Resolution No. 2010-071RESOLUTION NO. 2010-71
A RESOLUTION OF THE CITY COUNCIL OF THE -CITY OF:
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF
A MASTER POWER PURCHASE AND SALE AGREEMENT BY AND
BETWEEN THE CITY OF VERNON AND THE CITY OF
VICTORVILLE
WHEREAS, the City of Vernon ("City") is a chartered
municipal corporation of the State of California that owns and
operates a system for the generation,purchase, transmission,
distribution and sale of electric capacity and energy; and
WHEREAS, the City and the City of Victorville
("Victorville") own and operate publicly -owned electric utilities in
the California Independent System Operator Corporation ("CAISO")
Balancing Authority Area; and
WHEREAS, the City of Vernon and Victorville desire to enter
into an agreement to govern the purchase of electric capacity, energy,
and ancillary services; and
WHEREAS, by a memorandum dated June 1, 2010, the Director of
Light & Power has recommended that the City enter into a master power
purchase and sale agreement with the City of Victorville to set forth
the general terms and conditions.for the sale of energy to Victorville
(the "Agreement")
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon does
hereby find and determine that the recitals contained hereinabove are
true and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the Agreement with Victorville, a copy of which is attached
hereto as Exhibit A.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Mayor, or Mayor Pro=Tem to execute said Agreement for,
and on behalf of, the City of Vernon and the City Clerk, or Deputy
City Clerk, is hereby authorized to attest thereto.
SECTION 4: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to take whatever
actions are deemed necessary or desirable for the purpose of
implementing and carrying out the purposes of this Resolution and the
transactions herein approved or authorized.
SECTION 5: The City Council of the City of Vernon hereby
directs the City Clerk, or the City Clerks designee, to send a fully
executed Agreement to:
City of Victorville
14343 Civic Drive
Vic,torville, CA 92392
SECTION 6 The City Clerk of the City of Vernon shall
certify to the, passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this 7th day of June, 2010.
Name.. Hilario Gonzales
Title: Mayor
AT T ST:
it and Yp6aTuci) City Clerk
2
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. 2010-71, was duly passed, approved and adopted by the City Council
of the City of Vernon at a regular meeting of the City Council duly
held on Monday, June 7, 2010, and thereafter was duly signed by the
Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this day of June, 2010, at Vernon, California.
ill rd rrouchi, City Clerk
(SEAL)
3
EXHIBIT A
MASTER POWER PURCHASE
& SALE AGREEMENT
BETWEEN
THE CITY OF VERNON, CALIFORNIA
AND
THE CITY OF VICTORVILLE, CALIFORNIA
MASTER POWER PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
1.
PARTIES..........................................................................................
1
2.
RECITALS........................................................................................
1
3.
AGREEMENT....................................................................................
1
4.
DEFINITIONS....................................................................................
1
5.
TRANSACTION TERMS AND CONDITIONS ..........................................
5
6.
OBLIGATIONS AND DELIVERIES.......................................................
5
7.
REMEDIES FOR FAILURE TO DELIVER/RECEIVE................................
6
8.
EVENTS OF DEFAULT; REMEDIES..............................4.......................
7
9.
PAYMENT.......................................................................................
8
10.
LIMITATIONS..................................................................................
9
11.
CREDITWORTHINESS........................................................................
10
12.
GOVERNMENTAL AND OTHER CHARGES ............................................
11
13.
MISCELLANEOUS..............................................................................
11
14.
SEVERABILITY.................................................................................
15
15.
RELATIONSHIP OF PARTIES..............................................................
15
16.
NO DEDICATION OF FACILITIES........................................................
15
EXHIBIT A: SAMPLE TRANSACTION CONFIRMATION .........................
17
1
MASTER POWER PURCHASE AND SALE AGREEMENT
1. PARTIES
This Master Agreement for Power Purchase and Sale (the "Agreement") is entered into by and
between the City of Vernon, a California charter city and municipal corporation having its principal
place of business at 4305 Santa Fe Avenue, Vernon, California 90058 (hereinafter referred to as
"Seller") and the City of Victorville, a California charter city and municipal corporation having a
principal place of business at 14343 Civic Drive, Victorville, California 92392 (hereinafter referred to
as `Buyer"), and shall be effective as of the Effective Date, as that term is defined in Section 4.14 of
this Agreement. Hereinafter Buyer and Seller may be referred to individually as a "Party", or
collectively as the "Parties". This Agreement enables, but does not obligate, the Parties to enter into
transactions with each other to purchase, sell and/or exchange power.
2. RECITALS
2.1 Whereas Seller and Buyer own and operate publicly -owned electric utilities in the
CAISO Balancing Authority Area.
2.2 Whereas Buyer desires and Seller is willing to enter into this Agreement to govern the
purchase of Products (as that term is defined in Section 4.26 hereof) to be delivered at the CAISO EZ
Gen Trading Hub delivery point, or such other delivery point agreed to by the Parties in writing.
3. AGREEMENT
In consideration of the mutual covenants set forth herein, the Parties agree as follows:
4. DEFINITIONS
4.1 , "Agreement" means this Master Power Purchase and Sale Agreement.
4.2 "Bankrupt" means with respect to any entity, such entity (i) files a petition or otherwise
commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under
any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or
commenced against it, (ii) makes an assignment or any general arrangement for the benefit of
creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator,
administrator, receiver, trustee, conservator or similar official appointed with respect to it or any
substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due.
4.3 "Business Day" means any day except a Friday, Saturday, Sunday or a Federal Reserve
Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for the relevant
Party's principal place of business. The relevant Party, in each instance unless otherwise specified,
shall be the Party from whom the notice, payment or delivery is being sent and by whom the notice or
payment or delivery is to be received.
4.4 "CAISO" means the California Independent System Operator Corporation or any
successor organization.
1
4.5 "Claiming Party" has the meaning set forth in Section 6.3.
4.6 "Claims" means all third party claims or actions, threatened or filed and, whether
groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an
indemnity, and the resulting losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to
or after the termination of this Agreement.
4.7 "Confirmation" has the meaning set forth in Section 5.4.
4.8 "Contract Price" means the price in U.S. Dollars (unless otherwise provided for) to be
paid by Buyer to Seller for the purchase of the Product, as determined by the Parties for each
Transaction and specified in the Confirmation.
4.9 "Costs" means, with respect to the Non -Defaulting Party, brokerage fees, commissions
and other similar third party transaction costs and expenses reasonably incurred by such Party either in
terminating any arrangement pursuant to which it has hedged its obligations or entering into new
arrangements which replace a Terminated Transaction; and all reasonable attorneys' fees and expenses
incurred by the Non -Defaulting Party in connection with the termination of a Transaction.
4.10 "Defaulting Party" has the meaning set forth in Section 8.1.
4.11 "Delivery Period" means the period of delivery for each Transaction.
4.12 "Delivery Point" means the point at which the Product will be delivered and received,
as specified for each Transaction.
4.13 "Early Termination Date" has the meaning set forth in Section 8.2.
4.14 "Effective Date" means the date on which the last Party to this Master Agreement has
executed same as indicated by the dates of the signature page hereof.
4.15 "Equitable Defenses" means any bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and with regard to equitable remedies, the discretion of the court
before which proceedings to obtain same may be pending.
4.16 "Event of Default" has the meaning set forth in Section 8.1.
4.17 "Force Majcure" has the meaning set forth in Section 6.3.2.
4.18 "Gains" means, with respect to any Party, an amount equal to the present value of the
economic benefit to it, if any (exclusive of Costs), resulting from the termination of a Terminated
Transaction, determined in a commercially reasonable manner.
4.19 "Interest Rate" means, for any date, the lesser of (a) the per annum rate of interest equal
to the prime lending rate as may from time to time be published in The Wall Street Joumal under
"Money Rates" on such day (or if not published on such day on the most recent preceding day on
which published), plus two percent (2%) and (b) the maximum rate permitted by applicable law.
4.20 "IST" means "Inter -Scheduling Coordinator Trade" as defined in the CAISO Tariff.
4.21 "IST-enabled Product" means any Scheduling Coordinator -to -Scheduling Coordinator
traded product for which an IST can be submitted and for which CAISO will make a payment or issue
an invoice, including Energy, Tier I IFM Bid Cost Recovery Obligations and Ancillary Service
Obligation trades; as each are defined in the CAISO Tariff.
2
4.22 "Letter(s) of Credit" means one or more irrevocable, transferable standby letters of
credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a
credit rating of at least A- from S&P or A3 from Moody's, in a form acceptable to the Party in whose
favor the letter of credit is issued. Costs of a Letter of Credit shall be borne by the applicant for such
Letter of Credit.
4.23 "Losses" means, with respect to any Party, an amount equal to the present value of the
economic loss to it, if any (exclusive of Costs), resulting from termination of a Terminated
Transaction, determined in a commercially reasonable manner.
4.24 "Non -Defaulting Party" has the meaning set forth in Section 8.2.
4.25 "Performance Assurance" means collateral in the form of cash, Letter(s) of Credit, or
other security acceptable to the First Party (as defined in Section 11.2).
4.26 "Product" means electric capacity, energy, ancillary services or other product(s) related
thereto as specified in each Transaction and includes IST-enabled Products.
4.27 "Quantity" means that quantity of the Product that Seller agrees to make available or
sell and deliver, or cause to be delivered, to Buyer, and that Buyer agrees to purchase and receive, or
cause to be received, from Seller as specified for each Transaction.
4.28 "Replacement Price" means the price at which Buyer, acting in a commercially
reasonable manner, purchases for delivery at the Delivery Point a replacement for any Product
specified in a Transaction but not delivered by Seller, plus (i) costs reasonably incurred by Buyer in
purchasing such substitute Product and (ii) additional transmission charges, if any, reasonably incurred
by Buyer to the Delivery Point, or absent a purchase, the market price at the Delivery Point for such
Product not delivered as determined by Buyer in a commercially reasonable manner; provided,
however, in no event shall such price include any penalties, ratcheted demand or similar charges, nor
shall Buyer be required to utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition, Buyer shall be considered
to have purchased replacement Product to the extent Buyer shall have entered into one or more
arrangements in a commercially reasonable manner whereby Buyer repurchases its obligation to sell
and deliver the Product to another Seller the Delivery Point.
