SCPPA under any Pro ject Agreement shall be deposited into an account established by, or at the direction of, SCPPA. Consistent with SCPPA’s investment policy, moneys in such account shall be invested pursuant to instructions provided to SCPPA by Purchaser and all investment income shall be credited to such account. Payment of the amount of any monthly Billing Statement or Default Invoice shall be made from moneys available in such account to the extent set forth in written directions from Purchaser to SCPPA received at least five business days prior to the due date of such payment. Any credit or prepayment with respect to its monthly Billing
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14 Statement shall not relieve or reduce Purchaser’s other obligations under this Agreement.
8. UNCONDITIONAL PAYMENT OBLIGATIONS; RATE COVENANT;
AUTHORIZATIONS; CONFLICTS; LITIGATION.
8.1 Unconditional Payment Obligation. Beginning with the earliest of (i) the date SCPPA incurs or becomes obligated to pay any portion of the costs of the Project, (ii) the effective date of any Project, or (iii) the date of the first delivery of Facility Products to Purchaser and continuing through the term of this Agreement, Purchaser shall pay SCPPA the amounts of Monthly Costs set forth in the Billing Statements submitted by or on behalf of SCPPA to Purchaser in accordance with the provisions of Section 7 hereof and, without duplication, any amount set forth in any Default Invoice received by Purchaser as a result of the operation of Section 11 hereof, whether or not this Agreement has been terminated, or the Project or any part thereof has been completed, is functioning, producing, operating or operable or its output is suspended, interrupted, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever.
8.2 Source of Payments. Purchaser hereby represents and warrants that the obligations of Purchaser to make the payments to SCPPA under this Agreement shall constitute a cost of purchased power and an operating expense of Purchaser payable solely from its electric power revenue fund, including any and all legally available electric power system reserves. Purchaser will annually in each and every fiscal year of Purchaser during the term of this Agreement include in its electric power system budget, whether or not any other items are included, an appropriation from the revenues of its electric power system (including moneys derived from sales to third parties) sufficient to satisfy all the payments required to be made in such year under this Agreement until all payments required under this Agreement have been paid in full.
8.3 Rate Covenant. Purchaser will establish, maintain and collect rates and charges for the electric power service of its electric power system each year so as to provide revenues sufficient, together with any legally available electric power system reserves, to enable Purchaser to pay to SCPPA all amounts payable when due under this Agreement and to pay all other amounts payable from, and all lawful charges against or liens on, the revenues of its electric power system.
8.4 Authorizations. Purchaser hereby represents and warrants that no order, approval, consent or authorization of any governmental or public agency, authority or person, is required on the part of Purchaser for the execution and delivery by the Purchaser of this Agreement, or the performance by Purchaser of its obligations under this Agreement except for such as have been obtained.
8.5 Conflicts. Purchaser represents and warrants to SCPPA as of the Effective Date that, to Purchaser’s knowledge, the execution and delivery of this Agreement by Purchaser, and Purchaser’s performance thereunder , will not constitute a default under any agreement or instrument to which it is a party, or any order, judgment, decree or ruling
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15 of any court that is binding on Purchaser, or a violation of any applicable law of any governmental authority, which default or violation would have a material adverse effect on the financial condition of Purchaser’s electric power revenue fund.
8.6 Litigation. Purchaser represents and warrants to SCPPA as of the Effective Date that, to Purchaser’s knowledge, except as disclosed, there are no actions, suits or proceedings pending against Purchaser (service of process on Purchaser having been made) in any court that questions the validity of the authorization, execution or delivery by Purchaser of this Agreement, or the enforceability as to Purchaser of this Agreement.
9. OTHER TERMS AND SERVICES.
9.1 Delivery Procedures . Prior to the time at which any Energy is to be delivered to Purchaser from the Facility, to the extent applicable, Purchaser shall schedule and be obligated to take delivery of Energy to be delivered under this Agreement. The Facility Products generated and produced from the Project shall be scheduled and delivered at the Point of Delivery under the practices and procedures approved pursuant to Section
6.2, as applicable, all in accordance with the Power Purchase Agreement.
9.2 Other Services and Transmission From Point of Delivery . It is the obligation of Purchaser to receive its Participant Facility Products Share from SCPPA all in accordance with the Power Purchase Agreement. However, to the extent specified by Purchaser, and to the extent practicable for SCPPA to do so, SCPPA shall assist in arranging for Supplementary Services and for such additional transmission, interconnection arrangements, energy management , firming, shaping, swaps, exchanges or other services associated with the transmission, use or disposition of Facility Products to be utilized by the Purchaser and to provide for delivery, accounting for, transferring and crediting the ownership and transfer of such Facility Products from the Point of Delivery to any other points or destinations, as determined by the Purchaser.
9.3 Energy Services. Except as otherwise provided in this Agreement, nothing herein shall prevent or restrict Purchaser from providing for its own transmission, energy management services, firming, balancing, or exchanging services or otherwise using or dispatching its Energy under this Agreement; provided, however, that such services, use or activities shall not affect any of the obligations of Purchaser under this Agreement.
9.4 [Reserved.]
9.5 [Reserved.]
9.6 Transfer of Environmental Attributes to Purchaser . SCPPA shall transfer all Environmental Attributes received by SCPPA under the Power Purchase Agreement to each Purchaser based upon the Participant Facility Products Share of such SCPPA Participant in the same manner by which SCPPA receives Environmental Attributes.
10. PROJECT SPECIFIC MATTERS AND PURCHASER RIGHTS AND OBLIGATIONS.
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16 UNDER PROJECT AGREEMENTS.
10.1 Rights and Obligations under the Project Agreements. Notwithstanding anything to the contrary contained herein: (i) the obligation of SCPPA to deliver to Purchaser its Participant Facility Products Share during the term of this Agreement is limited to the Facility Products which SCPPA receives from the Power Purchase Provider for redelivery to Purchaser hereunder during such time; (ii) the obligation of SCPPA to pay any amount to Purchaser hereunder or to give credits against amounts due from Purchaser her eunder is limited to amounts SCPPA receives in connection with the transaction to which the payment or credit relates (or is otherwise available to SCPPA in connection with this Agreement for which such payment or credit relates); (iii) any purchase costs, operating costs, energy costs, capacity costs, environmental attribute costs, transmission costs, tax costs, insurance costs, indemnifications, other costs or other charges for which SCPPA is responsible under the Project Agreements shall be considered purchase costs, operating costs, energy costs, capacity costs, environmental attribute costs, transmission costs, tax costs, insurance costs, indemnifications, other costs or other charges incurred by SCPPA and payable by Purchaser as provided in this Agreement; and (iv) any Force Majeure under the Power Purchase Agreement or other event of force majeure affecting the delivery of Energy pursuant to applicable provisions of the Project Agreements shall be considered an event caused by Uncontrollable Forces aff ecting SCPPA with respect to the delivery of Facility Products hereunder, and SCPPA forwarding to Purchaser notices and information from the Power Purchase Provider concerning an event of Force Majeure upon receipt thereof shall be sufficient to constitute a notice that Uncontrollable Forces have occurred pursuant to Section 12.2 of this Agreement. Any net proceeds received by SCPPA from the sale of Guaranteed Delivered Energy by the Power Purchase Provider to any third-party purchaser as a result of a Force Majeure event or failure by SCPPA to accept delivery of Energy pursuant to the Power Purchase Agreement and any reimbursement received by SCPPA for purchase of Replacement Product shall be remitted by SCPPA to Purchaser in accordance with its Participant Facility Products Cost Share.
10.2 Revision of Appendix B. The Parties agree that adjustments of the Participant Facility Products Shares and Participant Facility Products Cost Shares in Appendix B in compliance with this Agreement shall be made and treated as an element of administration and not an amendment of this Agreement. The revised Appendix B shall become Appendix B to this Agreement in replacement of the prior Appendix B hereof.
11. NONPERFORMANCE AND PAYMENT DEFAULT.
11.1 Nonperformance by Purchaser . If Purchaser shall fail to perform any covenant, agreement or obligation under this Agreement or shall cause SCPPA to be in default with respect to any undertaking entered into for the Project or to be in default under the Power Purchase Agreement, or any other Project Agreement, as applicable, or cause a default to occur pursuant to such agreements, SCPPA may, in the event the performance of any such obligation remains unsatisfied after thirty (30) Days’ prior written notice t hereof to the Purchaser and a demand to so perform, take any action permitted by law to enforce its rights under this Agreement, including but not limited
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17 to termination of this Agreement, and/or (unless SCPPA has already taken action pursuant to the immediately following sentence) bring any suit, action or proceeding at law or in equity as may be necessary or appropriate to recover damages and/or enforce any covenant, agreement or obligation against the Purchaser with regard to its failure to so perform.
11.2 Notice of Payment Default . In the event of a Payment Default by Purchaser, on or promptly following the Initial Payment Default Date SCPPA shall issue a Default Invoice and shall provide written notice to Purchaser that as a result of a Payment Default, it is in default under this Agreement and has assumed the status of a Defaulting Purchaser and that Purchaser’s Project Rights are subject to discontinuance, termination and disposal in accordance with Sections 11.4 and 11.5 of this Agreement.
Notice of such Payment Default shall be provided promptly by SCPPA to the other SCPPA Participants. In addition to the foregoing, the notice of Payment Default shall specify that five (5) Days after the issuance of the written notice of Payment Default by SCPPA, deliveries of Facility Products to Purchaser pursuant to this Agreement shall be thereafter suspended until such time as Purchaser is in Compliance. SCPPA may take any action through or in conjunction with the Power Purchase Provider or any other counterparty under a Project Agreement or with the Project Manager, if applicable, to expeditiously implement the provisions of this Section 11.
11.3 Cured Payment Default . If after a Payment Default Purchaser cures such Payment Default within the Cure Period, its Project Rights shall not be subject to discontinuance, termination or disposal as provided for in Sections 11.4 and 11.5 of this Agreement as a result of any Payment Default associated with such Cured Payment Default.
11.4 Failure to Cure Payment Default . If , at any time after expiration of the Cure Period Purchaser fails to be in Compliance due to its failure to cure its Payment Default in a timely manner in accordance with this Agreement, Purchaser’s Project Rights shall immediately be discontinued and terminated and its Project Rights and Obligations shall be disposed of by SCPPA in accordance with Section 11.5 of this Agreement; provided, however, the Defaulting Purchaser’s obligation to make payments under this Agreement shall not be eliminated or reduced except to the extent provided in Section
11.5. SCPPA shall provide to the Defaulting Purchaser a separate monthly invoice of any such payment obligations under this Agreement. SCPPA shall immediately notify the Project Manager (if other than SCPPA), the other SCPPA Participants and such others as S CPPA deems appropriate, of such discontinuance and termination of the Defaulting Purchaser’s Project Rights.
11.5 Treatment of the Defaulting Purchaser’s Project Rights and Obligations upon its Payment Default. In the event Defaulting Purchaser’s Project Rights are discontinued and terminated pursuant to Section 11.4 of this Agreement, SCPPA shall undertake or cause to be undertaken the following actions in the order indicated:
11.5.1 SCPPA shall, to the extent permitted under the Project Agreements, offer to convey, transfer and assign to all non -Defaulting SCPPA Participants, on a temporary or permanent basis as determined by SCPPA, the Project Rights and Obligations of the Defaulting Purchaser, and SCPPA shall so convey, transfer and assign on such basis so determined by SCPPA to (i) all requesting non -
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18 Defaulting SCPPA Participants the amount of Project Rights and Obligations requested if the aggregate of such requests does not exceed the amount of the Project Rights and Obligations of the Defaulting Purchaser, or (ii) all requesting non-Defaulting SCPPA Participants on a pro-rata basis (based upon the amount requested) if the aggregate of such requests exceeds the amount of the Project Rights and Obligations of the Default ing Purchaser. Each such requesting non-Defaulting Participant shall assume all, b ut not less than all, Project Rights and Obligations so conveyed, transferred and assigned to it by SCPPA.
11.5.2 If one hundred percent (100%) of Defaulting Purchaser’s Project Rights and Obligations are not conveyed, transferred and assigned to non -Defaulting SCPPA Participants as provided in Section 11.5.1 of this Agreement, SCPPA shall, to the extent permitted under the Project Agreements and to the extent SCPPA in its discretion determines it appropriate, offer to convey, transfer and assign, on a temporary or permanent basis as determined by SCPPA, the remainder (or, all, if applicable) of Defaulting Purchaser’s Project Rights and Obligations to third parties, all in accordance with applicable law. Each such requesting third party shall assume all, but not less than all, Project Rights and Obligations so conveyed, transferred and assigned to it by SCPPA. If such third party is a SCPPA Member but not a SCPPA Participant as defined herein, such SCPPA Member, upon accepting such conveyance, transfer and assignment on a permanent basis, shall be deemed a SCPPA Participant.
11.5.3 If, at any time or from time to time, any of the Project Rights and Obligations of the Defaulting Purchaser are not conveyed, transferred and assigned as provided in Sections 11.5.1 or 11.5.2 of this Agreement, SCPPA shall use its best efforts, to the exte nt reasonably possible and economically beneficial, to offer all non-Defaulting SCPPA Participants and third parties, for long-term or short-term sale as determined by SCPPA, Facility Products associated with such Project Rights and Obligations or to remar ket or resell such Facility Products, or cause the same to be remarketed or resold; provided, however, that without eliminating Defaulting Purchaser’s obligation to make payments under this Agreement (notwithstanding anything to the contrary in this Agreement), including payment of SCPPA’s costs and expenses related to such default and sale, such payment obligation shall be offset, mitigated and satisfied to the extent that payments are received by SCPPA from the remarketing or sale of Facility Products associated with Defaulting Purchaser’s Project Rights.
11.5.4 If any of Defaulting Purchaser’s Project Rights and Obligations are not conveyed, transferred and assigned as provided in Sections 11.5.1 or 11.5.2, the associated voting rights with respect to Defaulting Purchaser’s Project Rights and Obligations shall be re distributed pro rata among the non - Defaulting SCPPA Participants, based upon the Participant Facility Products Share of such SCPPA Participant, so that the total voting rights remain at one hundred percent (100%).
11.5.5 Upon the termination, conveyance, transfer or assignment of a Defaulting Purchaser’s Project Rights and Obligations pursuant to Section 11.4 and this
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19 Section 11.5, SCPPA shall make any necessary adjustments to the Participant Facility Products Shares set forth in Appendix B and give written notice thereof to the non-Defaulting SCPPA Participants.
11.5.6 Except as provided in this Section 11.5 or otherwise in this Agreement, SCPPA may not convey, transfer or assign any SCPPA Participant’s Project Rights and Obligations without the prior written consent of the SCPPA Participant.
11.6 Elimination or Reduction of Payment Obligations . Upon termination of Defaulting Purchaser’s Project Rights pursuant to Section 11.4 and conveyance, transfer or assignment of Defaulting Purchaser’s Project Rights and Obligations pursuant to Sections 11.5.1 or 11.5.2, Defaulting Purchaser’s obligation to make payments under this Agreement (notwithstanding anything to the contrary in this Agreement) shall not be eliminated or reduced except to the extent of moneys received by SCPPA as a result of the conveyan ce, transfer and assignment of Defaulting Purchaser’s Project Rights and Obligations, less SCPPA’s related costs and expenses.
11.7 Use of Reserve Funds. With respect to a Payment Default by Purchaser, funds in the Reserve Funds may be used, to the extent necessary and to the extent available, to cover any deficiency with respect to any payment due by SCPPA attributable to Purchaser’s participation in the Project.
11.8 Step-Up Invoices. Step-Up Invoices shall be issued in accordance with the provisions set forth below.
11.8.1 In the event of a Payment Default by one or more Defaulting SCPPA Participants, which is in existence following the Operating Reserve Depletion Date, SCPPA shall provide by the fifth Day of the Month following such Operating Reserve Depletion Date, a separate Step -Up Invoice to each non - Defaulting SCPPA Participant that includes a charge equal to the non - Defaulting SCPPA Participant’s pro rata share, based upon the Participant Facility Products Cost Shares of all non-Defaulting SCPPA Participants, of the amount of Monthly Costs reflected in the unpaid Billing Statements for the previous Month for such Defaulting Purchaser). Notwithstanding the foregoing, the amount of each monthly Step -Up Invoice provided to a non - Defaulting SCPPA Participant shall not exceed one hundred percent (100%) of the aggregate amount of Monthly Costs that such non -Defaulting SCPPA Participant was billed in its Billing Statement for the Month preceding such monthly Step-Up Invoice.
11.8.2 Step-Up Invoices shall be due and payable within twenty (20) Day s after the receipt thereof by the non -Defaulting SCPPA Participant , and payments to SCPPA with respect to Step -Up Invoices shall be separate from any other payments due under each SCPPA Participant’s Power Sales Agreement, including but not limited to monthly Billing Statement payments.
11.9 Application of Moneys Received from Step -Up Invoices Relating to the Project .
Moneys received by or on be half of SCPPA from the payment of Step -Up Invoices relating to a Payment Default of a SCPPA Participant shall be applied in the following
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20 manner.
11.9.1 All moneys received from the SCPPA Participants with respect to the amount of Monthly Costs as set forth in the Step-Up Invoices, shall be applied toward the Defaulting SCPPA Participant’s Monthly Costs.
11.9.2 In the event a SCPPA Participant pays less than the total amount of its Step - Up Invoice, such SCPPA Participant shall be a Defaulting SCPPA Participant and its partial payment shall be allocated first toward the Monthly Costs of the Defaulting SCPPA Participant.
11.10 Application of Moneys Received from Default Invoices . Moneys received by or on behalf of SCPPA from the payment of Default Invoices shall be credited on each non- Defaulting SCPPA Participant’s next monthly Billing Statement or Billing Statements in an amount equal to the aggregate amount such non -Defaulting SCPPA Participant paid as a result of Step -Up Invoices with respect to such Default Invoice, plus a pro - rata share, based upon the Participant Facility Products Cost Shares of the non - Defaulting SCPPA Participants, of the amount SCPPA received regarding late payment interest charges. In the event a Defaulting SCPPA Participant pays less than the full amount of its Default Invoice, the credit to each non -Defaulting SCPPA Participant shall be adjusted in proportion to such non -Defaulting SCPPA Participant’s Facility Products Cost Shares.
11.11 Application of Moneys Received from Compliance Payments. Moneys received by or on behalf of SCPPA from a Defaulting SCPPA Participant that makes payments to remain in Compliance with respect to a Payment Default, associated with a Defaulting SCPPA Participant’s payments to remain in Compliance, shall be credited on each non- Defaulting SCPPA Participant’s next monthly Billing Statement(s) in an amount equal to the aggregate amount such non -Defaulting SCPPA Participant paid as a result of Step-Up Invoices wi th respect to such Compliance pay ment, plus a pro rata share, based upon the Participant Facility Products Cost Shares of the non-Defaulting SCPPA Participants, of the amount SCPPA received regarding late payment interest charges.
11.12 Application of Moneys Received from Sale of Facility Products. Moneys received by or on behalf of SCPPA from the sale of Facility Products related to a Defaulting SCPPA Participant’s Project Rights and Obligations, as provided in Section 11.5.3 hereof, shall be applied in the following manner in order:
11.12.1 SCPPA shall credit on each non-Defaulting SCPPA Participant’s next monthly Billing Statement(s) an amount up to, but not in excess of, the aggregate amount paid to SCPPA by such non -Defaulting SCPPA Participant with respect to each such non-Defaulting SCPPA Participant’s Step-Up Invoices.
11.12.2 Following consultation with the non -Defaulting SCPPA Participants, SCPPA shall determine the disposition of any moneys received that are in excess of the aggregate amount of related Step-Up Invoices paid by non-Defaulting SCPPA Participants. Unless otherwise required by law, the Defaulting SCPPA Participant shall have no claim or right to any such monies.
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21 11.13 Purchaser shall be responsible for Purchaser’s Participant Facility Products Share of all claims, demands, liabilities, obligations, losses, damages (whether direct, indirect or consequential), penalties, actions, loss of profits, judgments, orders, suits, costs, expenses (including attorneys’ fees and expenses) or disbursements of any kind or nature whatsoever in law, equity or otherwise incurred or owed by SCPPA under the Power Purchase Agreement, including any termination payment incurred or owed by SCPPA to Power Purchase Provider thereunder.
12. CHARACTER, CONTINUITY OF SERVICE.
12.1 Outages, Interruptions and Curtailment of Energy Deliveries . The Power Purchase Provider, or other counterparty, may under certain conditions set forth in the applicable provisions of a Project Agreement or other applicable operating agreement, interrupt or curtail deliveries of Facility Products to SCPPA which SCPPA was to deliver to Purchaser. Should such an interruption or curtailment occur , Purchaser shall be credited with such revenues as are credited or paid to SCPPA on Purchaser’s behalf in accordance with Purchaser’s Participant Facility Products Share and shall be obligated to pay any costs incurred by SCPPA in accordance with Purchaser’s Participant Facility Products Cost Share which are payable by SCPPA pursuant to the Power Purchase Agreement or any other applicable Project Agreement. SCPPA or the Project Manager (if other than SCPPA) or SCPPA’s agent will use its best efforts to apprise Purchaser of potential outages, interruptions or curtailments, the reason therefor and the probable duration thereof, when such outages, interruptions or curtailments can be deemed likely to occur.
12.2 Uncontrollable Forces. SCPPA shall not be required to provide, and SCPPA shall not be liable for failure to provide, Facility Products or other service under this Agreement when such failure or the cessation or curtailment of or interference with the service is caused by Uncontrollable Forces or the terms of the Agreement or by the inability of the Power Purchase Provider or other applicable counterparty to obtain any required governmental permits, licenses or approvals to enable the Power Purchase Provider to acquire, administer or operate the Project; provided, however, that Purchaser shall not thereby be relieved of its obligations to make payments under this Agreement except to the extent SCPPA is so relieved pursuant to the Project Agreements.
13. [RESERVED.]
14. LIABILITY.
14.1 Participants’ Obligations Several. Except as otherwise provided in Section 11 of this Agreement, Purchaser and each of the other SCPPA Participants shall be solely responsible and liable for performance under its respective Power Sales Agreement.
The obligation of Purchaser to make paym ents under this Agreement is a several obligation and not a joint obligation with those of the other SCPPA Participants under the other Power Sales Agreements to which such SCPPA Participants are parties.
14.2 No Liability of SCPPA, Directors, Officers, Etc. Each Party agrees that neither Party nor any of its past, present, future directors, officers, employees , board members, agents, attorneys or advisors and shall be liable to the other Party for loss of profits or
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22 direct or consequential loss or damage suffered by a released Party as a result of the performance or non -performance (excluding gross negligence or willful misconduct which, unless otherwise agreed to by the Parties, are both to be determined and established by a court of competent jurisdiction in a final, non -appealable order) of a releasing Party or any of its directors, officers, employees or agents under this Agreement. To the fullest extent permitted by law, Purchaser releases SCPPA and its directors, officers, employees and agents from any claim or liability (whether negligent or otherwise) as a result of any actions or inactions of SCPPA under this Agreement.
No such performance or non-performance by SCPPA shall relieve Purchaser from its obligations under this Agreement, including its obligation to make payments required under this Agreement, and such undisputed payments shall not be subject to any reduction, whether by offset, counterclaim or otherwise. The provisions of this Section
14.2 shall n ot be construed so as to relieve SCPPA from any obligation under this Agreement.
14.3 Extent of Exculpation; Enforcement of Rights. The exculpation provision set forth in Section 14.2 hereof shall apply to all types of claims or actions including, but not limited to, claims or actions based on contract or tort. Notwithstanding the foregoing, either Party may protect and enforce its rights under this Agreement by a suit or suits in equity for specific performance of any obligations or duty of the other Party, and each Party shall at all times retain the right to recover, by appropriate legal proceedings, any amount determined to have been an overpayment, underpayment or other monetary damages owed by the other Party in accordance with the terms of this Agreement.
14.4 Indemnification for Claims of Retail Customers . Purchaser shall assume all liability for any claim, action or judgment, whether or not caused by negligence, arising out of or in connection with electric service to any of its retail customers caused by the operation or failure of operation of the Faci lity or any portion thereof, and shall indemnify and hold harmless SCPPA from any such claim, action or judgment (including reasonable attorneys’ fees and other costs of defense).
14.5 Determination or Enforcement of Rights. Notwithstanding the provisions of Sections
14.2, 14.3 and 14.4 hereof, Purchaser or SCPPA may determine, protect and enforce its rights under this Agreement by a suit or suits in equity for specific performance of, or declaratory action with respect to, any obligation or duty hereunder or thereunder.
14.6 No Relief from Insurer’s Obligations . Notwithstanding any provision in this Agreement to the contrary, including but not limited to the provisions in this Section 14, the provisions of this Section 14 shall not be construed or applied so as to relieve any insurer of its obligation to pay an y insurance claims in accordance with any applicable insurance policy.
14.7 SCPPA Directors, Officers, Employees, Agents Not Individually Liable; No General Liability of SCPPA. It is hereby recognized and agreed that no member of SCPPA’s Board of Directors, officer, employee or agent of SCPPA or member of SCPPA in its capacity as a member of SCPPA shall be individually liable in respect of any undertakings by SCPPA under this Agreement. The undertakings by SCPPA under the Power Sales Agreements shall never constitute a debt or indebtedness of SCPPA within the meaning of any provi sion or limitation of the Constitution or statutes of the State
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23 of California and shall not constitute or give rise to a charge against its general credit.
15. RESTRICTIONS ON DISPOSITION.
15.1 Assignment. It is understood and agreed each SCPPA Participant (including Purchaser) may sell, assign or otherwise dispose of some or all of its Project Rights and Obligations to other SCPPA Participants or SCPPA members under the same terms and conditions as set forth in this Agreement, provided that each such other participating SCPPA member agrees in writing to be bound by the provisions of the Power Sales Agreement of the SCPPA Participant making such sale, assignment or other disposition. In the event of such a sale, assignment or other disposition, SC PPA shall revise Appendix B to reflect the new Participant Facility Products Share allocation and such revision to Appendix B shall not be considered an amendment to any Power Sales Agreement.
Participant may from time to time assign the right to receive all or a portion of the Energy that would otherwise be delivered to Participant hereunder. In connection with any such assignment, Participant and SCPPA agree to execute a Limited Assignment Agreement. For the avoidance of doubt, Participant will remain responsible for all of its obligations under this Agreement related to such assigned Energy, including (i) the obligation to pay for such Energy to the extent the assignee thereof does not do so and (ii) any damages associated with such assignee’s failure to take any such Energy.
15.2 Restrictions on Elimination of Payment Obligations. No sale, assignment or other disposition of Purchaser’s Project Rights and Obligations to any Person (“Assignee”) shall release Purchaser from its payment obligations under this Agreement; provided, however, such payment obligations may be eliminated or reduced if the sale, assignment or other disposition is made pursuant to Section 15.1 of this Agreement, or if (i) such Assignee shall assume and agree in writing to fully perform and discharge the Projec t Rights and Obligations under its Power Sales Agreement, (ii) such Assignee shall have a corporate or long-term senior unsecured credit rating of ”A-” or higher by S&P or “A3” or higher by Moody’s, unless otherwise provided by the Board of Directors, and (iii) the Board of Directors, by resolution, determines to eliminate or reduce such payment obligations, which determination shall not be unreasonably withheld.
15.3 Restrictions on Disposition of Purchaser’s Entire System . Purchaser shall not sell, lease or otherwise dispose of all or substantially all of its electric system to any Person (“Acquiring Entity”) unless the Acquiring Entity shall assume and agree to fully perform and discharge the Project Rights and Obligatio ns under this Agreement, and such Acquiring Entity shall have a corporate or long -term senior unsecured credit rating not less than investment grade.
15.4 Successors and Assigns. Subject in all respects to Sections 11 and 15 hereof, the Project Rights and Obligations under this Agreement shall inure to the benefit of and shall be binding upon the respective successors and assigns of the Parties to this Agreement.
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24 16. EFFECTIVE DATE, TERM AND EXPIRATION.
