Fillable Printable Example of Power Purchase Agreement

Example of Power Purchase Agreement

Exhibit C. Example of a Power Purchase Agreement

Contract No. 01PB-_____

_________, 2002

POWER PURCHASE AGREEMENT

Executed by the

UNITED S T ATES OF AMERICA,

DEPARTM ENT OF ENERGY

acting by and through the

BONNEVILL E POWER ADMINIS TRATION

and

[SELLER]

(__________ Wind Project)

Index to Sections

Section Page

1. Definitions..................................................................................................................... 4

2. Term .............................................................................................................................. 7

(a) Effectiveness; Basic Term ................................................................................. 7

(b) Survival of Terms and Conditions .................................................................... 8

3. Exhibits ......................................................................................................................... 8

4. Facility Description....................................................................................................... 8

(a) Summary Description........................................................................................ 8

(b) Site ..................................................................................................................... 8

5. Interconnection Facilities and Metering ...................................................................... 9

(a) Interconnection Facilities Agreement............................................................... 9

(b) Delivery Arrangements Agreement .................................................................. 9

6. Obligation to Sell and Purchase Energy Output........................................................ 12

(a) Conditional Obligation to Purchase................................................................ 12

(b) Sale and Purchase ........................................................................................... 12

(d) Exception ......................................................................................................... 13

(e) Exclusions........................................................................................................ 13

7. Payment for Energy Output ....................................................................................... 13

(a) Price for Energy Output Prior to the Completion Date.................................. 13

(b) Price for Energy Output after the Completion Date ...................................... 13

8. Billing and Payment ................................................................................................... 14

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(a) Billing Statement and Invoices....................................................................... 14

(b) Metered Billing Data....................................................................................... 14

(d) Billing Disputes ............................................................................................... 14

9. Operations and Maintenance...................................................................................... 14

(a) Conditions Precedent to Facility Completion Date ........................................ 14

(b) Facility Operation and Reliability Standards ................................................ 15

(d) Monthly Reports .............................................................................................. 16

(e) Operating Committee and Operating Procedures.......................................... 17

10. Default and Termination ............................................................................................ 17

(a) Events of Default of Seller .............................................................................. 17

(b) Events of Default of BPA................................................................................. 18

(d) No Consequential Damages ............................................................................ 20

11. Termination for Convenience...................................................................................... 20

(a) Termination by BPA for Convenience............................................................. 20

(b) Termination Under Section 11(a) ................................................................... 20

12. Contract Administration and Notices ........................................................................ 20

(a) Notices.............................................................................................................. 20

(b) Representative for Notice................................................................................ 21

(d) Operating Records ........................................................................................... 21

(e) Billing and Payment Records.......................................................................... 21

(f) Examination of Records ................................................................................... 22

13. Dispute Resolution...................................................................................................... 22

14. Force Majeure.............................................................................................................. 23

(a) Definition of Force Majeure............................................................................. 23

(b) Applicability of Force Majeure........................................................................ 24

(d) Delays Attributable to BPA............................................................................. 25

15. Representations and Warranties................................................................................ 25

(a) Seller’s Representations and Warranties ....................................................... 25

(b) BPA’s Representations and Warranties ......................................................... 26

16. Insurance and Indemnity............................................................................................ 26

(a) Evidence of Insurance ..................................................................................... 26

(b) Limitation on Liability .................................................................................... 27

17. Regulatory Jurisdiction and Compliance ................................................................... 28

(a) Governmental Jurisdiction and Regulatory Compliance ............................... 28

(b) Provision of Support ........................................................................................ 28

18. Assignment and Other Transfer Restrictions............................................................ 28

(a) No Assignment Without Consent.................................................................... 28

19. Confidential Information ............................................................................................ 28

(a) Availability....................................................................................................... 28

(b) Designation...................................................................................................... 29

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(c) Obligations....................................................................................................... 29

(d) Conditions and Restrictions ............................................................................ 29