4.29 "Sales Price" means the price at which Seller, acting in a commercially reasonable
manner, resells at the Delivery Point any Product not received by Buyer, deducting from such proceeds
any (i) costs reasonably incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the third party purchasers,
or absent a sale, the market price at the Delivery Point for such Product not received as determined by
Seller in a commercially reasonable manner; provided, however, in no event shall such price include
any penalties, ratcheted demand or similar charges, nor shall Seller be required to utilize or change its
utilization of its owned or controlled assets, including contractual assets, or market positions to
minimize Buyer's liability. For purposes of this definition, Seller shall be considered to have resold
such Product to the extent Seller shall have entered into one or more arrangements in a commercially
reasonable manner whereby Seller repurchases its obligation to purchase and receive the Product from
another Seller the Delivery Point.
4.30 "Schedule" or "Scheduling" means the actions of Seller, Buyer and/or their designated
representatives, including each Party's Transmission Providers, if applicable, of notifying, requesting
3
and confirming to each other the quantity and type of Product to be delivered on any given day or days
during the Delivery Period at a specified Delivery Point.
4.31 "Settlement Amount" means, with respect to a Transaction and the Non -Defaulting
Party, the Losses or Gains, and Costs, expressed in U.S. Dollars, which such party incurs as a result of
the liquidation of a Terminated Transaction pursuant to Section 8.2.
4.32 "Terminated Transaction" has the meaning set forth in Section 8.2.
4.33 "Termination Payment" has the meaning set forth in Section 8.3.
4.34 "Transaction" means the particular sale and purchase of a specific Quantity of
Product(s) for a particularly stated Contract Price, as determined by the Parties in electronic
communications or recorded telephonic communications, and as set forth in a Confirmation.
4.35 "Transmission Provider" means any entity or entities transmitting or transporting the
Product on behalf of Seller or Buyer to or from the Delivery Point in a particular Transaction.
4.36 "WECC" means the Western Electricity Coordination Council.
5. TRANSACTION TERMS AND CONDITIONS
5.1 Transaction. The Parties shall agree to the specific terms of each Transaction, including
the Contract Price, Quantity, Delivery Point, and Delivery Period, by communicating either
electronically (which for purposes of this Agreement shall mean electronic mail or "e-mail") or
through recorded telephonic communications. The Parties shall not contest or assert any defense to the
validity or enforceability of the agreed upon terms of a Transaction entered into in accordance with this
Agreement (i) based on any law requiring agreements to be in writing or to be signed by the Parties, or
(ii) based on any lack of authority of the Party or any lack of authority of any employee of the Party to
enter into a Transaction.
5.2 GoverningTerms. erms. Unless otherwise specifically agreed, each Transaction between the
Parties shall be governed by this Agreement. This Agreement (including all exhibits, schedules and
any written supplements hereto), any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any Confirmations accepted in
accordance with Section 5.4) shall form a single integrated agreement between the Parties. Any
inconsistency between any terms of this Agreement and any terms of a Confirmation shall be resolved
in favor of the terms of such Confirmation.
5.3 Confirmation. Seller shall confirm the terms of each Transaction by forwarding to
Buyer a confirmation ("Confirmation") by facsimile within three (3) Business Days after the Parties
have come to an agreement regarding the terms of a Transaction via telephonic or electronic
communications, pursuant to Section 5.1 of this Agreement. The Confirmation shall be in
substantially the form set forth in Exhibit A, attached hereto and incorporated by this reference, and
shall only include commercial terms of the Transaction (e.g., Contract Price, quantity, etc.) and shall
not include terms that purport to modify or supplement the general terms and conditions of this
Agreement. If Buyer objects to any term(s) of such Confirmation, Buyer shall notify Seller in writing
of such objections within two (2) Business Days of Buyer's receipt thereof, failing which Buyer shall
be deemed to have accepted the terms of the Confirmation as sent. Failure by Seller to send an
executed Confirmation shall not invalidate the Transaction agreed to by the Parties pursuant to Section
5.1 of this Agreement.
Z
5.4 Recording. Unless a Party expressly objects to a Recording at the beginning of a
telephone conversation, each Party consents to the creation of a tape or electronic recording
("Recording") of all telephone conversations between the Parties to this Agreement, and that any such
Recordings will be retained in confidence, secured from improper access, and may be submitted in
evidence in any proceeding or action relating to this Agreement. Each Party waives any further notice
of such monitoring or recording, and agrees to notify its officers and employees of such monitoring or
recording and to obtain any necessary consent of such officers and employees. The Recording, and the
terms and conditions described therein, if admissible, shall be the controlling evidence for the Parties'
agreement with respect to a particular Transaction in the event a Confirmation is not fully executed (or
deemed accepted) by both Parties. Upon full execution of a Confirmation by both Parties (or deemed
acceptance), such Confirmation shall control in the event of any conflict with the terms of a Recording,
or in the event of any conflict with the terms of this Agreement.
6. OBLIGATIONS AND DELIVERIES
6.1 Seller's and Buyer's Obligations. With respect to each Transaction, Seller shall sell and
deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the
Quantity of the Product at the Delivery Point, and Buyer shall pay Seller the Contract Price. Seller
shall be responsible for any costs or charges imposed on or associated with the Product or its delivery
of the Product up to the Delivery Point. Buyer shall be responsible for any costs or charges imposed
on or associated with the Product or its receipt at and from the Delivery Point.
6.2 Transmission and Scheduling.
6.2.1. Seller shall arrange and be responsible for transmission service to the Delivery
Point and shall Schedule or arrange for Scheduling services with its Transmission Providers, as
specified by the Parties in the Transaction, or in the absence thereof, in accordance with the practice of
the Transmission Providers, to deliver the Product to the Delivery Point. Buyer shall arrange and be
responsible for transmission service at and from the Delivery Point and shall Schedule or arrange for
Scheduling services with its Transmission Providers to receive the Product at the Delivery Point.
6.2.2. Unless otherwise agreed by the Parties and set forth in a Confirmation, the
Parties shall preschedule all deliveries of the Product on the Business Day that both parties observe as
a Business Day preceding the date of delivery or at such time as required by the CAISO's tariff.
6.2.3. Unless otherwise agreed by the Parties and set forth in a Confirmation, energy
sold as a Product shall mean energy without Ancillary Services (as defined in the CAISO tariff) that is
or will be scheduled as a Scheduling Coordinator -to -Scheduling Coordinator Transaction pursuant to
the CAISO's tariff and for which the only excuse for failure to deliver or receive is Force Majeure.
6.3 Force Majeure.
6.3.1. To the extent either Party is prevented by Force Majeure (as defined in Section
6.3.2) from carrying out, in whole or part, its obligations under a Transaction and such Party (the
"Claiming Party") gives notice and details of the Force Majeure to the other Party as soon as
practicable, the Claiming Party shall be excused from the performance of its obligations with respect to
such Transaction (other than the obligation to make payments then due or becoming due with respect
to performance prior to the Force Majeure). The Claiming Party shall remedy the Force Majeure with
all reasonable dispatch. The non -Claiming Party shall not be required to perform or resume
performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming
Party excused by Force Majeure.
6.3.2. For the purposes of this Agreement, "Force Majeure" means an event or
circumstance which prevents one Party from performing its obligations under one or more
Transactions, which event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the negligence of, the Claiming
Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid
or cause to be avoided. "Force Majeure" may include, but is not restricted to flood, drought,
earthquake, storm, fire, lightning, epidemic, wary riot, act of terrorism, civil disturbance or
disobedience, labor dispute, sabotage, restraint by court order or public authority, and action or
nonaction by, or failure to obtain the necessary authorizations or approvals from, any governmental
agency or authority. "Force Majeure" shall not be based on (i) the loss of Buyer's markets; (ii)
Buyer's inability economically to use or resell the Product purchased hereunder; (iii) the loss or failure
of Seller's supply; or (iv) Seller's ability to sell the Product at a price greater than the Contract Price.
Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a
Transmission Provider unless (i) such Party has contracted for firm transmission with a Transmission
Provider for the Product to be delivered to or received at the Delivery Point and (ii) such curtailment is
due to "force majeure" or "uncontrollable force" or a similar term as defined under the Transmission
Provider's, tariff; provided, however, that existence of the foregoing factors shall not be sufficient to
conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts
and circumstances which in the aggregate with such factors establish that a Force Majeure as defined
in the first sentence hereof has occurred.
6.3.3 No Party shall be relieved of liability for failure of performance to the extent
that such failure is due to causes arising out of its own negligence or due to removable or remediable
causes which it fails to remove or remedy within a reasonable time period.
7. REMEDIES FOR FAILURE TO DELIVER/RECEIVE
7.1 Seller Failure. If Seller fails to schedule and/or deliver all or part of the Product pursuant to
a Transaction, and such failure is not excused under the terms of such Transaction, Force Majeure, or
by Buyer's failure to perform, then Seller shall pay Buyer, on the date payment would otherwise be
due in respect of the month in which the failure occurred an amount for such deficiency equal to the
positive difference, if any, obtained by subtracting the Contract Price from the Replacement Price. The
invoice for such amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
7.2 Buyer Failure. If Buyer fails to schedule and/or receive all or part of the Product pursuant
to a Transaction and such failure is not excused under the terms of such Transaction, Force Majeure, or
by Seller's failure to perform, then Buyer shall pay Seller, on the date payment would otherwise be due
in respect of the month in which the failure occurred an amount for such deficiency equal to the
positive difference, if any, obtained by 'subtracting the Sales Price from the Contract Price. The
invoice for such amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. An "Event of Default" shall mean, with respect to a Party (a "Defaulting
Party"), the occurrence of any of the following:
a. the failure to make, when due, any payment required pursuant to this Agreement if such
failure is not remedied within three (3) Business Days after written notice;
b. any representation or warranty made by such Party herein is false or misleading in any
material respect when made or when deemed made or repeated;
c. the failure to perform any material covenant or obligation set forth in this Agreement
(except to the extent constituting a separate Event of Default, and except for such Party's obligations to
deliver or receive the Product, the exclusive remedy for which is provided in Section 7) if such failure
is not remedied within three (3) Business Days after written notice;
d. such Party becomes Bankrupt.