16.1 Effective Date; Execution in Counterparts. This Agreement shall become effective on the first Day when each and all of the following shall have occurred: (i) this Agreement shall have been duly executed and delivered by SCPPA and Purchaser, (ii) the Power Purchase Agreement shall have been duly executed and delivered by SCPPA and the Power Purchase Provider and (iii) the Power Sales Agreement between SCPPA and any other SCPPA Participant shall have been duly executed and delivered by the parties thereto. Once the Power Purchase Agreement has been executed and delivered as set forth above, SCPPA shall deliver a copy of the same to Purchaser. This Agreement may be executed in any number of counterparts, each of which shall constitute an original.
16.2 Termination Conditions. This Agreement shall be effective upon satisfaction of the conditions set forth in Section 16.1 and shall extend for the term specified in Section 16.3 unless earlier terminated pursuant to an express provision of this Agreement; provided, however, that any obligation to make payments by Purchaser or SCPPA or any outstanding liability of Purchaser or SCPPA hereunder which either exists or may exist as of the date of termination of this Agreement, or which comes into existence at any future time as a result of any activity or transaction implemented under this Agreement, shall survive such termination.
16.3 Expiration. The term of this Agreement shall begin on the Day this Agreement becomes effective pursuant to Section 16.1 hereof. Unless terminated earlier pursuant to Section 16.4, the term of this Agreement shall expire on the date on which the Power Purchase Agreement is terminated and all obligation(s) of the parties under the Power Purchase Agreement have been fully satisfied or otherwise adequate provision for satisfaction of such obligation(s) have been made and no other such obligation(s) under the Power Purchase Agreement is outstanding; provided, however, that in no event shall the term of this Agreement expire so long as the Power Purchase Agreement is of any force or effect.
16.4 Termination of Agreement before Expiration Date . Notwithstanding the expiration date set forth in Section 16.3 hereof, this Agreement shall terminate on the date, if any, by which SCPPA notifies Purchaser that this Agreement is superseded as a result of Purchaser having (i) succeeded to SCPPA’s rights through another agreement or agreements, or (ii) entered into a replacement power sales agreement or other agreement with SCPPA. The purchase price and consideration to be paid to SCPPA by Purchaser with res pect to any such superseding arrangement shall consist of the payments and satisfaction of all obligations by Purchaser under and pursuant to this Agreement prior to the effective date of the superseding arrangement plus any remaining costs or obligations incurred by SCPPA in connection with the Project.
16.5 Final Distribution of Reserve Fund s. Following the expiration or earlier termination of this Agreement, and upon payment and satisfaction of any and all liabilities and obligations to make payments of the SCPPA Participating Members under this Agreement and upon satisfaction of all remaini ng costs and obligations of SCPPA under this Agreement and in connection with the Facility, any amounts then remaining
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25 in the Reserve Fund s shall be paid to the SCPPA Participating Member pro rata in accordance with their respective Participant Facility Products Share.
17. SEVERABILITY. In case any one or more of the provisions of this Agreement shall for any reason be held to be illegal or invalid by a court of competent jurisdiction, it is the intention of each of the Parties hereto that such illegality or invalidity shall not affect any other provision hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had not been contained herein unless a court holds that the provisions are not separable from all other provisions of this Agreement.
18. REPRESENTATION AND GOVERNING LAW. The Parties acknowledge that each Party was represented by counsel in the negotiation and execution of this Agreement. This Agreement was made and entered into in the County of Los Angeles, California, and shall be governed by, interpreted and enforced i n accordance with the laws of the State of California.
All litigation arising out of, or relating to this Agreement, shall be brought in a State or Federal court in the County of Los Angeles, State of California. The Parties irrevocably agree to submit to the exclusive jurisdiction of such courts in the State of California and waive any defense of forum non conveniens.
19. ARBITRATION AND ATTORNEYS’ FEES. If a dispute arises between the Parties which the Board of Directors is unable to resolve, the Parties may by mutual agreement submit the dispute to mediation or non -binding arbitration. With respect to any such dispute the Parties agree that each Party shall bear its own attorneys’ fees and costs. Notw ithstanding the foregoing, Purchaser and SCPPA recognize and agree that SCPPA’s attorneys’ fees associated with any matter relating to the Project or this Agreement, including any dispute relating thereto, shall constitute a Project cost which shall be allocated and billed as set forth in Sections 4 and 7 of this Agreement.
20. CONDITIONS TO TERMINATION OR AMENDMENT . Neither Party may terminate this Agreement without the prior written consent of each of the other SCPPA Participants. None of the Power Sales Agreements may be amended as to any one or more of the SCPPA Participants so as to provide terms and conditions materially different from those contained therein , unless the SCPPA Participant seeking the amendment obtains a written consent or waiver of each other SCPPA Participant.
21. [RESERVED.]
22. NOTICES. Any notice, demand or request provided for in this Agreement shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by registered or certified mail, postage prepaid, to the persons specified below:
Southern California Public Power Authority
Attention: Executive Director
1160 Nicole Court
Glendora, California 91740
City of Colton
Colton Electric Utility
Attn: Electric Utility Director
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26 150 South 10th Street
Colton, CA 92324
(909) 370-6196
23. AMENDMENTS. The Parties acknowledge and agree that any amendment to this Agreement shall be in writing and duly executed by the Parties.
[SIGNATURE PAGE FOLLOWS]
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Attachment: Renewable Power Sales Agreement between Southern California Public Power Authority and the City of Colton (4672 : Agreement Each Party hereto has duly caused this Grace Orchard Solar Project Power Sales Agreement Between Southern California Public Power Authority and City of Colton to be executed on its behalf by its duly authorized representative.
SOUTHERN CALIFORNIA PUBLIC
POWER AUTHORITY
By:
DANIEL GARCIA
Executive Director
Approved as to Legal Form
tuffit-t-b
Assistant General Counsel
CITY OF COLTON
By
WILLIAM R. SMITH
City Manager
Attest:
L
STEPHANIE M. VARGAS
Deputy City Clerk
By:
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APPENDIX A
DEFINITIONS
The following terms, whether in the singular or the plural, and initially capitalized, shall have the meanings specified below:
1. Act. All of the provisions contained in the California Joint Exercise of Powers Act found in Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, beginning at California Government Code Section 6500 et seq., as amended from time to time.
2. [Reserved.]
3. Annual Budget. The budget adopted by SCPPA pursuant to Section 5.4.1 of this Agreement not less than thirty (30) Days nor more than sixty (60) Days prior to the beginning of each Power Supply Year, including any amendments thereto, which shall show a detailed estimate of the Total Power Costs under this Agreement and all credits, charges, revenues, income, or other funds to be applied to such costs, for and applicable to such Power Supply Year.
4. [Reserved.]
5. Billing Statement. The written statement prepared or caused to be prepared each Month by, or on behalf of, SCPPA which shall be based upon certain of the information in the Annual Budget and shall show for such Month the amount to be paid to SCPPA by Purchaser in accordan ce with the provisions of Section 7 of this Agreement.
6. Board of Directors. The Board of Directors of the Southern California Public Power Authority.
7. Commercial Operation. “Commercial Operation” shall have the same definition set forth in the Power Purchase Agreement.
8. Compliance. Following a Payment Default, the Defaulting Purchaser shall be in compliance with its payment obligations under this Agreement if it (i) no later than the last Day of the Cure Period fully pays all amounts owed as reflected in any Default Invoice; (ii) pays any monthly Billing Statement which comes due during the Cure Period; and (iii) replenishes any reduction made to the Reserve Funds as a result of any Payment Default.
9. Consent Agreements. All consents to assignments and all agreements relating thereto entered into with any lender, financial institution or other Person for the purpose of consenting to the assignment of the rights or securing the obligations of the Power Purchase Provider under the Power Purchase Agreement, and all consents or agreements relating to a Change in Control (as defined in the Power Purchase Agreement) under the Power Purchase Agreement.
10. Cure Period. That period of time beginning on the date of a Payment Default and concluding thirty (30) Days thereafter.
11. Cured Payment Default. A Payment Default which has been cured in accordance with Section
11.3 of this Agreement. If at any time during the Cure Period the Defaulting Purchaser is in Compliance, then the requirements of a Cured Payment Default shall be deemed to have been
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satisfied as of the date of receipt of such payments by SCPPA and the Cure Period shall expire.
12. Daily Delay Damages. “Daily Delay Damages” shall have the same definition set forth in the Power Purchase Agreement.
13. [Reserved.]
14. Day. “Day” means calendar day unless otherwise specified herein.
15. Default Invoice. An invoice during the Payment Default Period and the Cure Period issued to the Defaulting Purchaser pursuant to Section 11 of this Agreement that identifies the total defaulted amount owed, including late payment interest, to achieve a Cured Payment Default.
During the Cure Period, the Default Invoice shall also include the amount that must be paid to achieve Compliance.
16. Defaulting Purchaser. “Defaulting Purchaser” means Purchaser, where Purchaser has caused a Payment Default under Section 11.1 of this Agreement that has not been remedied or cured.
17. Defaulting SCPPA Participant. A SCPPA Participant (not including Purchaser) that causes a Payment Default under its Power Sales Agreement that has not been remedied or cured by the Defaulting SCPPA Participant.
18. Delivery Output Cost Component. “Delivery Output Cost Component” is defined in Section
4.3.1. 19. Energy. “Energy” shall have the same definition as in the Power Purchase Agreement.
20. Environmental Attributes. “Environmental Attributes” shall have the same definition set forth in the Power Purchase Agreement.
21. Facility. “Facility” shall have the same definition as the Power Purchase Agreement.
22. Facility Products. All output, rights, and other tangible or intangible benefits derived from the Facility, whatsoever, including without limitation all Energy , Test Energy, Environmental Attributes, Capacity Rights, Resource Adequacy Attributes, Replacement Product rights with respect to the battery energy storage system, whether received by SCPPA under or pursuant to the Power Purchase Agreement or other applicable Project Agreement.
23. Fiscal Year. The twelve-month period commencing at 12:01 a.m. on July 1 of each year and ending at 12:01 a.m. on the following July 1, or such other time frame as determined by the Board of Directors.
24. Force Majeure . “Force Majeure” shall have the definition set forth in the Power Purchase Agreement.
25. GEP Shortfall Damages. “GEP Shortfall Damages” shall have the same definition set forth in the Power Purchase Agreement.
26. [Reserved.]
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27. Initial Payment Default Date . The earlier of (i) the end of the fifth Day following the first Payment Default for which no remedy in payment has occurred and been received by SCPPA, or (ii) the last Day of the Month in which the first Payment Default has occurred for which no remedy in payment has occurred and been received by SCPPA.
28. Joint Powers Agreement . The “Southern California Public Power Authority Joint Powers Agreement” dated as of November 1, 1980, as amended and modified from time to time, entered into pursuant to the provisions of the Act, among SCPPA and its members.
29. Month. A calendar month.
30. Monthly Costs. “Monthly Costs” is defined in Section 7.1.
31. Moody’s. “Moody’s” shall mean Moody’s Investor Services, Inc.
32. Operating Budget. The operating budget approved by the Board of Directors which shall show a detailed estimate of Total Power Costs for a Power Supply Year and all revenues, income or other funds to be applied to Total Power Costs for and applicable to such Power Supply Year.
33. Operating Reserve Depletion Date . The date that is two Months prior to the date on which SCPPA anticipates, assuming continued Payment Defaults by the Defaulting Purchaser, that the moneys in the operating reserve account held at any time by SCPPA will be fully depleted; provided, however, if as of the date on which a Payment Default occurs SCPPA determines that the moneys in the operating reserve account held by SCPPA will be fully depleted in less than two Months (or currently are fully depleted), then the Operating Reserve Depletion Date shall be deemed to have occurred when such a Payment Default occurs.
34. Participant Facility Products Cost Share. With respect to a particular SCPPA Participant and during each Power Supply Year , the applicable percentage of SCPPA costs under this Agreement payable by such SCPPA Participant, as set forth for such SCPPA Participant in Appendix B of this Agreement.
35. Participant Facility Products Share. With respect to a particular SCPPA Participant and during each Power Supply Year, the applicable percentage entitlement of the Facility Products under this Agreement, as set forth for such SCPPA Participant in Appendix B of this Agreement.
36. Payment Default. A failure by the Purchaser to pay when due all of its Billing Statement for any Month.
37. Payment Default Period. That period of time beginning on the initial date of a Payment Default and ending thirty (30) Days following a notice of default as provided in accordance with Section 11.2 hereof.
38. Person. “Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization, entity, government or other political subdivision.
39. Point of Delivery. Point of Delivery shall have the definition set forth in the Power Purchase Agreement.
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40. Power Purchase Agreement . The Power Purchase Agreement between Southern California Public Power Authority and Grace Orchard Solar III, LLC, dated as of September 19, 2024, attached hereto as Appendix C, as the same may be amended from time to time , and all other agreements associated with the Facility.
41. [Reserved.]
42. Power Purchase Agreement Cost Component. “Power Purchase Cost Component” is defined in Section 4.3.5.
43. Power Purchase Agreement General and Administrative Cost Component. “Power Purchase Agreement General and Administrative Cost Component” is defined in Section 4.3.2.
44. Power Purchase Provider. Grace Orchard Solar III, LLC, and any other entity named under any applicable operating agreement to operate or otherwise run or manage the Facility , along with each of their successors, or any successors or assigns to the rights of these entities.
45. Power Sales Agreements . This Agreement and that certain Power Sales Agreement dated September 19, 2024, as may be amended from time to time , by and between SCPPA and COLTON, and those certain Power Sales Agreement s dated September 19, 2024, as may be amended from time to time , by and between SCPPA and City of Anaheim and City of Pasadena.
46. Power Supply Year. The Fiscal Year, except that the first Power Supply Year shall begin on the first to occur of (i) the date SCPPA is obligated to pay any portion of the costs of the Project, (ii) the Commercial Operation Date of the Facility, or ( iii) the date of the first delivery of Energy to Purchaser pursuant to this Agreement. The first Power Supply Year shall end on the last Day of the then current Fiscal Year.
47. Project. The term “Project” means the project described in SCPPA Resolution No. 2024-098 and known interchangeably as the Grace Orchard Solar Project or the Grace Orchard Solar III Project and shall be broadly construed to entail the aggregate of rights, liabilities, interests and obligations of SCPPA pursuant to the Power Purchase Agreement and the other Project Agreements, including but not limited to all associated rights, liabilities, i nterests and obligations; provided, that for purposes of this Agreement it shall be limited to those rights, liabilities, interests and obligations acquired or undertaken by SCPPA in the Power Purchase Agreement and the Project Agreements associated with that agreement. The term Project shall also include those rights, liabilities, interests or obligations necessary or appropriate to carry out the functions specified in Section 6 and to utilize or deliver the Energy of the Facility as specified in Section 9.
48. Project Agreements. Insofar as they pertain to this Project, any project management agreement, the Power Sales Agreements, the Power Purchase Agreement, and any other contracts for the purchase, procurement, delivery or transmission of Facility Products, and any other agreements for scheduling, dispatching, exchanging, tagging, movement or transmission of Facility Products, and agreements to which SCPPA is a party relating to the administration or management of the Project.
49. Project Manager . SCPPA in its capacity as Project Manager or a designee or designees
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appointed by SCPPA to carry out SCPPA’s responsibilities as Project Manager under this Agreement.
50. Project Rights. All rights and privileges of the Purchaser under this Agreement, including but not limited to its right to receive its Participant Facility Products Share under this Agreement.
51. Project Rights and Obligations. The Purchaser’s Project Rights and obligations under the terms of this Agreement.
52. Replacement Product. “Replacement Product” shall have the same definition as set forth in the Power Purchase Agreement.
53. Reserve Funds Cost Component. “Reserve Funds Cost Component” is defined in Section 4.3.4.
54. Reserve Funds. Those reserve accounts deemed appropriate to afford a reliable source of funds for the payment obligations of the Project and, taking into account the variability of costs associated with the Project , for the purpose of providing a reliable payment mechanism to address the ongoing costs associated with the Project.
55. S&P. “S&P” shall mean Standard & Poor’s Financial Services LLC.
56. SCPPA Member s. Each of the following: City of Anaheim, C alifornia; City of Azusa, California; City of Banning, C alifornia; City of Burbank, C alifornia; City of Cerritos, California; City of Colton, California; City of Glendale, California; Imperial Irrigation District; City of Los Angeles, California; City of Pasadena, California; City of Riverside, California; and City of Vernon, California.
57. SCPPA Participants . Those entities that have executed a P ower Sales Agreement for the Project, together in each case with each entity’s successors or assigns, identified as “SCPPA Participants” in Appendix B of this Agreement.
58. [Reserved.]
59. Step-Up Invoice . An invoice sent pursuant to Section 11.8.1 to a non -Defaulting SCPPA Participant as a result of one or more Payment Defaults, which invoice shall separately identify any amount owed with respect to the monthly Billing Statement of one or more Defaulting SCPPA Participants for Total Power Costs reflected in the Defaulting SCPPA Participant( s) unpaid monthly Billing Statement.
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60. Supplementary Services. Those services in connection with the delivery of Energy involving additional transmission, interconnection arrangements, energy management, firming, shaping, energy balancing, dispatching, tagging, scheduling, transmitting, interconnecting, swapping, exchanging or other services associated with the transmission, use or disposition of Facility Products to be utilized by the Purchaser under this Agreement, and to otherwise provide for delivery and facilitate the disposition, movement , taking, receiving, accounting for, transferring and crediting the transfer of Facility Products from the Point of Delivery to any other points or destinations, as determined by the Purchaser. Supplementary Services include but are not limited to delivery point swaps, stranded energy/transmission curtailments, tiepoint liquidity improvement, transmi ssion loss savings, tiepoint price spread optimization, on - peak/off-peak exchanges, peak shifting exchanges, seasonal exchanges, and both simultaneous or non-simultaneous green energy exchanges.
61. Supplementary Services Cost Component. “Supplementary Services Cost Component” is defined in Section 4.3.3.
62. Total Power Costs. “Total Power Costs” is defined in Section 4.3.
63. Test Energy . “Test Energy” shall have the definition set forth in the Power Purchase Agreement.
64. Uncontrollable Forces. Any Force Majeure event and any cause beyond the control of any Party, and which by the exercise of due diligence such Party is unable to prevent or overcome, including but not limited to, failure or refusal of any other Person to comply with then existing contracts, an act of God, fire, flood, explosion, earthquake, strike, sabotage, pestilence, an act of the public enemy (including terrorism), civil or military authority including court orders, injunctions and orders of governmental agencies with proper jurisdiction or the failure of such agencies to act, insurrection or riot, an act of the elements, failure of equipment, a failure of any governmental entity to issue a requested order, license or permit, inability of any Party or any Person engaged in work on the Project to obtain or ship materials or equipment because of the effect of similar causes on suppliers or carriers. Notwithstanding the foregoing, Uncontrollable Forces as defined herein shall also include events of Force Majeure pursuant to the Power Purchase Agreement, as defined therein.
65. WECC. The Western Electricity Coordinating Council or its successor.
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APPENDIX B*
GRACE ORCHARD SOLAR POWER PROJECT
POWER SALES AGREEMENT
SCHEDULE OF SCPPA PARTICIPANTS,
PARTICIPANT FACILITY PRODUCTS SHARES,
PARTICIPANT FACILITY PRODUCTS COST SHARES
SCPPA
PARTICIPANTS
PARTICIPANT FACILITY
PRODUCTS SHARES
PARTICIPANT FACILITY
PRODUCTS COST SHARES
PV
SHARE
GENERAL
SHARE
PV
COST
GENERAL
COST
City of Anaheim 58.8% 58.8% 58.8% 58.8%
City of Colton 11.8% 11.8% 11.8% 11.8%
City of Pasadena 29.4% 29.4% 29.4% 29.4%
TOTAL 100.00% 100.00% 100.00% 100.00%
____________________________
* Appendix B may be revised in accordance with the provisions of Section 10.2 of this Agreement.
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APPENDIX C
POWER PURCHASE AGREEMENT
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EXECUTION VERSION
POWER PURCHASE AGREEMENT
BETWEEN
GRACE ORCHARD SOLAR III, LLC
AND
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
Dated as of September 19, 2024
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION .............................................................. 1 Section 1.1 Definitions ......................................................................................................... 1 Section 1.2 Interpretation ................................................................................................... 28 ARTICLE II EFFECTIVE DATE, TERM, AND EARLY TERMINATION ............................ 29 Section 2.1 Effective Date.................................................................................................. 29 Section 2.2 Term ................................................................................................................ 29 Section 2.3 Survivability .................................................................................................... 30 Section 2.4 Early Termination ........................................................................................... 30 Section 2.5 Trade Event ..................................................................................................... 32 Section 2.6 Early Termination for Failure to Obtain Required Approvals ........................ 33 ARTICLE III DEVELOPMENT OF THE FACILITY ............................................................... 34 Section 3.1 General ............................................................................................................ 34 Section 3.2 Certification of Commercial Operation Date .................................................. 35 Section 3.3 Milestone Schedule ......................................................................................... 35 Section 3.4 Decommissioning and Other Costs ................................................................. 37 Section 3.5 Failure to Reach Contract Capacity ................................................................ 37 ARTICLE IV OPERATION AND MAINTENANCE OF THE FACILITY .............................. 38 Section 4.1 General Operational Requirements ................................................................. 38 Section 4.2 Operation and Maintenance Plan .................................................................... 38 Section 4.3 Environmental Credits .................................................................................... 38 Section 4.4 Shared Facilities .............................................................................................. 38 Section 4.5 Outages ............................................................................................................ 39 ARTICLE V COMPLIANCE DURING CONSTRUCTION AND OPERATIONS; SECURITY .......................................................................................................... 40 Section 5.1 Construction, Operation, and Maintenance of Facility ................................... 40 Section 5.2 Buyer’s Rights to Monitor in General ............................................................. 40 Section 5.3 Effect of Review by Buyer .............................................................................. 40 Section 5.4 Reporting and Information .............................................................................. 41 Section 5.5 Performance Security ...................................................................................... 41 Section 5.6 Compliance with Required Laws .................................................................... 43 ARTICLE VI PURCHASE AND SALE OF PRODUCT ........................................................... 43 Section 6.1 Purchases by Buyer ......................................................................................... 43 Section 6.2 Energy from Third Party Sources ................................................................... 44 Section 6.3 Third Party Sales ............................................................................................. 44 Section 6.4 Nature of Remedies ......................................................................................... 44 ARTICLE VII TRANSMISSION AND SCHEDULING; TITLE AND RISK OF LOSS ......... 44 Section 7.1 In General ........................................................................................................ 44
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Section 7.2 Scheduling Cost Allocation; CAISO Scheduling Coordinator ....................... 45 Section 7.3 Forecasting and Scheduling of Energy ........................................................... 45 Section 7.4 Curtailment ...................................................................................................... 48 Section 7.5 No Payment ..................................................................................................... 49 Section 7.6 Title; Risk of Loss ........................................................................................... 49 Section 7.7 RPS and EPS Compliance ............................................................................... 49 ARTICLE VIII ENVIRONMENTAL ATTRIBUTES ................................................................ 51 Section 8.1 Transfer of Environmental Attributes ............................................................. 51 Section 8.2 Reporting of Ownership of Environmental Attributes .................................... 51 Section 8.3 Environmental Attributes ................................................................................ 51 Section 8.4 Future Environmental Attributes..................................................................... 52 Section 8.5 WREGIS ......................................................................................................... 52 Section 8.6 Further Assurances .......................................................................................... 53 ARTICLE IX GEP SHORTFALL ............................................................................................... 53 Section 9.1 Makeup of GEP Shortfall ................................................................................ 53 Section 9.2 GEP Shortfall Damages .................................................................................. 54 ARTICLE X CAPACITY RIGHTS ............................................................................................ 54 Section 10.1 Capacity Rights ....................................................................................................... 54 Section 10.2 Covenant Regarding Capacity Rights ..................................................................... 55 ARTICLE XI BILLING; PAYMENT; AUDITS; METERING; ATTESTATIONS; POLICIES ............................................................................................................ 55 Section 11.1 Billing and Payment ........................................................................................ 55 Section 11.2 Calculation of Energy Delivered; Invoices and Payment ............................... 55 Section 11.3 Disputed Invoices ............................................................................................ 57 Section 11.4 Netting of Payments ........................................................................................ 57 Section 11.5 Books and Records .......................................................................................... 57 Section 11.6 Electric Metering Devices ............................................................................... 58 Section 11.7 Taxes ............................................................................................................... 59 ARTICLE XII REPRESENTATIONS, WARRANTIES AND COVENANTS ......................... 60 Section 12.1 Representations and Warranties of Buyer ....................................................... 60 Section 12.2 Representations and Warranties of Seller ....................................................... 61 Section 12.3 General Covenants .......................................................................................... 62 Section 12.4 Storage Technology ........................................................................................ 63 ARTICLE XIII DEFAULT; TERMINATION AND REMEDIES; PERFORMANCE DAMAGE ............................................................................................................ 63 Section 13.1 Default ............................................................................................................. 63 Section 13.2 Default Remedy Declaration of Early Termination Date ............................... 65
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Section 13.3 Notice of Termination Payment ...................................................................... 65 Section 13.4 Notice of Payment of Damage Payment or Termination Payment ................. 66 Section 13.5 Disputes With Respect to Damage Payment or Termination Payment........... 67 Section 13.6 Rights and Remedies Are Cumulative ............................................................ 67 Section 13.7 Seller’s Pre-COD Liability Limitation ............................................................ 67 ARTICLE XIV MISCELLANEOUS .......................................................................................... 67 Section 14.1 Authorized Representative .............................................................................. 67 Section 14.2 Notices............................................................................................................. 67 Section 14.3 Dispute Resolution; Governing Law; Venue .................................................. 68 Section 14.4 Further Assurances; Change in Electric Market Design ................................. 69 Section 14.5 No Dedication of Facilities ............................................................................. 69 Section 14.6 Force Majeure ................................................................................................. 69 Section 14.7 Assignment ...................................................................................................... 71 Section 14.8 Ambiguity ....................................................................................................... 73 Section 14.9 Attorneys’ Fees & Costs ................................................................................. 73 Section 14.10 Voluntary Execution ....................................................................................... 74 Section 14.11 Entire Agreement; Amendments ..................................................................... 74 Section 14.12 Execution in Counterparts ............................................................................... 74 Section 14.13 Effect of Section Headings.............................................................................. 74 Section 14.14 Waiver; Available Remedies........................................................................... 74 Section 14.15 Relationship of the Parties .............................................................................. 74 Section 14.16 Third Party Beneficiaries ................................................................................ 74 Section 14.17 Indemnification; Insurance; Limit of Liability ............................................... 75 Section 14.18 Severability ..................................................................................................... 76 Section 14.19 Confidentiality ................................................................................................ 76 Section 14.20 Mobile-Sierra .................................................................................................. 78 Section 14.21 Taxpayer Identification Number (TIN) ........................................................... 80 Section 14.22 Counterparts; Electronic Signatures ................................................................ 80 Section 14.23 Binding Effect ................................................................................................. 80 Section 14.24 Ownership of Renewable Energy Incentives .................................................. 80
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APPENDICES
APPENDIX A CONTRACT PRICE & COMPENSATION
APPENDIX B FACILITY, PERMITS, AND MAP
APPENDIX C ANNUAL CONTRACT QUANTITY
APPENDIX D FORM OF ATTESTATION
APPENDIX E FORM OF LETTER OF CREDIT
APPENDIX F INSURANCE
APPENDIX G FORM OF INSTALLED CAPACITY CERTIFICATE
APPENDIX H FORM OF REPLACEMENT PRODUCT FACILITIES
APPENDIX I MILESTONE SCHEDULE
APPENDIX J BUYER AND SELLER BILLING, NOTIFICATION AND SCHEDULING
CONTACT INFORMATION
APPENDIX K FORM OF CONSTRUCTION START DATE CERTIFICATION
APPENDIX L FORM OF COMMERCIAL OPERATION DATE CERTIFICATION
APPENDIX M FORM OF FACILITY LENDER CONSENT
APPENDIX N FORM OF PERFORMANCE TEST
APPENDIX O FORM OF ESTOPPEL CERTIFICATE FROM BUYER
APPENDIX P FORM OF MONTHLY REPORT
APPENDIX Q [RESERVED]
APPENDIX R ORGANIZATIONAL CHART
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POWER PURCHASE AGREEMENT
THIS POWER PURCHASE AGREEMENT (this “Agreement”), dated as of this 19th day of September, 2024 (the “Effective Date”), is entered into by and between the SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY (“Buyer”), a public entity and joint powers authority formed and organized pursuant to the California Joint Exercise of Powers Act (California Government Code Section 6500, et. seq.) (“Act”), and Grace Orchard Solar III, LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Seller”). Each of Buyer and Seller is referred to individually in this Agreement as a “Party” and together as the “Parties.”