(e) Exceptions........................................................................................................ 29

(f) Term of Obligations......................................................................................... 30

20. Miscellaneous.............................................................................................................. 30

(a) Waiver.............................................................................................................. 30

(b) Taxes................................................................................................................ 30

(d) Relationship of the Parties.............................................................................. 30

(e) Survival of Obligations.................................................................................... 31

(f) Severability...................................................................................................... 31

(g) Interpretation .................................................................................................. 31

(h) Complete Agreement; Amendments ............................................................... 31

(i) Binding Effect.................................................................................................. 31

(j) Headings .......................................................................................................... 31

(k) Counterparts.................................................................................................... 32

(l) Choice of Law................................................................................................... 32

(m) Equal Employment Opportunity Compliance Certification........................... 32

Exhibits

Exhibit A Facility Description and Map

Exhibit B Form of Notice

Exhibit C Form of Invoice

Exhibit D Termination Payment Schedule

This POWER PURCH AS E AGREEMENT (thi s “ Agr eem ent ” ) is exec ut ed by and

betw een [SELLER] (“Se l l e r ” ) , and t h e U NITED STATES OF AMERICA, DEPARTM EN T

OF EN ERGY, act i ng by and t hrough t he BONNEVILLE POWER AD M INIS TRATION

(“BPA”). Both Seller and BPA are sometimes referred to herein individually as “Party” and

collectively as “Parties.”

WHEREAS, BPA is aut hor ized by Fed e r al l aw, i nc lud i ng t he Pac i f i c N o r thwest

Electric Power Planning and Conservation Act ( Public Law 96- 501, the “Northw es t Pow er

Act”) and other applicable laws, to acquire sufficient capacity and energy (where “power”

may herein refer to either or both terms) from power production facilities, including wind

powered production facilities, to meet the electric power requirements placed on BPA by its

regional customers.

WHEREAS Se lle r de s ir es to co ns t r uct , own, and op erat e a w i nd po w er e d el ect r ic

generating plant to be located _________________.

WHEREAS, Sel le r d esire s t o s e ll t o BPA [ al l or a p o r t io n] of the Ener gy O ut p ut

generated by the Facility (as defined below), and BPA desires to buy the same from Seller.

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WHEREAS, BPA’ s obligati on her eund er i s not , nor shall it be c onstrued t o be, a

general obligation of the United States, nor is it intended to be or is it secured by the full

faith and credit of the United States.

NOW, THEREFO RE, in consider at io n of t he m ut ual c o venants herei n co nt ained ,

the sufficiency and adequacy of which are hereby acknowledged, the Parties agree to the

following:

1. Definitions

The terms listed in this Section shall have the meanings set forth herein whenever

the terms appear in this Agreement, whether in the singular or the plural or in the

present or past tense. The plain meaning of terms not listed in this Section and

otherwise used in this Agreement shall apply, unless such unlisted terms have

meanings as commonly used in Good Utility Industry Practice, in which case the

Good Utility Industry Practice meaning shall apply.

(a) “Actual Average Annual Output” means the actual amount of average annual

Energy Output generated by the Facility during any given 24-month rolling

(b) “Availability Factor” means the number of hours the Facility was in service

and ready during the preceeding twelve (12) month period to generate

Energy Output in accordance with Good Utility Industry Practice, divided by

8,760 hours .

and size] w ind turbine generators , or a reas onably acceptable replacement or

substitute therefor, which constitute part of the Facility and are dedicated to

producing Energy Output for sale to BPA pursuant to this Agreement.

(d) “Business Day” means each Monday through and including Friday during

the term of this Agreement other than nationally recognized holidays.

(e) “Commercial Operation” means w hen a particular BPA Wind Turbine in the

Facility is ready for regular, daily operation, has been connected to the Grid,

and is capable of producing Energy Output in accordance with Good Utility

Industry Practice, all as certified in writing by Seller to BPA.

