Resolution No. 5125
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RESOLUTION NO. 5125
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON APPROVING AND AUTHORIZING THE
EXECUTION OF A TRANSMISSION SERVICE AGREEMENT
BY AND BETWEEN SUNLAW COGENERATION PARTNERS I
AND THE CITY OF VERNON FOR COGENERATION FACILITY
LOCATED AT THE SOUTHWEST CORNER OF VERNON AND
ALCOA AVENUES
WHEREAS, Sunlaw Cogeneration Partners I (hereinafter
referred to as ItSunlaw") proposes to own, operate and maintain
a 29MW electric Generating Facility fueled by natural gas, with
No. 2 distillate as backup fuel; and
WHEREAS, Sunlaw has filed for and received the
necessary approval from the Federal Energy Regulatory Commission
to qualify as a "Qualifying Cogeneration Facilitylt pursuant to
the Public Utility Regulatory policies Act; and
WHEREAS, Sunlaw has filed an Environmental Impact
Analysis with the U.S. Department of Energy, Economic
Regulatory Administration and has received an Authority to
Construct permit from the South Coast Air Quality Management
District for said Cogeneration Facility; and
WHEREAS, the City of Vernon has performed an analysis
of the environmental impacts associated with the Cogeneration
Facility; and
WHEREAS, Sun1aw has filed with the City of Vernon an
application for a conditional use permit which would allow the
operation of said Cogeneration Facility at the southwest corner
of Vernon and Alcoa Avenues in the City of Vernon; and
WHEREAS, the City Council of the City of Vernon on
June 19, 1984, adopted and approved a Negative Declaration,
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1 in accordance with the California Environmental Quality Act,
2 that the issuance of a conditional use permit for the Co-
3 generation Facility will not have a significant effect on the
4 environment and approved a conditional use permit authorizing
5 cogeneration uses at the Cogeneration Facility; and
6 WHEREAS, Sunlaw desires to operate said Cogeneration
7 Facility in electrical parallel with Vernon's electrical system
8 and to sell to Edison a maximum of 29,000 kilowatts of Capacity
9 and the Energy associated with said Capacity from said Co-
10 generation Facility in accordance with an agreement with Edison;
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12 WHEREAS,' Sunlaw has requested Firm Transmission Service
13 at 66 kv from Vernon to transmit said Capacity and Energy from
14 said Cogeneration Facility to the Point of Interconnection with
15 Edison; and
16 WHEREAS, Sunlaw and the City of Vernon desire to enter
17 into an agreement to establish the terms, conditions and
18 obligations necessary to accomplish the Firm Transmission Service
19 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
20 THE CITY OF VERNON AS FOLLOWS:
21 SECTION 1: That the City Council of the City of Vernon
22 hereby determines that the recitals contained hereinabove are
23 true and correct.
24 SECTION 2: That the City Council of the City of Vernon
25 hereby approves the Transmission Service Agreement by and between
26 Sun1aw Cogeneration Partners I and the City of Vernon for
27 Cogeneration Facility located at the southwest corner of Vernon
28 and Alcoa Avenues, a copy of which has been presented to the City
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1 Council concurrently with this Resolution, and the City Council
2 hereby orders said Transmission Service Agreement to be received
3 and filed by the City Clerk.
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SECTION 3: That the City Council of the city of Vernon
5 hereby authorizes the Mayor and the City Clerk to execute said
6 Agreement for, and on behalf of, the City of Vernon.
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SECTION 4: That the City Clerk of the City of Vernon
S shall certify to the passage of this Resolution and thereupon
9 and thereafter the same shall be in full force and effect.
10 APPROVED AND ADOPTED this 3rd day of July, 1984.
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ATTEST: ~
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BRUCE V. MALKENHORST, City Clerk
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I, BRUCE V. MALKENHORST, City Clerk of the City 'of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 5125 , was duly adopted by the City Council of
the City of Vernon, and was approved by the Mayor of said City
an adjourned
at xlk regular meeting of the City Council held on Tuesday,
, 1984
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TRANSMISSION SERVICE AGREEMENT BETWEEN
SUNLAW COGENERATION PARTNERS I AND CITY OF VERNON
FOR A COGENERATION FACILITY TO BE LOCATED AT THE
SOUTHWEST CORNER OF VERNON AND ALCOA AVENUES
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TABLE OF CINrENTS
RECITALS . .
Definitions
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Firm Transmission Service
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Interruptible Transmission Service
Curtailment of Service
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Charges for Transmission Service
Rate Adjustments
Payxner1t . . . . . . . . . .
No Dedication of Facilities
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Indemnificatim
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Liability . . . . . .
Uncontrollable Forces
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Control and Maintenance of Facilities
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Effective Date and Term
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Assignment or Transfer of Interest . . . . . . . . . . . . .
Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . .
Captions ..
Choice of Laws
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Governmental Jurisdiction and Canpliance with Law
Land Rights
Metering
General Technical Requirements
Notices
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.P.ase.
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TART.F. OF a:lNTENTS. COl)' t.
Operation of the Cogeneration Facility
Disputes ...............
Disc1aiIner ..............
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Interconnection Facilities Design . . . . . . . . . . . . .
CMnership and Operation of Interconnection Facilities . . .
Taxes . . . . . . .. . . . . . . . . . . . . . . . . . . .
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Sale of Cogeneration Facility . . . . . . . . . . . . . . .
Priority of Agreement . . . . . . . . . . . . . . . . . . .
Previous Camnunications . . . . . . . . . . . . . . . . . .
Third Party Beneficiaries
Successors and Assigns
Fuel Use Franchise Fee
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Insurance
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Further Assurances
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TRANSMISSlOO SERVICE 1GRED1ENT
This Agreement is made and entered into and executed in duplicate
originals, either copy of which may be considered and used as the original hereof
for all IXIrposes, and to be performed in Vernon, California as of the_ day of
July, 1984.
BY AND BE'lWEEN
City of Vernon, a Municipal Corporation
(hereinafter referred to as ~ernon")
4305 Santa Fe Avenue
Vernon, CA 90058
AND
Sunlaw Cogenerati<n Partners I,
a California Limited Partnership
(hereinafter referred to as "Cogenerator")
8530 Wilshire Boulevard, Suite 401
Beverly Hills, CA 90211
1. RECITALS
Whereas, Cogenerator proposes to own, operate and maintain a 29MW
electric Generating FaCility fueled by natural gas, with No. 2 distillate as
backup fuel; and
Whereas, Cogenerator has agreed to sell to Edison all of the electrical
Energy and Capacity produced by the Cogeneration Facility at 66 kv; and
Whereas, Cogenerator has filed an application with the Federal Energy
Regulatory Commission ("FERC") requesting certification of "Qualifying
Cogeneration Facility" status of a proposed Cogeneration Facility at the
southwest corner of Vernon and Alcoa Avenues, Vernon, California; and
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Whereas, the FERC has approved said Cogeneration Facility as a
"Qualifying Cogeneration Facility" pursuant to the Public Utility Regulatory
Policies Act; and
Whereas, Cogenerator has filed an Enviromnental Impact Analysis with the
u.s. Department of Energy, Econanic Regulatory Administration; and
Whereas, Cogenerator has received an Authority to Construct permit from
the South Coast Air Quality Management District for said Cogeneration Facility;
and
Whereas, Vernon has performed an analysis of the environmental impacts
associated with the Cogeneration Facility; and
Whereas, Cogenerator has filed with Vernon an application for a
conditional use permit which would allow the operation of said Cogeneration
Facility at the southwest corner of Vernon and Alcoa Avenues, Vernon, California
90058; and
Whereas, Vernon has adopted and approved a Negative Declaration, in
accordance with the California Environmental Quality Act, that the issuance of a
conditional use per.mit for the Cogeneration Facility will not have a significant
effect on the envirornnent; and
Whereas, Vernon has approved a conditional use permit authorizing
cogeneration use at the southwest corner of Vernon and Alcoa Avenues, Vernon,
California 90058; and
Whereas, Cogenerator has entered into an agreement with Edison wherein
Cogenerator will construct, CMl, operate and control a Cogeneration Facility at
the southwest corner of Vernon and Alcoa Avenues, Vernon, California 90058; and
Whereas, Cogenerator desires to operate said Cogeneration Facility in
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electrical parallel with Vernon's electrical system and to sell to Edison a
ma~imum of 29,000 kilowatts of capacity and the Energy associated with said
Cap:icity fran said Cogeneration Facility in accordance with said agreement1 and
Whereas, Edison is obligated to purchase at 66kv capacity and Energy
associated with Cogeneration Facility pursuant to said agreement; and
Whereas, Cogenerator has requested Firm Transmission Service at 66kv from
Vernon to transmit said Capacity and Energy fran said Cogeneration Facility to
the Point of Interconnection with Edison; and
Whereas, Vemon has agreed to provide Firm Transmission Service at 66kv
in accordance with the terms and conditions provided for herein1 and
Whereas, Cogenerator desires to purchase from Vernon pursuant to filed
rates all of the electrical requirements of the Cogeneration Facility1 and
Whereas, Vernon acknowledges that Cogenerator receives payment from
Edison plrsuant to the Edison Agreement, which depends upon the reliability of
the Cap:icity and Energy supplied by Cogenerator and that the Firm Transmission
Service provided by Vernon may affect the reliability of said Capacity and
Energy1 and
Whereas, Cogenerator will limit the production of electrical production
fran said Cogeneration Facility, if necessary to maintain the Vernon Electric
System IntegritY1 and
Whereas, the Parties desire, by this Agreement, to establish the terms,
conditions, and obligations pursuant to which they can accomplish the above
desires and needs.