RECITALS
WHEREAS, members of Buyer have adopted or are adopting policies that are designed to increase the amount of energy that they provide to their retail customers from eligible renewable energy resources and to comply with the California Renewable Energy Resources Act; and WHEREAS, in 2023, Buyer issued a request for proposals (“RFP”) to acquire renewable energy resources; and
WHEREAS, NextEra Energy Resources Development, LLC, a Delaware limited liability company and Seller’s Affiliate responded to Buyer’s RFP and, following negotiation, Seller has agreed to sell to Buyer, and Buyer has agreed to purchase from Seller, certain renewable energy and associated environmental attributes for the purchase price set forth in Appendix A hereto; and WHEREAS, the Parties desire to set forth the terms and conditions pursuant to which such sales and purchases shall be made.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein, the mutual covenants and agreements herein set forth, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. The following terms in this Agreement and the appendices hereto shall have the following meanings when used with initial capitalized letters:
“AASMTC AD/CVD Case” means the filing of, and any proceedings, rulemakings, orders, determinations, tariffs, or duties related to, any of the Petitions for the Imposition of Antidumping and Countervailing Duties, filed on or around April 24, 2024 by the American Alliance for Solar Manufacturing Trade Committee, concerning Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from Cambodia, Malaysia, Thailand, and Vietnam, in any of the DOC dockets A-555-003, A-557-830, A-549-851, A-552-841, C-555-004, C-557-831, C-549-852, or C-552-842.
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2 “AC” means alternating current.
“Act” has the meaning set forth in the preamble of this Agreement. “Actual Cost Increase” has the meaning set forth in Section 2.5(b). “AD/CVD” means antidumping and/or countervailing duty.
“Adjusted Energy Production” means the sum of Facility Energy, plus Deemed Delivered Energy, plus Lost Output.
“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. With respect to Seller, as contained in the illustrative organizational chart in Appendix R identifying NextEra Energy Partners, LP (“NEP”) and NextEra Energy Operating Partners, LP’s (“NEOP”) with respect to their relationship to Seller as under common control of Ultimate Parent at the Effective Date, Affiliate shall include NEP and NEOP, and their respective direct or indirect subsidiaries. Seller’s organizational chart is subject to change. “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 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 of this Agreement, and includes the Appendices attached hereto, and any designated collateral, credit support or similar arrangement between the Parties.
“Agreement Term” has the meaning set forth in Section 2.2(a). “Amendment Notice” shall have the meaning set forth in Section 2.5(b).
“Ancillary Services” has the meaning set forth in the CAISO Tariff.
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3 “Annual Contract Quantity” means, for each Contract Year, the number of MWh set forth on Appendix C.
“Approved Forecast Vendor” means a forecast vendor selected by Seller reasonably acceptable to Buyer during the Agreement Term, which (subject to Buyer’s approval) may include Seller or a Seller Affiliate; provided if the Parties cannot agree at least sixty (60) days prior the anticipated Commercial Operation Date, such forecast vendor shall be the CAISO. “Approved Vendor” means: (a) for the solar photovoltaic panels with single axis tracking components, one or more credit worthy, reputable, high quality, and stable panel providers typically as included in the Bloomberg NEF’s manufacturer ranking (or if BloombergNEF no longer publishes such ranking, a successor ranking, or other comparable ranking then in use); and (b) for inverters and transformer(s), one or more credit worthy suppliers that have experience in successfully working through the due diligence process for similar projects, that typically involves a quality review with an independent engineer, as it relates to project level-tax equity or project debt financing with large national or international banks. “Assigned Product” has the meaning set forth in Section 14.7(e). “Authorized Auditors” means representatives of Buyer or Buyer’s Authorized Representative who are authorized to conduct audits on behalf of Buyer, subject to Seller’s consent, not to be unreasonably withheld, conditioned or delayed. “Authorized Officer” means the Chairman, President, any Vice President, Treasurer, Assistant Treasurer, or Secretary or Assistant Secretary of the Seller. “Authorized Representative” means, with respect to each Party, the Person designated as such Party’s authorized representative pursuant to Section 14.1. “Availability Standards” means the program set forth in the CAISO Tariff, as it may be amended, supplemented or replaced (in whole or in part) from time to time, setting forth certain standards regarding the desired level of availability for Resource Adequacy (as defined in the CAISO Tariff) resources and possible charges and incentive payments for performance thereunder. “Available Generating Capacity” means the capacity of the Facility, expressed in whole MWs, that is mechanically available to generate Energy. “Bankruptcy” means any case, action or proceeding under any bankruptcy, reorganization, debt arrangement, insolvency or receivership law or any dissolution or liquidation proceeding commenced by or against a Person and, if such case, action or proceeding is not commenced by such Person, such case, action or proceeding shall be consented to or acquiesced in by such Person or shall result in an order for relief or shall remain undismissed for sixty (60) days.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect.
“BLM” means the Bureau of Land Management.
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4 “Brown Act” has the meaning set forth in Section 14.19(c). “Business Day” means any day that is not a Saturday, a Sunday, or a day on which commercial banks are authorized or required to be closed in Los Angeles, California or New York, New York.
“Buyer” has the meaning set forth in the preamble of this Agreement. “Buyer Bid Curtailment” means the occurrence of both of the following:
(a) the CAISO provides notice to a Party or the Scheduling Coordinator for the Facility, requiring the Party to deliver less Facility Energy than the full amount of Energy forecasted in accordance with Section 7.3 to be produced from the Facility for a period of time; and (b) for the same time period as referenced in (a), the notice referenced in (a) results from Buyer or the SC for the Facility, as the result of a Buyer instruction or lack of instruction to the SC:
(i) not having submitted a Self-Schedule or Energy Supply Bid for the MW subject to the reduction;
(ii) having submitted an Energy Supply Bid and the MW subject to the reduction were not awarded solely based on the price associated with such Energy Supply Bid; or (iii) having submitted a Self-Schedule for less than the full amount of Facility Energy forecasted to be generated by or delivered from the Facility.
If the Facility is subject to a Scheduled Outage, Forced Outage, Force Majeure event and/or a Curtailment Period during the same time period as referenced in (a), then the calculation of Deemed Delivered Energy during such period shall not include any Facility Energy that was not generated due to such Scheduled Outage, Forced Outage, Force Majeure event, or Curtailment Period.
“Buyer Curtailment Order” means an instruction from Buyer or the Scheduling Coordinator to Seller to reduce Energy from the Facility by the amount, and for the period of time set forth in such instruction, for reasons unrelated to a Scheduled Outage, Forced Outage, Force Majeure event and/or Curtailment Order.
“CAISO” means the California Independent System Operator Corporation. “CAISO Controlled Grid” means the system of transmission lines and associated facilities and entitlements of the participating transmission owners within the CAISO Balancing Authority Area (as defined in the CAISO Tariff) that have been placed under the CAISO’s operational control.
“CAISO Costs” means the costs, expenses, fees, charges, credits, penalties, sanctions, and other amounts assigned by the CAISO associated with Scheduling the Facility Energy into the CAISO grid which includes those related to Imbalance Energy, if any.
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5 “CAISO Resource ID” means the number or name assigned by the CAISO to the CAISO- approved revenue-quality Electric Metering Device.
“CAISO Revenues” means the revenues, benefits, credits and other profits directly assigned by the CAISO associated with Scheduling the Facility Energy into the CAISO grid including those related to Imbalance Energy.
“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 Attributes” means any current or future defined characteristic, certificate, tag, credit, or accounting construct associated with the generating capability of the Facility or the amount of power that the Facility can deliver to the Delivery Point at a particular moment and that can be purchased, sold or conveyed under CAISO market rules, or any other balancing authority, reliability entity, or Governmental Authority, including Resource Adequacy Attributes, if any. “Capacity Rights” means the rights to the Facility’s Capacity Attributes. “CEC” means California’s State Energy Resources Conservation and Development Commission, also known as the California Energy Commission. “CEC Certified” or “CEC Certification” means that the CEC has certified (or, with respect to periods before the date that is one hundred eighty (180) days following the Commercial Operation Date, that the CEC has pre-certified) that the Facility is an eligible renewable energy resource in accordance with RPS Law.
“CEQA” means the California Environmental Quality Act, California Public Resources Code §§ 21000, et seq. and Chapter 3 of Division 6 of Title 14 of the California Code of Regulations.
“CEQA Documents” means a categorical exemption, negative declaration, mitigated negative declaration, or final environmental impact report (or an addendum, supplement or subsequent to the same), relied upon by the Lead Agency in connection with CEQA review for the Facility.
“CEQA/NEPA Determinations” means that:
(a) The Lead Agency conducting the review of the Facility as required under CEQA shall have (i) reviewed and approved the CEQA Documents, (ii) issued any necessary final land use entitlement or other discretionary permit for the Facility, and (iii) filed a Notice of Determination in compliance with CEQA; and
(b) The Lead Agency conducting the review of the Facility as required under NEPA shall have issued a final record of decision or decision record under NEPA.
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6 “Change in Law” means a change to any federal, state, provincial, local or other law (including any environmental law or RPS Law), resolution, standard, code, rule, ordinance, directive, regulation, order, judgment, decree, ruling, determination, permit, certificate, authorization, or approval of a Governmental Authority or WREGIS, including the adoption of any new law, resolution, standard, code, rule, ordinance, directive, regulation, order, judgment, decree, ruling, determination, permit, certificate, authorization, or approval, or approval or the issuance of any replacement or substitute law, resolution, standard, code, rule, ordinance, directive, regulation, order, judgment, decree, ruling, determination, permit, certificate, authorization, or approval, including for avoidance of doubt any order, decision, resolution, rule, regulation, guidance document, or other determination of the CEC, or any change in the CAISO Tariff, which adoption or implementation occurs after the Effective Date and is binding on a Party, the Parties, or the Facility or any of the products sold therefrom.
“Change of Control” means, except in connection with public market transactions of equity interests or capital stock of Seller’s Ultimate Parent, any circumstance in which Ultimate Parent ceases to own, directly or indirectly through one or more intermediate entities, more than fifty percent (50%) of the outstanding equity interests in Seller or ceases to have the right to direct the policies or operations of Seller; provided that in calculating ownership percentages for all purposes of the foregoing:
(a) any ownership interest in Seller held by Ultimate Parent indirectly through one or more intermediate entities shall not be counted towards Ultimate Parent’s ownership interest in Seller unless Ultimate Parent directly or indirectly owns more than fifty percent (50%) of the outstanding equity interests in each such intermediate entity; and (b) ownership interests in Seller owned directly or indirectly by any Facility Lender (including any Tax Equity Investor) as part of a tax monetization financing 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.
“Commercial Operation” means all of the following have occurred:
(a) The Facility is operational, interconnected, and synchronized with the transmission system;
(b) Seller has installed equipment for the Facility with a nameplate capacity of no less than ninety-five percent (95%) of the Original Contract Capacity; (c) The Facility’s testing included a performance test demonstrating peak electrical output of no less than ninety-five percent (95%) of the Original Contract Capacity for the Facility at the Delivery Point, as adjusted for ambient conditions on the date of the Facility testing;
(d) The Transmission Provider has provided documentation supporting release for Commercial Operation;
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7 (e) The CAISO has provided notification supporting Commercial Operation, in accordance with the CAISO Tariff;
(f) Seller has delivered to Buyer a certification from an Independent Engineer regarding installation, commissioning and testing of the Facility, substantially in the form in all material respects attached as Appendix L, along with the Installed Capacity certificate substantially in the form in all material respects attached as Appendix G; (g) Seller has received CEC pre-certification of the Facility and reasonably expects to receive final CEC Certification and verification for the Facility in no more than one hundred eighty (180) days from the COD;
(h) Seller (with the reasonable participation of Buyer) shall have completed all applicable WREGIS registration requirements that are reasonably capable of being completed prior to COD under WREGIS rules;
(i) Seller has delivered the Operation Security to Buyer and paid Buyer for any amounts then owing under the PPA; and
(j) All applicable regulatory authorizations, approvals (including CEQA/NEPA Determinations) and Permits (including any requisite Bureau of Land Management Right of Way Grant) required to commence operation of the Facility shall have been obtained, and such CEQA/NEPA Determinations are Materially Final and Non-Appealable. “Commercial Operation Date” or “COD” means the date on which Commercial Operation of the Facility occurs, as determined pursuant to Section 3.2. “Commercial Operation Date Deadline” means November 28, 2028. “Compensable Curtailment” means any curtailment due to a Buyer Bid Curtailment, a Buyer Curtailment Order, or a Buyer Default hereunder which directly causes Seller to be unable to deliver Facility Energy to the Delivery Point.
“Compensable Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which Seller reduces Energy from the Facility pursuant to or as a result of a Compensable Curtailment; provided, the duration of any Compensable Curtailment Period shall be inclusive of the time required for the Facility to ramp down and ramp up. “Complex” means the means the entire up to 500 MW maximum interconnection capacity solar photovoltaic projects and storage projects located in Riverside, CA being developed by Seller and/or its Affiliates, of which the Facility comprises a portion, together with all other Phases. “Compliance Action Plan” has the meaning set forth in Section 7.7(c). “Compliance Action Plan Estimate” has the meaning set forth in Section 7.7(c). “Compliance Actions” has the meaning set forth in Section 7.7(b).
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8 “Confidential Information” has the meaning set forth in Section 14.19(a). “Construction Start” will occur upon the occurrence of all of the following: Seller’s (i) acquisition of applicable regulatory authorizations, approvals, and permits for the construction of the Facility; (ii) execution of an engineering, procurement, and construction contract (or similar agreement); and (iii) the issuance thereunder of a notice to proceed that authorizes the contractor to mobilize to Site and begin physical construction at the Site. “Construction Start Certification” means certification in the form of Appendix K, provided by Seller to Buyer evidencing the date of Construction Start. “Construction Start Date” The date set forth in the Construction Start Certification as the date of Construction Start.
“Contract Capacity” means the 170 MWac capacity of the Facility, as may be adjusted downwards in accordance with Section 3.5.
“Contract Price” means the Contract Price set forth in Appendix A. “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” has the meaning set forth in Section 13.3(a)(iii). “COVID-19” means the epidemic disease designated COVID-19 and the related virus designated SARS-CoV-2, and any mutations thereof.
“CPRA” has the meaning set forth in Section 14.19(c).
“Curtailment Order” means any of the following:
(a) CAISO orders, directs, alerts, or provides notice to a Party or the SC, including a CAISO Operating Order, 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 Participating Transmission Owner, WECC, NERC, CAISO or any other applicable reliability agency for reasons including, but not limited to, (i) any situation that affects normal function of the electric system including, but not limited to, Transmission System outage, any abnormal condition that requires action to prevent circumstances such as equipment damage, loss of load, or abnormal voltage conditions, or (ii) any warning, forecast or anticipation of conditions or situations that jeopardize the Participating Transmission Owner’s electric system integrity or the integrity of other systems to which the Participating Transmission Owner is connected; or (iii) system improvements, scheduled maintenance, unscheduled repairs, Force Majeure, or maintenance at or beyond the Point of Delivery; or
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9 (c) a curtailment in accordance with Seller’s obligations under its Interconnection Agreement with the Participating Transmission Owner or distribution operator. “Curtailment Period” means the period of time, as measured using current Settlement Intervals, during which generation from the Facility is reduced pursuant to a Curtailment Order or Curtailment Error; provided, the Curtailment Period shall be inclusive of the time required for the Facility to ramp down and ramp up; provided further that the Curtailment Period shall include any period of time during which the generation of Facility Energy is curtailed (i) and Seller fails to allocate curtailment in accordance with Sections 4.4, 7.2, 7.3, and 7.4 of this Agreement or (ii) by CAISO, WECC, NERC or any other reliability entity due to Seller’s failure to (A) secure and maintain interconnection or communication to the CAISO or Transmission Services to the Point of Delivery, (B) operate or maintain the Facility in accordance with this Agreement, or (C) comply with the terms and conditions of this Agreement (such (i) or (ii) a “Curtailment Error”). “Daily Delay Damages” means the liquidated damages specified in Section 3.3(c) and Section 3.3(e).
“Damage Payment” means the liquidated damages specified in Section 13.2(b). “Day-Ahead Market” has the meaning set forth in the CAISO Tariff. “Dedicated Interconnection Capacity” means the maximum instantaneous amount of energy that is permitted to be delivered to the Delivery Point with respect to the Facility under the Interconnection Agreement, in total amount of 170 MWAC. “Deemed Delivered Energy” means the amount of Energy expressed in MWh that the Facility would have produced and delivered to the Delivery Point, but that is not produced by the Facility due to a Compensable Curtailment during a Compensable Curtailment Period, which amount shall, for any time period, be equal to the difference between (a) the total amount of Energy that the Facility would have produced and delivered during such Compensable Curtailment Period as provided in the forecast from the Approved Forecast Vendor in the applicable period, unless such forecast is unavailable, in which case the amount of MWh shall be based on a mutually agreed calculation reflecting relevant facility availability, weather, and other pertinent data in order to approximate the amount of Energy that the Facility would have produced and delivered, minus (b) the amount of energy that the Facility produced and delivered to the Delivery Point during the Compensable Curtailment Period; provided that, if the applicable difference between the foregoing clauses (a) and (b) is negative, the Deemed Delivered Energy shall be zero (0) “Default” has the meaning set forth in Section 13.1.
“Defaulting Party” has the meaning set forth in Section 13.1. “Delivery Term” has the meaning set forth in Section 2.2(b). “Development Cure Period” means a day-for-day extension of the Key Milestones for each day of delay arising out of any of the following circumstances that are beyond the reasonable control of Seller and not the result of Seller’s failure to take commercially reasonable actions to meet its requirements and deadlines to the extent Seller is actually delayed in achieving such Key
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10 Milestones due to: (i) Force Majeure; (ii) Qualifying Interconnection Delay; (iii) Qualifying BLM Delay; (iv) Qualifying Transformer Delay; (v) Qualified Transformer Failure; and/or (vi) Trade Event Delay; provided, that the total permitted day-for-day extensions cannot exceed two-hundred seventy (270) days in aggregate; provided further, that the Development Cure Period cannot extend past the Commercial Operation Date Deadline; and provided further the permitted extensions under the Development Cure Period extend each of the Key Milestones simultaneously on a day-for-day basis.
“Development Security” has the meaning set forth in Section 5.5(a). “Dispute” has the meaning set forth in Section 14.3(a). “Dispute Notice” has the meaning set forth in Section 14.3(a). “DOC” means the U.S. Department of Commerce.
“Early Termination Date” has the meaning set forth in Section 13.2(a). “Effective Date” means the first date that both Seller and Buyer have executed this Agreement.
“Electric Metering Devices” means all meters, metering equipment, metering schemes, and data processing equipment conforming to the requirements set forth in Section 11.6 and used to measure, record, or transmit data relating to the Facility Energy. “Electrical Losses” means all transmission or transformation losses between the Facility and the Point of Delivery, including losses associated with delivery of Energy to the Point of Delivery, calculated in accordance with CAISO approved methodologies applicable to revenue metering.
“Eligible Intermittent Resources Protocol” or “EIRP” means the Eligible Intermittent Resource Protocol, as may be amended from time to time, as set forth in the CAISO Tariff. “Energy” means electrical energy.
“Energy-Only Deliverability Status” has the meaning in the CAISO Tariff. “Energy Supply Bid” has the meaning set forth in the CAISO Tariff. “Environmental Attribute Reporting Rights” means all rights to report ownership of the Environmental Attributes to any Person, including under Section 1605(b) of the Energy Policy Act of 1992, as amended from time to time or any successor statute, or any other current or future international, federal, state or local law, regulation or bill, or otherwise. “Environmental Attributes” means any and all credits, benefits, emissions reductions, offsets, and allowances, howsoever entitled (including under the RPS regulations and/or under any and all other international, federal, regional, state or other law, rule, regulation, bylaw, treaty or other intergovernmental compact, decision, administrative decision, program, business method, or
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11 competitive market (including all credits, certificates, benefits, and emission measurements, reductions, offsets and allowances related thereto)), attributable to the generation from the Facility and its displacement of conventional energy generation, now or during the Agreement Term.
Environmental Attributes include but are not limited to Renewable Energy Credits, as well as: (1) any avoided emissions of pollutants to the air, soil or water such as sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (2) any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; (3) the reporting rights to these avoided emissions, such as Green Tag Reporting Rights. Green Tags are accumulated on a MWh basis and one Green Tag represents the Environmental Attributes associated with one (1) MWh of Energy. Environmental Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Facility, (ii) Renewable Energy Incentives including Tax Benefits including without limitation production tax credits or investment tax credits associated with the development, construction, operation or ownership of the Facility and other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits, which emission reduction credits are not generated by the Facility, that are encumbered or used by the Facility for compliance with local, state, or federal operating and/or air quality permits. “Environmental Attributes Value” means the value of the Renewable Energy Credits of the same Portfolio Content Category (i.e., PCC1) as the Environmental Attributes portion of the Product and of the same timeframe for retirement as the Renewable Energy Credits that would have been generated by the Facility during the applicable Contract Year, determined based on the average of quotes for any volume available from at least three (3) brokers obtained by Buyer which brokers must be reasonably acceptable to Seller; provided that such broker quotes shall relate to Environmental Attributes with RECs that are PCC1 and are derived from comparable vintage as the Environmental Attributes that are being replaced, and are from a generator that qualifies as an “eligible renewable energy resource” within the meaning of the RPS Law at the time of such pricing or broker quotes, as applicable. If three broker quotes are not available to Buyer after sixty (60) days of commercially reasonable efforts to obtain such quotes, then the value will be equal to the average of any available broker quotes Buyer received. If Buyer has not obtained any such broker quotes Seller shall have a commercially reasonable amount of time to obtain such a quote(s) from a broker(s) which must be reasonably acceptable to Buyer. If no broker quotes are available after sixty (60) days of commercially reasonable efforts by Seller, Buyer may elect to continue to seek broker quotes or apply the WREGIS Withhold Amount in lieu of the broker quote methodology.
“Estoppel Certificate” has the meaning set forth in Section 14.7 and substantially in the form attached as Appendix O.
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12 “Excess Energy” means, in any Contract Year, the amount of Facility Energy and Deemed Delivered Energy that is in excess of one hundred fifteen percent (115%) of the Annual Contract Quantity for such Contract Year.
“Excess Compliance Costs” has the meaning set forth in Section 7.7(c)(ii). “Excess Settlement Interval MWh” has the meaning set forth in Appendix A, Section 6. “Expected Commercial Operation Date” means the date set forth in Appendix I. “Expected Cost Increase” has the meaning set forth in Section 2.5(b). “Facility” means a separately metered one hundred seventy (170) MW photovoltaic solar facility located on the Site in Riverside County, California, and further described in Appendix B, and including mechanical equipment and associated facilities and equipment (but excluding any Shared Facilities) required to deliver Energy to the Delivery Point. “Facility Cost” means, measured as of any date, the aggregate amount of all costs and expenses incurred by Seller during the Agreement Term for the development, design, engineering, equipping, procuring, constructing, installing, starting up, and testing of the Facility, including (a) the cost of all labor, services, materials, suppliers, equipment, tools, transportation, supervision, storage, training, demolition, site preparation, civil works, and remediation in connection therewith, (b) the cost of acquiring title to, the leasehold interest, and/or any other property, easement or other interest in the Site, (c) the interest costs during construction, (d) real and personal property taxes, ad valorem taxes, sale, use, and excise taxes, and insurance (including title insurance) premiums payable with respect to the Facility, (e) initial working capital requirements of the Facility, (f) the cost of acquiring necessary permits for the Facility, (g) the cost of establishing a spare parts inventory for the Facility, and (h) financial, legal, and consulting fees, costs, and expenses.
“Facility Debt” means any senior or subordinated construction, interim or long-term debt financing (not including any back leverage debt) or refinancing for or in connection with the development, construction, purchase, ownership, installation or operation of the Facility, including (a) any financing or refinancing provided to Seller or any upstream equity owner with respect to the Facility (including as part of a portfolio with other energy generation or storage projects, with the amount of such debt attributable to the Facility equal to the pro rata amount of the MW capacity of the Facility as compared to the total MW capacity of any other projects included in such financing/the entire portfolio) and (b) any interest rate protection agreements hedging any of the foregoing debt obligations. For avoidance of doubt, the term Facility Debt does not include tax equity financing.
“Facility Energy” means Energy generated by the Facility associated with the Contract Capacity delivered to the Delivery Point, as measured by the Electric Metering Devices installed at the Point of Delivery (which excludes Electrical Losses and Station Use). “Facility Lender” means, collectively, any Person (a) providing senior or subordinated construction, interim, back leverage, mezzanine, or long-term debt, equity, or tax equity financing
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13 (such Person providing tax equity financing, a “Tax Equity Investor”) 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 cash or 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, (b) providing interest rate or commodity protection under an agreement hedging or otherwise mitigating the cost of any of the foregoing obligations, or (c) participating in a lease financing (including a sale leaseback or leveraged leasing structure) with respect to the Facility.
“Facility Lender Consent” has the meaning set forth in Section 14.7(d). “FERC” means the Federal Energy Regulatory Commission.
“Fitch” means Fitch Ratings Ltd., or its successor.
“Force Majeure” has the meaning set forth in Section 14.6(b). “Force Majeure Notice” has the meaning set forth in Section 14.6(a). “Forced Outage” means the removal of service availability of the Facility, or any portion of the Facility, for emergency reasons or conditions in which the Facility, or any portion thereof, is unavailable due to unanticipated failure, including as a result of a Force Majeure event. “Full Capacity Deliverability Status” has the meaning in the CAISO Tariff. “Future Environmental Attributes” means any and all Environmental Attributes that become recognized under any Requirement of Law after the Effective Date (and not before the Effective Date) that do not relate to RPS Compliance or a Successor Program. Future Environmental Attributes do not include (i) any energy, capacity, reliability or other power attributes from the Facility, (ii) Renewable Energy Incentives including Tax Benefits including without limitation production tax credits or investment tax credits associated with the development, construction, operation or ownership of the Facility, or other financial incentives in the form of credits, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular preexisting pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits, which emission reduction credits are not generated by the Facility, that are encumbered or used by the Facility for compliance with local, state, or federal operating and/or air quality permits.
“Gains” has the meaning set forth in Section 13.3(a)(i). “Generator Interconnection Agreement” means the agreement (or any successor agreement and associated documentation approved by FERC) by and among Seller or Seller’s Affiliate, Southern California Edison Company, and the CAISO governing the terms and
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14 conditions of the Facility’s interconnection with the CAISO grid, including any description of the plan for interconnecting to the CAISO grid and pursuant to which Seller’s Interconnection Facilities and any other Interconnection Facilities will be constructed, operated and maintained during the Agreement Term.