(f) “Commercial Operation Date” means, with respect to a particular BPA Wind

Turbine, the first day on which Commercial Operation occurs.

(g) “Commission(s)” means any of the state or Federal regulatory agencies

having jurisdiction over BPA or Seller including, but not limited to, the

Federa l Ener gy Regul at or y Com m issi on ( “ FERC” ) , or s uc c esso r agenc ies.

(h) “Completion Date” means the date when all of the BPA Wind Turbines have

achieved Commercial Operation and the Conditions Precedent in Section 9(a)

have been satisfied.

(i) “Conditions Precedent” has the meaning given in Section 9(a).

(j) “Contract Year” means any consecutive twelve (12) month period

commencing with the Completion Date or its anniversary.

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(k) “Delivery Arrangements Agreement” means an agreement between Power

Business Line and the Transmission System Operator that provides for the

receipt of Energy Output at the Point of Delivery and for the transmission

and delivery of such Energy Output to points beyond the Point of Delivery.

(l) “Emergency” means a physical condition or situation that, in the judgment of

the Transmission System Operator, affects or will affect the ability of the

Grid to accept Energy Output from the Facility at the Point of Delivery.

(m) “Energy Output” means the amount of electrical energy generated by the

BPA Wind Turbines and delivered at the Point of Delivery. Energy Output

shall be metered in whole kilowatt-hours (kWh) by the Metering Device(s) on

the high side of the transformer at the Facility Substation. Energy Output

delivered to BPA at the Point of Delivery shall be deemed to be equal to the

energy measured by the Metering Device(s) minus energy losses of ____

percent between the Metering Device and the Point of Delivery.

(n) “Energy Payment Rate” has the meaning ascribed in Section 7.

(o) “Event of Default” means an event as defined in Section 10 that confers a

contractual right upon the non-defaulting Party to terminate the Agreement.

(p) “Facility” means the ________ Project, which includes all of the following, the

purpose of which is to produce and sell electricity: Seller’s equipment,

property, wind turbines, step-up transformer(s), circuit breakers, necessary

electric lines to connect to the Point of Delivery, protective and associated

equipment, improvements, and other tangible and intangible assets,

property and access rights and contract rights reasonably necessary for the

construction, operation, and maintenance of the electric wind generating

facility to be located at the site specified in Section 4 that produces Energy

Output being sold under this Agreement.

(q) “Facility Substation” means the facilities located at the point of intersection

of the Facility Transmission Line and BPA’s ____________ transmission line.

(r) “Facility Transmission Line” means the transmission line connecting the

Wind Turbines to the Point of Delivery.

(s) “First Delivery Date” means the first date on which the Interconnection

Facilities are energized and capable of accepting delivery of Energy Output

at the Point of Delivery.

(t) “GDPIPD” means the implicit price deflator for the gross domestic product as

computed and published by the U.S. Department of Commerce. The figures

to be used in this adjustment shall be those presented in the “Gross

Domestic Product: First Quarter ‘Final’ Press Release” typically released in

June of each calendar year by the United States Department of Commerce,

Bureau of Economic Analysis. No subsequent revisions released by the

United States Department of Commerce to those figures will be considered to

affect or adjust the Energy Payment Rate for that particular Contract Year.

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(u) “Good Utility Industry Practice(s)” means the practices, methods, and acts

(including, but not limited to, the practices, methods, and acts engaged in or

approved by a significant portion of the electric utility industry) that, at a

particular time, in the exercise of reasonable judgment in light of the facts

known or that should reasonably have been known at the time a decision was

made, would have been expected to accomplish the desired result in a

manner consistent with law, regulation, codes, standards, equipment

manufacturer’s recommendations, reliability, safety, environmental

protection, economy, and expedition. With respect to the Facility, Good

Utility Industry Practice(s) include, but are not limited to, taking reasonable

steps to ensure that:

(1) equipment, materials, res ources , and s upplies are available to meet

the Facility’s needs;