8.2 Declaration of an Early Termination Date. If an Event of Default with respect to a
Defaulting Party shall have occurred and be continuing, the other Party (the "Non -Defaulting Party")
shall have the right (i) to designate a day, no earlier than the day such -notice is effective and no later
than 20 days after such notice is effective, as an early termination date ("Early Termination Date") to
accelerate all amounts owing between the Parties and to liquidate and terminate all, but not less than
all, Transactions (each referred to as a "Terminated Transaction") between the Parties, (ii) withhold
any payments due to the Defaulting Party under this Agreement and (iii) suspend performance.
8.3 Early Termination Payments. The Non -Defaulting Party shall calculate,, in a commercially
reasonable manner, a Settlement Amount for each Terminated Transaction as of the Early Termination
Date (or, to the extent that in the reasonable opinion of the Non -Defaulting Party certain of such
Terminated Transactions as are commercially impracticable to liquidate and terminate or may not be
liquidated and terminated under applicable law on the Early Termination Date, then each such
Transaction (individually, an "Excluded Transaction" and collectively, the "Excluded Transactions")
shall be terminated as soon thereafter as reasonably practicable), and upon termination shall be deemed
to be a Terminated Transaction and the Termination Payment payable in connection with, all such
Transactions shall be calculated in accordance with the following. The Gains and Losses for each
Terminated Transaction shall be determined by calculating the amount that would be incurred or
realized to replace or to provide the economic equivalent of the remaining payments or deliveries in
respect of that Terminated Transaction. The Non -Defaulting Party (or its agent) may determine its
Gains and Losses by reference to information either available to it internally or supplied by one or
more third parties including, without limitation, quotations (either firm or indicative) of relevant rates,
prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets.
Third parties supplying such information may include, without limitation, dealers in the relevant
markets, end -users of the relevant product, information vendors and other sources of market
information; provided, however, such third parties shall not be affiliates of either Party. Only in the
event the Non -Defaulting Party is not able, after using commercially reasonable efforts, to obtain third
party information, then the Non -Defaulting Party may calculate its Gains and Losses for such
Terminated Transaction in a commercially reasonable manner using relevant market data it has
7
available to it internally. The Non -Defaulting Party shall aggregate all Settlement Amounts into a
single amount by: netting out (a) all Settlement Amounts that are due to the Defaulting Party, plus, at
the, option of the Non -Defaulting Party, any cash or other form of security then available to the Non -
Defaulting Party pursuant to Section 11, plus any or all other amounts due to the Defaulting Party
under this Agreement against (b) all Settlement Amounts that are due to the Non -Defaulting Party, plus
any or all other amounts due to the Non -Defaulting Party under this Agreement, so that all such
amounts shall be netted out to a single liquidated amount (the "Termination Payment") payable by one
Party to the other.
8.4 Notice of Payment of Termination Payment. As soon as practicable after a liquidation,
notice shall be given by the Non -Defaulting Party to the Defaulting Party of the amount of the
Termination Payment and whether the Termination Payment is due to or due from the Non -Defaulting
Party. The notice shall include a written statement explaining in reasonable detail the calculation of
such amount. The Termination Payment shall be made by the Party that owes it within seven (7)
Business Days after such notice is effective.
8.5 Disputes With Respect to Termination Payment. If the Defaulting Party disputes the Non -
Defaulting Party's calculation of the Termination Payment, in whole or in part, the Defaulting Party
shall, within seven (7) Business Days of receipt of Non -Defaulting Party's calculation of the
Termination Payment, provide to the Non -Defaulting Party detailed written explanation of the basis for
such dispute; provided, however, that if the Termination Payment is due from the Defaulting Party, the
Defaulting Party shall first transfer Performance Assurance to the Non -Defaulting Party in an amount
equal to the Termination Payment.
8.6 Closeout Setoffs. After calculation of a Termination Payment in accordance with Section
8.3, if the Defaulting Party would be owed the Termination Payment, the Non -Defaulting Party shall
be entitled, at its option and in its discretion, to (i) set off against such Termination Payment any
amounts due and owing by the Defaulting Party to the Non -Defaulting Party under any other
agreements, instruments or undertakings between the Defaulting Party and the Non -Defaulting Party
and/or (ii) to the extent the Transactions are not yet liquidated in accordance with Section 8.3 withhold
payment of the Termination Payment to the Defaulting Party. The remedy provided for in this Section
shall be without prejudice and in addition to any right of setoff, combination of accounts, lien or other
right to which any Party is at any time otherwise entitled (whether by operation of law, contract or
otherwise).
8.7 Suspension of Performance. Notwithstanding any other provisionofthis Agreement, if an
Event of Default shall have occurred and be continuing, the Non -Defaulting Party, upon written notice
to the Defaulting Party, shall have the right (i) to suspend performance under any or all Transactions;
provided, however, in no event shall any such suspension continue for longer than ten (10) Business
Days with respect to any single Transaction unless an early Termination Date shall have been declared
and notice thereof pursuant to Section 8.2 given, and (ii) to the extent an Event of Default shall have
occurred and be continuing to exercise any remedy available at law or in equity.
9. PAYMENT
9.1 BillingPeriod. eriod. The calendar month shall be the standard period for all payments due for
Transactions entered into under this Agreement. As soon as practicable after the -end of each month,
8
each Party will render to the other Party an invoice for the payment obligations, if any, incurred
hereunder during the preceding month.
9.2 Timeliness of Payment. All invoices under this Agreement shall be due and payable in
accordance with each Party's invoice instructions on or before the later of the twentieth (20th) day of
each month, or tenth (loth) day after receipt of the invoice or, if such day is not a Business Day, then
on the next Business Day. Each Party will make payments by electronic funds transfer, or by other
mutually agreeable method(s), to the account designated by the other Party. Any amounts not paid by
the due date will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be
calculated from and including the due date to but excluding the date the delinquent amount is paid in
full.
9.3 Disputes and Adjustments of Invoices. A Party may, in good faith, dispute the correctness
of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice
for any arithmetic or computational error within twelve (12) months of the date the invoice, or
adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim
or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be
required to be made when due, with notice of the objection given to the other Party. Any invoice
dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of
the dispute, any required payment shall be made within two (2) Business Days of such resolution along
with interest accrued at the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such
overpayment from subsequent payments, with interest accrued at the Interest Rate from and including
the date of such overpayment to but excluding the date repaid or deducted by the. Party receiving such
overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in
accordance with this Section 9.3 within twelve (12) months after the invoice is rendered or any specific
adjustment to the invoice is made. If an invoice is not rendered within twelve (12) months after the
close of the month during which performance of a Transaction occurred, the right to payment for such
performance is waived.
10. LIMITATIONS
Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH HEREIN, THERE
IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS
AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE
AND EXCLUSIVE REMEDY, THE. OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET
FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN
EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE
LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES
SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR
DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN
9
PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS. OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY
INDEMNITY PROVISION OR OTHERWISE; PROVIDED, HOWEVER, NOTHING IN THIS
SECTION SHALL AFFECT THE ENFORCEABILITY OF THE PROVISIONS OF THIS
AGREEMENT RELATING TO REMEDIES FOR FAILURE TO DELIVER/RECEIVE IN
SECTIONS 7.1 AND 7.2, AND CALCULATION AND PAYMENT OF THE TERMINATION
PAYMENT IN SECTION 8.3. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS
HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED
TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE
DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE
OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE
HARM OR LOSS AND ARE NOT PENALTIES.
11. CREDITWORTHINESS
11.1 Financial Information. If requested by either Party, the other Party shall deliver (i) within
10 Business Days following its presentation to and approval by the City Council, a copy of its annual
report containing audited consolidated financial statements for such fiscal year. The statements shall be
for the most recent accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available on a timely basis due
to a delay in preparation or certification, such delay shall not be an Event of Default so long as each
Party diligently pursues the preparation, certification and delivery of the statements.
11.2 Should a Party's creditworthiness, financial responsibility, or performance viability change
such that the other Party ("First Party") has reasonable grounds to believe that other Party's ("Second
Party") creditworthiness or performance under this Agreement has become unsatisfactory, the First
Party may require the Second Party to provide Performance Assurance in an amount determined in the
succeeding sentence. The amount of the Performance Assurance required under this Section 11.2 shall
be limited to a reasonable estimate of the damages to the First Party (consistent with Section 8.3 of this
Agreement) if the Second Party were to fail to perform its obligations under this Agreement. Events
which may trigger the First Party questioning the Second Party's creditworthiness, financial
responsibility, or performance viability include, but are not limited to, the following:
a. The First Party has knowledge that the Second Party (or its guarantor if applicable) is
failing to perform or defaulting under other contracts.
b. The Second Party has exceeded any credit or trading limit set out inanyConfirmation
or other agreement between the Parties.
c. Other material adverse changes in the Second Party's financial condition occur.
10
If the Second Party fails to provide such Performance Assurance within seven (7) Business
Days of demand therefore, that will be considered an Event of Default under Section 8 of this
Agreement and the First Party shall have the right to exercise any of the remedies provided for under
that Section 8. Nothing contained in this Section 11 shall affect any credit agreement or arrangement,
if any, between the Parties.
12. GOVERNMENTAL AND OTHER CHARGES
12.1 Governmental Charges. Seller shall pay or cause to be paid all taxes imposed by any
government authority ("Governmental Charges") on or with respect to the Product or a Transaction
arising prior to the Delivery Point. Buyer shall pay or cause to be paid all Governmental Charges on or
with respect to the Product or a Transaction at and from the Delivery Point (other than ad valorem,
franchise or income taxes which are related to the sale of the Product and are, therefore, the
responsibility of the Seller). In the event Seller is required by law or regulation to remit or pay
Governmental Charges which are Buyer's responsibility hereunder, Buyer shall promptly reimburse
Seller for such Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may deduct the amount of
any such Governmental Charges from the sums due to Seller under Section 9 of this Agreement.
Nothing shall obligate or cause a Party to pay or be liable to pay any Governmental Charges for which
it is exempt under the law.