“GEP Shortfall” has the meaning set forth in Section 9.1. “GEP Shortfall Energy” means an amount of Energy equal to the positive difference, if any, obtained by subtracting (a) the Adjusted Energy Production from (b) the Guaranteed Generation for such applicable Performance Measurement Period. For avoidance of doubt, if such calculation results in a negative number, the GEP Shortfall Energy amount shall be zero (0). “GEP Shortfall Makeup Period” means the Contract Year following the Performance Measurement Period during which a GEP Shortfall occurs. “GEP Shortfall Damages” has the meaning set forth in Section 9.2. “Governmental Authority” means any federal, state, provincial, local, or municipal, any political subdivision thereof, or any other governmental, congressional or parliamentary, regulatory, or judicial instrumentality, authority, body, agency, department, bureau, or any entity with authority to bind a Party at law, including the CAISO and CEC. The term “Governmental Authority” shall not include any Party or Buyer’s Participating Members. “Green Tag Reporting Rights” means the right of a purchaser of renewable energy to report ownership of accumulated “green tags” in compliance with and to the extent permitted by applicable Law and include, without limitation, rights under Section 1605(b) of the Energy Policy Act of 1992, and any present or future federal, state or local certification program or emissions trading program, including pursuant to the WREGIS Operating Rules. “Guaranteed Construction Start Date” means July 1, 2026, which may be subject to a day-for-day extension under a Development Cure Period.
“Guaranteed Commercial Operation Date” means June 1, 2028, which may be subject to a day-for-day extension under a Development Cure Period up to the Commercial Operation Date Deadline (at the latest).
“Guaranteed Generation” means, an amount equal to eighty percent (80%) of the Annual Contract Quantity for a given Contract Year, as detailed in Appendix C. “Imbalance Energy” means the amount of energy in MWh, in any given Settlement Period or Settlement Interval, by which the amount of Facility Energy deviates from the amount of Scheduled Energy.
“Indemnified Group” has the meaning set forth in Section 14.17(a). “Indemnified Losses” has the meaning set forth in Section 14.17(a). “Indemnified Party” has the meaning set forth in Section 14.17(a).
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15 “Indemnifying Party” has the meaning set forth in Section 14.17(a). “Independent Engineer” means (a) Black & Veatch, DNV, Burns & McDonnell, or Sargent & Lundy, or (b) if none of the firms identified in clause (a) are selected by Seller, then a Person selected by Seller reasonably acceptable to the Buyer, provided that for each of (a) and (b) such Person satisfies each of the following: (i) such Person is not an Affiliate of the Parties; (ii) any monthly revenues for such Person in a given month from a Party shall not exceed seventy- five percent (75%) of such Person’s total monthly revenues; and (iii) such Person is a qualified engineer licensed in the State of California; provided further that Seller shall retain and pay for the Independent Engineer.
“Independent Evaluator” means: (a) Burns & McDonnell or Sargent & Lundy, provided that such Person satisfies each of the following, (i) such Person is not an Affiliate of the Parties, and (ii) any monthly revenues for such Person in a given month from a Party shall not exceed seventy-five percent (75%) of such Person’s total monthly revenues; or (b) if none of the firms identified in clause (a) are selected by Seller, then a Person selected by Seller reasonably acceptable to the Buyer, provided that such Person satisfies each of the following: (i) such Person is not an Affiliate of the Parties; (ii) any monthly revenues for such Person in a given month from a Party shall not exceed seventy-five percent (75%) of such Person’s total monthly revenues; and (iii) such Person is qualified to provide an Independent Report; provided further that Seller shall retain and pay for the Independent Evaluator.
“Independent Reports” has the meaning set forth in Section 2.5(b).
“Initial Independent Report” has the meaning set forth in Section 2.5(b).
“Initial Notice” has the meaning set forth in Section 2.5(b).
“Initial Synchronization” means the initial delivery of Facility Energy to the Delivery Point in connection with Trial Operation (as defined in the CAISO Tariff).
“Insurance” means the policies of insurance as set forth in Appendix F. “Installed Capacity” means the actual generating capacity of the Facility, as measured in MWAC at the Delivery Point, that achieves Commercial Operation, as demonstrated by a performance test, adjusted for ambient conditions on the date of the performance test, and evidenced by a certificate substantially in the form attached as Appendix G hereto; provided, the Installed Capacity may not exceed the Original Contract Capacity (which, for avoidance of doubt, is 170 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.
“Interest Rate” has the meaning set forth in Section 11.3. “Interim Deliverability Status” has the meaning set forth in the Tariff.
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16 “ITCs” means the investment tax credit established pursuant to Section 48, 48E or other applicable provisions of the United States Internal Revenue Code of 1986, as in effect from time- to-time throughout the Agreement Term or any successor provision. “Investment Grade Credit Rating” has the meaning set forth in the definition of “Qualified Buyer Assignee”.
“Key Milestone” means a Milestone for which liquidated damages are provided in Appendix I.
“Lead Agency” means the public agency with the principal responsibility for approving the Facility or relevant portion thereof as defined pursuant to CEQA, 14 C.C.R. § 15367, and NEPA, 40 C.F.R. § 1508.1.
“Letter(s) of Credit” means one or more irrevocable, standby letters of credit, issued by a Qualified Issuer, in a form substantially similar to the letter of credit set forth in Exhibit E.
“Lien” means any mortgage, deed of trust, lien, security interest, retention of title or lease for security purposes, pledge, charge, encumbrance, equity, attachment, claim, easement, right of way, covenant, condition or restriction, leasehold interest, purchase right or other right of any kind, including any option, of any other Person in or with respect to any real or personal property. “Locational Marginal Price” or “LMP” has the meaning set forth in Appendix C of the CAISO Tariff.
“Losses” has the meaning set forth in Section 13.3(a)(ii). “Lost Output” means Energy in the amount the Facility could reasonably have delivered to Buyer during a Contract Year or Performance Measurement Period, each as applicable, but was prevented from delivering to Buyer by reason of any Force Majeure events, System Emergency, a Qualifying Transformer Failure, and Curtailment Periods (except due to Curtailment Error). Lost Output shall be measured in the same manner as Deemed Delivered Energy. “Major Maintenance Blockout” has the meaning set forth in Section 4.5(a). “Market Price Index” means the weighted average of the Integrated Forward Market (as defined in the CAISO Tariff) hourly price for all the reference hours in the GEP Shortfall period as published by the CAISO, for the weighted by hourly and monthly volumes at the PNode; and, provided, further, that if a market price index for solar energy that would more accurately track the price of the Facility Energy is created, the Parties may mutually agree to adapt such index price as the “Market Price Index” at such time.
“Materially Final and Non-Appealable” means (a) any applicable review under CEQA and NEPA has been completed by the respective Lead Agency and all necessary CEQA approval(s) (the “CEQA Approval(s)”) and all necessary NEPA approvals (the “NEPA Approvals”) for the Facility have been issued by the respective Lead Agency; and (b) (i) the applicable period for any judicial challenges under CEQA relating to the Facility has expired
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17 without any such challenge having been filed in a California Superior Court (“CA Subject Court”) with jurisdiction over such CEQA Approval(s), or (ii) in the event of any such challenge, the challenge has been dismissed by the CA Subject Court or, if filed pursuant to NEPA such challenge has been dismissed by a United States District Court (“US Subject Court”), as applicable, or settlement agreement, or (iii) in the event of any such CEQA challenge, there is not pending any motion for preliminary injunction (or similar action such as a stay) before the CA Subject Court and such CEQA Approval(s) by the Lead Agency have not been enjoined by the CA Subject Court (or such motion otherwise approved), and in the event of any such NEPA challenge, there is not pending any motion for preliminary injunction (or similar action such as a stay) before the US Subject Court and such NEPA Approval(s) by the Lead Agency have not been enjoined by the US Subject Court (or such motion otherwise approved).
“Maximum Pre-COD Liability” means seventeen million dollars ($17,000,000) in aggregate, including without limitation when determining that cap figure any amounts attributable to any Daily Delay Damages, Pre-COD Termination Fee, Seller Approvals Termination Fee, any Damage Payment, any other payments by Seller to Buyer under this Agreement, and any draws on the Development Security permitted under the Agreement. “Milestone” has the meaning set forth in Section 3.3(a). “Milestone Date” has the meaning set forth in Section 3.3(a). "Module Baseline Date” has the meaning set forth in Section 2.5(b). “Module Delivery Date” means the date that the last shipment of PV Panels for the Facility is expected to arrive at the Site (which date shall not be later than ninety (90) days prior to the Commercial Operation Date).
“Moody’s” means Moody’s Investor Services, Inc.
“Month” means a calendar month commencing at 00:00 Pacific Prevailing Time on the first day of such month and ending at 24:00 Pacific Prevailing Time on the last day of such month. “Monthly Report” means the report required to be delivered by Seller pursuant to Section 5.4 in form and substance substantially similar to Appendix P. “MW” means megawatt in alternating current, or ac, unless expressly stated in terms of direct current.
“MWh” means megawatt-hours measured in alternating current, unless expressly stated in terms of direct current.
“NEER” means NextEra Energy Resources, LLC.
“Negative LMP” means, in any Settlement Period or Settlement Interval, whether in the Day-Ahead Market or Real-Time Market, the LMP at the Facility’s pNode is less than zero dollars ($0).
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18 “NEOP” has the meaning set forth in the definition of Affiliate.
“NEP” has the meaning set forth in the definition of Affiliate.
“NERC” means the North American Electric Reliability Corporation.
“NEPA” means the National Environmental Policy Act, 42 United States Code §§ 4321, et seq., and Council on Environmental Quality regulations at 40 Code of Federal Regulations Parts 1500-1508.
“Network Upgrades” has the meaning set forth in the CAISO Tariff.
“New PV Trade Measure Event” means any of the following events, that occur after the Subject Approvals Deadline, during the period while the applicable ruling request, inquiry, rulemaking, or other filing or proceeding remains pending or subject to appeal before the DOC or other applicable Governmental Authority:
i. Filing of any anti-circumvention ruling request alleging that manufacturers or importers are circumventing any AD/CVD orders on PV Panels; ii. Initiation of any anti-circumvention inquiry into whether manufacturers or importers are circumventing any AD/CVD orders on PV Panels or issuance in any such inquiry of any finding or ruling that manufacturers or importers are circumventing any AD/CVD orders on PV Panels; or
iii. Filing or initiation of any rulemakings, adjudications, or other proceedings to increase, extend, or expand application of, or impose any new, tariffs, duties (including but not limited to AD/CVD), or other trade measures, or issuance of any related determinations, orders, tariffs, duties, or trade measures, on PV Panels.
For the avoidance of doubt, the Parties acknowledge that any of the following shall trigger the occurrence of a New PV Trade Measure Event with respect to the Auxin Anti-Circumvention Proceeding to the extent any of the following after the Subject Approvals Deadline prevents or delays the delivery of or otherwise impacts the cost of the PV Panels for the Facility: (a) any legislative, judicial, or administrative challenge to, or withdrawal (in whole or in part) of, (I) that certain Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty- Free Importation of Solar Cells and Modules from Southeast Asia, by the President of the United States, dated June 6, 2022, or supporting Presidential Determination Pursuant to Section 303 of the Defense Production Act, or (II) any implementation thereof by the DOC or other Governmental Authority, including through any rulemaking; or (b) any legislative, judicial, or administrative challenge that seeks to expand the scope of the DOC’s final affirmative circumvention determinations, as published on August 23, 2023 in 88 Fed. Reg. 57,419, to cover companies or activities excluded in such final affirmative determinations, or to narrow the scope of, or vacate or reverse, any negative circumvention determinations or guidance on avoiding circumvention in such published issuance.
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19 For the avoidance of doubt, the Parties acknowledge that the AASMTC AD/CVD Case shall constitute a New PV Trade Measure Event to the extent after the Subject Approvals Deadline the AASMTC AD/CVD Case prevents or delays the delivery of or otherwise impacts the cost of the PV Panels for the Facility.
“Non-Defaulting Party” has the meaning set forth in Section 13.2. “Non-Merchant Agreement” means any agreement to sell any Product from the Facility for a delivery term that is longer than one (1) year.
“Notifying Party” has the meaning set forth in Section 14.3(a). “Operation Security” has the meaning set forth in Section 5.5(b). “Original Contract Capacity” has the meaning set forth in Section 3.5. “Pacific Prevailing Time” means the local time in the State of California. “Participating Intermittent Resource” has the meaning set forth in the CAISO Tariff. “Participating Members Agreement” means the agreement(s) between Buyer and the Participating Members that sets forth the terms and conditions under which Buyer is authorized to enter into this Agreement on behalf of the Participating Members. “Participating Members” means the members of Buyer that enter into the Participating Members Agreement. As of the Effective Date, such Participating Members are the City of Anaheim, City of Colton, and City of Pasadena. If the Participating Members change after the Effective Date, Buyer shall provide written notice to Seller confirming the then-current list of Participating Members, and such written notice shall not be considered to be an amendment to this Agreement.
“Party” or “Parties” has the meaning set forth in the preamble of this Agreement. “PCC1” has the meaning set forth in definition of “Products.” “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 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 the Development Security or Operation Security for the Facility, together or individually, as applicable.
“Permits” means all discretionary permits, licenses, authorizations, certifications, approvals, and similar requirements of whatever kind and however described that are required to be filed, submitted, obtained or maintained by any Person with respect to the development, siting, design, construction, operation or maintenance of the Facility, including any required Conditional
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20 Use Permit, Public Use Permit, CEQA/NEPA Determinations, Bureau of Land Management Right of Way Grant and the Permits described in Appendix B.
“Permitted Transfer” means each of the following transactions:
(a) A Change of Control of the Ultimate Parent due to public market transactions of equity interests or capital stock of Seller’s Ultimate Parent; (b) 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 provided that the entity is a Permitted Transferee; provided that, for the avoidance of doubt, any exercise of rights or remedies by a Tax Equity Investor (who is a Permitted Transferee) under the tax equity financing documents pursuant to which Tax Equity Investor becomes the managing member or otherwise obtains the right to direct the policies or operations of Seller shall be considered a Permitted Transfer; provided further this subsection (b) shall not apply to any associated transfer or assignment by Tax Equity Investor, which shall be governed by the other provisions of this Agreement;
(c) The direct or indirect transfer of shares of, or equity interests in, Seller to a Facility Lender provided that Section 14.7 is followed;
(d) Assignment to an Affiliate of Seller, including due to any corporate reorganization, merger, combination or similar transaction or transfer of assets or ownership interests involving Seller or its Affiliates, provided that: (i) there is no Change of Control; and (ii) such Affiliate is or has retained a Qualified Operator; (iii) such Affiliate assumes all liabilities and obligations of Seller under the Agreement, including the maintenance of Performance Security; and (iv) such Affiliate is not in litigation with Buyer or Buyer’s Participating Members. (e) An assignment of the Agreement, or the transfer of the Facility or the direct or indirect ownership of equity interests in Seller, to a Permitted Transferee. “Permitted Transferee” means any Person that satisfies, or is controlled by another Person that satisfies, all the following requirements:
(i) A tangible net worth of not less than One Hundred Fifty Million Dollars ($150,000,000) or a credit rating of at least BBB- from S&P, BBB- from Fitch, or Baa3 from Moody’s;
(ii) Is a Qualified Operator or has retained a third-party Qualified Operator to operate the Facility;
(iii) Is not in litigation with Buyer or Buyer’s Participating Members; and (iv) If such Person is a direct or indirect transferee of Seller, such Person assumes all liabilities and obligations of Seller under the Agreement, including the maintenance of Performance Security.
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21 “Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint stock company, trust, unincorporated organization, entity, government or other political subdivision.
“Phase” or “Phases” means one or more separately metered photovoltaic solar facilities or battery facilities located adjacent to the Site or otherwise sharing any shared facilities under a Shared Facilities agreement, including the structures, facilities, equipment, fixtures, appurtenances, improvements, and associated real and personal property, physical and intangible property, including all property interests and related transmission and other facilities. “PNode” means the CAISO Pricing Node as defined in the CAISO Tariff to be established by CAISO for the Facility that is associated with the Colorado River Substation within the CAISO Controlled Grid in Riverside County described in Appendix B, and Seller shall provide notice to Buyer of the name that CAISO designates for the PNode prior to the Commercial Operation Date. “Point of Delivery” or “Delivery Point” means the PNode, or such other point as mutually agreed in writing by the Parties described in Appendix B; provided that in the case of Replacement Product, an alternative delivery point may be designated in accordance with Section 9.1. “Portfolio” means a 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 entails assets in the United States, that is pledged as collateral security in connection with a Portfolio Financing.
“Portfolio Financing” means any tax equity or debt transactions with a Facility Lender entered into by an Affiliate of Seller that is secured only by a Portfolio. No Portfolio Financing may (i) divide the Facility or the Seller’s interest in this Agreement or (ii) to the extent that a Seller Affiliate holds a direct or indirect interest in Seller, partition such interest in Seller or such Seller Affiliate, excluding any tax equity financing with respect to Seller or such Seller Affiliate; provided that Seller shall not be precluded from entering into different types of financing concurrently (for example, Seller entering a tax equity financing and a back leverage facility) that satisfy the terms and conditions set forth in this Agreement.
“Portfolio Financing Entity” means any Affiliate of Seller that enters into a tax equity transaction or incurs debt (each with a Facility Lender) in connection with any Portfolio Financing.
“Pre-CEC Certification Period” has the meaning set forth in Section 6.1(a). “Pre-COD Termination Fee” means seventeen million dollars ($17,000,000), less each of any (A) Daily Delay Damages, (B) Damage Payment, (C) Seller Approvals Termination Fee, (D) other payments by Seller to Buyer under this Agreement, and (E) draws by Buyer on the Development Security permitted under this Agreement.
“Present Value Rate” means, at any date, the sum of 0.50% plus the yield reported on page “USD” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally-recognized trading screen reporting on-line intraday trading in United States
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22 government securities) at 11:00 a.m. (New York City, New York time) for the United States government securities having a maturity that most nearly matches the Remaining Term at that date. “Product” and “Products” mean any and all Facility Energy, Environmental Attributes, Capacity Attributes (subject to the second paragraph of this defined term), and Ancillary Services (subject to the second paragraph of this defined term), and ancillary products, services or attributes similar to the foregoing that are or can be produced by, or are associated with, the Facility, including delivered energy, renewable attributes, and renewable energy credits. Unless otherwise provided under Section 7.7(c)(ii)(A)-(C), the Products shall meet the standard of “Portfolio Content Category 1” as defined by RPS Law, including under Section 399.16(b)(1) of the California Public Utilities Code (“PCC1”) and be produced on a bundled basis with all associated Environmental Attributes.
Buyer shall have the exclusive rights to any and all Capacity Attributes and Ancillary Services associated with the Facility, if any, and subject to Section 10.2 below. This commitment of Ancillary Services and Capacity Attributes is made with the understanding of Buyer that the Facility has Energy-Only Deliverability Status at the Effective Date and certain CAISO Ancillary Services certifications as of the Effective Date only pertain to certain resource types that are not the Facility (such as an energy storage system). For avoidance of doubt, in no event shall black start be included.
“Prudent Utility Practices” means those practices, methods, and acts, that are commonly used by a significant portion of the grid-interconnected, utility-scale generating facilities in the Western United States solar-photovoltaic electric generation industry in prudent engineering and operations to design, construct, and operate and maintain electric equipment (including solar- powered facilities) lawfully and with safety, dependability, reliability, efficiency, and economy, including any applicable practices, methods, acts, guidelines, standards and criteria of the CAISO, FERC, NERC, WECC, as each may be amended from time to time, and all applicable Requirements of Law. Prudent Utility Practices are not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather are intended to include acceptable practices, methods, and acts generally accepted in the solar-powered electric generation industry. “PTC” or “PTCs” means the production tax credit(s) established pursuant to Section 45 or 45Y or other applicable provisions of the United States Internal Revenue Code of 1986, as in effect from time-to-time throughout the Agreement Term or any successor provision. “PTC Amount” means the amount, on a dollar per MWh basis, equal to the PTCs that Seller would have earned in respect of Facility Energy at the time, grossed up on an After-Tax Basis at the then-highest marginal combined federal and state corporate tax rate, but failed to earn as a result of a Compensable Curtailment, with the applicable MWh figure to be calculated by reference to the amount of Deemed Delivered Energy; provided that, the PTC Rate shall be $0/MWh to the extent the Facility is not then receiving any PTCs during the applicable period (other than due to reduced deliveries from a Compensable Curtailment), such as, for example, if Seller does not claim the PTC, or if the Facility does not qualify for the PTC, or if 10 years has elapsed after the Facility was originally placed into service.
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23 “Public Utilities Code” means the Public Utilities Code of the State of California, as may be amended from time to time.
“PUC” means the California Public Utilities Commission and any successor thereto. “PV Panels” means the photovoltaic solar panels or any of their components used for photovoltaic production (including without limitation cells and modules, but for avoidance of doubt excludes inverters, mounts, and other equipment not used for production). “QRE” has the meaning set forth in Section 8.5.
“Qualified Buyer Assignee” means a Participating Member that is a load serving entity purchasing energy for resale which assumes all of the obligations of Buyer under the PPA with (A) rate setting authority, and (B) a credit rating of at least BBB- from S&P, BBB- from Fitch, or Baa3 from Moody’s (such credit rating, an “Investment Grade Credit Rating”). “Qualified Issuer” means (i) a United States commercial bank; (ii) a United States branch of a Canadian, Japanese, or Australian bank from which any draw can be made; (iii) a United States branch of another foreign bank from which any draw can be made that is acceptable to Buyer in its sole discretion; with any such bank having at least $10 billion of assets and having a credit rating of at least A- from S&P or A3 from Moody’s, or (iv) other Person acceptable to Buyer in its sole discretion.
“Qualified Operator” means Seller or an operator of photovoltaic solar generation 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 two (2) or more photovoltaic solar generation facilities in the CAISO, each having a nameplate capacity rating of fifty (50) MW or more, for not less than two (2) years. “Qualifying BLM Delay” means the Bureau of Land Management’s notice to proceed for construction of the Complex (which includes the Facility) is not complete by the Guaranteed Construction Start Date despite Seller’s commercially reasonable efforts for reasons not caused by Seller or any Affiliate of Seller or resulting from inaction or omission of Seller or any Affiliate of Seller.
“Qualifying Interconnection Delay” means the Transmission Provider’s Interconnection Facilities, Distribution Upgrades, and Network Upgrades (each as defined in the Generator Interconnection Agreement), despite Seller’s commercially reasonable efforts, are or will not be complete by four (4) months prior to the Expected Commercial Operation Date for reasons not caused by Seller or any Affiliate of Seller or resulting from inaction or omission of Seller or any Affiliate of Seller.
“Qualifying Transformer Delay” means a development delay caused by a material problem with any final step-up transformer prudently procured by Seller for the Facility in a commercially reasonable manner to meet Facility construction timeframes, that is not caused by any actions or negligence of Seller.
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24 “Qualifying Transformer Failure” means a failure of the Facility’s final step-up transformer prudently procured and maintained by Seller, which, despite commercially reasonable efforts (all in accordance with any applicable CAISO standards), prevents the delivery of more than fifteen percent (15%) of the Energy generated by the Facility to the Delivery Point; provided that such failure may only occur one time during the Agreement Term for a maximum period of one (1) year.
“Real-Time Forecast” means any Notice of any change to the available generating capacity or hourly expected Facility Energy delivered by or on behalf of Seller pursuant to Section
7.3(b)(vi).
“Real-Time Market” has the meaning set forth in the CAISO Tariff. “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. “REC” or “Renewable Energy Credit” means a certificate of proof associated with the generation of electricity from an eligible renewable energy resource, which certificate is issued through the accounting system established, used or approved by the CEC pursuant to the RPS Law, evidencing that one (1) MWh of Energy was generated and delivered from such eligible renewable energy resource. Such certificate is a tradable environmental commodity (also known as a “green tag” or “renewable energy certificate”) for which the owner of the REC can evidence that it has purchased Energy that is CEC Certified.
“Recipient Party” has the meaning set forth in Section 14.3(a). “Remedial Action Plan” has the meaning set forth in Section 3.3(a). “Remaining Complex” means the other Phases and other portions of the Complex that are not a part of the Facility.
“Remaining Term” means, at any date, the remaining portion of the Delivery Term at that date without regard to any early termination of this Agreement. “Renewable Energy 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 Benefits 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 available under subsequently enacted federal legislation; and (c) any other form of incentive relating in any way to the Facility that is not an Environmental Attribute, Future Environmental Attribute, or other component of the Product. “Replacement Energy” means Energy produced by a facility other than the Facility that is reasonably acceptable to Buyer and, at the time delivered to Buyer, (i) is RPS Compliant,
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25 (ii) qualifies under RPS Law; (iii) will be accompanied by Environmental Attributes that are only PCC1 RECs and have the same or comparable value, including with respect to the timeframe for retirement of such Environmental Attributes, if any, as the Environmental Attributes that would have been generated by the Facility during the Contract Year for which the Replacement Energy is being provided; and (iv) has the same or comparable value as the RPS Compliant Energy that would have been generated by the Facility during the relevant period considering the timing of delivery.
“Replacement Product” means (a) Replacement Energy and (b) the applicable Environmental Attributes.
“Requirement of Law” means any law (including any environmental law, RPS Law), resolution, standard, code, rule, ordinance, directive, regulation, order, judgment, decree, ruling, determination, permit, certificate, authorization, or approval by a Governmental Authority, including those pertaining to electrical, building, zoning, environmental and occupational safety and health requirements.
“Resource Adequacy Attributes” means the benefits or attributes, if any, now or existing in the future based on the procurement obligations of Buyer with respect to Resource Adequacy as prescribed by the PUC, the CAISO, the CEC, or any other regional entity, and that are associated with the electric generating capability of the Facility. Buyer will be entitled to all Resource Adequacy Attributes from the Facility, if any.
“RFP” has the meaning set forth in the recitals to this Agreement. “RPS Compliance” or “RPS Compliant” means, when used with respect to the Facility or any other facility at any time, that all Energy generated by such facility at all times shall, together with all of the associated Environmental Attributes, qualify as a PCC1 eligible renewable resource, or equivalent if RPS Law is changed or under any Successor Program. “RPS Compliance Period” means each “Compliance Period” as defined in the RPS Law. “RPS Guidebook” means the RPS eligibility guidebook, ninth edition (or its successor), as may be revised from time-to-time by the CEC.
“RPS Law” means the renewable energy program and policies established by California State Senate Bills 1038 (2002), 1078 (2002), 107 (2008), X-1 2 (2011), 350 (2015), and 100 (2018), codified in, inter alia, California Public Utilities Code Sections 399.11 through 399.31 and California Public Resources Code Sections 25740 through 25751, and any related regulations or guidebooks promulgated by the CEC, as all of the foregoing may be promulgated and implemented from time to time, and any replacement laws or regulations. “SCADA” means the supervisory control and data acquisition system for the Facility. “Schedule” has the meaning set forth in the CAISO Tariff, and “Scheduled” and “Scheduling” have a corollary meaning.
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26 “Scheduled Outage” means any outage with respect to the Facility other than a Forced Outage, scheduled in accordance with Section 4.5.
“Scheduled Outage Projection” has the meaning set forth in Section 4.5(a). “Scheduling Coordinator” has the meaning set forth in the CAISO Tariff. “Self-Schedule” has the meaning set forth in the CAISO Tariff. “Seller” has the meaning set forth in the preamble of this Agreement. “Seller Approvals Termination Fee” means Ten Million Dollars ($10,000,000), less each of any (A) other payments by Seller to Buyer under this Agreement, and (B) draws by Buyer on the Development Security permitted under this Agreement. “Seller Safety Curtailment” has the meaning set forth in Section 7.4(d). “Seller’s Compliance Expenditure Cap” means Five Million One Hundred Thousand Dollars ($5,100,000) in the aggregate during the Agreement Term. “Settlement Amount” means the Non-Defaulting Party’s Costs and Losses, on the one hand, netted against its Gains, on the other.
“Settlement Interval” has the meaning set forth in the CAISO Tariff.
“Settlement Period” has the meaning set forth in the CAISO Tariff.
“Shared Facilities” means the gen-tie lines, transformers, substations, or other equipment, permits, contract rights, and other assets and property (real or personal), in each case, as necessary to enable delivery of Energy from the Facility (which is excluded from Shared Facilities) to the point of interconnection, including the Generator Interconnection Agreement itself, that are used in common with Seller’s Affiliates and/or third parties or by Seller for electric generation or storage facilities owned by Seller other than the Facility. “Site” means the real property on which the Facility is or will be located, as further described in Appendix B, and as such description may be updated by Seller to reduce the size of the Site (but not to add any new parcels) at the time Seller provides an executed Construction Start Certificate in the form of Appendix K to Buyer or by other Notice by Seller to Buyer prior to the Construction Start Date.