(2) sufficient operating pers onnel are available at all times and are

adequately experienced, trained and licensed as necessary to operate

the Facility properly and efficiently, and are capable of responding to

reasonably foreseeable emergency conditions whether caused by

events on or off the site of the Facility;

(3) preventive, routine, and non- routine maintenance and repairs are

performed on a basis that ens ures reliable long- term and s af e

operation, and are performed by k now ledgeable, trained, and

experienced personnel utilizing proper equipment and tools;

(4) appropriate monitoring and testing are performed to ensure

equipment is functioning as designed;

(5) equipment is not operated in a reckless manner, or in a manner

unsafe to workers, the general public, or contrary to environmental

laws or regulations or without regard to defined limitations such as

flood conditions, safety inspection requirements, operating voltage,

curr ent , vol t - am p er e r eac t ive (VAR) lo ad ing, fr equenc y, r ot at i onal

speed, polarity, synchronization, and/or control system limits; and

(6) the equipment will function properly under both normal and

reasonably expected Emergency conditions at the Facility.

(v) “Grid” means the electrical transmission system that is beyond the Point of

Delivery and controlled by the Transmission System Operator.

(w) “Inflation Adjustment Factor” shall mean a fraction, the numerator of which

is the GDPIPD for the first (1

) quarter of the current calendar year and the

denominator of which is the GDPIDP for the first (1

) quarter of the

preceding year.

(x) “Interconnection Facilities” means all the land rights, materials, equipment,

and facilities installed for the purpose of interconnecting the BPA Wind

Turbines to BPA’s __________ transmission line, including, but not limited to,

electrical interconnection, switching, metering, relaying, and communication

and safety equipment.

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Example of Power Purchase Agreement

(y) “Interconnection Facilities Agreement” means the Generation

Interconnection Agreement between Seller and Transmission System

Operator that contains the rights and obligations of the parties with respect

to the interconnection of the Facility to BPA’s __________ transmission line

and the methods and procedures for the safe operation and maintenance of

the Interconnection Facilities.

(z) “Metering Device(s)” means the electronic kilowatt-hour meter and

associated potential transformers and current transformers used to measure

the Energy Output from the Facility, as described in Section 5(c)(2) and

Exhibit A.

(aa) “Non-Billing Dispute” means any and all disputes between the Parties other

than Billing Disputes.

(bb) “On-Peak Month” means any calendar months of September through and

including February.

(cc) “Operating Committee” means the committee comprised of one delegate each

from BPA and Seller pursuant to Section 9(e) of this Agreement.

(dd) “Seller’s Computer Monitoring System” means the computer-based

monitoring system comprised of computer hardware, software, and private

communication system extending to each BPA Wind Turbine, which system

gathers, archives and reports turbine operating data.

(ee) “Party” and/or “Parties” means Seller, BPA, or Seller and BPA.

(ff) “Point of Delivery” means the electric system point at which Seller makes the

Energy Output available to BPA.

(gg) “Power Business Line” means BPA’s Power Business Line.

(hh) “Seller’s Interconnection Facilities” means that portion of the

Interconnection Facilities that are located outside of the boundary fence of

the Facility Substation but with sufficient additional cable attached to reach

to the Point of Delivery within the Facility Substation, as described in

greater detail in Exhibit A.

(ii) “Transmission System Operator” means BPA’s Transmission Business Line

or any successor that controls and operates the Grid.

2. Term

(a) Effectiveness; Basic Term

This Agreement shall become effective upon the date signed by both Parties

(Effective Date) and shall remain in effect for a period of _______ years from

the Completion Date, subject to the early termination provisions set forth in

Section 11(a) of this Agreement.

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(b) Survival of Terms and Conditions

Applicable provisions of this Agreement shall continue in effect after

termination to the extent necessary to provide for final billings and

adjustments related to the period prior to termination, including repayment

of any money due and owing to or by BPA pursuant to this Agreement.