12.2 Costs and Other Charges. Seller shall be responsible for any costs or charges imposed .
on or associated with the Product or delivery thereof, including transmission and congestion costs, up
to the Delivery Point. Buyer shall be responsible for any costs or charge imposed on or associated
with the Product or receipt thereof, including transmission .and congestion costs, from the Delivery
Point.
12.3 Cooperation. Each Party shall use reasonable efforts to take any specific action
requested by the other party to implement the provisions of and 'to administer this Agreement in
accordance with the intent of the Parties to minimize all taxes, so long as neither Party is materially
adversely affected by such efforts.
13. MISCELLANEOUS
13.1 Term of Agreement. The term of this Agreement shall commence on the Effective Date
and shall remain in effect until terminated by either Party upon (thirty) 30 days' prior written notice;
provided, however, that such termination shall not affect or excuse the performance of either Party
under any provision of this. Agreement that by its terms survives any such termination and, provided
further, that this Agreement and any other documents executed and delivered hereunder shall remain in
effect with respect to the Transaction(s) entered into prior to the effective date of such termination until
both Parties have fulfilled all of their obligations with respect to such Transaction(s), or such
Transaction(s) that have been terminated under Section 8.2 of this Agreement.
13.2 Representations and Warranties. On the Effective Date and the date of entering into each
Transaction, each Party represents and warrants to the other Party as follows, and agrees to provide
such documents as may be reasonably requested by the other Party for the purpose evidencing such
representations and warranties:
11
a. it is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation;
b. it has all regulatory authorizations necessary for it to legally perform its obligations
under this Agreement and each Transaction;
c. the execution, delivery and performance of this Agreement and each Transaction are
within its powers, have been duly authorized by all necessary action and do not violate
any of the terms and conditions in its governing documents, any contracts to which it is
a party or any law, rule, regulation, order or the like applicable to it;
d. this Agreement, each Transaction, and each other document executed and delivered in
accordance with this Agreement constitutes its legally valid and binding obligation
enforceable against it in accordance with its terms; subject to any Equitable Defenses.
e. it is not Bankrupt and there are no proceedings pending or being contemplated by it or,
to its knowledge, threatened against it which would result in it being or becoming
Bankrupt;
f. there is not pending or threatened against it, to its knowledge, any legal proceeding that
-has not been disclosed to the other Party and could materially adversely affect its
ability to perform its obligations under this Agreement and each Transaction;
g. no Event of Default with respect to it has occurred and is continuing and has not been
disclosed to the other Party and no such event or circumstance would occur as a result
of its entering into or performing its obligations under this Agreement and each
Transaction;
h. it is acting for its own account, has made its own independent decision to enter into this
Agreement and each Transaction and as to whether this Agreement and each such
Transaction is appropriate or proper for it based upon its own judgment, is not relying
upon the advice or recommendations of the other Party in so doing, and is capable of
assessing the merits of and understanding, and understands and accepts, the terms,
conditions and risks of this Agreement and each Transaction;
i. it is a "forward contract merchant" within the meaning of the United States Bankruptcy
Code;
j. it has entered into this Agreement and each Transaction in connection with the conduct
of its business and it has the capacity or ability to make or take delivery of all Products
referred to in the Transaction to which it is a Party;
k. with respect to each Transaction involving the purchase or sale of a Product, it is a
producer, processor, commercial user or merchant handling the Product, and it is
entering into such Transaction for purposes related to its business as such; and
1. the material economic terms of each Transaction are subject to individual negotiation
by the Parties.
12
13.3 Title and Risk of Loss. Title to and risk of loss related to the Product shall transfer from
Seller to Buyer at the Delivery Point. Seller warrants that it will deliver to Buyer the Quantity of the
Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or
thereto by any person arising prior to the Delivery Point.
13A Indemnity. Each Party shall indemnify, defend and hold harmless the other Party from
and against any Claims arising from or out of any event, circumstance, act or incident first occurring or
existing during the period when control and title to Product is vested in such Party provided in Section
13.3. Each Party shall indemnify, defend and hold harmless the other Party against any Governmental
and Other Charges for which such Party is responsible under Section 12.
13.5 Assignment. Neither Party shall assign this Agreement or its rights hereunder without the
prior written consent of the other Party, which consent may be withheld in the exercise of its sole
discretion; provided, however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer,sell, pledge, encumber or assign this Agreement
or the accounts, revenues or proceeds hereof in connection with any financing or other financial
arrangements, (ii) transfer or assign this Agreement to a third party whose creditworthiness is equal to
or higher than that of such Party, or (iii) transfer or assign this Agreement to any person or entity
succeeding to all or substantially all of the assets whose creditworthiness is equal to or higher than that
of such Party; provided, however, that in each such case, any such assignee shall agree in writing to be
bound by the terms and conditions hereof and so long as the transferring Party delivers such tax and
enforceability assurance as the non -transferring Party may reasonably request.
13.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY WAIVES TTS
RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT.
13.7 Notices. All notices, approvals, and consents between the Parties shall be in writing, and
shall be sent by certified mail (return receipt requested) or other delivery service which provides
evidence of delivery, using the address set forth for the Parties below, or at such other address as may
be furnished by either Party to the other in writing. Mailed notices will be deemed communicated as
of the day of receipt.
To Buyer: City of Victorville
To Seller: City of Vernon
14343 Civic Drive
4305 Santa Fe Avenue
Victorville, California 92392
Vernon, California 90058
Attention:
Attention:
Telephone No.:
Telephone No.:
Facsimile No.:
Facsimile No.:
13
13.8 General Provisions.
13.8.1. This Agreement (including the exhibits, schedules and any written supplements
hereto), any designated collateral, credit support or margin agreement or similar arrangement between
the Parties and all Transactions (including Confirmations accepted in accordance with Section 5.4)
constitute the entire agreement between the Parties relating to the subject matter. Notwithstanding the
foregoing, any collateral, credit support or margin agreement or similar arrangement between the
Parties shall, upon designation by both Parties in writing, be deemed part of this Agreement and shall
be incorporated herein by reference.
13.8.2. This Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party or the other as a result of the
preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
13.8.3. Except to the extent herein provided for, no amendment or modification to this
Agreement shall be enforceable unless reduced to writing and executed by both Parties.
13.8.4. This Agreement shall not impart any rights enforceable by any third party
(other than a permitted successor or assignee bound to this Agreement).
13.8.5. Waiver by a Party of any default by the other Party shall not be construed as a
waiver of any other default.
13.8.6. Any provision of this Agreement declared or rendered unlawful by any
applicable court of law or regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as "Regulatory Event") will not otherwise affect
the remaining lawful obligations that arise under this Agreement; and provided, further, that if a
Regulatory Event occurs, the Parties shall use their best efforts to reform this Agreement in order to
give effect to the original intention of the Parties.
13.8.7. The term "including" when used in this Agreement shall be by way of example
only and shall not be considered in any way to be in limitation. The headings used herein are for
convenience and reference purposes only.
13.8.9. All indemnity and audit rights shall survive the termination of this Agreement
for twelve (12) months. This Agreement shall be binding on each Party's successors and permitted
assigns.
13.9 Audit. Each Party has the right, at its sole expense and during normal working hours, to
examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any
statement, charge or computation made pursuant to this Agreement. If requested, a Party shall provide
to the other Party statements evidencing the Quantity delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and
the payments thereof will be made promptly and shall bear interest calculated at the Interest Rate from
the date the overpayment or underpayment was made until paid; provided, however, that no adjustment
for any statement or payment will be made unless objection to the accuracy thereof was made prior to
the lapse of twelve (12) months from the rendition thereof, and thereafter any objection shall be
deemed waived.
14
13.10 Forward Contract. The Parties acknowledge and agree that all Transactions constitute
"forward contracts" within the meaning of the United States Bankruptcy Code.
13.11 Confidentiality. Neither Party shall disclose the terms or conditions of a Transaction
under this Agreement to a third party (other than the Party's employees, lenders, counsel, accountants
or advisors who have a need to know such information and have agreed to keep such terms
confidential) except in order to comply with any applicable law (including the Ralph M. Brown Act
and/or the California Public Records Act), regulation, or any exchange, control area or independent
system operator rule or in connection with any court or regulatory proceeding; provided, however,
each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The
Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in
connection with, this confidentiality obligation. The Parties acknowledge and agree that each are
public entities and that nothing contained in this Section 13.11 shall be construed or interpreted to
prevent or restrain the Parties' compliance with the provisions of the California Public Records Act or
the Ralph M. Brown Act. The Parties acknowledge and agree that this Agreement is not considered a
confidential or non-disclosable document.
14. SEVERABILITY
- In the event that any of the terms, covenants or conditions of this Agreement or any
Confirmation, or the application of any such term, covenant or condition, shall be held invalid as to
any person or circumstance by any court, regulatory agency, or other regulatory body having
jurisdiction, all other terms, covenants or conditions of this Agreement and the Confirmation and their
application shall not be affected thereby, but shall remain in force and effect unless a court, regulatory
agency, or other regulatory body holds that the provisions are not separable from all other provisions
of this Agreement or such Confirmation (s).
15. RELATIONSHIP OF PARTIES
Nothing contained in this. Agreement or in any Confirmation shall be construed to create an
association, joint venture, trust, or partnership, or agency relationship between or among the Parties, or
to impose a trust or partnership covenant, obligation, or liability on or with regard to any of the Parties.
Each Party shall be individually responsible for its own covenants, obligations, and .liabilities under
this Agreement and under any applicable Confirmation. All rights and obligations of the Parties under
this Agreement are several and are not joint.
16. NO DEDICATION OF FACILITIES
Any undertaking by one Party to another Party under any provision of this Agreement shall not
constitute the dedication of the electric system or any portion thereof of the undertaking Party to the
public or to the other Party, and it is understood and agreed that any such undertaking under any
provision of this Agreement by a Party shall cease upon the termination of such Party's obligations
under this Agreement.
[Signatures begin on next page]
15
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on
behalf of each by and through their authorized representatives as of the dates written below.