Now, therefore, in consideration of the mltual covenants, promises, and
conditions contained herein, the Parties hereto agree as follows:
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1.0 Definitions - Whenever used in this Agreement, appendices or attachments
hereto, the following terms when initially capitalized shall have the following
meanings:
1.1 Agreement - This document, including its appendices, as amended
from time to time.
1.2 Both Coqeneration Facilities - The Cogeneraticn Facilities located
in Vernon, California at the southwest corner of Vernon and Alcoa Avenues and
Downey Road at 50th Street, Vernon, California 90058.
1.3 Capaci~ - The maximum output capability of the Cogeneration
Facility, expressed in kilowatts.
1.4 Cogeneration Facility - The Generator, together with all
associated equipnent and improvements, necessary to produce electrical energy and
the Interconnection Facilities installed by Cogenerator at the southwest corner
of Vernon and Alcoa Avenues, Vernon, California 90058.
1.5. Control - To establish and maintain the electrical energy output
of the Cogeneration Facility through dispatching procedures, including shutdown
and startup.
1.6 Edison - The Southern California Edison Canpany.
1.7 Edison Agreement - The Parallel Generation Agreement between
Sunlaw Energy Corporation and Southern California Edison Canpany, dated July 12,
1982, and its amendments, which will be fully assigned by Sunlaw Energy
Corporation to Cogenerator.
1.8 Emergenqy - Any condition or situation which would occur during
any periOd which in Vernon's sole judgement affects Vernon's ability to maintain
continuous electrical service.
1.9 Energy - Kilowatt-hours generated by the Cogeneration Facility.
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1.10 Firm Qpe~ation Date - The day commencing at 0001 hours following
the day on which Cogenerator notifies Vernon in writing that all features and
equipment of the Cogeneration Facility are capable of operating to deliver a
reliable source of Capacity and Energy through Vernon's system to Edison.
1.11 Firm Transmission Capaci~ - The fixed electric capacity made
available on Vernon's 66kv electrical system fo~ the purpose of providing Firm
Transmission Service to Cogenerator, and further specified as 29,000 kilowatts
for the Cogeneration Facility and/or 58,000 kilowatts for Both Cogeneration
Facilities.
1.12 Firm Transmission Service - Vernon's acceptance of Capacity and
Energy from the Cogeneration Facility at 66kv into Vernon's Transmission
Facilities, and delivery of said Capacity and Energy at 66kv less any
transmission losses to Edison.
1.13 Generator - '!he generator and/or its associated prime mover which
is a part of the Cogeneration Facility.
1.14 Harmonics - Waveforms whose frequencies are multiples of the
fundamental sixty (60) Hertz waveform.
1.15 Int~rconnection Facilities - The protection and metering equipment
and other related facilities which are required in order to permit an interface
or interconnection between Vernon's electrical system and the Cogeneration
Facility, all in accordance with good utility standards.
1.16 O~rate - To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection, operation, use,
management, replacement, retirement, reconstruction, and maintenance of and for
the Cogeneration Facility.
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1.17 Operation Teetin9 Date- The date on which the Cogeneration
Facility is ready for testing purposes requiring delivery of electricity into the
Vernon electric system.
1.18 Parti,es - Vernon and Cogenerator.
1.19 Point of Interconnection with Vernon - '!he J;ilysical and electrical
interconnection of the Cogeneration Facility with the 66kv electric facilities of
Vernon.
1.20 Protective Devices - The equipment and apparatus installed by
Cogenerator and/or Vernon to facilitate the separation of the Cogeneration
Facility from Vernon's electrical system in the event of a fault.
1.21 Prudent Electrical Practices - Those practices, methods, and
equipment, as changed from time to time, that are commonly used in prudent
electrical engineering and operations to operate equipment lawfully and with
safety, dependability, efficiency, and economy.
1.22 a,pecial Facilities - Additions, betterments, IOOdifications and/or
reinforcements to the Vernon system which are reasonably and necessarily required
to accamnodate the receipt of Capacity and Energy into the Vernon System frorn the
Cogeneration Facility or to accommodate the delivery of Capacity and Energy to
Edison.
1.23 Transmi~sion Facilities - The 66kv transmission lines and all
associated equipment and facilities extending from the Point of Interconnection
with Vernon to Vernon's Point of Interconnection with Edison.
1.24 Transmission Service Rate - Vernon's rate in dollars per
kilowatt-month charged to Cogenerator for Firm Transmission Service.
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1.25 Vernon Electric qystem Integrity - Operation of Verno~'s electric
system in a planner that minimizes risk of injury to persons and/or property and
enables Vernon to provide reliable electric service to its alstaners.
1.26 Vernoo's Point of Interconnection with Edison - 1he point where
Vernon's electrical conductors connect to Edison's electrical conductors and
where transfer of electrical energy between Vernon and Edison takes place.
1.27 Vernon System - Vernon's electrical system including but not
limited to distribution facilities, transmission facilities, substations,
metering facilities, protective devices, generating plant and other related
facilities.
2.0 Firm Transmission Service
2.1 Vernon shall receive at 66kv Capacity and Energy generated ~
Cogenerator and transmit and deliver at 66kv said Capacity and Energy reduced by
transmission losses to Edison subject to the terms and conditions provided for
herein. For purposes of this Agreement, transmission losses shall be designated
as 0.6 percent of the Capacity and Energy generated and delivered ~ Cogenerator
and received by Vernon at the Point of Interconnection with Vernon. Vernon's
Capacity obligation to provide Firm Transmission Service herein shall be limited
to a maximum of 29,000 kilowatts.
2.2 Firm Transmission Service under this Agreement shall ccmnence at
the Firm Operation Date of the Cogeneration Facility.
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2.3 Vernon shall construct and place into operation the Special
Facilities which will be used to transmit the Capacity and Energy generated ~
the Cogeneration Facility to Edison. Vernon shall canplete construction of such
facilities prior to the Operation Testing Date of the Cogeneration Facility.
3.0 Int~rnwtibl~ Transmission Servic~
3.1 Vernon shall provide interruptible transmission service at 66kv
commencing on the Operation Testing Date and prior to the Firm Operation Date,
and at times when Cogenerator delivers to Vernon Energy in excess of 29,000
kilowatts when transmission capacity is available.