“Site Control” means that, upon the Construction Start Date and for the remainder of the Agreement Term, Seller or its Affiliate: (a) owns the Site; (b) is the lessee of the Site; or (c) is the holder of an easement, a right-of-way grant or similar instrument with respect to the Site. “Special Purpose Entity” means a limited liability company which during the Agreement Term is solely engaged in the business of developing, constructing, owning and operating the Facility and which shall (a) conduct business in its own name and hold itself out as a separate entity; (b) maintain separate books and records; (c) maintain adequate capital in light of its
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27 contemplated business operations; and (d) allocate expenses shared with Affiliates in a fair and reasonable manner.
“S&P” means Standard & Poor’s Financial Services LLC.
“Station Use” means: (a) the Energy generated by the Facility that is used within the Facility to power the lights, motors, control systems and other electrical loads that are necessary for operation of the Facility; (b) the Energy generated by the Facility that is consumed within the Facility’s electric energy distribution system as losses; and (c) any other parasitic load that impacts the Facility.
“Subject Approvals Deadline” means November 15, 2024.
“System Emergency” means, in the judgment of CAISO or the Transmission Provider, as applicable, a: (a) “System Emergency” as set forth in the CAISO Tariff; or (b) automatic or immediate action is required to (1) prevent or limit harm to or loss of life or property, (2) prevent loss of transmission facilities or generation supply in the immediate vicinity of the Facility, or (3) to preserve Transmission System reliability.
“Tax” or “Taxes” means each domestic or foreign federal, state, county, local and other (a) net income, gross income, gross receipts, sales, use, ad valorem, business or occupation, transfer, franchise, profits, withholding, payroll, employment, excise, property or leasehold tax; levies, assessments, and (b) customs, duty or other fee, assessment or charge of any kind whatsoever, each together with any interest and any penalties, additions to tax or additional amount with respect thereto.
“Tax Benefits” means the PTC, ITC, and any other domestic or foreign federal, state, county, local and/or other tax benefit or incentive, including energy credits determined under Sections 38, 45, 45Y, 46, 48 and 48E of the Internal Revenue Code of 1986, as amended, investment tax credits, production tax credits, depreciation, amortization, deduction, expense, exemption, preferential rate, and/or other tax benefit or incentive associated with the production or sale of renewable energy and/or the operation, construction, investments in or ownership of, the Facility (including any cash payment or grant).
“Termination Notice” has the meaning set forth in Section 13.2(a). “Termination Payment” has the meaning set forth in Section 13.3. “Test Energy” means Facility Energy that is delivered to the Point of Delivery prior to the Commercial Operation Date.
“TP Deliverability” has the meaning in the CAISO Tariff. “Trade Entity” means any entity with jurisdiction over the PV Panels (including the manufacture, export, or import thereof).
“Transmission Provider” means the Person operating the Transmission System from the Point of Delivery.
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28 “Transmission Services” means the transmission and other services required to transmit Facility Energy from the Point of Delivery.
“Transmission System” means the facilities utilized to provide Transmission Services. “Trade Event” means any New PV Trade Measure Event or withhold release order or other import restraint issued by U.S. Customs and Border Protection, other applicable Governmental Authority, or Trade Entity, including under the Uyghur Forced Labor Prevention Act, that: (i) to the extent of any cost increases or schedule delays with respect to the Facility that occur after the Subject Approvals Deadline; (ii) prevents or delays the delivery of or otherwise impacts the cost of the PV Panels for the Facility; and (iii) such event occurs despite the use by Seller of commercially reasonable efforts to avoid procurement or sourcing of PV Panels that were reasonably foreseeable to become subject to such event.
“True-Up Independent Report” has the meaning set forth in Section 2.5(b).
“True-Up Notice” has the meaning set forth in Section 2.5(b).
“Ultimate Parent” means NextEra Energy, Inc. The Ultimate Parent may change, including possibly to NEER, NEP or NEOP, pursuant to the processes in Section 14.7 of this Agreement.
“ WECC” means the Western Electricity Coordinating Council. “WREGIS” means Western Renewable Energy Generation Information System. “WREGIS Certificates” has the meaning set forth in WREGIS Operating Rules. “WREGIS Operating Rules” means the rules describing the operations of the WREGIS, as published by WREGIS.
Other terms defined herein have the meanings so given when used in this Agreement with initial-capitalized letters.
Section 1.2 Interpretation. In this Agreement, unless a clear contrary intention appears:
(a) time is of the essence;
(b) the singular number includes the plural number and vice versa; (c) reference to any Person includes such Person’s successors and assigns (regardless of whether such Person’s successors and assigns are expressly referenced in the provision) but, in case of a Party hereto, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;
(d) reference to any gender includes the other;
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29 (e) reference to any agreement (including this Agreement), document, act, statute, law, instrument, or tariff means such agreement, document, act, statute, law, instrument, or tariff, as amended, modified, restated, replaced or superseded and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, regardless of whether the reference to the agreement, document, act, statute, law, instrument, or tariff expressly refers to amendments, modifications, replacements, or successors; (f) reference to any Article, Section, or Appendix means such Article of this Agreement, Section of this Agreement, or such Appendix to this Agreement, as the case may be, and references in any Article or Section or definition to any clause means such clause of such Article or Section or definition;
(g) “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article or Section or other provision hereof or thereof;
(h) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term, regardless of whether words such as “without limitation” are expressly included in the applicable provision; (i) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”; (j) unless otherwise indicated, reference to time shall always refer to Pacific Prevailing Time; and reference to any “day” shall mean a calendar day, unless otherwise indicated; (k) the term “or” is not exclusive, regardless of whether “and/or” is used in the applicable provision; and the expression “and/or” when used as a conjunction shall connote “any or all of”;
(l) references to any amount of money shall mean a reference to the amount in United States Dollars; and
(m) words, phrases or expressions not otherwise defined herein that (i) have a generally accepted meaning in Prudent Utility Practice shall have such meaning in this Agreement or (ii) do not have well known and generally accepted meaning in Prudent Utility Practice but that have well known and generally accepted technical or trade meanings, shall have such recognized meanings.
ARTICLE II
EFFECTIVE DATE, TERM, AND EARLY TERMINATION
Section 2.1 Effective Date. This Agreement is effective as of the Effective Date.
Section 2.2 Term.
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30 (a) Agreement Term. The term of this Agreement (the “Agreement Term”) shall commence on the Effective Date and end on the last day of the Delivery Term or upon the earlier termination of this Agreement in accordance with the terms hereof. (b) Delivery Term. This Agreement shall have a delivery term (the “Delivery Term”) commencing on the Commercial Operation Date and ending at 11:59 pm on the date that is twenty (20) years after the Commercial Operation Date, unless sooner terminated in accordance with the terms of this Agreement. For example purposes only, if the Commercial Operation Date occurs on December 1, 2027, the last day of the Delivery Term shall be November 30, 2047.
Section 2.3 Survivability. The provisions of Sections 2.3, 11.7, 13.4, 13.5, 13.7, 14.1 through 14.3, 14.8 through 14.16, 14.17(c), 14.18, 14.20 through 14.24, shall survive following the termination of this Agreement. The provisions of ARTICLE I shall survive to the extent necessary for the enforcement of other surviving provisions, the provisions in Section 2.4(i) shall survive for the time period therein for enforcement of Seller’s ROFO obligation and shall survive until Seller’s payment of the Pre-COD Termination Fee obligations (if any) and Buyer’s return of the Development Security, and the provisions of Section 2.6(b) shall survive until Seller’s payment of the Seller Approvals Termination Fee obligations (if any) and Buyer’s return of the Development Security. The provisions of Sections 11.5 (subject to any shorter limitation period set forth therein), 14.17(a), and 14.19 shall survive for a period of four (4) years following the applicable invoice date. The provisions of Section 5.5, ARTICLE VI, ARTICLE VIII, ARTICLE IX, and Sections 11.1 through 11.4 and 11.6 shall continue in effect after termination to the extent necessary to provide for final billing, adjustments, and deliveries (including the provision to Buyer by Seller of Replacement Product or GEP Shortfall Damages and the provision to Seller by Buyer of payment for any Product including any Deemed Delivered Energy) related to any period prior to termination of this Agreement, and Buyer’s return to Seller of the unused portion of any Performance Security.
Section 2.4 Early Termination.
(a) Early Termination for Failure to Deliver Post-Effective Date Deliverable. Buyer may, in its sole discretion and without penalty to Buyer, terminate this Agreement, effective upon notice to Seller, if Seller fails to deliver the Development Security within thirty (30) days after the Effective Date, and such failure is not remedied within ten (10) Business Days after notice thereof.
(b) Early Termination by Mutual Agreement. This Agreement may be terminated by mutual written agreement of the Parties.
(c) Early Termination for Failure to Achieve a Key Milestone. Buyer may, in its sole discretion and without penalty to Buyer, terminate this Agreement for failure to achieve a Key Milestone after one hundred and eighty (180) days, subject to and in accordance with Section
3.3(c).
(d) Early Termination for Failure to Achieve Commercial Operation Date by the Commercial Operation Date Deadline. Either Party may terminate this Agreement if
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31 Commercial Operation is not achieved by the Commercial Operation Date Deadline subject to and in accordance with Section 3.3(c).
(e) Early Termination for Failure to Obtain CEC Certification. Unless otherwise provided under Section 7.7(c)(ii)(A)-(B) (where certification is either not obtained or not maintained because RPS Law is completely removed with no successor or solar photovoltaic resources as a category no longer qualify), and subject to the cure period in Section 13.1(b) or to the extent applicable Section 7.7(c)(ii)(C), Buyer may, in its sole discretion and without penalty to Buyer, terminate this Agreement, effective upon notice to Seller if the Facility is not CEC Certified by the date that is one hundred eighty (180) days after the Commercial Operation Date, or if Seller thereafter fails to maintain CEC Certification.
(f) Early Termination for Default. Upon the occurrence of a Default, the Non-Defaulting Party may terminate this Agreement as set forth in Section 13.2. (g) Early Termination for Force Majeure. This Agreement may be terminated pursuant to Section 14.6(c)
(h) Early Termination for RPS Compliance. Either Party may terminate this Agreement, without penalty, upon notice to the other Party pursuant to Section 7.7(c)(ii)(C). (i) Seller’s Pre-COD Termination Rights. 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:
(1) prior to the Construction Start Date in exchange for payment in the amount of the Pre-COD Termination Fee, if, despite commercially reasonable and diligent efforts by Seller, Seller reasonably determines either: (A) that CEQA/NEPA Determinations cannot be achieved by October 1, 2026; or (B) that a Qualifying Interconnection Delay or other transmission- related delay outside of the reasonable control of Seller (e.g., related to affected systems not included in the Generator Interconnection Agreement) exists such that Commercial Operation cannot occur on or prior to the Commercial Operation Date Deadline; provided that both (A) and (B) are subject to Buyer’s consent not to be unreasonably withheld, conditioned or delayed. Seller shall provide any information reasonably requested by Buyer in connection with such consent evaluation by Buyer; and
(2) for failure to achieve Commercial Operation by the Guaranteed Commercial Operation Date (as such date may be extended by a Development Cure Period) in exchange for payment in the amount of the Pre-COD Termination Fee.
Seller’s exercise of such termination right under each of (1) and (2) shall require that Seller provide at least ten (10) Business Days’ Notice of such termination signed by a duly-authorized officer of Seller which specifically provides that Seller is exercising its right to terminate this Agreement and specifically provides that such termination is being made pursuant to this Section 2.4(i)(1) or (2) of the Agreement, and for Section 2.4(i)(1) is not effective until Buyer’s consent (not to be unreasonably withheld, conditioned or delayed). Further, Seller’s exercise of such termination right under Section 2.4(i)(1) shall require that Seller not enter into any Non-Merchant Agreement to sell any Product from the Facility within one (1) year after the Commercial Operation Date
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32 Deadline (“ROFO Period”) without first having provided Notice to Buyer of an offer to purchase such Product (a “ROFO Offer”). Buyer shall have seventy-five (75) days to consider and respond to such ROFO Offer (the “ROFO Exercise Period”). If Buyer provides notice to Seller accepting the ROFO Offer within the ROFO Exercise Period, then the Parties shall negotiate in good faith to enter into a binding agreement (the “ROFO Agreement”), within seventy-five (75) days after Seller’s receipt of Buyer’s notice of acceptance (the “ROFO Negotiation Period”), for purchase and sale of the Product in accordance with the price in such ROFO Offer (i.e., the contract price in such ROFO may be different than the Contract Price in this Agreement to reflect market conditions at that time) and otherwise with terms substantially in the form of this Agreement. If Buyer does not provide notice accepting the ROFO Offer within the ROFO Exercise Period, or if the Parties fail to enter into the ROFO Agreement within the ROFO Negotiation Period, Seller shall have the right during the ROFO Period to enter into any Non-Merchant Agreement to sell any of the Product to any third parties, so long as the price under such Non-Merchant Agreement is equal to or greater than the respective price under the ROFO Offer.
For avoidance of doubt, Seller’s liability in connection with Seller’s termination under this Section
2.4(i) shall not exceed the Maximum Pre-COD Liability.
(j) Effect of Termination. Except as otherwise provided herein, any early termination of this Agreement under this Section 2.4 shall be without prejudice to the rights and remedies of a Party for Defaults occurring prior to termination.
Section 2.5 Trade Event. Notwithstanding anything to the contrary in this Agreement, in connection with any Trade Event:
(a) Seller shall receive a day-for-day extension of the Guaranteed Construction Start Date and the Guaranteed Commercial Operation Date (and not to exceed the Commercial Operation Date Deadline) for each day that a Trade Event delays the delivery of PV Panels to the Site necessary for construction of the Facility (“Trade Event Delay”) for up to two hundred seventy (270) days under the Development Cure Period process. (b) Seller may, in its sole discretion at any time prior to the Construction Start Date provide a one-time written notice to Buyer (“Initial Notice”) so long as Seller provides a corresponding one-time written notice to Buyer truing-up to actual PV Panel cost increases on the Module Delivery Date (“True-Up Notice”), of an increase to the Contract Price of up to $3.75/MWh (for avoidance of doubt such total increase not-to-exceed $3.75/MWh) to keep Seller whole with respect to any PV Panel cost increases that Seller reasonably expects to incur for the Facility, including under any replacement supply arrangements, as a result of such Trade Event (each Initial Notice and True-up Notice respectively, an “Amendment Notice”), and (subject to the dispute process below) the Agreement shall be deemed automatically amended to reflect such higher price. For any price increase under this Section 2.5(b) pursuant to an Initial Notice, Seller shall deliver to Buyer a report from an Independent Evaluator that explains in reasonable detail (1) the expected PV Panel cost increase (the “Expected Cost Increase”) to Seller and the Facility that results from the applicable Trade Event with the impact being measured from reasonably forecasted cost baseline obtained and preserved by Seller on the Subject Approvals Deadline (the “Module Baseline Date”) and ending on the Module Delivery Date, and (2) how the Expected Cost Increase was determined, including an explanation of why the Expected Cost Increase is
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33 reasonably necessary to keep Seller whole with respect to the Expected Cost Increase for the Facility from the Module Baseline Date to the Module Delivery Date that Seller expects as a result of the Trade Event (“Initial Independent Report”). For the True-Up Notice, Seller shall deliver to Buyer a report from an Independent Evaluator that explains in reasonable detail (1) the actual PV Panel cost increase (the “Actual Cost Increase”) to Seller and the Facility that results from the applicable Trade Event with the impact being measured from reasonably forecasted cost baseline obtained and preserved by Seller on the Module Baseline Date and ending on the Module Delivery Date, and (2) how the Actual Cost Increase was determined, including an explanation of why the price increase is reasonably necessary to keep Seller whole with respect to the actual PV Panel cost increase for the Facility from the Module Baseline Date to the Module Delivery Date that Seller actually incurs as a result of the Trade Event, and why any positive or negative difference (if any) exists between the Expected Cost Increase and Actual Cost Increase (“True-Up Independent Report”, together with the Initial Independent Report, the “Independent Reports”).
Cost impacts shall be shown in the Independent Report in terms of $/WAc to explain changes to the Contract Price. Buyer shall only be able to contest the Initial Independent Report on the basis that the Initial Independent Report contains a material and manifest mathematical error, which objection shall be raised by Buyer within ten (10) Business Days of Buyer’s receipt of the Initial Independent Report and, if so timely raised by Buyer, such objection shall be determined in compliance with the dispute resolution provisions set forth in Section 14.3. Buyer shall only be able to contest the True-Up Independent Report on the basis that the True-Up Independent Report contains a material and manifest mathematical error and such contest shall be solely with respect to the difference between the Expected Cost Increase and the Actual Cost Increase, which such objection shall be raised by Buyer within ten (10) Business Days of Buyer’s receipt of the True- Up Independent Report and, if so timely raised by Buyer, such objection shall be determined in compliance with the dispute resolution provisions set forth in Section 14.3 To the extent consistent with Requirements of Law and in compliance with Section 14.19, Buyer shall strive to protect the market sensitive details within the Independent Reports (but not the overall cost increase) from disclosure.
Section 2.6 Early Termination for Failure to Obtain Required Approvals. (a) Buyer Early Termination for Failure to Obtain Required Approvals.
If Buyer has not obtained all required approvals associated with the Agreement, including without limitation Participating Members’ approval, by way of Participating Members’ board and city council approvals (each to the extent applicable) of the Participating Members Agreement, determinations with respect to the filing of any notices of exemption by Buyer and the Participating Members, and any other CEQA approvals required by Buyer and the Participating Members (“Buyer Approvals”), then within ten (10) Business Days after the Subject Approvals Deadline, either Buyer (subject to the immediately following sentence) or Seller may terminate this Agreement by providing written notice to the other Party signed by a duly-authorized officer of Buyer or Seller, as applicable, which specifically provides that Buyer or Seller, as applicable, is exercising its right to terminate this Agreement and specifically provides that such termination is being made pursuant to this Section 2.6(a) of the Agreement, with such termination to be effective immediately. Notwithstanding the immediately preceding sentence, Buyer’s right to terminate this Agreement shall expire the earliest to occur of the following: (1) when all Participating Members have received board and city council approval (each to the extent applicable) and the 45 day window for challenging any CEQA NOE filings has expired; and (2) ten (10) Business Days after
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34 the Subject Approvals Deadline. Upon such termination, neither Party shall have any liability to the other Party, save and except for those obligations specified in Section 2.3 and Buyer shall promptly return to Seller any Development Security then held by Buyer, less any amounts drawn in accordance with this Agreement.
(b) Seller Early Termination for Failure to Obtain Required Approvals. If Seller has not received all approvals of the management and board of directors (or equivalent governing body) of Seller and its Affiliates, including, if applicable, the approval of the board of directors of NextEra Energy, Inc. or a committee thereof, as Seller determines in its sole discretion are required under its and their respective constituting documents for the performance by Seller of its obligations under this Agreement (“Seller Board Approval”), on or before the Subject Approvals Deadline, then Seller may elect to terminate this Agreement by providing written notice of termination to Buyer within fifteen (15) Business Days after the Subject Approvals Deadline (“Seller Board Approval Deadline”), which specifically provides that Seller is exercising its right to terminate this Agreement and specifically provides that such termination is being made pursuant to this Section 2.6(b) of the Agreement, with such termination to be effective immediately. If this Agreement is terminated by Seller pursuant to this Section 2.6(b), then, within ten (10) Business Days of the date of such notice of termination, Seller shall pay to Buyer an amount equal to the Seller Approvals Termination Fee, which shall be Buyer’s sole and exclusive remedy associated with such failure to obtain the Seller Board Approval and related termination. Upon such termination under this Section 2.6(b), neither Party shall have any liability to the other Party, save and except for those obligations specified in Section 2.3 and Buyer shall promptly return to Seller any Development Security then held by Buyer to the extent not used by Seller to pay such Seller Approvals Termination Fee, less any amounts drawn in accordance with this Agreement.
ARTICLE III
DEVELOPMENT OF THE FACILITY
Section 3.1 General.
(a) Design. Seller shall determine the proposed location, design, and configuration of the Facility as it deems appropriate, subject to any applicable Requirement of Law and this Agreement, and also subject to any conditions imposed by the Lead Agency as part of the CEQA review or NEPA review, if applicable, of the Facility and which Seller deems acceptable.
Throughout the Agreement Term, Seller shall have and maintain sufficient interconnection capacity in an amount equal to 170 MW and rights to interconnect the Facility with the CAISO grid and fulfill its obligations under the Agreement. Seller shall use commercially reasonable efforts to ensure that the PV Panels are not sourced from the Xinjiang region of China, in response to the business advisory jointly issued by the U.S. Departments of State, Treasury, Commerce and Homeland Security on July 1, 2020.
(b) Construction. Seller shall develop, operate and maintain the Facility, at its sole risk and expense, and in compliance with any applicable Requirement of Law and in material compliance with applicable manufacturer’s and operator’s specifications and recommended procedures; provided, however, meeting these requirements shall not relieve Seller of its other obligations under this Agreement. Seller shall use reasonable efforts to ensure that all employees hired by Seller, and its contractors and subcontractors, that will perform construction work or
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35 provide services at the Site related to construction of the Facility are paid wages at rates not less than those prevailing for workers performing similar work in the locality as provided by applicable California law, if any (“Prevailing Wage Requirement”). Nothing herein shall require Seller, its contractors and subcontractors to comply with, or assume liability created by inapplicable provisions of any California or federal labor laws.
(c) Other Information. Seller shall provide the reports required to be delivered under this Agreement, including Section 5.4. Buyer and Buyer’s Authorized Representative shall be permitted to inspect the Facility from time to time upon reasonable notice to Seller and during reasonable business hours subject to Site safety protocols and orientation as set forth in Section 5.2, but Buyer and Buyer’s Authorized Representative shall not interfere with the activities at the Facility and be escorted while on the Site by an employee or other representative of Seller. Without limiting Seller’s indemnification obligations in Section 14.17(a), the presence of Buyer, its representatives or both on the Site shall be at Buyer’s sole expense and risk.
Section 3.2 Certification of Commercial Operation Date. Seller shall provide Buyer with no fewer than sixty (60) days prior written notice of the date on which Seller anticipates achieving all of the conditions precedent to achieving Commercial Operation. When Seller believes that all conditions precedent to achieving Commercial Operation of the Facility as specified in the definition of “Commercial Operation” have been satisfied, Seller shall provide Buyer with written notice thereof together with all supporting documentation (the “Commercial Operation Certificate”); provided, however, that Buyer shall not be obligated to accept a Commercial Operation Date that is earlier than June 1, 2027. Buyer shall in writing either accept or reject the Commercial Operation Certificate in its reasonable discretion within two (2) Business Days, identifying any basis for rejection, and if Buyer rejects the Commercial Operation Certificate, Seller shall promptly correct any defects or deficiencies and resubmit the Commercial Operation Certificate. If Buyer accepts such certificate without rejection, the Commercial Operation Date shall be deemed to relate back to the date of the Commercial Operation Certificate that was provided to Buyer. Buyer’s failure to accept or reject such certificate within the timeframe provided upon receipt shall be deemed to be an acceptance of such Commercial Operation Certificate by Buyer pursuant to this Section 3.2, and the Commercial Operation Date shall be deemed to relate back to the date the Commercial Operation Certificate was provided to Buyer. If Buyer rejects the Commercial Operation Certificate, the Commercial Operation Date shall be deemed to relate back to the date any subsequent Commercial Operation Certificate was provided to Buyer that is either approved or deemed approved by Buyer.
Section 3.3 Milestone Schedule.
(a) Attached as Appendix I is a milestone schedule with deadlines for the development of the Facility through the Commercial Operation Date (each milestone, a “Milestone” and each date by which a Milestone is to be completed, a “Milestone Date”). From the Effective Date until the Commercial Operation Date, Seller shall provide Buyer with a report on a quarterly basis (until six (6) months prior to the scheduled Commercial Operation Date, at which time such reports shall be provided on a Monthly basis) that includes: (i) a description of the Site plan for the Facility, (ii) a description of any material or planned changes to the Facility or Site plan since the previously delivered report, (iii) a bar chart schedule showing progress to
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36 achieving the remaining Milestones, (iv) a description about the progress relative to the Milestones, including whether Seller has met or is on target to meet the Milestones, (v) a summary of activities at the Facility during the previous Month or quarter, as applicable, (vi) a forecast of activities during the then-current Month or quarter, as applicable, (vii) a list of any issues that are likely to potentially impact Seller’s achievement of Milestones by the applicable Milestone Dates, and (viii) pictures, in sufficient quantity and of appropriate detail, documenting construction and startup progress with respect to the Facility. If Seller misses a milestone set forth in Appendix I by more than ten (10) Business Days, then within thirty (30) days, Seller shall deliver to Buyer a remedial action plan that identifies (i) the anticipated period of delay; (ii) the basis for such delay; and (iii) a remedial action plan (“Remedial Action Plan”) outlining the commercially reasonable steps that Seller is taking to address the delay and to ensure that future milestones, including the Commercial Operation Date, will be achieved by the required date to the extent possible. Except as set forth in Section 3.3(c), Seller shall not have any liability for failure to timely achieve a Milestone other than the obligation to submit a Remedial Action Plan; provided, however, that the foregoing shall not limit Buyer’s right to exercise any right or remedy available under this Agreement, or at law or in equity (consistent with the terms of this Agreement), for any other Default occurring concurrently with or before or after Seller’s delay in achievement of the applicable Milestone.
(b) Each Key Milestone may be extended without being subject to Daily Delay Damages under a Development Cure Period; provided that, for the avoidance of doubt, the Commercial Operation Date cannot occur after the Commercial Operation Date Deadline, and the Commercial Operation Date Deadline cannot be extended.
(c) If Seller fails to achieve any Key Milestone by the applicable Milestone Date, (as the Milestone Date may have been extended under a Development Cure Period), i.e., a failure to achieve the Construction Start Certification by the Guaranteed Construction Start Date or failure to achieve the Commercial Operation Date by the Guaranteed Commercial Operation Date, Seller shall pay liquidated damages to Buyer for up to one hundred eighty (180) days for each such failure in a daily amount for each Key Milestone equal to (1) the Development Security amount required hereunder, divided by (2) one hundred eighty (180) (the “Daily Delay Damages”). If Seller fails to achieve any Key Milestone within one hundred eighty (180) days of the Guaranteed Construction Start Date or Guaranteed Commercial Operation Date, as applicable, Buyer shall have the right in its sole discretion and without penalty to (1) terminate this Agreement for a Default under Section 13.2 or (2) allow Seller to continue to pay the Daily Delay Damages to Buyer, and, to the extent Seller continues to pay Daily Delay Damages, Buyer shall not terminate this Agreement based on Seller’s failure to achieve such Key Milestone by the Milestone Date therefor. If Seller achieves the Commercial Operation Date by the Guaranteed Commercial Operation Date, then Buyer shall refund to Seller, without interest, any amounts previously paid to Buyer as Daily Delay Damages for failure to achieve a Key Milestone by the Milestone Date therefor. Buyer shall have the right to terminate this Agreement pursuant to Section
13.1(k) if Seller fails to pay the Daily Delay Damages as required by this Section 3.3(c). Either Party may terminate this Agreement, with no liability or penalty to Buyer, if Commercial Operation is not achieved by the Commercial Operation Date Deadline; provided that, Buyer is entitled to either the Pre-COD Termination Fee or the Damage Payment, as applicable, and within ten (10) Business Days Buyer shall return any remaining Development Security held by Buyer to
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37 Seller; provided further that Seller’s termination is not effective until the either the Pre-COD Termination Fee or the Damage Payment, as applicable, is received by Buyer. (d) In no event shall the Commercial Operation Date occur beyond the Commercial Operation Date Deadline.