Buyer
By:
Name:
Title: Mayor
Date:
ATTEST:
CITY OF VICTORVILLE Seller CITY OF VERNON
City Clerk
APPROVED AS TO FORM
City Attorney
APPROVED:
Chuck Buquet, Risk Manager
By:
Name:
Title: Mayor
Date:
ATTEST:
City Clerk
Willard G. Yamaguchi
APPROVED AS TO FORM
City Attorney
Laurence S. Wiener
16
EXHIBIT A
EXHIBIT A
SAMPLE TRANSACTION CONFIRMATION
The following shall confirm the terms of the Transaction, entered into by electronic or telephonic communications on
2010, between the City of Victorville and the City of Vernon (collectively, the "Parties"), pursuant to
the Master Power Purchase and Sale Agreement entered into by the Parties on _, 2010 ("Agreement"), as it
is supplemented and modified below with respect to details of the Transaction, and not with respect to the general terms of
the Agreement.
Buyer: City of Victorville Seller: Vernon Light & Power Department
14343 Civic Drive 4305 Santa Fe Avenue
Victorville, CA 92392 Vernon, CA 90058
Attn:
Attn:
Phone:
Phone:
Fax:
Fax:
Scheduling #:
Scheduling #:
Quantity (AM:
Quantity (MWhrs):
Price:
Product: Firm
Start Date:
End Date:
Day of Week:
Hours:
(See Attachment for deliveries by hour)
Delivery Point: SP-15 EZ Gen Hub CAISO (IST)
Special Provisions: CAISO IST-enabled Product.
Enabling Agreement: The Transaction, as described in this Confirmation, shall be subject to the terms and conditions
set forth in the Agreement. This Confirmation may only be modified by a writing signed by both
Parties.
Other: If the above accurately reflects your understanding of our agreement, please
indicate your approval by signing a copy of this letter and returning it via fax
to
City of Victorville
By:
Name:
Title:
[All prices are in US Dollars]
Ln
Name:
Title:
City of Vernon
17
-/-
DPW
OFFICE OF THE CITY CLERK
4M5 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
June 9, 2010
City of Victorville
Attn: Jenelle Davidson
14343 Civic Center Drive
Victorville, CA 92392
Re: Master Power Purchase and Sale Agreement
Dear Ms. Davidson:
Transmitted herewith are two partially executed agreements, as referenced above, approved by
City Council on June 7, 2010, through Resolution No. 2010-71.
Upon complete execution, please return one fully executed original agreement to the undersigned.
If you have any questions regarding this matter, please call Mr. Abraham Alemu at (323) 583-
8811 ext. 250.
Very ly yours,
WILLARD G. YA G C I
City Clerk
WGY:dj
Enclosures
c: Abraham Alemu
Donal O'Callaghan
Resolution No. 2010-71
Agreement File No. 10-035
ExcCusivefy 1-ndustt7af
MASTER POWER PURCHASE
& SALE AGREEMENT
BETWEEN
THE CITY OF VERNON, CALIFORNIA
AND
THE CITY OF VICTORVILLE, CALIFORNIA
MASTER POWER PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
1.
PARTIES .............................................
2.
RECITALS........................................................................................
1
3.
AGREEMENT....................................................................................
1
4.
DEFINITIONS....................................................................................
1
5.
TRANSACTION TERMS AND CONDITIONS ..........................................
5
6.
OBLIGATIONS AND DELIVERIES.......................................................
5
7.
REMEDIES FOR FAILURE TO DELIVER/RECEIVE................................
6
8.
EVENTS OF DEFAULT; REMEDIES......................................................
7
9.
PAYMENT.......................................................................................
8
10.
LIMITATIONS..................................................................................
9
11.
CREDITWORTHINESS........................................................................
10
12.
GOVERNMENTAL AND OTHER CHARGES ............................................
11
13.
MISCELLANEOUS..............................................................................
11
14.
SEVERABILITY.................................................................................
15
15.
RELATIONSHIP OF PARTIES..............................................................
15
16.
NO DEDICATION OF FACILITIES.........................................................
15
EXHIBIT A: SAMPLE TRANSACTION CONFIRMATION .........................
17
i
MASTER POWER PURCHASE AND SALE AGREEMENT
1. PARTIES
This Master Agreement for Power Purchase and Sale (the "Agreement") is entered into by and
between the City of Vernon, a California charter city and municipal corporation having its principal
place of business at 4305 Santa Fe Avenue, Vernon, California 90058 (hereinafter referred to as
"Seller") and the City of Victorville, a California charter city and municipal corporation having a
principal place of business at 14343 Civic Drive, Victorville, California 92392 (hereinafter referred to
as "Buyer"), and shall be effective as of the Effective Date, as that term is defined in Section 4.14 of
this Agreement. Hereinafter Buyer and Seller may be referred to individually as a "Party", or
collectively as the "Parties". This Agreement enables, but does not obligate, the Parties to enter into
transactions with each other to purchase, sell and/or exchange power.
2. RECITALS
2.1 Whereas Seller and Buyer own and operate publicly -owned electric utilities in the
CAISO Balancing Authority Area.
2.2 Whereas Buyer desires and Seller is willing to enter into this Agreement to govern the
purchase of Products (as that term is defined in Section 4.26 hereof) to be delivered at the CAISO EZ
Gen Trading Hub delivery point, or such other delivery point agreed to by the Parties in writing.
3. AGREEMENT
In consideration of the mutual covenants set forth herein, the Parties agree as follows:
4. DEFINITIONS
4.1 "Agreement" means this Master Power Purchase and Sale Agreement.
4.2 "Bankrupt" means with respect to any entity, such entity (i) files a petition or otherwise
commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under
any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or
commenced against it, (ii) makes an assignment or any general arrangement for the benefit of
creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator,
administrator, receiver, trustee, conservator or similar official appointed with respect to it or any
substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due.
4.3 "Business Day" means any day except a Friday, Saturday, Sunday or a Federal Reserve
Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for the relevant
Party's principal place of business. The relevant Party, in each instance unless otherwise specified,
shall be the Party from whom the notice, payment or delivery is being sent and by whom the notice or
payment or delivery is to be received.
4.4 "CAISO" means the California Independent System Operator Corporation or any
successor organization.
1
4.5 "Claiming Party" has the meaning set forth in Section 6.3.
4.6 "Claims" means all third party claims or actions, threatened or filed and, whether
groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an
indemnity, and the resulting losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to
or after the termination of this Agreement.
4.7 "Confirmation" has the meaning set forth in Section 5.4.
4.8 "Contract Price" means the price in U.S. Dollars (unless otherwise provided for) to be
paid by Buyer to Seller for the purchase of the Product, as determined by the Parties for each
Transaction and specified in the Confirmation.
4.9 "Costs" means, with respect to the Non -Defaulting Party, brokerage fees, commissions
and other similar third party transaction costs and expenses reasonably incurred by such Party either in
terminating any arrangement pursuant to which it has hedged its obligations or entering into new
arrangements which replace a Terminated Transaction; and all reasonable attorneys' fees and expenses
incurred by the Non -Defaulting Party in connection with the termination of a Transaction.
4.10 "Defaulting Party" has the meaning set forth in Section 8.1.
4.11 "Delivery Period" means the period of delivery for each Transaction.
4.12 "Delivery Point" means the point at which the Product will be delivered and received,
as specified for each Transaction.
4.13 "Early Termination Date" has the meaning set forth in Section 8.2.
4.14 "Effective Date" means the date on which the last Party to this Master Agreement has
executed same as indicated by the dates of the signature page hereof.
4.15 "Equitable Defenses" means any bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and with regard to equitable remedies, the discretion of the court
before which proceedings to obtain same may be pending.
4.16 "Event of Default" has the meaning set forth in Section 8.1.
4.17 "Force Majeure" has the meaning set forth in Section 6.3.2.
4.18 "Gains" means, with respect to any Party, an amount equal to the present value of the
economic benefit to it, if any (exclusive of Costs), resulting from the termination of a Terminated
Transaction, determined in a commercially reasonable manner.
4.19 "Interest Rate" means, for any date, the lesser of (a) the per annum rate of interest equal
to the prime lending rate as may from time to time be published in The Wall Street Journal under
"Money Rates" on such day (or if not published on such day on the most recent preceding day on
which published), plus two percent (2%) and (b) the maximum rate permitted by applicable law.
4.20 "IST" means "Inter -Scheduling Coordinator Trade" as defined in the CAISO Tariff.
4.21 "IST-enabled Product" means any Scheduling Coordinator -to -Scheduling Coordinator
traded product for which an IST can be submitted and for which CAISO will make a payment or issue
an invoice, including Energy, Tier I IFM Bid Cost Recovery Obligations and Ancillary Service
Obligation trades, as each are defined in the CAISO Tariff.
2
4.22 "Letter(s) of Credit" means one or more irrevocable, transferable standby letters of
credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a
credit rating of at least A- from S&P or A3 from Moody's, in a form acceptable to the Party in whose
favor the letter of credit is issued. Costs of a Letter of Credit shall be borne by the applicant for such
Letter of Credit.
4.23 "Losses" means, with respect to any Party, an amount equal to the present value of the
economic loss to it, if any (exclusive of Costs), resulting from termination of a Terminated
Transaction, determined in a commercially reasonable manner.
4.24 "Non -Defaulting Party" has the meaning set forth in Section 8.2.
4.25 "Performance Assurance" means collateral in the form of cash, Letter(s) of Credit, or
other security acceptable to "the First Party (as defined in Section 11.2).
4.26 "Product" means electric capacity, energy, ancillary services or other product(s) related
thereto as specified in each Transaction and includes IST-enabled Products.
4.27 "Quantity" means that quantity of the Product that Seller agrees to make available or
sell and deliver, or cause to be delivered, to Buyer, and that Buyer agrees to purchase and receive, or
cause to be received, from Seller as specified for each Transaction.
4.28 "Replacement Price" means the price at which Buyer, acting in a commercially
reasonable manner, purchases for delivery at the Delivery Point a replacement for any Product
specified in a Transaction but not delivered by Seller, plus (i) costs reasonably incurred by Buyer in
purchasing such substitute Product and (ii) additional transmission charges, if any, reasonably incurred
by Buyer to the Delivery Point, or absent a purchase, the market price at the Delivery Point for such
Product not delivered as determined by Buyer in a commercially reasonable manner; provided,
however, in no event shall such price include any penalties, ratcheted demand or similar charges, nor
shall Buyer, be required to utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition, Buyer shall be considered
to have purchased replacement Product to the extent Buyer shall have entered into one or more
arrangements in a commercially reasonable manner whereby Buyer repurchases its obligation to sell
and deliver the Product to another Seller the Delivery Point.