3.2 Interruptible transmission service will be subject to interruption
at Vernon's sole discretion.
4.0 Curtailment of ~rvic~
4.1 Vernon reserves the right to interrupt, suspend or curtail Firm
Transmission Service in order to maintain, repair or replace its Transmission
Facilities or preserve Vernon's Electric System Integrity and will provide
reasonable notice to Cogenerator as circumstances permit. Vernon agrees to use
reasonable efforts to coordinate planned outages with Cogenerator.
4.2 Vernon reserves the right to interrupt, suspend or curtail Firm
Transmission Service in order to improve its Transmission Facilities in
accordance with Prudent Electric Practice upon giving reasonable advance notice,
pursuant to the provisions of Section 23.3. Vernon agrees to use reasonable
efforts to coordinate planned outages with Cogenerator.
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4.3 Vernon shall retain priority of use over its Transmission
Facilities,. and reserves the right to interrupt, suspend or curtail Firm
Transmission Service and will provide reasonable notice to Cogenerator as
circumstances permit in the event that said facilities are required by Vernon for
transmission of Capacity and Energy throughout its system.
4 .4 In the event that Firm Transmission Service or any portion thereof
is interrupted, suspended or curtailed, Vernon shall not be obligated to deliver
to Edison for Cogenerator from Vernon resources or the resources of another, that
amount of Energy or Capacity that Cogenerator would have transmitted to Edison
had Firm Transmission Service not been interrupted, suspended or curtailed.
4.5 Vernon acknowledges that the Firm Transmission Service provided
for herein may impact Cogenerator's revenue from Edison under the Edison
Agreement and therefore Vernon shall use its best efforts to minimize the
frequency and duration of curtailments.
4.6 Vernon's inability to provide Firm Transmission Service during a
period of anergency on the Edison systan in accordance with the Edison Agreement
may subject Cogenerator to a penalty in the level of payments which Cogenerator
receives from Edison for its Capacity. Accordingly, at Cogenerator's request,
Vernoo shall use its best efforts during such periods to deliver Cogenerator' s
Capaci ty to Edison. In the event that said emergency occurs during a time period
that Vernon has previously scheduled an outage, Vernon shall make reasonable
efforts to reschedule the outage.
4.7 The provisions of this Agreement have been designed under the
assumption that Edison will not improperly deny Vernon the right or ability to
receive econany energy and/or to obtain energy credits for said ecooany energy as
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a result of the deliver of Capacity and Energy by Cogenerator into the Vernon
System. In the event that Edison improperly denies Vernon the right to receive
said econonrt energy and/or credits as a result of the delivery of capacity and -
Energy by Cogenerator into the Vernon System, Vernon shall notify Cogenerator of
such event. Said notification shall include the capacity, cost of energy,
duration of availability and any other relevant details pertaining to the ecoo~
energy purchase available to Vernon to the extent that such infor.mation is
available. Following such notificatioo, Cogenerator shall at its optioo:
(i) curtail the delivery of Capacity and Energy to the Vernon
System during such time that said econ~ energy is available for
purchase by Vernon, provided that. such curtailment by Cogenerator
will enable Vernoo to receive said econ~ energy and/or credits from
Edison; or
(ii) indemnify Vernon for financial losses incurred
as a result of Edison's improper denial of Vernon's ability to receive
said econany energy.
5.0 <:barges for Tran~ssipn Service
5.1 The obligation to pay charges for Firm Transmission Service Wlder
this Agreement shall commence as of the Fir.m Operation Date, but in no event
shall payment for Firm Transmission Service be deferred beyond December 31, 1987.
5.2 Cogenerator and Vernon intend to execute a similar transmission
agreement to transmit Capacity and Energy fran a cogeneration facility located at
the southwest corner of Vernon and Alcoa Avenues, Vernon, California 90058.
Therefore, a total of 58,000 kilowatts of Firm Transmission Capacity will be
required in order to provide service for Both Cogeneratioo Facilities.
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5.2.1 Cogenerator shall pay Vernon a monthly fee for Firm
Tran_ssion Service under this Agreement. SUbject to Section 5.2.2
and Article 6, the Transmission Service Rate shall be $1.006 per
kilowatt-month for the first ten (10) years (120 months) after the
Firm Operation Dates of Both Cogeneration Facilities. The monthly
fee charged to Cogenerator shall be canpute<1 by multiplying the
Transmission Service Rate times the canbined 58,000 kilowatt Firm
Transmission Capacity reserved and required for Both Cogeneration
Facilities.
5.2.2 In the event that only one Cogeneration Facility is
finally canpleted or that the Firm Operation Dates of Both Cogenera-
tion Facilities are not the same, then subject to Article 6, the
Transmission Service Rate shall be increased to 1.115 dollars per
kilowatt-month and the IOOnthly fee for Firm Transmission Service for
the first-canpleted Facility shall be canputed by multiplying the
Transmission Service Rate, as provided for in this Section 5.2.2,
times the 29,000 kilowatt Firm Transmission Capacity reserved and
required for the completed facility, until the second facility is also
completed.
5.3 Additionally, Cogenerator shall pay to Vernon a fee of 2 mills
($0.002) per kilowatt-hour for interruptible transmission service, applied to the
Energy actually received at the Point of Interconnection with Vernon, for (a) the
transmission of Energy delivered to Edisa1 fran the Operation Testing Date and
continuing until the Firm Operation Date for the Cogeneration Facility is
established, and (b) the transmission of Energy delivered to Edison which is
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greater than 29,000 kilowatts or a combined 58,000 kilowatts for Both
Cogeneration,Facilities when measured at the Point of Interconnection with
Vernon.
5.4 Cogenerator shall coordinate with Vernon concerning the initiation
of operation testing, and shall provide thirty (30) days advance written
notification of establishment of the Firm Operation Date for the Cogeneration
FaCility.
5.5 Cogenerator shall pay the costs of all Special Facilities required
to provide or continue to provide Firm Transmission Service wherever located
except Vernon shall pay the first Two Hundred Fifty 'lbousand Dollars ($250,000)
of the Cogeneration Facility, or the first Five Hundred Thousand Dollars
($500,000) of Both Cogeneration Facilities installed on Vernon's side of the
Point of Interconnection with Vernon.
5.6 Cogenerator shall pay costs reasonably and necessarily incurred by
Vernon in the event Vernon must redesign its system or modify the Vernon/Edison
intertie in the future to continue to provide Firm Transmission Service to
Cogenerator herein. In the event that there are other cogenerators on the Vernon
System contributing to the need for such redesign or modification of the Vernon
System, Cogenerator shall be required to pay only its proportionate share of said
cost, based on the total capacity of transmission service provided by Vernon to
all cogenerators contributing to the need for said redesign or modification.
5.7 In the event that Cogenerator abandons its plans for installation
of the Cogeneration Facility at any time and for any reason whatsoever, including
the failure to obtain any required permits, Cogenerator shall provide thirty (30)
days advance notice to Vernon to stop construction and cancel equipment
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purchases. Cogenerator agrees to reimburse Vernon for any and all
non-recoverable costs incurred by Vernon for the Special Facilities prior to the
date of such notification. Cogenerator shall reimburse Vernon for all such costs
within thirty (30) days after presentaticn of an invoice. Vernon shall supply
documentation of said costs incurred at Cogenerator's request.
5.8 Cogenerator acknowledges that (a) electrical line losses will
occur as a result of Vernon's transmission of Energy generated by the
Cogeneration Facility from the Point of Interconnecticn with Vernon to the Point
of Interconnection with Edison, (b) Vernon estimates that such losses will amount
to 0.6 percent of the Energy received by Vernon at the Point of Interconnection
with Vernon, (c) Vernon and Cogenerator agree that Vernon should be canpensated
by or receive appropriate credits from Edison for actual line lOSses, (d) as of
the date of this Agreement, Vernon and Edison have not reached a satisfactory
agreement as to a method for providing such compensation or credit, and (e)
Vernon desires to encourage the developnent of cogeneration resources within the
City, and is therefore willing to execute this Agreement prior to reaching a
satisfactory understanding with Edison concerning compensation or credit to
Vernon for said line losses, provided that. Cogenerator shall agree, to reimburse
Vernon for up to one-third of such expected line losses.