(e) The damages that Buyer would incur due to Seller’s failure to timely achieve a Key Milestone would be difficult or impossible to predict with certainty, and it is impractical or difficult to assess actual damages in those circumstances, but the Daily Delay Damages are a fair and reasonable calculation of such damages, and shall be Seller’s sole liability and obligation, and Buyer’s sole rights and remedies, for Seller’s failure to achieve any Key Milestone by the Milestone Date therefor. Notwithstanding the foregoing, the payment of Daily Delay Damages shall not limit Buyer’s right to exercise any right or remedy available under this Agreement, or at law or in equity (consistent with the terms of this Agreement) for: (i) any Default occurring concurrently with, before or after Seller’s delay in achievement of the applicable Key Milestone or (ii) in connection with any termination for failure to achieve a Key Milestone by the Key Milestone Date including Commercial Operation within 180 days of the Guaranteed Commercial Operation Date, as may be extended by the Development Cure Period (for Commercial Operation up to the Commercial Operation Date Deadline at the latest); provided that the payment of Daily Delay Damages or other amounts drawn from the Development Security shall be taken into account when determining any damages due Buyer for such termination; provided further that in no event shall any damages, including Daily Delay Damages, owed in connection with such termination exceed the limitation of liability provided in Section 14.17(c).
Section 3.4 Decommissioning and Other Costs. Without regard to whether or not there is any Requirement of Law requiring decommissioning or demolition of the Facility or any environmental or other liability associated with the decommissioning or demolition of the Facility, Buyer shall not be responsible for any cost of decommissioning or demolition of the Facility or any environmental or other liability associated with the decommissioning or demolition of the Facility, or any other environmental cost or liability associated with the Facility, without regard to the timing or cause of the decommissioning or demolition.
Section 3.5 Failure to Reach Contract Capacity. If, at Commercial Operation, the Installed Capacity is less than one hundred percent (100%) but greater than ninety-five percent (95%) of the original one hundred seventy (170) MWac Contract Capacity (such original 170 MW contract capacity, the “Original Contract Capacity”), then (i) the Contract Capacity shall be reduced to the Installed Capacity, and (ii) the Annual Contract Quantity and Guaranteed Generation shall be reduced in proportion to the Installed Capacity relative to the Original Contract Capacity (such adjustments in the foregoing (i) and (ii), the “PV Shortfall Adjustments”), and Seller shall have one hundred fifty (150) days after the Commercial Operation Date (the “Capacity Cure Period”) to install additional capacity such that the Installed Capacity is equal to (but not greater than) the Original Contract Capacity. Prior to the expiration of the Capacity Cure Period, Seller shall provide Buyer with capacity testing contents substantially in the form of Appendix G specifying the new Installed Capacity (an “Updated Capacity Certificate”). If Seller fails to deliver an Updated Capacity Certificate prior to the expiration of the Capacity Cure Period or delivers an Updated Capacity Certificate that demonstrates Installed Capacity less than the Original Contract Capacity, then (1) Seller shall, within five (5) Business Days after the Capacity Cure Period, pay
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38 “PV Capacity Damages” to Buyer in an amount equal to two hundred fifty thousand dollars ($250,000) for each MW that the Original Contract Capacity exceeds the Installed Capacity, and (2) the PV Shortfall Adjustments shall become permanent based on the Installed Capacity (as updated by an Updated Capacity Certificate, if applicable). If Seller delivers an Updated Capacity Certificate demonstrating Installed Capacity equal to the Original Contract Capacity prior to the expiration of the Capacity Cure Period, then the PV Shortfall Adjustments shall no longer apply as of the date of delivery of such Updated Capacity Certificate.
ARTICLE IV
OPERATION AND MAINTENANCE OF THE FACILITY
Section 4.1 General Operational Requirements. Seller shall, at all times during the Delivery Term:
(a) At its sole expense, operate and maintain the Facility (i) in accordance with applicable Requirements of Law and (ii) use reasonable efforts consistent with Prudent Utility Practices and the other provisions of this Agreement to maximize the output of Facility Energy from the Facility except as otherwise set forth and in accordance with this Agreement and to result in a useful life for the Facility of not less than the Delivery Term; (b) At its sole expense, operate and maintain the Facility using a Qualified Operator in accordance with applicable Requirements of Law; (c) Seller will maintain 24-7 remote monitoring of the Facility. This includes advanced alarm management, data analytics, emergency response, scheduling of preventative and corrective maintenance, troubleshooting, remote resets and dispatch of on-site resources.
Section 4.2 Operation and Maintenance Plan. Seller shall devise and implement a plan of inspection, maintenance, and repair for the Facility and the components thereof in order to maintain such equipment in accordance with Prudent Utility Practices and shall keep records with respect to inspections, maintenance, and repairs thereto. The aforementioned plan and all records of such activities shall be available for inspection by Buyer during Seller’s regular business hours upon reasonable notice.
Section 4.3 Environmental Credits. Seller shall, if applicable, obtain in its own name and at its own expense all pollution or environmental credits or offsets necessary to operate the Facility in compliance with any Requirement of Law; provided for the avoidance of doubt, Seller shall not use any Environmental Attributes to satisfy the foregoing obligation, if any such obligation exists.
Section 4.4 Shared Facilities. The Parties acknowledge and agree that certain of the Shared Facilities and Interconnection Facilities, and Seller’s rights and obligations under the Generator Interconnection Agreement, may be subject to certain shared facilities or co-tenancy agreements to be entered into among Seller, the Participating Transmission Owner, Seller’s Affiliates, or other third parties pursuant to which certain Shared Facilities and Interconnection Facilities may be subject to joint ownership and shared maintenance and operation arrangements; provided that such agreements (i) shall permit Seller to perform or satisfy, and shall not purport to limit, its obligations under this Agreement, including providing interconnection capacity in the
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39 amount of 170 MW for the Facility’s sole use, (ii) provide for separate metering of the Facility, (iii) provide that any other generating or energy storage facilities not included in the Facility but using Shared Facilities shall not be included within the Facility’s CAISO Resource ID, and (iv) provide that any curtailment of the Shared Facilities that is ordered by the CAISO or Transmission Provider that Seller and its Affiliates have discretion to allocate across generating or energy storage facilities using the Shared Facilities shall not be allocated to the Facility in an amount that is higher than Buyer’s pro rata portion of the total capacity of all generating or energy storage facilities using the Shared Facilities, provided further that the Facility shall not be allocated curtailment caused by or isolated to the Remaining Complex, or any portion thereof.
Section 4.5 Outages.
(a) Buyer and Seller shall cooperate to minimize Scheduled Outages during May 1 through September 30 of each calendar year in accordance with Prudent Utility Practices and this Section 4.5 (such periods, the “Major Maintenance Blockout”). Seller shall attempt to minimize its Scheduled Outages during the Major Maintenance Blockout consistent with Prudent Utility Practices; provided that Seller shall be permitted to perform scheduled and unscheduled maintenance on the Facility during Major Maintenance Blockouts (1) during such nighttime hours when solar irradiance levels are insufficient to permit the production of any Energy, if such maintenance is permitted under the CAISO Tariff and conducted in accordance with all applicable Requirements of Law and Prudent Utility Practices (including, for avoidance of doubt, the requirements of the Transmission Provider), (2) such outage or maintenance is required to avoid an emergency or damage to the Facility or its Interconnection Facilities, (3) such outage or maintenance is necessary to maintain equipment warranties or is otherwise required by the equipment manufacturer and cannot be scheduled outside the Major Maintenance Blockout, (4) such outage or maintenance occurs in connection with any Force Majeure event, (5) such outage or maintenance is required by any Requirement of Law or by the CAISO Tariff or the tariffs of the Transmission Provider, (6) the Parties agree to such outage or maintenance in writing, or (7) such outage is reasonably necessary and does not decrease the usable capacity of the Facility by more than 10%. No later than sixty (60) days prior to the anticipated Commercial Operation Date, and for each calendar year thereafter, no later than one hundred twenty (120) days prior to the deadline for providing the CAISO Resource Adequacy filings and proposed maintenance outages for the following year as described in the CAISO Tariff, Seller shall provide Buyer with its non- binding written projection of all Scheduled Outages for the succeeding calendar year (the “Scheduled Outage Projection”) reflecting a minimized schedule of scheduled maintenance during the Major Maintenance Blockout. The Scheduled Outage Projection shall include information concerning all projected Scheduled Outages during such period, including (A) the anticipated start and end dates of each Scheduled Outage; (B) a description of the maintenance or repair work to be performed during the Scheduled Outage; and (C) the anticipated MW of operational capacity, if any, during the Scheduled Outage. Seller shall use commercially reasonable efforts to notify Buyer of any change in the Scheduled Outage Projection fifty (50) days prior to the first day of the month of the originally scheduled date of the Scheduled Outage, but in no event later than fifteen (15) days prior to the first day of the month of the originally- scheduled date of the Scheduled Outage. Seller shall use commercially reasonable efforts to accommodate reasonable requests of Buyer with respect to the timing of Scheduled Outages, to the extent consistent with Prudent Utility Practices, to arrange for Scheduled Outages to occur outside the Major Maintenance Blockout in accordance with this Section 4.5(a).
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40 (b) In addition to reporting outages to Buyer within any applicable time period for reporting outages under the CAISO Tariff and applicable rules and regulations of the CAISO, Seller shall notify Buyer immediately upon identification of a situation likely to result in a Forced Outage that is likely to cause or require removal of ten percent (10%) or more of the Facility from service, or a reduction in the maximum output capability of the Facility by ten percent (10%) or more from the value most recently recorded in the generation outage reporting system for the CAISO. For all other Forced Outages, Seller shall provide Buyer with as much advance notice as practicably possible, but in all cases, shall notify Buyer within 30 minutes after the commencement of the Forced Outage. Seller shall provide detailed information, once known to Seller, concerning each Forced Outage, including (i) the start and anticipated end dates of the Forced Outage; (ii) a description of the cause of the Forced Outage; (iii) a description of the maintenance or repair work to be performed during the Forced Outage; and (iv) the anticipated MW of nameplate capacity, if any, during the Forced Outage. In the event of any inconsistency between the provisions in this Section 4.5 and any applicable requirements of CAISO, the provisions of CAISO shall govern. (c) Seller shall exercise commercially reasonable efforts to avoid Forced Outages and to limit the duration and extent of any such outages. In addition to the requirements set forth in Section 4.5(a) and Section 4.5(b), the Parties shall cooperate to develop mutually acceptable procedures for addressing Scheduled Outages and any other outages arising in connection with the Facility.
ARTICLE V
COMPLIANCE DURING CONSTRUCTION AND OPERATIONS; SECURITY Section 5.1 Construction, Operation, and Maintenance of Facility. Seller shall only engage with Approved Vendors for the solar panels, inverters, and transformers to be incorporated into the Facility. Seller shall, as between Seller and Buyer, be solely responsible for the operation and maintenance of the Facility, and shall comply with applicable Requirements of Law and Prudent Utility Practices relating to the construction, operation, and maintenance of the Facility.
Section 5.2 Buyer’s Rights to Monitor in General. Buyer shall have the right, and Seller shall permit Buyer and its Authorized Representative, advisors, engineers and consultants, to observe, inspect, and monitor the construction and operations and activities of the Facility, including reviewing and monitoring all initial performance tests during Facility start-up. Seller shall provide Buyer at least ten (10) Business Days prior notice of the commencement of any initial performance tests during Facility start-up; provided that in no event shall Seller be required to reschedule any such tests should Buyer or its representatives not be available on the scheduled date for such tests. Upon any visit to the Site, Buyer and its representatives shall: (a) not interfere with the orderly progression of the work on Site or operation of the Facility; (b) follow Seller’s rules and policies with respect to safety and protection of property and the environment; and (c) be escorted while on the Site by an employee or other representative of Seller. Without limiting Seller’s obligations under Section 14.17(a), the presence of Buyer, its representatives or both on the Site shall be at Buyer’s sole expense and risk.
Section 5.3 Effect of Review by Buyer. Any review by Buyer or a Buyer’s Authorized Representative of the design, construction, engineering, operation or maintenance of the Facility, or observation of any testing, is solely for the information of Buyer. Buyer shall have no obligation
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41 to share the results of any such review or observations with Seller, nor shall any such review or the results thereof (whether or not the results are shared with Seller), nor any failure to conduct any such review, nor any observation of testing or failure to observe testing, relieve Seller from any of its obligations under this Agreement. By making any such review or observing any such testing, Buyer makes no representation as to the economic and technical feasibility, operational capability or reliability of the Facility. Seller shall in no way represent to any third party that any such review by Buyer or Buyer’s Authorized Representative of the Facility thereof, including any review of the design, construction, operation or maintenance, is a representation by Buyer as to the economic and technical feasibility, operational capability or reliability of the Facility. Seller is solely responsible for the economic and technical feasibility, operational capability and reliability thereof.
Section 5.4 Reporting and Information. Following the Commercial Operation Date, Seller shall provide monthly reports including (i) a summary of the Month and Contract Year-to- date Facility performance with respect to MWh of generation on an actual vs. expected basis, (ii) non-Buyer-caused curtailments and outages, and (iii) maintenance and repair actions, substantially in the form of Appendix P.
Section 5.5 Performance Security.
(a) Within twenty (20) days after the Effective Date, Seller shall furnish to Buyer one or more letters of credit issued by Qualified Issuers substantially in the form attached hereto as Appendix E in the aggregate amount of Seventeen Million Dollars ($17,000,000), to secure Seller’s obligations under this Agreement during the period of the Agreement Term prior to the Commercial Operation Date (the “Development Security”). Seller shall maintain the Development Security until either: (i) the Commercial Operation Date is achieved and Seller posts the Operation Security pursuant to Section 5.5(b); or (ii) until Buyer is required to return the Development Security under Section 5.5(c), and provided that Seller shall have no replenishment obligation with regard to the Development Security.
(b) On or before the date set forth on Appendix I and as a condition to the achievement of the Commercial Operation Date, Seller shall have furnished to Buyer one or more letters of credit issued by Qualified Issuers in the form attached hereto as Appendix E in the aggregate amount of Eighteen Million Seven Hundred Thousand Dollars ($18,700,000), to secure Seller’s obligations under this Agreement during the Delivery Term (collectively, the “Operation Security”) and which Seller shall maintain in full force and effect, subject to the replenishments cap, in the required amount until the end of the Delivery Term or until Buyer is required to return the Operation Security to Seller as set forth in Section 5.5(c). (c) Buyer shall return the unused portion of the (i) Development Security, if any, to Seller after: (A) Seller’s provision of the Operation Security, unless Seller elects to apply the Development Security toward the Operation Security, or (B) the effective date of any early termination of this Agreement by Buyer or Seller upon payment (whether directly or indirectly such as through set-off or netting) of all damages due and owing to Buyer, if any, and (ii) Operation Security, if any, to Seller after: the later of (1) all payment obligations of Seller due and payable to Buyer arising under this Agreement are paid (whether directly or indirectly such as through set- off or netting) in full, and (2) six (6) months after the Agreement Term has ended.
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42 (d) Buyer may draw on the Performance Security, subject to any Development Cure Period, a Qualifying Transformer Failure, and any applicable cure period provided under this Agreement, (i) at any time following Seller’s failure to timely pay Daily Delay Damages when due hereunder in the amount of such Daily Delay Damages or any other liquidated damages provided for hereunder, (ii) upon Seller’s failure to pay Buyer the GEP Shortfall Damages when due after the GEP Shortfall Makeup Period as provided in Article IX in the amount of such unpaid GEP Shortfall Damages, (iii) upon Seller’s failure to make any other payment due when due to Buyer hereunder in the amount of such unpaid payment, including any Termination Payment, Pre- COD Termination Fee, or Seller Approvals Termination Fee; or (iv) upon the occurrence and during the continuation of any event of Default to pay all amounts due to Buyer hereunder at such time including all damages, costs, losses, expenses, other liabilities, and any Indemnifiable Losses, incurred by Buyer and the Indemnified Group, resulting from such event of Default. Buyer may draw all or any part of such amounts due to Buyer from any form of security provided under this Section 5.5, and in any sequence Buyer may elect, in its sole discretion. Any failure of, or delay by, Buyer in electing to draw any amount from the Performance Security shall in no way prejudice Buyer’s rights to subsequently recover such amounts from the Performance Security or in any other manner. Within ten (10) Business Days following any draw by Buyer on the Operation Security, Seller shall replenish the amount drawn such that the Operation Security is restored to the applicable amount set forth in Section 5.5(b); provided that Seller’s replenishment obligation with respect to the Operation Security shall be limited such that the total amount of any replenishments of such Operation Security shall not exceed two (2) times the initial $18,700,000 amount of the original Operation Security (i.e., the total of any such replenishments shall be limited to $37,400,000). For avoidance of doubt, (a) the limit on Seller’s obligation to replenish the Operation Security shall not be construed as a cap on Seller’s liability under the Agreement; and (b) the amount of any draw permitted prior to the Commercial Operation Date shall be subject to Section 13.7 and the limitation that Seller liability for the period prior to the Commercial Operation Date shall not exceed the Maximum Pre-COD Liability. (e) Seller shall provide, or cause to be provided, a replacement Letter of Credit from a Qualified Issuer, in the amount required under this Section 5.5 within (1) ten (10) Business Days after Seller receives notice from Buyer requesting such replacement Performance Security due to the occurrence of any one of the following events, or (2) within fifteen (15) Business Days after Seller’s Authorized Officers receive knowledge of the occurrence of any one of the following events: (A) the issuer of the letter of credit has provided a notice to Seller or Buyer indicating its intent not to renew such letter of credit and such letter of credit expires prior to the end of the Delivery Term; (B) the failure of the issuer of the letter of credit to timely honor Buyer’s properly documented request to draw on such letter of credit; (C) the issuer of the letter of credit becomes Bankrupt; (D) Buyer is directed by a Governmental Authority to terminate any relationship with the issuer of the Letter of Credit; (E) the issuer of the letter of credit fails to maintain any of the requirements of a Qualified Issuer; (F) the issuer of the letter of credit denies any liability in respect to any draw request made in compliance with the issued letter of credit on the Performance Security; or (G) the issuer of the letter of credit fails to maintain the letter of credit in full force and effect. If the replacement Letter of Credit is not delivered in accordance with this Section 5.5(e), Buyer shall have the right to demand payment of the Performance Security, and Buyer shall retain such amount in order to secure Seller’s obligations under this Agreement; provided that, if and to the extent such retained amount exceeds payment and performance in full of all of Seller’s obligations under this Agreement, Buyer shall refund the excess to Seller promptly
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43 after all payment obligations of Seller due and payable to Buyer arising under this Agreement are paid (whether directly or indirectly such as through set-off or netting) in full. (f) Seller shall, from time to time as requested by Buyer’s Authorized Representative, execute, acknowledge, record, register, deliver and file all such notices, statements, instruments and other documents as may be necessary under all applicable law to render fully valid, perfected and enforceable the Performance Security and the rights, Liens and priorities of Buyer in such Performance Security.
(g) Notwithstanding the other provisions of this Agreement, the Performance Security: (i) constitutes security for, but is not a limitation of, Seller’s obligations under this Agreement, and (ii) except to the extent otherwise set forth herein, shall not be Buyer’s exclusive remedy against Seller for Seller’s failure to perform in accordance with this Agreement.
Section 5.6 Compliance with Required Laws. Seller shall cause the Facility to be constructed, operated and maintained in compliance with all applicable Requirements of Law.
Seller shall comply with all reporting requirements for the Facility required under applicable Requirements of Law (other than reporting requirements for the Facility pertaining to the Scheduling Coordinator, which shall be the responsibility of the Scheduling Coordinator).
ARTICLE VI
PURCHASE AND SALE OF PRODUCT
Section 6.1 Purchases by Buyer.
(a) Subject to the terms of this Agreement, prior to the Commercial Operation Date, Seller shall sell and deliver, and Buyer shall purchase, the Products associated with Test Energy for the applicable Contract Price set forth in Section 5 of Appendix A; provided that if any Test Energy is delivered before the Facility is CEC Certified (i.e., any Test Energy delivered prior to the Facility being pre-certified by the CEC), the Contract Price shall exclude the applicable Environmental Attributes Value for such period, if any, between the date Seller first delivers Test Energy from the Facility and the day that is one (1) day following the date upon which Seller delivers evidence to Buyer that the Facility is CEC Certified (any such period, the “Pre-CEC Certification Period”).
(b) Subject to the terms of this Agreement, and except as set forth in this Agreement (including Section 6.1(e)), Buyer pay Seller for Deemed Delivered Energy as set forth in Section 7.4(b) and Section 3 of Appendix A.
(c) Subject to the terms of this Agreement, and except as set forth in Section 6.1(e), on and after the Commercial Operation Date and continuing for the Delivery Term, Seller shall sell and deliver, and Buyer shall purchase, the Products associated with Facility Energy (other than Excess Energy, Deemed Delivered Energy, or Test Energy) and Replacement Product at the Contract Price as set forth in Section 2 of Appendix A. (d) Subject to this Agreement, and except as set forth in Section 6.1(e), on and after the Commercial Operation Date and continuing for the Delivery Term, Seller shall sell and
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44 deliver, and Buyer shall purchase, the Products associated with Excess Energy as set forth in Section 4 of Appendix A.
(e) If during any Settlement Interval, Seller delivers Product amounts, as measured by the amount of Facility Energy, in excess of the product of the Installed Capacity and the duration of the Settlement Interval, expressed in hours (“Excess Settlement Interval MWh”), then the price applicable to all such Excess Settlement Interval MWh in such Settlement Interval shall be zero dollars ($0), and if there is a Negative LMP during such Settlement Interval, Seller shall pay to Buyer an amount equal to the absolute value of the Negative LMP times such Excess Settlement Interval MWh.
Section 6.2 Energy from Third Party Sources. Except for Replacement Product, and as provided in ARTICLE IX, in no event shall Seller have the right to procure Energy from sources other than the Facility for sale and delivery pursuant to this Agreement.
Section 6.3 Third Party Sales. During the Agreement Term and subject to the terms and conditions of this Agreement, all of the Product from the Facility shall be dedicated to Buyer.
Except with the prior written consent of Buyer or as provided in this Agreement, Seller shall not sell or otherwise transfer all or any part of the Products required to be delivered by Seller under this ARTICLE VI, ARTICLE VII, ARTICLE VIII or ARTICLE X to someone other than Buyer.
A violation of this Section 6.3 with respect to transfer of the Products to someone other than Buyer shall be a Default subject to Section 13.1(b), in addition to any other rights and remedies available to Buyer under Section 13.2, Seller shall pay Buyer an amount for each MWh of such deficiency equal to the positive difference, if any, obtained by subtracting (A) the price per MWh that would have been payable by Buyer for the Energy had such Energy been delivered to Buyer from (B) the sum of (1) the Market Price Index for such Energy and (2) the Environmental Attributes Value associated therewith. Buyer shall provide Seller prompt written notice of the Environmental Attributes Value, together with back-up documentation.
Section 6.4 Nature of Remedies. The remedy set forth in Section 6.3 is in addition to, and not in lieu of, any other right or remedy of Buyer, under this Agreement, for failure of Seller to sell and deliver the Products as and when required in this Agreement.
ARTICLE VII
TRANSMISSION AND SCHEDULING; TITLE AND RISK OF LOSS
Section 7.1 In General.
(a) Seller shall establish and maintain a separate and distinct CAISO Resource ID for the Facility, as defined in the CAISO Tariff, that is capable of being utilized by Buyer for scheduling purposes. Seller shall use reasonable efforts consistent with Prudent Utility Practices and the other provisions of this Agreement to maximize the output of Facility Energy from the Facility except as otherwise set forth and in accordance with this Agreement. Seller shall arrange for, and shall bear all risks and benefits associated with, delivery of all Facility Energy and Replacement Energy to the Point of Delivery, including the arrangement of and payment for the interconnection of the Facility to the CAISO grid and any Transmission Services required to deliver Test Energy, Facility Energy and Replacement Energy to the Point of Delivery in the
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45 CAISO grid, including interconnection costs, transmission losses to the Point of Delivery, the transmission of Facility Energy associated with the transmission of Energy from the Facility to the Point of Delivery; provided that Replacement Energy may be delivered at locations approved by Buyer and subject to Seller’s reimbursement of any costs incurred by Buyer associated with any alternate delivery location (including the amount, if any, by which the Real-Time LMP at such point of interconnection is less than the Real-Time LMP at the Point of Delivery). (b) Buyer shall arrange for, and shall bear all risks associated with, acceptance and transmission of Facility Energy and Replacement Energy at and from the Point of Delivery, including the arrangement of and payment for Transmission Services at and from the Point of Delivery at the CAISO grid, and shall Schedule or arrange for Scheduling and Transmission Services to deliver Facility Energy and Replacement Energy at and from the Point of Delivery to Buyer, including charges related to control area services, inadvertent energy flows, transmission losses, the transmission of Facility Energy and Replacement Energy, and otherwise associated with the management of Buyer’s loads.
Section 7.2 Scheduling Cost Allocation; CAISO Scheduling Coordinator. From and after Initial Synchronization, Buyer, or Buyer’s designated third party, shall act as Scheduling Coordinator for the Facility and shall have the full right and obligation to Schedule all Energy from the Facility and Replacement Energy in accordance with all CAISO and other applicable requirements at and from the Point of Delivery. Seller shall cooperate and coordinate with Buyer ahead of Initial Synchronization to ensure Buyer’s ability to act as Scheduling Coordinator on such date. Buyer as Scheduling Coordinator shall assist with the need to test, commission and to timely achieve Commercial Operation, and Buyer shall not knowingly provide any scheduling instructions which interferes with those purposes. Buyer shall be the recipient of all CAISO Revenues associated with operation of the Facility and shall be financially responsible for and shall pay for all CAISO Costs; provided, however, that notwithstanding the foregoing, Seller shall assume all liability and reimburse Buyer for any and all costs, penalties or charges to the extent such costs or charges are incurred by Buyer as a direct result of Seller’s failure to perform any covenant or obligation set forth in this Agreement (including but not limited to Seller’s failure to provide the required notices for outages of the Facility or comply with any curtailment order or any data request) or failure to comply with any CAISO Tariff, WECC, NERC, Prudent Utility Practices, or other Requirements of Law, each except to the extent such non-compliance is caused by Buyer’s failure to perform its duties as Scheduling Coordinator for the Facility.
Section 7.3 Forecasting and Scheduling of Energy.
(a) Except upon the occurrence of a Curtailment Period under Section 7.4, Buyer or Buyer’s designated agent, as Scheduling Coordinator, shall Schedule all Facility Energy in accordance with the CAISO Tariff, NERC and WECC operating policies and criteria, and any other applicable guidelines, and the Scheduling and forecasting procedures provided in or developed under this Section 7.3. Seller, at its own cost, shall install metering, telemetry and control equipment so as to be able to provide Facility Energy to the Point of Delivery and respond to CAISO, Transmission Provider, or reliability coordinator’s dispatch orders. Seller will take all actions, at its sole costs and expense, required for the Facility to comply with the Eligible Intermittent Resources Protocol and the CAISO’s new resource implementation process, as applicable, and all additional applicable tariffs and protocols issued after the Effective Date by the
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46 CAISO applicable for Facility forecasting and scheduling of energy relating to eligible intermittent resources and the CAISO’s new resource implementation process during the Delivery Term subject to, to the extent applicable, a change in electric market design in Section 14.4(b). (b) Seller shall provide, or shall cause its designee to provide, the following non-binding forecasts, and any updates to such forecasts, to Buyer based on the most current forecast of Facility Energy and Replacement Energy, all in accordance with the requirements of the CAISO Tariff:
(i) At least one-hundred twenty (120) days before (a) the anticipated Commercial Operation Date and (b) the beginning of each Contract Year (other than the first Contract Year), a non-binding forecast of each Month’s average-day deliveries of Facility Energy and Replacement Energy, for the shorter of (i) following eighteen (18) Months, and (ii) the remaining Delivery Term.