4.29 "Sales Price" means the price at which Seller, acting in a commercially reasonable
manner, resells at the Delivery Point any Product not received by Buyer, deducting from such proceeds
any (i) costs reasonably incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the third party purchasers,
or absent a sale, the market price at the Delivery Point for such Product not received as determined by
Seller in a commercially reasonable manner; provided, however, in no event shall such price include
any penalties, ratcheted demand or similar charges, nor shall Seller be required to utilize or change its
utilization of its owned or controlled assets, including contractual assets, or market positions to
minimize Buyer's liability. For purposes of this definition, Seller shall be considered to have resold
such Product to the extent Seller shall have entered into one or more arrangements in a commercially
reasonable manner whereby Seller repurchases its obligation to purchase and receive the Product from
another Seller the Delivery Point.
4.30 "Schedule" or "Scheduling" means the actions of Seller, Buyer and/or their designated
representatives, including each Party's Transmission Providers, if applicable, of notifying, requesting
3
and confirming to each other the quantity and type of Product to be delivered on any given day or days
during the Delivery Period at a specified Delivery Point.
4.31 "Settlement Amount" means, with respect to a Transaction and the Non -Defaulting
Party, the Losses or Gains, and Costs, expressed in U.S. Dollars, which such party incurs as a result of
the liquidation of a Terminated Transaction pursuant to Section 8.2.
4.32 "Terminated Transaction" has the meaning set forth in Section 8.2.
4.33 "Termination Payment" has the meaning set forth in Section 8.3.
4.34 "Transaction" means the particular sale and purchase of a specific Quantity of
Product(s) for a particularly stated Contract Price, as determined by the Parties in electronic
communications or recorded telephonic communications, and as set forth in a Confirmation.
4.35 "Transmission Provider" means any entity or entities transmitting or transporting the
Product on behalf of Seller or Buyer to or from the Delivery Point in a particular Transaction.
4.36 "WECC" means the Western Electricity Coordination Council.
5. TRANSACTION TERMS AND CONDITIONS
5.1 Transaction. The Parties shall agree to the specific terms of each Transaction, including
-the Contract Price, Quantity, Delivery Point, and Delivery Period, by communicating either
electronically (which for purposes of this Agreement shall mean electronic mail or "e-mail") or
through recorded telephonic communications. The Parties shall not contest or assert any defense to the
validity or enforceability of the agreed upon terms of a Transaction entered into in accordance with this
Agreement (i) based on any law requiring agreements to be in writing or to be signed by the Parties, or
(ii) based on any lack of authority of the Party or any lack of authority of any employee of the Party to
enter into a. Transaction.
5.2 GoverningTerms. erms. Unless otherwise specifically agreed, each Transaction between the
Parties shall be governed by this Agreement. This Agreement (including all exhibits, schedules and
any written supplements hereto), any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any Confirmations accepted in
accordance with Section 5.4) shall form a single integrated agreement between the Parties. Any
inconsistency between any terms of this Agreement and any terms of a Confirmation shall be resolved
in favor of the terms of such Confirmation.
5.3 Confirmation. Seller shall confirm the terms of each Transaction by forwarding to
Buyer a confirmation ("Confirmation") by facsimile within three (3) Business Days after the Parties
have come to an agreement regarding the terms of a Transaction via telephonic or electronic
communications, pursuant to Section 5.1 of this Agreement. The Confirmation shall be in
substantially the form set forth in Exhibit A, attached hereto and incorporated by this reference, and
shall only include commercial terms of the Transaction (e.g., Contract Price, quantity, etc.) and shall
not include terms that purport to modify or supplement the general terms and conditions of this
Agreement. If Buyer objects to any term(s) of such Confirmation, Buyer shall notify Seller in writing
of such objections within two (2) Business Days of Buyer's receipt thereof, failing which Buyer shall
be deemed to have accepted the terms of the Confirmation as sent. Failure by Seller to send an
executed Confirmation shall not invalidate the Transaction agreed to by the Parties pursuant to Section
5.1 of this Agreement.
4
5.4 Recording. Unless a Party expressly objects to a Recording at the beginning of a
telephone conversation, each Party consents to the creation of a tape or electronic recording
("Recording") of all telephone conversations between the Parties to this Agreement, and that any such
Recordings will be retained in confidence, secured from improper access, and may be submitted in
evidence in any proceeding or action relating to this Agreement. Each Party waives any further notice
of such monitoring or recording, and agrees to notify its officers and employees of such monitoring or
recording and to obtain any necessary consent of such officers and employees. The Recording, and the
terms and conditions described therein, if admissible, shall be the controlling evidence for the Parties'
agreement with respect to a particular Transaction in the event a Confirmation is not fully executed (or
deemed accepted) by both Parties. Upon full execution of a Confirmation by both Parties (or deemed
acceptance), such Confirmation shall control in the event of any conflict with the terms of a Recording,
or in the event of any conflict with the terms of this Agreement.
6. OBLIGATIONS AND DELIVERIES
6.1 Seller's and Buyer's Obligations. With respect to each Transaction, Seller shall sell and
deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the
Quantity of the Product at the Delivery Point, and Buyer shall pay Seller the Contract Price. Seller
shall be responsible for any costs or charges imposed on or associated with the Product or its delivery
of the Product up to the Delivery Point. Buyer shall be responsible for any costs or charges imposed
on or associated with the Product or its receipt at and from the Delivery Point.
6.2 Transmission and Scheduling.
6.2.1. Seller shall arrange and be responsible for transmission service to the Delivery
Point and shall Schedule or arrange for Scheduling services with its Transmission Providers, as
specified by the Parties in the Transaction, or in the absence. thereof, in accordance with the practice of
the Transmission Providers, to deliver the Product to the Delivery Point. Buyer shall arrange and be
responsible for transmission service at and from the Delivery Point and shall Schedule or arrange for
Scheduling services with its Transmission Providers to receive the Product at the Delivery Point.
6.2.2. Unless otherwise agreed by the Parties and set forth in a Confirmation, the
Parties shall preschedule all deliveries of the Product on the Business Day that both parties observe as
a Business Day preceding the date of delivery or at such time as required by the CAISO's tariff.
6.2.3. Unless otherwise agreed by the Parties and set forth in a Confirmation, energy
sold as a Product shall mean energy without Ancillary Services (as defined in the CAISO tariff) that is
or will be scheduled as a Scheduling Coordinator -to -Scheduling Coordinator Transaction pursuant to
the CAISO's tariff and for which the only excuse for failure to deliver or receive is Force Majeure.
6.3 Force Majeure.
6.3.1. To the extent either Party is prevented by Force Majeure (as defined in Section
6.3.2) from carrying out, in whole or part, its obligations under a Transaction and such Party (the
"Claiming Party") gives notice and details of the Force Majeure to the other Party as soon as
practicable, the Claiming Party shall be excused from the performance of its obligations with respect to
such Transaction (other than the obligation to make payments then due or becoming due with respect
to performance prior to the Force Majeure). The Claiming Party shall remedy the Force Majeure with
all reasonable dispatch. The non -Claiming Party shall not be required to perform or resume
performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming
Party excused by Force Majeure.
6.3.2. For the purposes of this Agreement, "Force Majeure" means an event or
circumstance which prevents one Party from performing its obligations under one or more
Transactions, which event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the negligence of, the Claiming
Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid
or cause to be avoided. "Force Majeure" may include, but is not restricted to flood, drought,
earthquake, storm, fire, lightning, epidemic, war, riot, act of terrorism, civil disturbance or
disobedience, labor dispute, sabotage, restraint by court order or public authority, and action or
nonaction by, or failure to obtain the necessary authorizations or approvals from, any governmental
agency or authority. "Force Majeure" shall not be based on (i) the loss of Buyer's markets; (ii)
Buyer's inability economically to use or resell the Product purchased hereunder; (iii) the loss or failure
of Seller's supply; or (iv) Seller's ability to sell the Product at a price greater than the Contract Price.
Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a
Transmission Provider unless (i) such Party has contracted for firm transmission with a Transmission
Provider for the Product to be delivered to or received at the Delivery Point and (ii) such curtailment is
due to "force majeure" or "uncontrollable force" or a similar term as defined under the Transmission
Provider's. tariff; provided, however, that existence of the foregoing factors shall not be sufficient to
conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts
and circumstances which in the aggregate with such factors establish that a Force Majeure as defined
in the first sentence hereof has occurred.
6.3.3 No Party shall be relieved of liability for failure of performance to the extent
that such failure is due to causes arising out of its own negligence or due to removable or remediable
causes which it fails to remove or remedy within a reasonable time period.
7. REMEDIES FOR FAILURE TO DELIVER/RECEIVE
7.1 Seller Failure. If Seller fails to schedule and/or deliver all or part of the Product pursuant to
a Transaction, and such failure is not excused under the terms of such Transaction, Force Majeure, or
by Buyer's failure to perform, then Seller shall pay Buyer, on the date payment would otherwise be
due in respect of the month in which the failure occurred an amount for such deficiency equal to the
positive difference, if any, obtained by subtracting the Contract Price from the Replacement Price. The
invoice for such amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
7.2 Buyer Failure. If Buyer fails to schedule and/or receive all or part of the Product pursuant
to a Transaction and such failure is not excused under the terms of such Transaction, Force Majeure, or
by Seller's failure to perform, then Buyer shall pay Seller, on the date payment would otherwise be due
in respect of the month in which the failure occurred an amount for such deficiency equal to the
positive difference, if any, obtained by 'subtracting the Sales Price from the Contract Price. The
invoice for such amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
6
8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. An "Event of Default" shall mean, with respect to a Party (a "Defaulting
Party"), the occurrence of any of the following:
a. the failure to make, when due, any payment required pursuant to this Agreement if such
failure is not remedied within three (3) Business Days after written notice;
b. any representation or warranty made by such Party herein is false or misleading in any
material respect when made or when deemed made or repeated;
c. the failure to perform any material covenant or obligation set forth in this Agreement
(except to the extent constituting a separate Event of Default, and except for such Party's obligations to
deliver or receive the Product, the exclusive remedy for which is provided in Section 7) if such failure
is not remedied within three (3) Business Days after written notice;
d. such Party becomes Bankrupt.