5.9 Cogenerator agrees to pay to Vernon line loss reimbursement as
follCMS:
5.9.1 Payments for reimbursement by (bgenerator to Vernon
for line losses shall only be due in the event that (a) the
(bgeneration Facility shall have produced more than 235 million
kilCMatt-hours of electrical energy in a calendar year for which the
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determination of payment is to be made, and (b) Vernon has remained
unsu~ssful in negotiating an arrangement with Edison to receive for
actual line loss full canpensation or full credit.
5.9.2 In the event that such conditions have occurred, Vernon
shall, within thirty (30) days following the end of each calendar year
for which any payment lIlder this Section is due, sutmit an invoice to
Cogenerator in an amount to be canputed by multiplying:
(i) one-fifth (1/5) of the number of kilowatt-hours
in excess of 235 million kilowatt-hours generated by the
Cogeneration Facility and delivered to the Point of Inter-
connection with Vernon, provided that, the number of kilowatt-
hours so canputed shall not exceed 470,000 kilowatt-hours; times
(ii) the average rate for electric energy (in
dOllars-per-kilowatt-hour) during the year for which the
payment determination is made, charged by Edison to resale
custaners as filed with the Federal Energy Regulatory
Conmission (currently Edison's 'lUJ-R rate, or such
successor designations as may fran time to time be applied).
5.9.3 In the event that Vernon and Edison agree to a method
whereby Vernon is fully canpensated by or receives full appropriate
credits fran Edison for actual line losses, Cogenerator shall be
relieved of any further line loss payments to Vernon. Vernon will pass
through to Cogenerator any refunds that may eventually be received by
Vernon fran Edison in respect to said line loss canpensatioo or credits
to the extent that Cogenerator has paid funds to Vernon as provided for
in this Section 5.9.
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6.0 Rate Adjustments - The Transmission Service Rate for Firm Transmission
Service proviped for herein shall be adjusted after ten (10) years (120 months).
Said rate adjustment shall take effect on the one hundred twenty-first (121)
month after the Firm Operation Date. Thereafter, said rate shall be further
adjusted at the time of each new Rate Case Design Study approved by the City
Council. Transmission Service Rate adjustments shall be made in accordance with
the formula specified in Appendix A attached hereto.
7.0 Pgyment
7.1 Vernon shall render a monthly billing to Cogenerator for
Transmission Service for the preceeding month. The amount of the billing shall
be the monthly charge computed in accordance with the charges provided for in
Article 5 and Article 6.
7.2 Cogenerator's payment obligations shall be reduced by one-half
(50%) for the total number of hours of any period of time during which
interruption or curtailment of Firm Transmission Service was necessitated as a
result of the exercise by Vemon of its rights under Section 4.1 and Section 4.2
of this Agreement, or which was the result of the occurrence of an uncontrollable
circumstance pursuant to Article 11 hereof, provided that said interruption or
curtailment results in a capacity penalty or reduction in capacity payments
received by Cogenerator pursuant to the Edison Agreement. In such event, the
monthly fee charged to Cogenerator pursuant to Section 5.2 hereof shall be
reduced for each occurrence of said curtailment by an amount equal to the result
of dividing:
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(i) the Transmission Service Rate'times the CUrtailment
Capacity times the number of hours, or {X>rticn thereof,
during which said interruptioo or curtailment of Ficn
Transmission Service was necessitated times ooe-half1 by
(ii) the total number of hours in the monthly billing period.
For the purposes of this Agreement, the term nCurtailment Capacityn shall mean
the difference obtained by subtracting (a) the actual Capacity of Both
Cogeneration Facilities permitted to be delivered into the Vernon System, from
(b) the 58,000 kilowatt Firm Transmission Capacity of Both Cogeneration
Facilities1 or in the event that only one Cogeneration Facility is developed,
said term shall mean the difference obtained by subtracting (x) the actual
Capacity permitted to be delivered into the Vernon System, from (y) the Firm
Transmission Capacity of 29,000 kilowatts.
7.3 CUrtailment which was the result of the exercise by Vernon of its
right under Section 4.3 and Section 4.7 of this Agreement shall result in the
amount of the bill being pro-rata reduced for the total number of hours of
curtailment during the period for which the bill was rendered, provided that.
said interruption or curtailment results in a capacity penalty or reduction in
capacity payments received by Cogenerator pursuant to the Edison Agreement. In
such event, the monthly fee charged to Cogenerator pursuant to Section 5.2 hereof
shall be reduced for each occurrence of said curtailment by an amount equal to
the result of dividing:
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(i) the Transmission Service Rate times the CUrtailment
Capacity times the number of hours, or portion thereof,
during which said interruption or curtailment of Firm
Transmission Service was necessitated; by
(ii) the total number of hours in the IOOnthly billing period.
7.4 Bills which are not paid in full within thirty (30) days after
receipt thereof shall thereafter bear interest at a monthly rate equal to prime
plus one percentage point as specified by Bank of America, Los Angeles,
California, pro-rated by days until payment is made; provided that, if bills are
not paid in full within ninety (90) days after receipt thereof, Vernon shall have
the right to disconnect the Point of Interconnection with Vernon and Vernon I s
obligation to provide Firm Transmission Service hereunder shall cease until all
bills due are paid by Oogenerator. However, Cogenerator's obligations to make
payments shall continue in force until such time as this Agreement is terminated
pursuant to Article 29.
7.5 Vernon shall render bills for costs of all Transmission Facilities
and Special Facilities required to provide or continue Firm Transmission Service.
Payment of those bills shall be subject to the same conditions set forth in
Section 7.4; provided further that, Cogenerator shall pay all bills for
Transmission Facilities and Special Facilities which it is obligated to pay
pursuant to Section 5.4 prior to the Operation Testing Date.
7.5.1 Vernon shall give Oogenerator ninety (90) days advance
notice of additional costs for said Transmission Facilities and Special
Facilities, including any such costs which Oogenerator may be obligated
to pay prior to the Operation Testing Date.
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8.0 No ~dication of Facilities - No undertaking by one Party to the other
under any provision of this Agreement shall constitute the dedication of that
Party's system or any portim thereof to the other Party or to the public, nor
affect the status of Vernon as an independent municipal utility or Cogenerator as
an independent entity.
9.0 indemnification
9.1 Each Party shall indemnify the other Party, its officers, agents
and employees against all loss, damage, expense and liability for injury to or
death to person, or injury to property, except as provided in Article 10, caused
by the indemnifying Party's engineering, design, construction, ownership,
maintenance or operation of or making of replacements, additions or betterments
to, that Party's works or facilities used in connection with this Agreement by
reason of anissim or negligence, whether active or passive. '!be indemnifying
Party shall, on the other Party's request, defend any suit asserting a claim
covered by this indemnity. '!he indemnifying Party shall pay all costs that may
be incurred by the other Party in enforcing this indemnity.
9.2 The provisions of this Agreement have been designed under the
assumption that Vernon's cost of capacity and energy purchases from Edison will
not be adversely impacted by the arrangement provided for in this Agreement.
Therefore, it is understood and agreed that Cogenerator will indemnify and hold
Vernon harmless against Cogenerator' s pro-rated share of any and all additional
costs and liabilities incurred by Vernon, including increased charges that Vernon
. is required to pay to Edison and expenses incurred by Vernon in defending against
an Edison attempt to increase such charges, due to a revision by Edison, or an
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attempt by Edison to revise, the rates or charges at which Edison sells capacity
and energy to, Vernon, in the event that Edison has included in its filed resale
rate under Section 205 of the Federal Power Act additional costs arising out of
or related to the Firm Transmission Service provided for in this Agreanent. Such
indemnification shall be co-extensive both as to dollar amount and to the timing
of any and all adverse monetary imp:lct experienced by Vernon, resulting from the
arrangement provided for in this Agreement, in connection with Vernon I s capacity
and energy p.lrchases from Edison. Vernon will pass through to Cogenerator any
refunds that may eventually be received by Vernon from Edison in respect to said
issue and to the extent that Cogenerator has paid funds to Vernon as provided for
herein. Vernon shall bill Cogenerator in accordance with the provisions of
Article 7 hereof for any indemnification required p.lrsuant to this Section 9.2.