(ii) No later than sixty (60) days before the beginning of each Month during the Delivery Term, a non-binding forecast of each day’s average hourly deliveries of Facility Energy and Replacement Energy, for such Month. (iii) No later than ten (10) Business Days before the beginning of each Month during the Delivery Term, a non-binding forecast of each day’s average hourly deliveries of Facility Energy and Replacement Energy for the following Month. (iv) On the first Business Day of each calendar week during the Delivery Term, a non-binding forecast of each day’s average deliveries of Facility Energy and Replacement Energy, by hour, for the following fourteen (14) days.
(v) By 5:30 a.m. Pacific Prevailing Time on the Business Day immediately preceding each day of delivery of Facility Energy and Replacement Energy during the Delivery Term, a copy of a non-binding hourly forecast of Seller deliveries of Facility Energy and Replacement Energy for each hour of the immediately succeeding day (“Day-Ahead Forecast”). Any forecast provided on a day prior to any non-Business Day shall include forecasts for the immediate day, each succeeding non-Business Day and the next Business Day. Seller shall, by 9:00 a.m. Pacific Prevailing Time, provide to Buyer a copy of any updates to such forecast indicating a change in forecasted Facility Energy or Replacement Energy from the then-current forecast.
(vi) During the Delivery Term, Seller shall notify Buyer of any changes from the Day-Ahead Forecast in (i) Available Generating Capacity of one (1) MW or more and (ii) hourly expected Energy of one (1) MWh or more, whether due to Forced Outage, Force Majeure or other cause, as soon as reasonably possible, but no later than one (1) hour prior to the deadline for submitting Schedules to the CAISO in accordance with the rules for participation in the Real-Time Market. If the Available Generating Capacity changes by at least one (1) MW or hourly expected Energy changes by one (1) MWh as of a time that is less than one (1) hour prior to the Real-Time Market deadline, but before such deadline, then Seller must notify Buyer as soon as reasonably possible. Such Real-Time Forecasts of Energy shall be provided by an Approved Forecast Vendor and shall contain information regarding the beginning date and time of the event
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47 resulting in the change in Available Generating Capacity or hourly expected Energy, as applicable, the expected end date and time of such event, and any other information required by the CAISO or reasonably requested by Buyer. With respect to any Forced Outage, Seller shall use commercially reasonable efforts to notify Buyer of such outage within ten (10) minutes of the commencement of the Forced Outage. Seller shall inform Buyer of any developments that will affect either the duration of such outage or the availability of the Facility during or after the end of such outage. These Real-Time Forecasts shall be communicated in a method reasonably acceptable to Buyer; provided that Buyer specifies the method no later than fifteen (15) Business Days prior to the effective date of such requirement. In the event Buyer fails to provide Notice of an acceptable method for communications under this Section 7.3(b)(vi), then Seller shall send such communications by telephone or e-mail to Buyer. In the event Seller does not in a given hour provide the forecast required in this Section 7.3(b)(vi) and Buyer incurs a cost, loss, or penalty resulting from Seller’s failure and Buyer’s scheduling activities in such hour with respect to Facility Energy, Seller shall be responsible for any and all costs, losses, or penalties, including (but not limited to) the product of (a) the absolute difference (if any) between (i) the expected Energy for such hour set forth in the Day-Ahead Forecast, or if there is no Day-Ahead Forecast, then the Monthly Delivery Forecast, and (ii) the actual Energy produced by the Facility, multiplied by (b) the absolute value of the Real-Time Price in such hour. (c) Seller shall, at its own cost and expense, develop and install all communication systems necessary for the operation of the Facility in accordance with Prudent Utility Practices and this Agreement, including communications systems that provide for (i) the receipt and following of automated dispatch instructions from the CAISO, (ii) enabling of automated generation control capability for Ancillary Services, and (iii) inter-control center communications protocol and distributed network protocol communications protocols. (d) Throughout the Delivery Term, Seller shall provide to Buyer the following data on a real-time basis, and in a format that reasonably allows Buyer to copy, paste or otherwise use such data:
(i) Read-only access to meteorological and related solar measurements, megawatt capacity and any other Facility availability information required in accordance with EIRP requirements;
(ii) Read-only access via secure login credentials to Energy output information collected by the SCADA system for the Facility; provided that if Buyer is unable to access the Facility’s SCADA system, then upon written request from Buyer, Seller shall provide Energy output information and meteorological measurements through such other format as may be mutually acceptable to Seller and Buyer, all as may be updated from time to time based on advancements in technology in accordance with Prudent Utility Practices; and (iii) Read-only access to all Electric Metering Devices. (e) The Parties shall work together after the Effective Date to develop Scheduling and operating procedures, which the Parties shall finalize no later than thirty (30) days prior to the Commercial Operation Date, or such other date agreed to by the Parties, in addition to those set forth in this Section 7.3, in order to administer the provisions of this Agreement in
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48 compliance with all applicable Requirements of Law and requirements of the Transmission Provider, CAISO, NERC, WECC, and any balancing authority involved in the Scheduling of Energy under this Agreement. Procedures may be reviewed annually (date and time to be mutually agreed), or as needed to account for actual Scheduling and operating requirements, to optimize operations for both Parties.
Section 7.4 Curtailment.
(a) Seller shall reduce deliveries of Facility Energy to the Point of Delivery promptly upon notice from, as applicable, the CAISO, a Transmission Provider, or any applicable balancing authority or reliability entity during Curtailment Orders. If required by the CAISO, a Transmission Provider, or any balancing authority or reliability entity, Seller shall provide the capability to implement curtailments and adjust ramp rates, megawatt output, power factor and voltage, and (if applicable) megavar output in real-time by means of setpoints received from the SCADA system of Seller.
(b) Buyer may curtail deliveries of Facility Energy (including for economic reasons and bid offers into the CAISO), at any time and for the duration specified by Buyer, subject to the Deemed Delivered Energy requirements, as applicable. Seller shall comply with such request and respond to Buyer curtailment notices (including the end of such curtailment periods) in accordance with Prudent Utility Practices. Seller shall install equipment at the Facility capable of measuring and recording representative solar data twenty-four (24) hours per day and collecting other data necessary to reasonably determine the amount of Deemed Delivered Energy. (i) Test Energy. Buyer shall not unreasonably curtail Test Energy in a manner that would materially delay Facility testing and the occurrence of the Commercial Operation Date. During the Test Energy period prior to the Commercial Operation Date, Buyer shall pay Seller for any Deemed Delivered Energy from a Compensable Curtailment in accordance with Appendix A, Section 5.
(ii) Commercial Operation. Starting on the Commercial Operation Date, Buyer shall pay Seller for any Deemed Delivered Energy from a Compensable Curtailment in accordance with Appendix A, Section 3; provided that the PTC Amount shall not be payable under Appendix A, Section 4 for Excess Energy.
(c) If delivery of Energy from the Complex is curtailed or reduced pursuant to Section 7.4(a), Seller shall allocate, and shall cause its Affiliates to allocate, to the extent it/they have discretion regarding such allocation, such curtailment or reduction, or cause the allocation of such curtailments or reductions as set forth in Section 4.4. (d) Seller may reduce deliveries of Facility Energy to the Point of Delivery when necessary to prevent imminent risk of damage or injury to any Person or any Person’s property that does not qualify as a System Emergency, a Force Majeure event, Scheduled Outage, or Forced Outage (“Seller Safety Curtailment”); provided that (i) such Facility Energy that would otherwise have been produced during a Seller Safety Curtailment shall not be considered Deemed Delivered Energy or count towards Lost Output, (ii) Seller will receive no compensation for such
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49 reductions; and (iii) Seller shall reimburse Buyer for any costs or penalties, including CAISO Costs, associated with such Seller Safety Curtailment.
Section 7.5 No Payment. Aside from Compensable Curtailments, Buyer shall not be obligated to pay Seller for any Facility Energy that is not or cannot be delivered to the Point of Delivery for any reason (including Force Majeure).
Section 7.6 Title; Risk of Loss. As between the Parties, Seller shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby) of all Facility Energy and Replacement Energy prior to the Point of Delivery, and Buyer shall be deemed to be in exclusive control (and responsible for any damages or injury caused thereby), of all Facility Energy and Replacement Energy from and after the Point of Delivery. Seller warrants that it will deliver all Facility Energy and Replacement Energy, and all of the associated Environmental Attributes, Capacity Attributes, Ancillary Services, and any other portions of the Product and Replacement Product to Buyer free and clear of all Liens, security interests, claims, and encumbrances of any kind created by any Person other than Buyer. Title to and risk of loss as to all Facility Energy and Replacement Energy and all of the associated Products shall pass from Seller to Buyer at the Point of Delivery; provided that title to and risk of loss as to any (a) Replacement Energy specified by Buyer to be delivered to a point or points of delivery other than the Point of Delivery pursuant to Section 9.1 and all of the associated Environmental Attributes shall pass from Seller to Buyer upon delivery of such Replacement Energy to such point or points, and (b) renewable energy credits associated with the Products shall pass from Seller to Buyer upon the deposit of the applicable WREGIS Certificate into Buyer’s WREGIS account in accordance with WREGIS protocols.
Section 7.7 RPS Compliance.
(a) Seller warrants and covenants that, from the time it receives notice from the CEC that the Facility is CEC Certified, and at all times thereafter until the expiration of the Delivery Term or earlier termination of this Agreement, the Facility (including the Facility Energy and the associated Environmental Attributes) shall be in RPS Compliance, subject to the remainder of this Section 7.7, and the provisions of this Section 7.7 shall apply notwithstanding any contrary provisions elsewhere in this Agreement.
(b) If a Change in Law occurs after the Effective Date that increases Seller’s known or reasonable expected costs to be in RPS Compliance, then the Parties agree that the maximum aggregate amount of costs and expenses (“Compliance Costs”) that Seller shall be required to bear during the Agreement Term to comply with all of such obligations (collectively, the “Compliance Actions”) shall be up to the Compliance Expenditure Cap; provided, however, that Seller’s Compliance Expenditure Cap shall not apply to Compliance Actions that are required due to the installation of storage technologies at the Facility or related to cost of facilities, material, or equipment that are part of the Remaining Complex but not the Facility, and shall further be subject to Section 7.7(c) below. Seller’s Compliance Expenditure Cap shall be reduced by any amounts that have accrued toward Seller’s Compliance Expenditure Cap under any provision in this Agreement.
(c) Compliance Action Notice; Responsibility for Expenditures.
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50 (i) If after a commercially reasonable period of time after such Change in Law, Seller reasonably expects that the Compliance Action costs necessary to cause the Facility to be in RPS Compliance will exceed Seller’s Compliance Expenditure Cap even after Seller’s future efforts to comply with such Change in Law, including Seller’s expenditure of Compliance Action costs in an amount no less than Seller’s Compliance Expenditure Cap, or if it is not possible to overcome through the payment of money the Change in Law to remain in RPS Compliance, then, in either case, Seller shall promptly provide notice to Buyer of the foregoing along with a reasonably detailed report (the “Compliance Action Notice”) consisting of (A) the Compliance Actions that Seller has performed and an itemized list of costs of such Compliance Actions, (B) Seller’s proposed additional Compliance Actions and a good faith itemized estimate of the applicable costs, and (C) a good faith estimate of the date that the Facility will again be in RPS Compliance or the applicable portions of the Product will be in compliance with the successor RPS Law (if any), as applicable, (the aggregate estimated costs of all performed and proposed Compliance Actions, “Compliance Action Plan Estimate”), or (D) a statement that if it is not possible to overcome through the payment of money the Change in Law for the Facility to remain in RPS Compliance or for the applicable portions of the Product to be in compliance with the successor RPS Law (if any), as applicable.
(ii) For sixty (60) days after delivery of the Compliance Action Notice, either Party may elect to pay costs in excess of Seller’s Compliance Expenditure Cap (“Excess Compliance Costs”). If a Party does elect through notice to the other Party to pay Excess Compliance Costs, then Seller shall be responsible for all Compliance Action costs up to Seller’s Compliance Expenditure Cap, and the electing Party shall be responsible for Compliance Action costs in excess thereof. If neither Party has provided notice to the other Party in writing of its election to pay the Excess Compliance Costs after sixty (60) days from the delivery of the Compliance Action Notice, or if it is not possible to overcome through the payment of money the Change in Law for the Facility to remain in RPS Compliance or for the applicable portions of the Product to be in compliance with the successor RPS Law (if any), as applicable, then one of the following scenarios (A)-(C) shall apply:
(A) In the event that the RPS Law is completely removed, with no similar successor state or federal requirement or program established that mandates the procurement of Environmental Attributes such as RECs or other environmental attributes (such successor requirement or program, a “Successor Program”), then both Parties shall continue performance of the Agreement (subject to Seller being excused from any related provisions including any RPS related representations, warranties and obligations under the Agreement), including Buyer paying to the Seller the Contract Price in accordance with this Agreement. (B) In the event that the RPS Law or a Successor Program remains, and solar photovoltaic resources as a category no longer qualifies but the Facility remains a carbon-free resource, then both Parties shall continue performance of the Agreement (subject to Seller being excused from any related provisions including any RPS related representations, warranties and obligations under the Agreement); provided that the Contract Price set forth in Appendix A, Section 1 during any period in this scenario (B) shall be equal to eighty percent (80%) of the then-current Contract Price (together, the “Reduced Contract Price”); provided that if the Facility, despite being a solar photovoltaic resource, subsequently nonetheless is considered RPS Compliant, the Contract Price in Appendix A, Section 1 shall revert to the full Contract Price.
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51 (C) In the event that neither scenario (A) nor (B)
immediately above applies, but the Facility in particular no longer qualifies for the RPS or a Successor Program, then if not cured by Seller within 180 days after notice to Seller by Buyer, Buyer may, in its sole discretion and without penalty to Buyer, terminate this Agreement by notice to Seller, without liability to either Party, except for such liabilities that accrued prior to the date of termination or that otherwise survive termination in accordance with the terms of this Agreement. During any period in scenario (C), Buyer shall pay Seller the Reduced Contract Price (and for avoidance of doubt if and when Seller timely cures any deficiency under this scenario (C), Buyer from that date forward shall revert to paying Seller the full Contract Price). (d) From time to time and at any time reasonably requested by Buyer or Buyer’s Authorized Representative, Seller shall furnish to Buyer, Buyer’s Authorized Representative, Governmental Authorities, or other Persons designated by Buyer, all certificates and other documentation reasonably requested by Buyer or Buyer’s Authorized Representative in order to demonstrate that the Facility, the Facility Energy, and the associated Environmental Attributes were or are in RPS Compliance, subject and except to the extent set forth in Section 7.4(c).
ARTICLE VIII
ENVIRONMENTAL ATTRIBUTES
Section 8.1 Transfer of Environmental Attributes. For and in consideration of Buyer entering into this Agreement, and in addition to the agreement by and between Buyer and Seller to purchase and sell Facility Energy on the terms and conditions set forth herein, Seller shall transfer to Buyer, and Buyer shall receive from Seller, all right, title, and interest in and to all Environmental Attributes, whether now existing or acquired by Seller or that hereafter come into existence or are acquired by Seller during the Agreement Term associated with the Facility Energy and any Replacement Energy. Seller agrees to transfer and make such Environmental Attributes available to Buyer immediately to the fullest extent allowed by applicable law upon Seller’s production or acquisition of the Environmental Attributes. Seller represents and covenants that it has not assigned, transferred, conveyed, encumbered, sold or otherwise disposed of and shall not assign, transfer, convey, encumber, sell or otherwise dispose of all or any portion of such Environmental Attributes to any Person other than Buyer or attempt to do any of the foregoing with respect to any of the Environmental Attributes. Buyer and Seller acknowledge and agree that the consideration for the transfer of Environmental Attributes is contained within the Contract Price.
Section 8.2 Reporting of Ownership of Environmental Attributes. During the Agreement Term, Seller shall not report to any Person that the Environmental Attributes granted hereunder to Buyer belong to any Person other than Buyer, and Buyer may report under any program that such Environmental Attributes purchased hereunder belong to it.
Section 8.3 Environmental Attributes. Seller shall take all necessary steps in making or supporting timely filings with the CEC to obtain and maintain CEC Certification and verification for the Facility throughout the Delivery Term, including compliance with all applicable requirements for certified facilities set forth in the current version of the RPS Guidebook (or its successor), subject to Section 7.7. Seller shall be responsible for any compliance obligations, and other regulatory or legal obligations associated with the Facility and delivery of
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52 the Product, including but not limited to costs and expenses incurred by Seller to third parties in connection with or related to environmental liabilities, losses, damages or costs, Greenhouse Gas Emissions Reporting, WREGIS (for Seller’s WREGIS account only), and CEC Certification and verification. Upon the request of Buyer or Buyer’s Authorized Representative and subject to Section 7.7, Seller execute all documents or instruments necessary under applicable law regulations, guidebooks promulgated by the CEC or PUC, or bilateral arrangements, as applicable, necessary for the attribution, accrual, realization, generation, production, recognition and validation of Environmental Attributes for the benefit of Buyer consistent with the other terms of this Agreement throughout the Agreement Term and Seller shall file with the CEC and any other applicable Persons all materials and documents required to demonstrate that the Facility is entitled to be CEC Certified.
Section 8.4 Future Environmental Attributes.
(a) The Parties acknowledge and agree that as of the Effective Date, environmental attributes sold under this Agreement are restricted to the Environmental Attributes; however, Future Environmental Attributes may be created by a Governmental Authority though Requirements of Law enacted after the Effective Date that do not relate to RPS Compliance or a Successor Program (such as a new third-party green credit associated with a new voluntary program). Buyer shall have the exclusive right to such Future Environmental Attributes and there shall be no increase in the Contract Price; provided, however, Buyer shall bear all costs and risks associated with the transfer, qualification, and verification for such Future Environmental Attributes. Upon Seller’s receipt of Notice from Buyer of Buyer’s intent to claim such Future Environmental Attributes, the Parties shall determine the necessary actions and additional costs associated with such Future Environmental Attributes. Seller shall have no obligation to bear any costs, losses or liability, or alter the Facility or the operation of the Facility, unless the Parties have agreed on all necessary terms and conditions relating to such alteration or change in operation and Buyer has agreed to reimburse Seller for all costs, losses, and liabilities associated with such alteration or change in operation.
(b) Seller agrees to work with Buyer in good faith to provide reasonably requested documentation and execute reasonable documentation necessary to effectuate the transfer and registration of such Future Environmental Attributes, including agreement with respect to (i) appropriate transfer, delivery and risk of loss mechanisms, and (ii) appropriate allocation of any additional costs to Buyer, as set forth above; provided, that the Parties acknowledge and agree such terms shall not alter the other material terms of this Agreement.
Section 8.5 WREGIS. In furtherance and not in limitation of Section 8.3, Seller shall ensure all applicable steps have been taken to register the Facility with WREGIS that are reasonably capable of being completed prior to the Commercial Operation Date under WREGIS Operating Rules, and, within ninety (90) days after Commercial Operation, Seller shall ensure the Facility is registered with active status in WREGIS and is associated with an active account in WREGIS, which Seller shall maintain until the end of the Delivery Term. After the Facility is registered with WREGIS, Seller shall transfer WREGIS Certificates using the Forward Certificate Transfer method as described in WREGIS Operating Rules from Seller’s WREGIS account to Buyer’s WREGIS accounts, as designated by Buyer’s Authorized Representative. Seller shall be responsible for WREGIS Certificate issuance fees and WREGIS expenses associated with
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53 registering the Facility, maintaining its account, acquiring and arranging for a Qualified Reporting Entity (“QRE”) to the extent required, and any applicable QRE agreements, and transferring WREGIS Certificates to Buyer or any Buyer designees (provided that if Seller makes any change to the recipient of the WREGIS Certificates to any third-party designated by Buyer, pursuant to instructions provided by Buyer to Seller, and any such Product due to such designation fails to meet any requirements of this Agreement, then Seller shall not be deemed to be in breach of any obligation of this Agreement, including without limitation any representation or warranty herein).
Buyer shall be responsible for its WREGIS expenses associated with maintaining its own account, or the accounts of its designees, if any, and subsequent transferring or retiring by it of WREGIS Certificates. Forward Certificate Transfers shall occur monthly based on the certificate creation timeline established by the WREGIS Operating Rules. Seller shall be responsible for, at its expense, validating and disputing data with WREGIS prior to WREGIS Certificate creation each Month. If Buyer accepts any WREGIS Certificate for a Product and that Product is later deemed not to be Compliant, Seller shall reimburse Buyer for such WREGIS Certificate at the Environmental Attributes Value plus interest at the Interest Rate within ninety (90) days after Seller is notified of such non-compliance, and if after such Seller reimbursement any such Product is later deemed compliant by WREGIS then Buyer shall further refund such amount back to Seller within ninety (90) days after Buyer is notified of thereof.
Section 8.6 Further Assurances. In addition to and not in limitation of Section 8.5, Seller shall document the production of Environmental Attributes by delivering with each invoice to Buyer an attestation for the Environmental Attributes associated with Facility Energy or included with Replacement Energy, if any, for the preceding Month in the form of attestation set forth as Appendix D.
ARTICLE IX
GEP SHORTFALL
Section 9.1 Makeup of GEP Shortfall. Within thirty (30) days after the end of each Contract Year, Seller shall provide Buyer with a calculation of Adjusted Energy Production during such Contract Year, and if the end of a Performance Measurement Period, the amount of Adjusted Energy Production during such Performance Measurement Period. If Seller fails during any Performance Measurement Period to deliver (or be deemed to deliver) Adjusted Energy Production in an amount greater than or equal to the Guaranteed Generation, then such failure is a “GEP Shortfall” and the Performance Measurement Period in which the GEP Shortfall occurs is a “GEP Shortfall Performance Period”. During the GEP Shortfall Makeup Period, (i) the Adjusted Energy Production during such Shortfall Makeup Period will not be counted toward make-up of the GEP Shortfall Energy until such time the Adjusted Energy Production for the Contract Year composing such GEP Shortfall Makeup Period is equal to the Guaranteed Generation for such Contract Year and (ii) the amount of GEP Shortfall Energy shall first be reduced by the amount of any (a) Adjusted Energy Production during the applicable Shortfall Makeup Period in excess of the Guaranteed Generation, and then (b) Replacement Product delivered by Seller. Such Replacement Product shall be delivered to the Point of Delivery or such other point of delivery as is mutually agreed upon by the Parties (which point of delivery shall be deemed the “Point of Delivery” for such Replacement Product and the other Scheduling and delivery provisions hereof) and on a delivery schedule mutually agreed to by Seller and Buyer. The Parties agree to update Appendix H in a mutually agreeable manner related to facilities used for Replacement Product, or at Buyer’s
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54 election, Seller shall alternatively provide notice consistent with Section 14.2 of the facilities used for Replacement Product in a form that includes the content of Part B of Appendix H. Any additional costs or expenses associated the Replacement Product or with delivery of Replacement Product to a Point of Delivery designated under this Section 9.1 shall be borne by Seller. To the extent Seller is unable to deliver or provide sufficient Adjusted Energy Production or Replacement Product in excess of the Guaranteed Generation to make up the remaining GEP Shortfall Energy, then Seller shall, at the end of the GEP Shortfall Makeup Period, pay Buyer GEP Shortfall Damages. Notwithstanding the foregoing, if a GEP Shortfall occurs during the last Contract Year, Seller shall pay GEP Shortfall Damages as provided in Section 9.2 without a GEP Shortfall Makeup Period which, except as set forth in Section 13.1(i), shall be Buyer’s sole and exclusive remedy in connection with Seller’s failure to meet the achieve the Guaranteed Generation amount.
Section 9.2 GEP Shortfall Damages. If Seller fails to make up the full amount of any GEP Shortfall Energy by the end of the GEP Shortfall Makeup Period, then Seller shall within sixty (60) days after the end of such GEP Shortfall Makeup Period pay Buyer the GEP Shortfall Damages; provided that, if the GEP Shortfall occurs during the final Contract Year, then Seller shall within sixty (60) days after the end of that final Contract Year pay Buyer the GEP Shortfall Damages, if any. The damages shall be an amount equal to the positive difference (if any), for each MWh of remaining GEP Shortfall, resulting from subtracting (a) the Contract Price that Buyer would have paid for such remaining GEP Shortfall had it been delivered from (b) the sum of (1) the Market Price Index for such remaining GEP Shortfall and (2) the Environmental Attributes Value associated therewith (such positive difference of (a) and (b) for each MWh, the “GEP Shortfall Damages”) No payment shall be due if the calculation yields a negative number. For the avoidance of doubt, Buyer shall not be obligated to procure Replacement Product in order to recover GEP Shortfall Damages, but may elect to procure replacement product from the GEP Shortfall Damages as a result of Seller’s GEP Shortfall. If Seller fails following ten (10) Business Days’ Notice from Buyer to pay Buyer the GEP Shortfall Damages within sixty (60) days after the end of the GEP Shortfall Makeup Period, Buyer shall have the right to immediately draw the applicable amount of GEP Shortfall Damages owed to Buyer from the Operation Security.
ARTICLE X
CAPACITY RIGHTS
Section 10.1 Capacity Rights. For and in consideration of Buyer entering into this Agreement, and in addition to the agreement by Buyer and Seller to purchase and sell Facility Energy and Environmental Attributes on the terms and conditions set forth herein, Seller hereby transfers to Buyer, and Buyer hereby accepts from Seller, all of Seller’s rights, title and interest in and to the Capacity Rights, including any Resource Adequacy Attributes and other present and future capacity attribute values related to the Facility, if available and to the extent set forth in Section 10.2. The Parties acknowledge that the Product as of the Effective Date does not contain any Resource Adequacy Attributes or any other Capacity Attributes, and as of the Effective Date the Facility has Energy-Only Deliverability Status. Similarly, Sellers’s commitment of Ancillary Services is made with the acknowledgment of Buyer that the Facility as of the Effective Date has Energy-Only Deliverability Status and certain CAISO Ancillary Services certifications as of the Effective Date only pertain to certain resource types that are not the Facility (such as an energy storage system). Under this Agreement, there is no energy storage facility contemplated as of the Effective Date and any possible future installation is subject to the provisions of Section 12.4.
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55 Further, for avoidance of doubt, black start is not included. Buyer and Seller acknowledge and agree that the consideration for the transfer of Capacity Rights, and associated Capacity Attributes (if any), is contained within the applicable Contract Price.
Section 10.2 Covenant Regarding Capacity Rights. Without limiting any of Seller’s obligations under this Agreement at Seller’s cost, Seller shall conduct commercially reasonable efforts (which efforts may include actions that occurred prior to the Effective Date) through the CAISO affidavit process existing as of the Effective Date to obtain from the CAISO by July 1, 2025 an award of solar generation TP Deliverability that is both sufficient and timely enough to provide the Facility deliverability by the Guaranteed Commercial Operation Date in the full amount of the Contract Capacity and qualified for Full Capacity Deliverability Status (the “Facility TP Deliverability Allocation Condition”). If Seller receives an allocation of solar generation TP Deliverability for the Complex that is in excess of 330 MW, then any such excess amount of solar generation TP Deliverability, up to a maximum amount of 170 MW, shall be attributable to the Facility (the “Facility Allocation Amount”). In the event of a Change in Law that affords the ability to secure Resource Adequacy Attributes or Capacity Attributes associated with the Capacity Rights of the Facility, upon Buyer’s reasonable request and at Buyer’s sole cost, Seller shall conduct commercially reasonable efforts to secure Resource Adequacy Attributes or Capacity Attributes associated with the Capacity Rights of the Facility. Subject to the preceding sentence, if the Facility TP Deliverability Allocation Condition has not occurred by Seller July 1, 2025, then Seller shall not have any further obligation to seek an allocation of TP Deliverability for the Project. The achievement of Full Capacity Deliverability Status or Interim Deliverability Status shall not be a condition to the achievement of Commercial Operation, and no Default shall occur due to the failure of the Facility to obtain Full Capacity Deliverability Status, Interim Deliverability Status, or any Resource Adequacy Attributes or any other Capacity Attributes, unless such failure is due to Seller’s failure to comply with this Section 10.2. At a minimum, Seller will obtain Energy-Only Deliverability Status for the Facility upon Commercial Operation and maintain it during the Delivery Term, or be equivalently authorized by the CAISO and Governmental Authorities to deliver Product to Buyer to the same extent Product may be delivered under an Energy-Only Deliverability Status construct under any successor designation, each at Seller’s own cost. To the extent that the Facility becomes subject to the Availability Standards from the CAISO, Seller shall be responsible for all availability incentive costs and penalties, and shall receive any availability incentive revenues. Seller further represents and covenants that it has not assigned, transferred, conveyed, encumbered, sold or otherwise disposed of and shall not in the future assign, transfer, convey, encumber, sell or otherwise dispose of any of the Capacity Rights to any Person other than Buyer or attempt to do any of the foregoing with respect to any of the Capacity Rights.