8.2 Declaration of an Early Termination Date. If an Event of Default with respect to a
Defaulting Party shall have occurred and be continuing, the other Party (the "Non -Defaulting Party")
shall have the right (i) to designate a day, no earlier than the day such notice is effective and no later
than 20 days after such notice is effective, as an early termination date ("Early Termination Date") to
accelerate all amounts owing between the Parties and to liquidate and terminate all, but not less than
all, Transactions (each referred to as a "Terminated Transaction") between the Parties, (ii) withhold
any payments due to the Defaulting Party under this Agreement and (iii) suspend performance.
8.3 Early Termination Pa vents. The Non -Defaulting Party shall calculate, in a commercially
reasonable manner, a Settlement Amount for each Terminated Transaction as of the Early Termination
Date (or, to the extent that in the reasonable opinion of the Non -Defaulting Party certain of such
Terminated Transactions as are commercially impracticable to liquidate and terminate or may not be
liquidated and terminated under applicable law on the Early Termination Date, then each such
Transaction (individually, an "Excluded Transaction" and collectively, the "Excluded Transactions")
shall be terminated as soon thereafter as reasonably practicable), and upon termination shall be deemed
to be a Terminated Transaction and the Termination Payment payable in connection with all such
Transactions shall be calculated in accordance with the following. The Gains and Losses for each
Terminated Transaction shall be determined by calculating the amount that would be incurred or
realized to replace or to provide the economic equivalent of the remaining payments or deliveries in
respect of that Terminated Transaction. The Non -Defaulting Party (or its agent) may determine its
Gains and Losses by reference to information either available to it internally or supplied by one or
more third parties including, without limitation, quotations (either firm or indicative) of relevant rates,
prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets.
Third parties supplying such information may include, without limitation, dealers in the relevant
markets, end -users of the relevant product, information vendors and other sources of market
information; provided, however, such third parties shall not be affiliates of either Party. Only in the
event the Non -Defaulting Party is not able, after using commercially reasonable efforts, to obtain third
party information, then the Non -Defaulting Party may calculate its Gains and Losses for such
Terminated Transaction in a commercially reasonable manner using relevant market data it has
7
available to it internally. The Non -Defaulting Party shall aggregate all Settlement Amounts into a
single amount by: netting out (a) all Settlement Amounts that are due to the Defaulting Party, plus, at
the option of the Non -Defaulting Party, any cash or other form of security then available to the Non -
Defaulting Party pursuant to Section 11, plus any or all other amounts due to the Defaulting Party
under this Agreement against (b) all Settlement Amounts that are due to the Non -Defaulting Party, plus
any or all other amounts due to the Non -Defaulting Party under this Agreement, so that all such
amounts shall be netted out to a single liquidated amount (the "Termination Payment") payable by one
Party to the other.
8.4 Notice of Payment of Termination Payment. As soon as practicable after a liquidation,
notice shall be given by the Non -Defaulting Party to the Defaulting Party of the amount of the
Termination Payment and whether the Termination Payment is due to or due from the Non -Defaulting
Party. The notice shall include a written statement explaining in reasonable detail the calculation of
such amount.. The Termination Payment shall be made by the Party that owes it within seven (7)
Business Days after such notice is effective.
8.5 Disputes With Respect to Termination Payment. If the Defaulting Party disputes the Non -
Defaulting Party's calculation of the Termination Payment, in whole or in part, the Defaulting Party
shall, within seven (7) Business Days of receipt of Non -Defaulting Party's calculation of the
Termination Payment, provide to the Non -Defaulting Party detailed written explanation of the basis for
such dispute; provided, however, that if the Termination Payment is due from the Defaulting Party, the
Defaulting Party shall first transfer Performance Assurance to the Non -Defaulting Party in an amount
equal to the Termination Payment.
8.6 Closeout Setoffs. After calculation of a Termination Payment in accordance with Section
8.3, if the Defaulting Party would be owed the Termination Payment, the Non -Defaulting Party shall
be entitled, at its option and in its discretion, to (i) set off against such Termination Payment any
amounts due and owing by the Defaulting Party to the Non -Defaulting Party under any other
agreements, instruments or undertakings between the Defaulting Party and the Non -Defaulting Party
and/or (ii) to the extent the Transactions are not yet liquidated in accordance with Section 8.3 withhold
payment of the Termination Payment to the Defaulting Party. The remedy provided for in this Section
shall be without prejudice and in addition to any right of setoff, combination of accounts, lien or other
right to which any Party is at any time otherwise entitled (whether by operation of law, contract or
otherwise).
8.7 Suspension of Performance. Notwithstanding any other provision of this Agreement, if an
Event of Default shall have occurred and be continuing, the Non -Defaulting Party, upon written notice
to the Defaulting Party, shall have the right (i) to suspend performance under any or all Transactions;
provided, however, in no event shall any such suspension continue for longer than ten (10) Business
Days with respect to any single Transaction unless an early Termination Date shall have been declared
and notice thereof pursuant to Section 8.2 given, and (ii) to the extent an Event of Default shall have
occurred and be continuing to exercise any remedy available at law or in equity.
9. PAYMENT
9.1 BillingPeriod. eriod. The calendar month shall be the standard period for all payments due for
Transactions entered into under this Agreement. As soon as practicable after the end of each month,
each Party will render to the other Party an invoice for the payment obligations, if any, incurred
hereunder during the preceding month.
9.2 Timeliness of Payment. All invoices under this Agreement shall be due and payable in
accordance with each Party's invoice instructions on or before the later of the twentieth (20th) day of
each month, or tenth (loth) day after receipt of the invoice or, if such day is not a Business Day, then
on the next Business Day. Each Party will make payments by electronic funds transfer, or by other
mutually agreeable method(s), to the account designated by the other Party. Any amounts not paid by
the due date will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be
calculated from and including the due date to but excluding the date the delinquent amount is paid in
full.
9.3 Disputes and Adjustments of Invoices. A Party may, in good faith, dispute the correctness
of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice
for any arithmetic or computational error within twelve (12) months of the date the invoice, or
adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim
or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be
required to be made when due, with notice of the objection given to the other Party. Any invoice
dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of
the dispute, any required payment shall be made within two (2) Business Days of such resolution along
with interest accrued at the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such
overpayment from subsequent payments, with interest accrued at the Interest Rate from and including
the date of such overpayment to but excluding the date repaid or deducted by the Party receiving such
overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in
accordance with this Section 9.3 within twelve (12) months after the invoice is rendered or any specific
adjustment to the invoice is made. If an invoice is not rendered within twelve (12) months after the
close of the month during which performance of a Transaction occurred, the right to payment for such
performance is waived.
10. LIMITATIONS
Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH HEREIN, THERE
IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS, REMEDIES. AND MEASURES OF DAMAGES PROVIDED IN THIS
AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE
AND EXCLUSIVE REMEDY, THE. OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET
FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN
EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE
LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES
SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR
DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN
PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY
INDEMNITY PROVISION OR OTHERWISE; PROVIDED, HOWEVER, NOTHING IN THIS
SECTION SHALL AFFECT THE ENFORCEABILITY OF THE PROVISIONS OF THIS
AGREEMENT RELATING TO REMEDIES FOR FAILURE TO DELIVER/RECEIVE IN
SECTIONS 7.1 AND 7.2, AND CALCULATION AND PAYMENT OF THE TERMINATION
PAYMENT IN SECTION 8.3. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS
HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED
TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE
DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE
OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE
HARM OR LOSS AND ARE NOT PENALTIES.
11. CREDITWORTHINESS
11.1 Financial Information. If requested by either Party, the other Party shall deliver (i) within
1.0 Business Days following its presentation to and approval by the City Council, a copy of its annual
report containing audited consolidated financial statements for such fiscal year. The statements shall be
for the most recent accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available on a timely basis due
to a delay in preparation or certification, such delay shall not be an Event of Default so long as each
Party diligently pursues the preparation, certification and delivery of the statements.
11.2 Should a Party's creditworthiness, financial responsibility, or performance viability change
such that the other Party ("First Party") has reasonable grounds to believe that other Party's ("Second
Party") creditworthiness or performance under this Agreement has become unsatisfactory, the First
Party may require the Second Party to provide Performance Assurance in an amount determined in the
succeeding sentence. The amount of the Performance Assurance required under this Section 11.2 shall
be limited to a reasonable estimate of the damages to the First Party (consistent with Section 8.3 of this
Agreement) if the Second Party were to fail to perform its obligations under this Agreement. Events
which may trigger the First Party questioning the Second Party's creditworthiness, financial
responsibility, or performance viability include, but are not limited to, the following:
a. The First Party has knowledge that the Second Party (or its guarantor if applicable) is
failing to perform or defaulting under other contracts.
b. The Second Party has exceeded any credit or trading limit set out in any Confirmation
or other agreement between the Parties.
c. Other material adverse changes in the Second Party's financial condition occur.
10
If the Second Party fails to provide such Performance Assurance within seven (7) Business
Days of demand therefore, that will be considered an Event of Default under Section 8 of this
Agreement and the First Party shall have the right to exercise any of the remedies provided for under
that Section 8. Nothing contained in this Section 11 shall affect any credit agreement or arrangement,
if any, between the Parties.
12. GOVERNMENTAL AND OTHER CHARGES
12.1 Governmental Charges. Seller shall pay or cause to be paid all taxes imposed by any
government authority ("Governmental Charges") on or with respect to the Product or a Transaction
arising prior to the Delivery Point. Buyer shall pay or cause to be paid all Governmental Charges on or
with respect to the Product or a Transaction at and from the Delivery Point (other than ad valorem,
franchise or income taxes which are related to the sale of the Product and are, therefore, the
responsibility of the Seller). In the event Seller is required by law or regulation to remit or pay
Governmental Charges which are Buyer's responsibility hereunder, Buyer shall promptly reimburse
Seller for such Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may deduct the amount of
any such. Governmental Charges from the sums due to Seller under Section 9 of this Agreement.