10.0 Liabili~
10.1 Except for the obligations cited herein, nothing in this
Agreement shall be construed to create any duty to, any standard of care with
reference to or any liability to any person not a Party to this Agreement.
10.2 Neither Vernon, its officers, agents, or employees shall be
liable for any claims, demands, costs, losses, cause of action, or any other
liability of any nature or kind, arising out of the engineering, design,
construction, ownership, maintenance or operation of, or making of replacements,
additions or betterments to the Cogeneration Facility by Cogenerator or any other
person or entity, or for the exercise of the curtailment provisions p.lrsuant to
Article 4 resulting in the curtailment of Firm Transmission Service.
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10.3 Neither Vernon, its officers, agents or employees shall be liable
for damages tp the Cogeneration Facility caused by an electric disturbance on the
Vernon System, or on the system of another, whether or not the electric
disturbance results fran the negligence of Vernon.
10.4 Except where specifically stated in this Agreement to be
otherwise, the duties, obligations and liabilities of the Parties shall be
several and not joint.
10.5 Nothing contained in this Agreement shall be constr~ed to create
an association, trust, partnership or joint venture or impose a trust or
partnership duty, obligation or liability on or with regard to either Party.
10.6 Cogenerator hereby releases Vernon, its councilmen, officers,
employees, agents and attorneys from any and all claims and demands arising based
upon violation of state and federal antitrust laws out of the negotiation and
execution of this Agreement inclUding any positions asserted in such negotiations
or conduct taken respecting the subject matter of this Agreement of whatever
nature, anticipated, known or unknown prior to the date of this Agreement.
Cogenerator expressly waives the provisions of Section 1542 of the Civil Code of
the State of California, reading as follows: "1542 Certain Claims Not Affected
by General Release. A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing
the release, which is known by him must have materially affected his settlement
with the debtor."
11.0 Uncontrollable Forces - Neither Party shall be liable to the other for
failure to perfoIIn its obligations hereunder, except for the obligation to make
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payment of money subject to Section 7.2, if the failure is due to strikes,
lockouts, labor disturbances, revocation of land rights, riots, sabotage,
vandalism, war, acts of God, or the plblic enemy, unavoidable accidents or other
matters beyond the reasonable control of and without the fault or negligence of
the Party so obligated. Upon the cessation of the mcontrollable cirClDIlStances,
the obligations of the Parties heremder shall recoomence and the Parties shall
continue to diligently perform all obligations mder this Agreement.
12.0 Control and Maintenance of Facilities - The Transmission Facilities and
Special Facilities shall at all times be and remain in the exclusive possession
and control of Vernon and this Agreement shall not be construed to grant to
Cogenerator any rights of ownership in or possession of any of those facilities.
13.0 Effectiv~ Date and Term
13.1 This Agreement shall be effective when duly executed by both
Parties and shall continue in force for twenty (20) years fran the later of the
Firm Operation Date or such similar date for the other cogeneration facility to
be developed by Cogenerator as contemplated in Section 5.2 hereof, unless
terminated IUrsuant to Article 29.
13.2 Notice of any degree of curtailment mder Article 4 shall not be
construed as constituting notice of termination under this Article 13.
14.0 Assignment or Transfer of Interest
14.1 My assignment or transfer by a Party of its interest in this
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Agreement which is made without written consent of the other Party shall not
relieve the Cl$signing or transferring Party fran primary liability for any of its
duties and obligations lD'lder this Agreement, and in the event of such assignment
or transfer, the assigning or transferring Party shall continue to remain
primarily liable for payment of any and all money due the other Party as provided
under this Agreement, and for the performance and observance of all other
covenants, duties and obligations to be perfonmed and observed under this
Agreement by the Party to the same extent as though no assignment or transfer has
been made.
14.2 Whenever an assignment or a transfer of a Party's interest in
this Agreement is made with the written consent of the other Party, the assigning
or transferring Party's assignee or transferee shall expressly assume in writing
the duties and obligations under this Agreement of the assigning or transferring
Party and, within thirty (30) days after any such assignment or transfer and
assumption of duties and obligations, the assigning or transferring Party shall
furnish or cause to be furnished to the other Party a true and correct copy of
such assignment or transfer and assumption of duties and obligations. Upon
furnishing of such assignment or transfer, the assigning or transferring Party
shall be released fran all its obligations lD'lder this Agreement.
15.0 Waiver - Any waiver at any time by either Party of its rights with
respect to a defualt under this Agreement, or with respect to any other matters
arising in connection with this Agreement, shall not be deemed a waiver with
respect to any subsequent default or other matter.
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16.0 captions - All indexes, titles, subject headings, section titles and
similar i terns are provided for the plrpose of reference and convenience and are
not intended to be inclusive, definitive or to affect the meaning of the contents
or scope of this Agreement.
17.0 Choice of Laws - This Agreement shall be construed and interpreted in
accordance with the laws of the State of California.
18.0 GovernmenT1'Il Jurisdiction and CaQpliance with Law
18.1 This Agreement is subject to the jurisdiction of those
governmental agencies having control over either Party or this Agreement. '!he
Parties shall take all reasonable action necessary to secure all required
governmental approvals necessary to construct and operate the Cogeneration
Facility. The pax;ties shall at all times conform to all applicable laws and
regulations.
18.2 Vernon shall not be obligated to accept delivery of Capacity and
Energy generated by the Cogeneration Facility until all required goveDrnnental
authorization.s and permits listed in Appendix B attached hereto are first
obtained and copies thereof are sul:mi.tted to Vernon.
18.3 Cogenerator shall maintain any governmental authorizations and
permi ts required to legally operate the Cogeneration Facility. If Cogenerator
fails to maintain such authorizations and permits, Vernon may refuse to accept
delivery of Capacity and Energy hereunder after giving reasonable advance written
notice.
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19.0 Land Riqhts - Cogenerator hereby grants to Vernon for the term of this
Agreement all necessary rights-of-way, easements or irrevocable licenses to
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install, operate, inspect, maintain, replace, and remove any Special Facilities
required to be located on property leased or owned by COgenerator, and to inspect
the COgeneration Facility, including adequate and continuing access rights on
property leased or owned by COgenerator, and Cogenerator agrees to execute all
other grants, deeds, or documents as Vernon may require to enable it to record
those rightS-Of-way, easements, or irrevocable licenses.
20.0 ~tering
20.1 Vernon shall provide, install, and maintain in and out
kilOlrlatt-hour meters, in and out pulse recorders, and instrument transformers at
a mutually agreed upon designated location at Cogenerator's expense. The
out-meters shall be used to record and indicate the integrated demand for each
half-hour and to measure kilowatt-hour deliveries of Energy from COgenerator into
the Vernon System. The in-meters shall be used to record and indicate the
integrated demand for each half-hour and to measure kilowatt-hour deliveries of
any energy from Vernon to Cogenerator. Meters and pulse recorders for
measurement of reactive volt-ampere hours shall also be provided. All costs for
installation, maintenance, administration, inspecticn and testing of said meters
shall be borne by COgenerator.
20.2 All meters used to determine deliveries of Energy and Capacity
hereunder shall be sealed and the seals shall be broken only upon occasions when
the meters are to be inspected, tested or adjusted by Vernon personnel.