3. Exhibits

The exhibits listed in the Table of Contents are incorporated into this Agreement by

reference.

4. Facility Description

(a) Summary Descript ion

Seller shall construct, operate, and maintain the Facility. Exhibit A provides

a complete description of the Facility, including identification of the BPA

Wind Turbines and other equipment and components that comprise the

Facility.

(b) Site

The Facility shall be located at the area generally described as:

Facility Name: _________ Wind Project

Location: Sections ___, Township ___, Range ___ of the ___ Principal

Meridian, ____________, with a portion of Seller’s

Interconnection Facilities also located ___________.

County/State: _______________________________.

A scaled map that identifies the location of the Facility, the BPA Wind

Turbines, the Interconnection Facilities, and significant ancillary facilities,

including the facilities located at Point of Delivery, is included in Exhibit A.

Seller shall construct the Facility in a workmanlike, professional manner

according to Good Utility Industry Practice(s). The Facility shall be:

(1) capable of supplying Energy Output in compliance with the

requirements of the Interconnection Facilities Agreement;

(2) capable of operating at power levels as specified in the

Interconnection Facilities Agreement; and

(3) equipped with protective devices and generator control systems

designed and operating in accordance with the Interconnection

Facilities Agreement and Good Utility Industry Practice(s).

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5. Interconnection Facilities and Metering

(a) Interconnection Facili ties Agreement

Seller shall negotiate in good faith and enter into an Interconnection

Facilities Agreement that is reasonably acceptable to Power Business Line

for the purposes and in accordance with the schedules set forth in this

Section 5(a). Power Business Line shall diligently cooperate with Seller in

these negotiations.

(1) The Interconnection Facilities Agreement shall address and describe

(i) the switching, metering, relaying, communications and safety

equipment that will constitute the Interconnection Facilities, (ii) the

processes, procedures for, and timing of the procurement,

construction, testing and placement into operation of the

Interconnection Facilities and their connection to the Point of

Delivery, (iii) the billing and payment schedules for the construction,

operation and maintenance of the Interconnection Facilities, (iv) the

operating procedures and requirements of the Interconnection

Facilities, including the requirements for the BPA Wind Turbines to

be capable of immediate disconnection from the Point of Delivery in

accordance with Good Utility Industry Practice(s) or in the event of

Emergency, and (v) the terms, conditions and other requirements

relating to the construction, operation and maintenance of the

Interconnection Facilities. As between BPA and Seller, all expenses

associated with the procurement, construction, installation and

operation of the Interconnection Facilities shall be paid by Seller in

accordance with the Interconnection Facilities Agreement.

(2) It is an objective of this Agreement that the First Delivery Date occur

no later than _________, provided that such date shall be extended

day-for- d ay by any For c e M ajeur e or any d e lay c aus ed by Power

Business Line. Seller shall give Power Business Line fifteen (15)

calendar days written notice prior to the First Delivery Date. If the

Completion Date occurs more than thirty (30) days after the First

Delivery Date, irrespective of the occurrence of any Force Majeure

and otherwise not due to the negligence or fault of BPA, then Seller

shall reimburse BPA for payments made for transmission services for

the period commencing on the day following the thirtieth (30

) day

after the First Delivery Date and continuing until the Completion

Date; provided that Power Business Line shall act in a commercially

reasonable manner to minimize costs related to such transmission

services.

(b) Delivery Arrangements Agreement

Power Business Line shall enter into one or more agreements with the

Transmission System Operator and/or with others that provide for the

receipt of the Energy Output at the Point of Delivery and for the

transmission and delivery of such Energy Output to points beyond the Point

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of Delivery (such agreements shall constitute the “Delivery Arrangements

Agreement”). Power Business Line shall be solely responsible for negotiating,

and maintaining during the term of this Agreement, the Delivery

Arrangements Agreement. Seller shall diligently cooperate with Power

Busines s Line in thes e negotiations .