ARTICLE XI
BILLING; PAYMENT; AUDITS; METERING; ATTESTATIONS; POLICIES Section 11.1 Billing and Payment. Billing and payment for all Products shall be as set forth in this ARTICLE XI.
Section 11.2 Calculation of Energy Delivered; Invoices and Payment. (a) Commencing with the Month following the Month in which Test Energy is first delivered by Seller and received by Buyer under this Agreement, Seller shall use
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56 commercially reasonable efforts to deliver by the fifteenth (15th) day of such Month to Buyer an invoice showing the amount due from Buyer to Seller in accordance with this Agreement for Test Energy, Facility Energy, Replacement Energy, Deemed Delivered Energy and Compensable Curtailments, and Excess Energy (if any) during the preceding Month, any other amounts due to Seller including amounts due under Section 7.4, and any supporting calculations (including Curtailment Periods and Lost Output) and records of meter data. Seller shall calculate the amount of Facility Energy from meter readings at the Electric Metering Devices maintained pursuant to Section 11.6. Each invoice shall reference this Agreement, and the name, address and identifying information of Seller and the identification of the Facility, and shall be sent to the address set forth in Appendix J or such other address as Buyer may provide to Seller. Any electronic information delivered by Seller under this Section 11.2 shall be in a format such as Microsoft Excel (or its equivalent) that allows Buyer to cut, paste or otherwise readily use and work with such information or documentation or as otherwise mutually agreed by the Parties. The Parties shall, and Buyer shall cause its Scheduling Coordinator to, provide each other with all reasonable access to any records, including invoices or settlement data from the CAISO, forecast data and other information, all as may be necessary from time to time for Seller to prepare and the Parties to verify the accuracy of all invoices.
(i) Concurrently with the delivery of each monthly invoice and to the extent received in time by Seller from WREGIS and except as otherwise provided in Section 7.7, Seller shall deliver information regarding the WREGIS Certificates, including the WREGIS certificates created in the prior month vintage and serial numbers. (b) Subject to this Section 11.2 and Section 11.3, not later than the sixtieth (60th) day after receipt by Buyer of Seller’s Monthly invoice (or the next succeeding Business Day, if the sixtieth (60th) day is not a Business Day), Buyer shall pay to Seller, by wire transfer of immediately available funds to an account specified by Seller or by any other means agreed to by the Parties from time to time, the amount set forth as due in such Monthly invoice. Buyer shall use commercially reasonable efforts to pay Seller for undisputed amounts within thirty (30) days after invoice receipt; provided that payment for undisputed amounts shall not be due to Seller until sixty (60) days after receipt of invoice as provided in the preceding sentence. (c) Seller shall, in subsequent invoices, adjust previously invoiced amounts to reflect adjustments, reconciliations or final settlements with WREGIS occurring after the date of the initial invoice, or any other adjustments agreed to by the Parties (other than adjustments resulting from the resolution of invoice disputes, which are addressed in Section 11.3), which shall be without interest of any kind.
(d) Buyer shall not be required to make invoice payments if the invoice is received more than twelve (12) Months after the applicable Monthly billing period except with respect to any disputed amounts for which an invoice was provided within twelve (12) Months after the applicable Monthly billing period and for which Buyer’s liability is established and for any corrections or adjustments resulting in amounts owing by Buyer pursuant to Section 11.6(a). (e) Buyer may withhold from payment to Seller an amount equal to twenty dollars ($20) per MWh (such amount, the “WREGIS Withhold Amount”) for each MWh of Facility Energy in accordance with this Agreement (including in accordance with Section 6.1 and
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57 Section 9.1) until such time as the WREGIS Certificate associated with such MWh of Facility Energy or Replacement Energy has been accurately and fully credited to Buyer’s WREGIS account as set forth in Section 8.5, at which point Buyer shall pay or release the respective WREGIS Withhold Amount to Seller within sixty (60) days.
Section 11.3 Disputed Invoices. If any portion of any invoice is in dispute, the undisputed amount shall be paid when due. The Party disputing a payment shall promptly notify the other Party of the basis for the dispute, setting forth the details of such dispute in reasonable specificity. Disputes shall be discussed directly by the Parties’ Authorized Representatives, who shall use reasonable efforts to amicably and promptly resolve such Disputes, and any failure to agree shall be subject to resolution in accordance with Section 14.3. Upon resolution of any Dispute, if all or part of the disputed amount is later determined to have been due, then the Party owing such payment or refund shall pay within ten (10) Business Days after receipt of notice of such determination the amount determined to be due plus interest thereon at the Interest Rate from the due date until the date of payment. “Interest Rate” shall mean the lesser of (i) two percent (2%) above the per annum Prime Rate reported daily in The Wall Street Journal, or (ii) the maximum rate permitted by applicable Requirements of Law.
Section 11.4 Netting of Payments. The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other with respect to this Agreement 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, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it. For avoidance of doubt, in addition to any right now or hereafter granted under applicable law and not by way of limitation of any such rights, each Party shall have the right at any time or from time to time without notice to the other Party or to any other Person, any such notice being hereby expressly waived, to set off against any amount due the other Party from that Party under this Agreement any amount due that Party from the other Party under this Agreement, including any amounts due because of breach of this Agreement or any other obligation. 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 11.3 or an adjustment to an amount previously invoiced or paid is required due to a correction of data by the CAISO; provided, however, that there shall be no adjustments to prior invoices based upon meter inaccuracies except to the extent that such meter adjustments are accepted by CAISO for revenue purposes. 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 11.3, accruing from the date on which the adjusted amount should have been due.
Section 11.5 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 four (4) years after the creation of such related invoice or as otherwise required by any applicable Requirement of Law. Such books and records shall include documentation and materials necessary to verify all costs claimed to have been incurred under this Agreement, such as meter data. In the event of a Dispute, records that
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58 relate to the Dispute, litigation or costs, shall be maintained. Buyer or Buyer’s Authorized Auditors may inspect, reproduce, photocopy, download, transcribe, and the like any such records, provided, however (except for any required public disclosure of findings in accordance with Section 14.19(e) below) any such Authorized Auditors shall be subject to the confidentiality obligations set forth in Section 14.19 below. Upon fifteen (15) Business 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. 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 four (4) years 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 ten (10) 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; provided that notwithstanding anything to the contrary set forth in this Section 11.5 or anywhere else in this Agreement, there shall be no adjustments to prior invoices except to the extent that such adjustments are accepted by CAISO for revenue purposes. Inadvertent overpayments shall be returned via adjustments in accordance with Section 11.4. Any dispute with respect to an invoice is waived if the other Party is not notified in accordance with this Section 11.5 within four (4) years after the invoice is rendered or subsequently adjusted. 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. Seller acknowledges that in accordance with California Government Code Section 8546.7, Seller may be subject to audit by the California State Auditor with regard to Seller’s performance of this Agreement because the compensation under this Agreement exceeds $10,000.
Section 11.6 Electric Metering Devices.
(a) Facility Energy shall be measured using CAISO-approved revenue-quality Electric Metering Devices that comply with the CAISO Tariff (including adjustment for losses occurring between the Facility and the Delivery Point), RPS Guidebook, and relevant protocols and is dedicated exclusively to the Facility. Seller shall arrange and bear all costs associated with the installation of the Electric Metering Devices needed for the registration, recording and transmission of information regarding the Facility Energy. Seller hereby agrees to provide a mutually agreed set of meter data to Buyer, which data shall be accessible to, and usable by, Buyer.
In addition to providing Buyer with such meter data, Seller shall use commercially reasonable efforts to support any efforts by Buyer to obtain CAISO meter data applicable to the Facility and all inspection, testing and calibration data and reports from the CAISO. All such Electric Metering Devices used to provide data for the computation of payments shall be sealed and Seller shall only break the seal when such Electric Metering Devices are to be inspected and tested or adjusted in accordance with this Section 11.6. If the CAISO makes any adjustment to any CAISO meter data for a given time period which adjustment is accepted by the CAISO for revenue purposes, Seller agrees that it shall submit revised Monthly invoices, pursuant to this ARTICLE XI covering the entire applicable time period in order to fully conform such adjustments to the meter data. Seller
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59 shall submit any revised invoices no later than thirty (30) days after the date on which the CAISO provides Seller with binding adjustments for revenue purposes to the meter data. (b) Telemetering of Energy quantities for revenue reporting shall utilize DNP
3.0, Inter-Control Center Communications Protocol, or any other mutually agreed upon, industry- standard protocol that ensures proper counter operation. Seller or its Authorized Representative, at no expense to Buyer, shall inspect and test all Electric Metering Devices upon installation and annually thereafter, or upon Buyer’s reasonable request. Seller shall provide Buyer with reasonable advance notice of, and permit representatives of Buyer to witness and verify, such inspections and tests, provided Seller shall not be required to delay or reschedule such inspections and tests. The actual expense of any such requested additional inspection or testing shall be borne by Seller, though Buyer shall be responsible for the costs and expenses of Buyer’s representatives. Seller shall provide copies of any inspection or testing reports to Buyer. (c) If an Electric Metering Device fails to register, or if the measurement made by an Electric Metering Device is found upon testing to be inaccurate by more than plus or minus one percent (+/- 1.0%), an adjustment shall be made to correct all measurements made by the inaccurate or defective Electric Metering Device for both the amount of the inaccuracy and the period of the inaccuracy. If the period of the inaccuracy cannot be reasonably ascertained, any such adjustment shall be for a period equal to one-half of the time elapsed since the preceding test of the applicable Electric Metering Devices; provided, such period may not exceed twelve (12) months. To the extent that the adjustment period covers a period of deliveries for which payment has already been made by Buyer, the Parties shall use the corrected measurements as determined in accordance with this Section 11.6 to recompute the amount due for the period of the inaccuracy and shall subtract the previous payments by Buyer for this period from such recomputed amount.
If the difference is a positive number, the difference shall be paid by Buyer to Seller; if the difference is a negative number, that difference shall be paid by Seller to Buyer, or at the direction of Buyer, may take the form of an offset to payments due to Seller from Buyer. Payment of such difference by the owing Party shall be made not later than thirty (30) days after the owing Party receives notice of the amount due, unless Buyer elects payment via an offset. Notwithstanding anything to the contrary set forth in this Section 11.6 or anywhere else in this Agreement, there shall be no adjustments to prior invoices based upon meter inaccuracies except to the extent that such meter adjustments are accepted by CAISO for revenue purposes. (d) On or before the first date on which Test Energy is produced by the Facility, and continuing throughout the Delivery Term, Seller shall provide to Buyer at Seller’s cost read- only access to all Electric Metering Devices installed, owned, and operated by Seller that are used to measure Facility Energy.
Section 11.7 Taxes. Seller shall be responsible for and pay any and all federal, state, and local Taxes incurred by it as a result of entering into this Agreement and all Taxes imposed or assessed with respect to the Facility, the Site or any other assets of Seller, the Products or the transaction arising before the Point of Delivery per transfer of title provisions in Section 7.6 (excluding, for avoidance of doubt, withholding or other Taxes imposed on Buyer’s income, revenue, receipts, or employees), if any. Buyer shall be responsible for and pay or cause to be paid all Taxes on or with respect to the Products or the transaction from and after the Point of Delivery per the transfer of title provisions in Section 7.6 (excluding, for avoidance of doubt, withholding
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60 or other Taxes imposed on Seller’s income, revenue, receipts, or employees), if any. If Seller is required by a Requirement of Law to remit or pay Taxes that are the responsibility of Buyer hereunder, Buyer shall promptly reimburse Seller for such Taxes. If Buyer is required by Requirement of Law to remit or pay Taxes that are Seller’s responsibility hereunder, Buyer may deduct such amounts from payments to Seller hereunder; if Buyer elects not to deduct such amounts from Seller’s payments, Seller shall promptly reimburse Buyer for such amounts upon request. Nothing shall obligate or cause a Party to pay or be liable to pay any Taxes for which it is exempt under law. In the event any sale of Product hereunder is exempt from or not subject to any particular Tax, the Party claiming the exemption shall provide the other Party with all necessary documentation to evidence such exemption or exclusion within thirty (30) days upon the request of the other Party to the claiming Party. The claiming Party shall indemnify, defend, and hold the other Party harmless from any liability with respect to Taxes for which the claiming Party is responsible hereunder and from which the claiming Party claims it is exempt. Each Party shall use reasonable efforts to implement the provisions of and administer this Agreement in accordance with the intent of the Parties to minimize all Taxes, so long as no Party is materially adversely affected by such efforts. The Parties shall cooperate to minimize Tax exposure; provided, however, that neither Party shall be obligated to incur any financial or operational burden (or undertake any activities which in its sole discretion such Party believes are not lawful) to reduce Taxes for which the other Party is responsible hereunder. All Product delivered by Seller to Buyer hereunder shall be a sale made at wholesale, with Buyer reselling such Product.
ARTICLE XII
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 12.1 Representations and Warranties of Buyer. Buyer makes the following representations and warranties to Seller as of the Effective Date:
(a) Buyer is a validly existing California joint powers authority, and has the legal power and authority to own its properties, to carry on its business as now being conducted and to enter into this Agreement, and to carry out the transactions contemplated hereby, and to perform and carry out all covenants and obligations on its part to be performed under and pursuant to this Agreement.
(b) The execution, delivery and performance by Buyer of this Agreement (i) have been duly authorized by all necessary action; and (ii) does not violate any federal, state, and local law, including the California Government Code and similar laws. (c) Buyer has the power and authority to enter into and, subject to the Buyer Approvals termination rights in Section 2.6(a), perform this Agreement and is not prohibited from entering into this Agreement or, subject to the Buyer Approvals termination rights in Section
2.6(a), 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, subject to the Buyer Approvals termination rights in Section 2.6(a), performance of this Agreement by Buyer Approvals 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.
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61 (d) This Agreement has been duly and validly executed and delivered by Buyer, constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditors’ rights generally or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law.
(e) 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 Buyer formation documents, and Buyer has been given all requisite authority by the Buyer’s governing body to execute this Agreement.
Section 12.2 Representations and Warranties of Seller. Seller makes the following representations and warranties to Buyer as of the Effective Date:
(a) Seller is a limited liability company, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation, and is qualified to conduct business in the State of California and each jurisdiction where the failure to so qualify would have a material adverse effect on the business or financial condition of Seller. (b) Seller has the power and authority to enter into and, subject to the Seller Board Approval termination rights in Section 2.6, perform this Agreement and is not prohibited from entering into this Agreement or subject to the Seller Board Approval termination rights in Section 2.6 to 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 Seller’s performance under this Agreement. The execution, delivery and, subject to the Seller Board Approval termination rights under Section 2.6, 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. (c) The execution and delivery of this Agreement, consummation of the obligations 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 Requirement of Law presently in effect having applicability to 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) Seller has (i) not entered into this Agreement with the actual intent to hinder, delay or defraud any creditor, and (ii) has or will receive reasonably equivalent value in exchange
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62 for its obligations under this Agreement. No petition in bankruptcy has been filed against Seller (other than petitions that have been dismissed within thirty (30) days after filing), and Seller has never made an assignment for the benefit of creditors or taken advantage of any insolvency act for its benefit as a debtor. There is no pending or threatened action or proceeding affecting Seller before any Governmental Authority, which purports to affect the legality, validity or enforceability of this Agreement.
(f) Seller has not assigned, transferred, conveyed, encumbered, sold or otherwise disposed of the Products except as provided herein. (g) The Site is located in the State of California and the Facility is or will be located in the State of California.
Section 12.3 General Covenants. Commencing on the Effective Date (unless otherwise noted below) and thereafter continuing throughout the Agreement Term:
(a) Each Party covenants that 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) Each Party covenants that 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;
(c) Each Party covenants that it shall perform its obligations under this Agreement in compliance with all terms and conditions in its governing documents and in compliance with any Requirement of Law;
(d) Seller covenants that it shall be a Special Purpose Entity; (e) Seller shall not, at any time during the Delivery Term, incur or permit Facility Debt in an amount that, in the aggregate as of the date it is incurred, exceeds ninety percent (90%) of the Facility Cost;
(f) Seller covenants that it will obtain by the Construction Start Date and maintain Site Control required for constructing, operating, and maintaining the Facility (and Seller shall provide evidence of Site Control to Buyer prior to Construction Start to Buyer, which may be satisfied by providing the publicly recorded information for such Site or other documentation subject to redaction for confidential information that still allows Buyer to reasonably verify such Site Control).
(g) Seller shall maintain (or obtain from time to time as required) at its sole cost all Permits (including those issued under the CEQA/NEPA Determinations) and ministerial permits necessary for the construction and operation of the Facility and for it to legally perform its obligations under this Agreement.
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63 Section 12.4 Storage Technology. In order to optimize the benefits of the Facility by potentially adding a co-located storage facility for Buyer (“Buyer Storage”) to the Agreement if the CAISO were to timely allocate sufficient deliverability for the Complex including the Facility (subject to the deliverability provisions in Section 10.2 above), Buyer and Seller each agree that if requested by Buyer, then Buyer and Seller will discuss in good faith potential reconfiguration of the Facility to accommodate Buyer Storage that preserves each Party’s benefits and obligations under the Agreement to the extent not affected by the addition of Buyer Storage with the Facility, but subject to any changes in light of the addition of such a possible Buyer Storage, and subject to each Party’s agreement in each Party’s sole discretion. Buyer shall have a right of first offer to evaluate and negotiate an agreement for such storage facility and subject to any such possible storage facility being a co-located facility with the Facility (i.e., such right of first refusal is in connection with the Facility only, and not any other third-party facilities or Phases located at the Complex, one of which already includes a proposed storage facility, or elsewhere) and subject to any such proposed storage facility sharing with the Facility the same 170 MW of interconnection capacity to which the Facility is already entitled. For the avoidance of doubt, (a) as of the Effective Date the Facility has Energy-Only Deliverability Status; and (b) Seller makes no representation or warranty that the Facility, or any potential Buyer Storage, will obtain deliverability or any allocation of TP Deliverability, or achieve Full Capacity Deliverability Status or Interim Deliverability Status.
ARTICLE XIII
DEFAULT; TERMINATION AND REMEDIES; PERFORMANCE DAMAGE
Section 13.1 Default. Each of the following events or circumstances shall constitute a “Default” by the responsible Party (the “Defaulting Party”):
(a) Payment Default. Failure by a Party to make any payment under this Agreement when and as due (other than payments disputed in good faith), including payment of GEP Shortfall Damages, that is not cured within ten (10) Business Days after receipt of notice thereof from the other Party (which amount shall include payment of interest from the due date at the Interest Rate).
(b) Performance Default. Failure by a Party to perform any of its material duties or obligations under this Agreement (other than any failure that is separately listed as a Default of Seller under this Section 13.1; and except for failures to achieve the Guaranteed Generation that do not trigger the provisions of Section 13.1(i), the exclusive remedies for which are set forth in Section 9.2)), that is not cured within thirty (30) days after receipt of notice thereof from the other Party; provided that if such failure cannot be cured within such thirty (30) day period despite reasonable commercial efforts, such failure is not a failure to make a payment when due, such Party expeditiously commences to cure such breach following its receipt of notice, and such Party continues to diligently proceed with such cure within such longer period of time, such Party shall have an additional sixty (60) days to cure. (c) Breach of Representation and Warranty. Any representation or warranty made by a Party in this Agreement is materially false or inaccurate or omits a material fact or circumstance present at the time made; provided that no Default shall exist if such falsity, inaccuracy, or omission is remedied within thirty (30) days after receipt of notice thereof from the
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64 other Party (or such longer additional period, not to exceed an additional sixty (60) days, if the Defaulting Party is unable to remedy such default within such initial thirty (30) day period despite exercising commercially reasonable efforts).
(d) Bankruptcy. Bankruptcy of a Party.
(e) Performance Security Failure. The failure of Seller to furnish, maintain, or replace Performance Security, or otherwise be in full force or effect as and to the extent required by and in the times set forth in Section 5.5, subject to a ten (10) Business Day cure period in total for the Development Security posting under the first sentence of Section 5.5(a). (f) Insurance Default. The failure of Seller to maintain acceptable evidence of the required insurance for the required period of coverage as set forth in Section 14.17(b) and such failure is not remedied within thirty (30) days after Notice thereof. (g) Construction Start Date. Seller’s failure to achieve Construction Start on or before one-hundred eighty (180) days after the Guaranteed Construction Start Date (as may be extended by a Developer Cure Period).
(h) Commercial Operation Date. Seller’s failure to achieve Commercial Operation: (i) on or before one-hundred eighty (180) days after the Guaranteed Commercial Operation Date (as may be extended by a Developer Cure Period); or (ii) by the Commercial Operation Date Deadline.
(i) Adjusted Energy Production Default Event. The amount of Adjusted Energy Production for the following respective time periods is not at least: (i) fifty percent (50%) of the Annual Contract Quantity amount measured over a single Contract Year or (ii) an average of at least 70% of the Annual Contract Quantity during any Performance Measurement Period (either (i) or (ii) a “GEP Failure”). To the extent that a GEP Failure is due to a Qualifying Transformer Failure, then such GEP Failure is not subject to Default; provided that a Qualifying Transformer Failure shall only be applied to a GEP Failure one time during the Delivery Term for a maximum period of one (1) year.
(j) Fundamental Change. (1) A Party assigns this Agreement or any of its rights hereunder, (2) such Party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity, or (3) a foreclosure of Seller’s interests in this Agreement, other than for each of (1), (2) and (3), (A) in compliance with Section
14.7, or (B) with the other Party’s prior written consent.. (k) Failure to pay Daily Delay Damages. Failure by Seller to make any payment of Daily Delay Damages pursuant to Section 3.3(c) when and as due (other than payments disputed in good faith) that is not cured within fifteen (15) Business Days after receipt of notice thereof from Buyer (which amount shall include payment of interest from the due date at the Interest Rate).
(l) CEQA/NEPA. Seller’s CEQA/NEPA Determinations (and as applicable any BLM right-of-way grant described in Appendix B) are no longer Materially Final and Non- Appealable, and such occurrence, if curable, is not cured within 180 days thereof.
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65 Section 13.2 Default Remedy; Declaration of Early Termination Date. If an event of Default with respect to a Defaulting Party shall have occurred and be continuing, the other Party (“Non-Defaulting Party”) shall have the following rights:
(a) to send Notice (a “Termination Notice”), designating a day, no earlier than the day such notice is deemed to be received and no later than twenty (20) days after such notice is deemed to be received, as an early termination date of this Agreement (“Early Termination Date”) that terminates this Agreement (the “Terminated Transaction”) and ends the Delivery Term effective as of the Early Termination Date;
(b) to accelerate all amounts owing between the Parties, and to collect as liquidated damages (i) a damage payment in the amount of the Development Security less each of the following items (A) – (E) already paid or drawn (and for avoidance of doubt no unpaid or undrawn amounts pertaining to items (A) – (E) shall be further owing by Seller) (A) Daily Delay Damages, (B) Pre-COD Termination Fee, (C) Seller Approvals Termination Fee, (D) other payments by Seller under this Agreement, and (E) draws by Buyer on the Development Security permitted under this Agreement (the “Damage Payment”) (in the case of an event of Default by Seller occurring before the Commercial Operation Date, including without limitation an event of Default under Section 13.1(g), (h) & (k) subject to the limitations in Section 13.7), or (ii) the Termination Payment calculated in accordance with Section 13.3 below (in the case of any other event of Default by either Party);
(c) to withhold any payments due to the Defaulting Party under this Agreement; (d) to suspend performance;
(e) if Buyer, to apply the Development Security or Operation Security to the extent of any outstanding amounts owed by Seller; and
(f) 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 the Terminated Transaction and the event of Default related thereto, and further provided, promptly upon Buyer’s receipt of the Damage Payment or Termination Payment, as applicable, Buyer shall promptly return to Seller the Development Security or the Operation Security to the extent either of them, as applicable, did not comprise (i.e., was not used as) the Damage Payment or the Termination Payment, as applicable, or applied to any outstanding amounts owed by Seller; provided further; that, the Termination Payment shall not be construed to limit Seller’s indemnification obligations under this Agreement.
Section 13.3 Notice of Termination Payment. The Termination Payment (“Termination Payment”) for the Terminated Transaction shall be the Settlement Amount owing to the Non-Defaulting Party plus (or minus) any and all other outstanding amounts due to or from the Non-Defaulting Party (including any Product delivered and any Deemed Delivered Energy as of the Early Termination Date), netted into a single amount. If the Non-Defaulting Party’s
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66 aggregate Gains exceed its aggregate Losses and Costs, if any, resulting from the termination of this Agreement, the net Settlement Amount shall be zero. The Non-Defaulting Party shall calculate, in a commercially reasonable manner, a Termination Payment for the Terminated Transaction as of the Early Termination Date. Without prejudice to the Non-Defaulting Party’s duty to mitigate, the Non-Defaulting Party shall not have to enter into replacement transactions to establish a Settlement Amount. Each Party agrees and acknowledges that (a) the actual damages that the Non-Defaulting Party would incur in connection with the Terminated Transaction would be difficult or impossible to predict with certainty, (b) the Damage Payment or Termination Payment described in Section 13.2 or this Section 13.3 (as applicable) is a reasonable and appropriate approximation of such damages, and (c) the Damage Payment or Termination Payment described in Section 13.2 or this Section 13.3 (as applicable) is the exclusive remedy of the Non- Defaulting Party in connection with the 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 provided further; that, the Termination Payment shall not be construed to limit Seller’s indemnification obligations under this Agreement.
(a) For purposes of this Agreement:
(i) “Gains” means, with respect to the Non-Defaulting Party, an amount equal to the present value of the economic benefit (exclusive of Costs), if any, resulting from the termination of its obligations under this Agreement, determined in a commercially reasonable manner;
(ii) “Losses” means, with respect to the Non-Defaulting Party, an amount equal to the present value of the economic loss (exclusive of Costs), if any, resulting from the termination of its obligations under this Agreement, determined in a commercially reasonable manner;
(iii) “Costs” means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar transaction costs and expenses reasonably incurred in terminating any arrangement pursuant to which it has hedged its obligations or in entering into new arrangements which replace this Agreement, excluding attorneys’ fees, if any, incurred in connection with enforcing its rights under this Agreement. (iv) In no event shall a Party’s Gains, Losses or Costs include any penalties or similar charges imposed by the Non-Defaulting Party. In no event shall a Party’s Gains, Losses or Costs include any consequential, incidental, punitive, exemplary or indirect or business interruption damages.
(v) The Present Value Rate shall be used as the discount rate in all present value calculations required to determine Gains, Losses and Costs.
Section 13.4 Notice of Payment of Damage Payment or Termination Payment. As soon as practicable after a Terminated Transaction, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the amount of the Damage Payment or Termination Payment, as applicable and whether the Damage Payment or Termination Payment, as applicable, is due to or
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67 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 Damage Payment or Termination 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.
Section 13.5 Disputes With Respect to Damage Payment or Termination Payment.
If Defaulting Party disputes the Non-Defaulting Party’s calculation of the Damage Payment or the Termination 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 Damage Payment or the Termination Payment, as applicable, (i) provide to the Non-Defaulting Party a detailed written explanation of the basis for such dispute, and (ii) pay the Non-Defaulting Party any undisputed portion of the Damage Payment or Termination Payment, as applicable. Disputes regarding the Damage Payment or Termination Payment, as applicable, shall be determined in accordance with Section 14.3.