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20.3 Vernon shall inspect and test all meters upon their installation
and at least mce each year thereafter. Vernon shall give reasonable notice of
the time when any inspection or test shall take place to Cogenerator, and
Cogenerator may have representatives present at the test inspection. If a meter
is found to be inaccurate or defective, it shall be adjusted, repaired or
replaced in order to provide accurate metering.
20.4 If a meter fails to register, or if the measurement made by a
meter during a test varies by more than two percent (2%) from the measurement
made by the standard meter used in the test, adjustments shall be made correcting
all measurements made by the inaccurate meter for:
20.4.1 '!he actual period during which inaccurate measurements
were made, if the period can be determined; or if not,
20.4.2 The period inmediately preceding the test of the
meter equal to one-half the time from the date of the last previous
test of the meter; provid~ that, the period covered by the
correction shall not exceed six (6) months.
20.4.3 Cogenerator shall be responsible for resolving all
disputes arising fran metering accuracy of Edison's meters with Edison.
20.5 Cogenerator, after reasonable notice to Vernon, shall have the
right of access to all metering and related records.
21.0 Gen~ral Technical ~irements
21.1 Cogenerator shall design, construct, maintain, and Operate the
Cogeneration Facility. Said facility and related equipment shall meet all
requirements of applicable codes and all standards of Prudent Electrical
Practices.
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21.2 Vernon agrees to design, construct, operate and maintain its
Transmission Facilities and Special Facilities in a manner consistent with good
utility standards and Prudent Electrical Practices.
21.3 Cogenerator shall provide Vernon with specifications of all major
electrical equipnent and facilities associated with the generator and protection
thereof for review at least two (2) months prior to the scheduled Operation
Testing Date. If Cogenerator fails to do so, Vernon may refuse interconnectioo
until two (2) months after the specifications are submitted to Vernon.
Cogenerator shall give written notice to Vernon at three (3) month intervals of
the estimated Operation Testing Date. If Cogenerator fails to notify Vernon,
Vernon may at its option refuse interconnection for a period not to exceed three
(3) months fran the date of actual notice.
21.3.1 Vernon agrees to provide Cogenerator with construction
schedules for the Transmission Facilities, and Special Facilities and
to advise Cogenerator of any changes to same.
21.3.2 Cogenerator shall change its facilities and equipnent
as may be reasonably required by Vernon to meet current or future
requirements of the Vernon System.
21.4 Cogenerator shall not cause, as the result of its
interconnection, any reduction in the quality of service being provided to Vernon
customers.
21.4.1 Abnormal voltages, frequencies, radio or TV'
interference or Harmonics shall not be permitted.
21.4.2 Cogenerator shall not cause interference with the
electrical or structural integrity of Vernon facilities.
21.5 Cogenerator shall provide synchronizing relays at the main
generator breaker as required. Induction starting, automatic synchronizing or
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manual synchronizing shall be supervised by a synchronizing check relay.
Induction starting will be permitted only when the inrush current will not exceed
limits specified by Vernon which limits shall be in accordance with good utility
practice. Synchronous generation shall include loss of excitation relays.
21.6 Cogenerator shall maintain its equipnent in good operating order.
The Generator and related electrical equipment shall be subject to periodic
inspection by Vernon. If Cogenerator fails to provide proper routine maintenance
of said equipnent in accordance with good utility practice, Vernon shall have the
right to disconnect the Point of Interconnection with Vernon after providing
reasonable advance written notice and Vernon's obligation to provide Firm
Transmission Service hereunder shall cease until appropriate corrective action is
taken.
21.7 Parallel operation of the Cogeneration Facility with the Vernon
System shall be with the permission of the Vernon System dispatcher. Vernon
reserves the right to separate the Cogeneration Facility from the Vernon System
without notice due to a Vernon System Emergency as determined at the time by the
Vernon System dispatcher. The Vernon dispatcher may notify and separate the
Generating Facility fran the Vernon System in order to maintain Vernon's Electric
System Integrity. Vernon shall promptly notify Cogenerator when such separation
is no longer necessary.
21.8 Cogenerator shall provide equipment necessary to inhibit manual
or automatic reclosing to an energized line so that the Interconnection Facility
cannot be established with the Generator out of phase with the Vernon System.
Cogenerator shall not be permitted to energize a deenergized Vernon circuit.
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21.9 The Cogeneration Facility shall be capable of generating at a
power factor, between .90 lag and .95 lead. If necessary, Cogenerator may be
required to maintain voltage levels and reactive support for the Vernon System.
21.10 Protective Devices such as fuses, relays, and circuit breakers
necessary to iImnediately remove the fault contribution into the Vernon System
from the Cogeneration Facility shall be owned, operated, and maintained by
Cogenerator. Canplete maintenance records must be maintained and be available
for Vernon review. If Cogenerator fails to maintain and keep operational
necessary Protective Devices, Vernon shall have the right after reasonable
notification to disconnect the Point of Interconnection with Vernon and Vernon I s
obligation to provide Firm Transmission Service hereunder shall cease until such
time as necessary corrective actions have been performed. Cogenerator's
obligations shall remain in force.
21.10.1 Cogenerator shall provide overcurrent voltage
restrained relays to detect faults in the Vernon line to which the
Cogeneration Facility is connected. These relays shall separate and
lock out the Cogeneration Facility from the Vernon System until the
Vernon System restabilizes and/or the dispatcher reauthorizes parallel
operation.
21.10.2 Cogenerator shall provide under/over frequency relays
to separate the Cogeneration Facility fran the Vernon System in case
of sustained under/over frequency conditions.
21.10.3 Cogenerator shall provide reverse power relays to
separate the Cogeneration Facility in the event of loss of the prime
mover.
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21.10.4 Cogenerator shall provide over/under voltage relays
to separate the Cogeneration Facility fran the Vemon System if the
lihe voltage exceeds limits designated by Vemon, which limits shall
be in accordance with Prudent Electrical Practices. These relays
shall also prevent plralleling of the Generator if the line voltage
is not within said limits or if the line is deenergized.
21.10.5 Cogenerator shall provide indicators in the form of
alarms, meters, and annunciators designed to monitor Generator
parameters such as current, watts, vars, temperature and any other
applicable point to give its operator a clear assessment of the
operation of the Cogeneration Facility.
21.10.6 All Protective Devices installed to protect the
Vemon System from the Cogeneration Facility infeed during abnormal
conditions are subject to revi6\' and approval by Vemon, such approval
not to betmreasonably withheld. All Protective Devices at the Point
of Interconnection with Vemon shall be utility grade.
21.10.7 Vernon reserves the right to observe the checkout and
testing of all Protective Devices. Assemblies involving the sequential
operation of devices shall be tested to ensure that the devices in the
sequence ftmction properly and in the order intended. Relay settings
of Protective Devices shall be reviewed with Vernon. The correctness
of control wiring shall be verified by either actual electrical
operation of the canponent control devices or individual circuit checks
by electrical circuit testers.
21.10.8 Any generation failure which may result in mmecessary
disturbance to the Vemon System must be pranptly removed fran service.
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21.11 Cogenerator shall provide disconnects, capable of being locked in
the ~pen posiJ:ion to isolate the Cogeneration Facility from the Vernon System.
Said disconnects shall provide open or closed visible indicatial.
21.11.1 Cogenerator shall notify the Vernal dispatcher pri~r to
scheduling coomencement 6r ceasing P'!rallel operatial with the Vernon
System. The Vernal disP'!tcher must be notified of the status and
operation of the disconnects prior to and after each operatial.
21.12 If Cogenerator fails to canply with any of the provisions of this
Article 21 or fails to correct any of the conditions set forth herein, Vernon
shall have the right to disconnect, after providing reasonable advance written
notice, the Point of Interconnection with Vernon and Vernon's obligatial to
provide Firm Transmission Service hereunder shall cease until such provisions are
complied with or such conditions are corrected by Cogenerator. Cogenerator's
obligations shall remain in force.