(1) Access to Facility

During the term of this Agreement, appropriate representatives of

BPA shall at all reasonable times , including w eek ends and nights,

and with reasonable prior notice, have access to the Facility, including

the control room and the Interconnection Facilities, to read and

maintain meters and to perform all inspections, maintenance, service,

and operational reviews as may be appropriate to facilitate the

performance of this Agreement. While at the Facility, such

representatives shall observe such reasonable safety precautions as

may be required by Seller and shall conduct themselves in a manner

that will not interfere with the construction, operation or

maintenance of the Facility.

(2) Metering Devices

(i) All Metering Devices used to measure the Energy Output

under this Agreement shall be subject to approval by BPA,

owned by Seller, and installed in accordance with the

Interconnection Facilities Agreement. Seller shall, at Seller’s

expense, install communication equipment that allows BPA to

read the Metering Devices from a remote location (such as

BPA headquarters) at any time. Metering Devices s hall be

maintained directly by Seller or by agents or subcontractors

directly under the Seller’s control or by the Transmission

System Operator. All Metering Devices used to measure the

Energy Output under this Agreement shall be sealed and the

seal may be broken only when such Metering Devices are to be

inspected, and tested and/or adjusted. The number, type, and

location of such Metering Devices shall be specified in the

Interconnection Facilities Agreement.

(ii) All Metering Devices shall be maintained, calibrated, and

tested in conformance with the policies of the Transmission

System Operator and the terms of the Interconnection

Facilities Agreement. Seller shall arrange to test the Metering

Devices at leas t once per calendar year. BPA, at its own

expense, may require that Seller initiate testing and inspection

of the Metering Devices. Seller shall permit a representative

of BPA to witness and verify such inspections and tests,

provided, however

, that BPA shall comply with all of the

Seller’s safety standards. Seller shall provide BPA with copies

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of any periodic or special inspection or testing reports relating

to the Metering Devices.

(iii) BPA may elect to install and maintain, at its own expense,

Metering Devices and data gathering and communication

equipment used to monitor, record, or transmit data relating to

the Energy Output from the BPA Wind Turbines. Seller shall

arrange for a location within the Facility Substation control

house accessible to Seller and BPA, for such data gathering

and communication equipment that may be installed.

(iv) Seller shall notify BPA within 48 hours of Seller receiving

actual notice of any inaccuracy or defect in a Metering Device.

Seller shall cause the Metering Devices to be adjusted,

repaired, replaced, and/ or recalibrated as near as practicable

to a condition of zero error at the expense of Seller or the Party

owning the defective or inaccurate device.

(3) Adjustment for Inaccurate M eters

If a Metering Device fails to register or is found upon testing to be

inaccurate by more than a quarter of one percent (0. 25% ), an

adjustment shall be made correcting all measurements by the

inaccurate or defective Metering Device, for both the amount of the

inaccuracy and the period of the inaccuracy, in the following manner:

(i) In the event that the Metering Device is found to be defective

or inaccurate and an adjustment factor for the Metering Device

cannot be reliably calculated, the Parties shall use the

measurements from BPA-owned meters if they have been

installed, fully operational and calibrated pursuant to

Section 5(c)( 2) . If BPA- ow ned meters have not been ins t alled

or, if installed, are not fully operational or calibrated, the

Parties shall use production data from Seller’s Computer

Monitoring System to determine the amount of such

inaccuracy.

(ii) In the event that Seller’s Computer Monitoring System is

found to be inaccurate by more than two percent (2.0%), the

Parties shall estimate the amount of the necessary adjustment

using the site meteorological information for the period of the

inaccuracy based upon deliveries of Energy Output from the

BPA Wind Turbines during periods of similar operating

conditions when the Metering Device was registering

accurately. The adjustment shall be made for the period

during which inaccurate measurements were made.

(iii) In the event that the Parties cannot agree on the actual period

during which the inaccurate measurements were made, the

period during which the measurements are to be adjusted shall

be the shorter of (1) the last one-half of the period from the last