22.0 Notices - Any notice, demand or request required or permitted to be given
by either Party to the other and any instrument required or permitted to be
tendered or delivered by either Party to the other may be so given, tendered or
delivered, as the case may be by depositing the same in any United States Post
Office with IX>stage prepaid, for transmission by certified or registered mail,
addressed to the Party, or personally delivered to the Party, at the address
designated in this Agreement. Changes in such designation may be made by notice
similarly given. All written notices shall be directed as follCMS:
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To Vernon:
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
Attn: City Administrator
To Cogenerator:
S~lawCogeneratim~rtners I
8530 Wilshire Blvd., Suite 401
Beverly Hills, CA 90211
23.0 Qperqtion of the C0generation Fa~ili~ - Cogenerator shall Operate the
Cogeneration Facility, subject to the following provisions:
23.1 The Cogeneration Facility and Protective Devices shall be
operated and maintained in accordance with applicable utility industry standards
and good engineering practices with respect to synchronizing, voltage and
reactive power control.
23.2 The Cogeneration Facility shall be operated with all of the
Protective Devices in service whenever the Generator is connected to or is
operated in parallel with the Vernon System. Any deviatim for brief periods of
Emergency or maintenance shall only be by mutual agreement.
23.3 Cogenerator shall keep Vernon notified as to the scheduled
outages of the Generator, inCluding any changes thereto and shall provide Vernon
with reasonable advance notice regarding its scheduled outages for the Generator.
Vernon shall provide reasonable advance notice to Cogenerator as to the Vernon
System I s maintenance and scheduled outage requirements affecting Vernon I s ability
to provide Firm Transmission Service. Reasonable advance notice is defined as
follows:
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SCHEDm ,m c:vrAGES
EXPECl'ED OORATION
ADVANCE mI'ICE
ro PARrIES
Less than one day 24 hours
One day or lOOre 1 week
One week or longer 6 months
Notification of outage date and duration should be
by telephone and directed as follows:
Vernon: Electrical Dispatch Center
Cogenerator: Cogeneration Facility Control Center
Written notification p.1rsuant to Article 22 shall also
be provided for scheduled outages of one day or more.
23.4 Cogenerator shall maintain an operating log with records of real
and reactive power flow, changes in operating status, outages, Protective Devices
operations and any unusual conditions found during inspection. In addition,
Cogenerator shall maintain records applicable to the Generator, including the
electrical characteristics of the Generator and settings or adjustments of the
Generator control equipnent and Protective Devices. Such information shall be
available to Vernon upon request and copies of such operating logs and records
shall be provided, if requested, to Vernon within thirty (30) days.
23.5 If at any time Vemon has reason to suspect the integrity of any
of the Protective Devices and such suspected loss of integrity is hazardous to
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the Vernon Electric System Integrity, Cogenerator shall demonstrate, to Vernon's
satisfaction,.the correct calibratioo and operation of the equipnent in questioo.
23.6 Cogenerator shall test all Protective Devices with qualified
personnel at intervals of not more than four (4) years.
23.7 Cogenerator shall notify Vernon at least fourteen (14) calendar
days prior to the initial energizing of the Point of Interconnection with Vernon
and initial testing of the Protective Devices. Vernon shall have the right to
have a representative present at such time.
23.8 Cogenerator shall, to the extent p:>ssible, provide reactive power
for his own requirements. Cogenerator shall not deliver excess reactive power to
Vernon 1Illess otherwise nutually agreed upon between the Parties.
24.0 Di~tes
24.1 Any dispute arising between the Parties relating to
interpretation of the provisions of this Agreement or to performance of the
Parties herelllder shall be reduced to writing by the disputing Party, stating the
complaint and the proposed solution, and submitted to the other Party's manager
responsible for administration of this Agreement, whose interpretation and
decision thereon shall be incorporated into a written document, which shall
specify that it is the final decision of such manager, and a copy of said
document shall be furnished to the disputing Party within ten (10) days following
receipt of the disputing Party's written canplaint.
24.2 The decision of the manager pursuant to Section 24.1 shall be
final and Calclusive thirty (30) days after receipt of such copy by the disputing
Party unless, within such thirty (30) day period, the disp.1ting Party furnished a
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written appeal to such manager. Following receipt of such appeal, a joint
hearing shall be held at a nutually acceptable date within fifteen (15) days, at
which time the Parties shall each be afforded an opportunity to present evidence -
in support of their respective positions. SUch joint hearing shall be conducted
by one authorized representative of Vernon, and one authorized representative of
Cogenerator which representatives may be assisted by other persons deemed
necessary by either Party. Pending final decision of a dispute pursuant to this
section, the Parties shall proceed diligently with the performance of their
obligations lIlder this Agreement and maintain the status quo of the cooditioo
under dispute unless a nutually acceptable interim solution is develOped.
24.3 The final decision by the Parties' authorized representatives
shall be made within fifteen (15) days after presentatioo of all data affecting
the dispute, and shall be reduced to writing. The decision shall be final and
conclusive.
24.4 If the Parties' authorized representatives cannot reach a final
decision regarding the dispute within fifteen (15) days, any remedies which are
provided by law may be p.1rsued.
25.0 Disclaimer - Any review by Vernon of the design, constructim, operatim,
or maintenance of the Project is solely for the information of Vernon. By making
such review, Vernon makes no representation as to the economic and technical
feasibility, operational capability, or reliability of the Cogeneration Facility.
Cogenerator shall in no way represent to any third party that any such review by
Vernon of the Cogeneration Facility, including but not limited to, any review of
the deSign, Calstructioo, operation, or maintenance of the Cogeneratim Facility
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Facility by Vernon is a representatim by Vernal as to the econanic and technical
feasibility,. operational capability, or reliability of said facilities.
Cogenerator is solely responsible for economic and technical feasibility,
operational capability, or reliability thereof. Vernon shall not be liable to
Cogenerator for, and Cogenerator shall defend and indemnify Vernon from, any
claim, cost, loss, damage, or liability arising from any contrary representation
concerning the effect of Vernon's review of the design, construction, operation,
or naintenance of the Cogeneration FaCility.
26.0 Interconnectial Facilities Desiqn - The Interconnection Facilities shall
be designed, installed, operated and maintained at Cogenerator' s expense. The
deSign, installatim, operatim and maintenance of the Interconnectim Facilities
shall be in accordance with applicable codes and good engineeering practice.
27.0 OWnership and Operation of Inter~ection Facilities
27.1 Cogenerator shall not commence parallel operation of the
Cogeneration Facility until written awroval for operatim of the Interconnection
Facility has been given by Vernon, such awroval not to be unreasonably withheld.
27.2 Cogenerator shall own, operate and maintain the Interconnectim
Facilities.
28.0 Taxes - Cogenerator shall pay ad valorem taxes and other taxes properly
attributable to the Cogeneration Facility. If such taxes are assessed or levied
against Vernon, Cogenerator shall pay Vernon for such assessment or levy.
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29.0 ~rmination/Abandanment
29.1 This Agreement shall terminate if the Firm Operation Date does
not occur within five (5) years of the date of the Agreement execution.
29.2 Vernon shall have the right to terminate this Agreement if
Cogenerator continually fails to make Firm Transmission Service payments as set
forth in this Agreement.
29.3 Vernon shall have the right to terminate this Agreement if
Cogenerator abandons the Cogeneration Facility. The Cogeneration Facility shall
be deemed to be abandoned if Cogenerator discontinues operation of the
Cogeneration Facility with the intent that such discontinuance be permanent.
Such intent shall be conclusively presumed by either (i) Cogenerator's notice to
Vernon of such intent, or (ii) Cogenerator's operation of the Cogeneration
Facility in such a manner that no Energy is generated therefrom for two hundred
(200) consecutive days during any period after the Firm Operation Date unless
Cogenerator has continued to make payments to Vernon for Firm Transmission
Service, or unless otherwise agreed to in writing by the Parties.
29.4 Vernon shall have the right to terminate Firm Transmission
Service upm the termination of the Edison Agreement. At such time, Vernm may
effectuate a p:>wer p;lrchase agreement with Cogenerator.
29.5 If after this Agreement becomes effective, any governmental
agency having jurisdiction over either Party or this Agreement imposes an
unreasonably burdensome condition or obligation on either Party with respect to
such Party's obligations under this Agreement, and the affected Party has
challenged such rUling to the best of its abilities and such challenge has been
unsuccessful, the affected Party may terminate this Agreement upon thirty (30)
days written notificatial to the other Party, unless an alternative resolution,
agreeable to both Parties, can be reached.
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30.0 Sale of Cogeneration Facility
30.1 If Cogenerator desires to sell the Cogeneration Facility and has
made an offer to or received an offer from any public utility or municipal
utility (as those terms are defined in the California Public utility Code) then,
Cogenerator shall promptly offer to Vernon, or any entity designated by Vernon in
its sole discretion, the right to purchase the Cogeneration Facility. Vernal or
any such entity designated by Vernon, shall have up to sixty (60) days following
the offer to accept Cogenerator's offer to reach agreement with Cogenerator.
30.2 If Cogenerator abandms the Cogeneratial Facility during the term
of this Agreement, Vernon, or any entity designated by Vernon in its sole
discretial, shall have the right to p;lrchase the Cogeneration Facility at fair
market value.
31.0 Priority of 1\qreement - If there is a conflict between this Agreement and
any appendix, the provisions of this document shall govern. Each Party shall
notify the other immediately upon the determination of the existence of any such
cmflict.
32.0 Previous Communications - This Agreement contains the entire agreement
and understanding between the Parties, their agents, and employees as to the
subject matter of this Agreement, and merges and supercedes all prior agreements,
commitments, representations, and discussions between the Parties. No Party
shall be bound to any Obligations, conditions, or representations from prior
agreements, carmitments, representations and discussial between the Parties with
respect to the subject matter of this Agreement.
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33.0 Thirq Party Beneficiaries - This Agreement is for the sole benefit of the
Parties and shall not be construed as granting any rights to any persal or entity
other than the Parties or imposing obligatims m either Party to any person or
entity other than the Parties.
34.0 Successors and Assigns - This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Parties.
35.0 Fpel Use Franchise Fee - Cogenerator aCknowledges that Vernon has reduced
its transmission fees in recognition that Cogeneration Facility will consume
natural gas as its primary fuel source and Vernon will therefore receive
additional franchise fees from Southern California Gas Canpany at the rate of one
percent (1%) of "gross billing" of all natural gas consumed in the Cogeneration
Facility. If Cogenerator should consume a fuel other than natural gas in the
Cogeneratial Facility, and if Vernon does not receive franchise fees for the use
by Cogenerator of such alternate fuel, then Cogenerator shall pay Vernon a fee
equal to one percent (1%) of the purchase price of the alternate fuel which is
consumed in the Cogeneration Facility, except for alternate fuels used for up to
three hundred (300) hours per year for testing or reliability purposes.
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36.0 Insurance
36.1 Oogenerator shall obtain and maintain in force as hereinafter
provided comprehensive general liability insurance, including contractual
liability coverage, with a combined single limit of not less than Five Millial
Dollars ($5,000,000) for each occurrence. The insurance carrier or carriers and
form of policy shall be subject to review and approval by Vernon, such approval
not to be lIlreasonably withheld.
36.2 Prior to the date Cogeneration Facility is first operated in
parallel with the Vernon System, Oogenerator shall (a) furnish a certificate of
insurance to Vernon, which certificate shall provide that such insurance shall
not be terminated nor expire except on thirty (30) days prior written notice to
Vernon, (b) maintain such insurance in effect for so long as Cogenerator's
Cogeneration Facility is operated in parallel with Vernon's electric system, and
(c) furnish to Vernon an additional insured endorsement with respect to such
insurance in substantially the following form:
"In Calsideratial of the premium charges, Vernon
is named as additialal insured with respect to
all liabilities arising out of Cogenerator's
use and ownership of Cogenerator's facilities.
The inclusion of more than ale insured lD'lder this
policy shall not operate to impair the rights of
one insured against another insured and the coverages
afforded by this policy will apply as though separate
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policies had been issued to each insured. '!he
inclusion of more than one insured will not, however,
" operate to increase the limit of the carrier's
liability. Vernon will not, by reasoo of its
inclusial under this policy, incur liability to
the insurance carrier for payment of premium for
this policy.
Any other insurance carried by Vernon which may be
aWlicable shall be deemed excess insurance and
Cogenerator's insurance primary for all purp:>ses
despite any conflicting provisioos in Cogenerator's
policy to the contrary."
36.3 If Cogenerator fails to comply with all of the provisions of this
Article 36, Cogenerator shall, at its own cost, defend, indemnify, and hold
harmless Vernon, its directors, officers, employees, agents, assigns, and
successors in interest from and against any and all loss, damage, claim, cost,
charge, or expense of any kind or nature including direct, indirect or
consequential loss, damage, claim, cost, charge, or expense, including attorney's
fees and other costs of litigation resulting from the death or injury to any
perSal or damage to any property, including the personnel and property of Vernon,
to the extent that Vernon would have been protected had Cogenerator canplied with
all of the provisions of this ArtiCle 36.
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37.0 Further Assurances - Each Party, on request of the other Party, will
perform such acts as may be reasonably necessary or advisable to carry out the
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intent of this Agreement.
IN WITNESS WHEROOF, the Parties have executed this Agreement Ql
ATl'EST:
BY.
Bruce V. Malkenhorst, City Clerk
APPOOVED AS 'ID FORM:
BY.
David B. Brearley, City Attorney
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CITY OF VER!m
BY.
Leonis C. Malburg, Mayor
SUNLAW CX:X;ENERATION PARINERS I
a California Limited Partnership
~: Sunl~~~ting~rp:>ratial,
a California corp:>ration,
its General Partner
BY.
E. Jay !obit, Vice President
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AWendix A
Pursuant to Article 5 of this Agreement, the rate for Firm Transmission Service
shall be initially adjusted after ten (10) years (120 months) from the Firm
Operation Date. Such adjustment shall be based on cost and demand information
contained in the most recent Report on Rate Design of the Municipal Light
Department, City of Vernon, California, prior to the date for such adjustment, as
awroved by the City Council. Further adjustments shall be made at the time of
each succeeding Report on Rate Design. All such adjustments shall be made in
accordance with the following formula:
Rate for
Firm Transmission Service =
(in dollars per kilowatt per IOOnth)
MC+OC+D+R+LP(0~15)
CG(12)+ASD
where,
MC = Annual Miscellaneous Costs (in dollars per year)
DC = Annual Operating Costs (in dollars per year)
D = Annual Depreciatial Allowance (in dollars per year)
R = Vernm rate base multiplied by rate of return on rate base
granted in Edison JOOst recent croc rate case
LP = Annual In Lieu Payment (in dollars per year)
0.15 = 15 Percent Factor to be Applied to In Lieu Payment
CG = Combined Firm Transmission Capacity of Cogeneration
Projects Operating on the Vernon System (in kilowatts)
12 = twelve months per year
ASD = The SlmI of City of Vernon roonthly retail sales Peak Demand
Adjusted for Losses (in kilowatts-month per year)
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APPENDIX B
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Governmental Agenqy
Goven:nnental authorizations and permits required by Cogenerator:
Authorization Qr Permit
Federal Energy Regulatory Comnission
u.s. Dept. of Energy, Economic Regulatory
Administration
u.s. Enviromnental Protection Agency
South COast Air Quality Management District
Los Angeles County Sanitatial District
City of Vernon
L.A. Junctim and Union Railroads
(U.S. Growers only)
Qualifying Cogeneration
Facili ty Status
Fuel Use Act Exemption
Preventioo of Significant
Deterioration Review
Exemptial
Authority to Construct Permit
Industrial Wastewater
Discharge Permit
Conditiooal Use Permit for
Cogeneration
Building and Safety Fermi t
Irrevocable Lease for Amnonia
liquid and gas pipelines