Nothing shall obligate or cause a Party to pay or be liable to pay any Governmental Charges for which
it is exempt under the law.
12.2 Costs and Other Charges. Seller shall be responsible for any costs or charges imposed
on or associated with the Product or delivery thereof, including transmission and congestion costs, up
to the Delivery Point. Buyer shall be responsible for any costs or charge imposed on or associated
with the Product or receipt thereof, including transmission and congestion costs, from the Delivery
Point.
12.3 Cooperation. Each Party shall use reasonable efforts to take any specific action
requested by the other party to implement the provisions of and to administer this Agreement in
accordance with the intent of the Parties to minimize all taxes, so long as neither Party is materially
adversely affected by such. efforts.
13. MISCELLANEOUS
13.1 Term of Agreement. The term of this Agreement shall commence on the Effective Date
and shall remain in effect until terminated by either Party upon (thirty) 30 days' prior written notice;
provided, however, that such termination shall not affect or excuse the performance of either Party
under any provision of this Agreement that by its terms survives any such termination and, provided
further, that this Agreement and any other documents executed and delivered hereunder shall remain in
effect with respect to the Transaction(s) entered into prior to the effective date of such termination until"
both Parties have fulfilled all of their obligations with respect to such Transaction(s), or such
Transaction(s) that have been terminated under Section 8.2 of this Agreement.
13.2 Representations and Warranties. On the Effective Date and the date of entering into each
Transaction, each Party represents and warrants to the other Party as follows, and agrees to provide
such documents as may be reasonably requested by the other Party for the purpose evidencing such
representations and warranties:
11
a. it is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation;
b. it has all regulatory authorizations necessary for it to legally perform its obligations
under this Agreement and each Transaction;
c. the execution, delivery and performance of this Agreement and each Transaction are
within its powers, have been duly authorized by all necessary action and do not violate
any of the terms and conditions in its governing documents, any contracts to which it is
a party or any law, rule, regulation, order or the like applicable to it;
d. this Agreement, each Transaction, and each other document executed and delivered in
accordance with this Agreement constitutes its legally valid and binding obligation
enforceable against it in accordance with its terms; subject to any Equitable Defenses.
e. it is not Bankrupt and there are no proceedings pending or being contemplated by it or,
to its knowledge, threatened against it which would result in it being or becoming
Bankrupt;
f there is not pending or threatened against it, to its knowledge, any legal proceeding that
has not been disclosed to the other Party and could materially adversely affect its
ability to perform its obligations under this Agreement and each Transaction;
g. no Event of Default with respect to it has occurred and is continuing and has not been
disclosed to the other Party and no such event or circumstance would occur as a result
of its entering into or performing its obligations under this Agreement and each
Transaction;
h. it is acting for its own account, has made its own independent decision to enter into this
Agreement and each Transaction and as to whether this Agreement and each such
Transaction is appropriate or proper for it based upon its own judgment, is not relying
upon the advice or recommendations of the other Party in so doing, and is capable of
assessing the merits of and understanding, and understands and accepts, the terms,
conditions and risks of this Agreement and each Transaction;
i. it is a "forward contract merchant" within the meaning of the United States Bankruptcy
Code;
j. it has entered into this Agreement and each Transaction in connection with the conduct
of its business and it has the capacity or ability to make or take delivery of all Products
referred to in the Transaction to which it is a Party;
k. with respect to each Transaction involving the purchase or sale of a Product, it is a
producer, processor, commercial user or merchant handling the Product, and it is
entering into such Transaction for purposes related to its business as such; and
1. the material economic terms of each Transaction are subject to individual negotiation
by the Parties.
12
13.3 Title and Risk of Loss. Title to and risk of loss related to the Product shall transfer from
Seller to Buyer at the Delivery Point. Seller warrants that it will deliver to Buyer the Quantity of the
Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or
thereto by any person arising prior to the Delivery Point.
13.4 Indemnity. Each Party shall indemnify, defend and hold harmless the other Party from
and against any Claims arising from or out of any event, circumstance, act or incident first occurring or
existing during the period when control and title to Product is vested in such Party provided in Section
13.3. Each Party shall indemnify, defend and hold harmless the other Party against any Governmental
and Other Charges for which such Party is responsible under Section 12.
13.5 Assignment. Neither Party shall assign this Agreement or its rights hereunder without the
prior written consent of the other Party, which consent may be withheld in the exercise of its sole
discretion; provided, however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement
or the accounts, revenues or proceeds hereof in connection with any financing or other financial
arrangements, (ii) transfer or assign this Agreement to a third party whose creditworthiness is equal to
or higher than that of such Party, or (iii) transfer or assign this Agreement to any person or entity
succeeding to all or substantially all of the assets whose creditworthiness is equal to or higher than that
of such Party; provided, however, that in each such case, any such assignee shall agree in writing to be
bound by the terms and conditions hereof and so long as the transferring Party delivers such tax and
enforceability assurance as the non -transferring Party may reasonably request.
13.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS
RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT.
13.7 Notices. All notices, approvals, and consents between the Parties shall be in writing, and
shall be sent by certified mail (return receipt requested) or other delivery service which provides
evidence of delivery, using the address set forth for the Parties below, or at such other address as may
be furnished by either Party to the other in writing. Mailed notices will be deemed communicated as
of the day of receipt.
To Buyer: City of Victorville
To Seller: City of Vernon
14343 Civic Drive
4305 Santa Fe Avenue
Victorville, California 92392
Vernon, California 90058
Attention:
Attention:
Telephone No.:
Telephone No.:
Facsimile No.:
Facsimile No.:
13
13.8 General Provisions.
13.8.1. This Agreement (including the exhibits, schedules and any written supplements
hereto), any designated collateral, credit support or margin agreement or similar arrangement between
the Parties and all Transactions (including Confirmations accepted in accordance with Section 5.4)
constitute the entire agreement between the Parties relating to the subject matter. Notwithstanding the
foregoing, any collateral, credit support or margin agreement or similar arrangement between the
Parties shall, upon designation by both Parties in writing, be deemed part of this Agreement and shall
be incorporated herein by reference.
13.8.2. This Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party or the other as a result of the
preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
13.8.3. Except to the extent herein provided for, no amendment or modification to this
Agreement shall be enforceable unless reduced to writing and executed by both Parties.
13.8.4. This Agreement shall not impart any rights enforceable by any third party
(other than a permitted successor or assignee bound to this Agreement).
13.8.5. Waiver by a Party of any default by the other Party shall not be construed as a
waiver of any other default.
13.8.6. Any provision of this Agreement declared or rendered unlawful by any
applicable court of law or regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as "Regulatory Event") will not otherwise affect
the remaining lawful obligations that arise under this Agreement; and provided, further, that if a
Regulatory Event occurs, the Parties shall use their best efforts to reform this Agreement in order to
give effect to the original intention of the Parties.
13.8.7. The term "including" when used in this Agreement shall be by way of example
only and shall not be considered in any way to be in limitation. The headings used herein are for
convenience and reference purposes only.
13.8.9. All indemnity and audit rights shall survive the termination of this Agreement
for twelve (12) months. This Agreement shall be binding on each Party's successors and permitted
assigns.
13.9 Audit. Each Party has the right, at its sole expense and during normal working hours, to
examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any
statement, charge or computation made pursuant to this Agreement. If requested, a Party shall provide
to the other Party statements evidencing the Quantity delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and
the payments thereof will be made promptly and shall bear interest calculated at the Interest Rate from
the date the overpayment or underpayment was made until paid; provided, however, that no adjustment
for any statement or payment will be made unless objection to the accuracy thereof was made prior to
the lapse of twelve (12) months from the rendition thereof, and thereafter any objection shall be
deemed waived.
14
13.1 Q Forward Contract. The Parties acknowledge and agree that all Transactions constitute
"forward contracts" within the meaning of the United States Bankruptcy Code.
13.11 Confidentiality. Neither Party shall disclose the terms or conditions of a Transaction
under this Agreement to a third party (other than the Party's employees, lenders, counsel, accountants
or advisors who ,have a need to know such information and have agreed to keep such terms
confidential) except in order to comply with any applicable law (including the Ralph M. Brown Act
and/or the California Public Records Act), regulation, or any exchange, control area or independent
system operator rule or in connection with any court or regulatory proceeding; provided, however,
each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The
Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in
connection with, this confidentiality obligation. The Parties acknowledge and agree that each are
public entities and that nothing contained in this Section 13.11 shall be construed or interpreted to
prevent or restrain the Parties' compliance with the provisions of the California Public Records Act or
the Ralph M. Brown Act. The Parties acknowledge and agree that this Agreement is not considered a
confidential or non-disclosable document.
14. SEVERABILITY
In the event that any of the terms, covenants or conditions of this Agreement or any
Confirmation, or the application of any such term, covenant or condition, shall be held invalid as to
any person or circumstance by any court, regulatory agency, or other regulatory body having
jurisdiction, all other terms, covenants or conditions of this Agreement and the Confirmation and their
application shall not be affected. thereby, but shall remain in force and effect unless a court, regulatory
agency, or other regulatory body holds that the provisions are not separable from all other provisions
of this Agreement or such Confirmation (s).
15. RELATIONSHIP OF PARTIES
Nothing contained in this Agreement or in any Confirmation shall be construed to create an
association, joint venture, trust, or partnership, or agency relationship between or among the Parties, or
to impose a trust or partnership covenant, obligation, or liability on or with regard to any of the Parties.
Each Party shall be individually responsible for its own covenants, obligations, and liabilities under
this Agreement and under any applicable Confirmation. All rights and obligations of the Parties under
this Agreement are several and are not joint.
16. NO DEDICATION OF FACILITIES
Any undertaking by one Party to another Party under any provision of this Agreement shall not
constitute the dedication of the electric system or any portion thereof of the undertaking Party to the
public or to the other Party, and it is understood and agreed that any such undertaking under any
provision of this Agreement by a Party shall cease 'upon the termination of such Party's obligations
under this Agreement.
[Signatures begin on next page]
15
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on
behalf of each by and through their authorized representatives as of the dates written below.
Buyer
By:
Name:
Title: Mayor
Date:
ATTEST: //%%
1 Y' k1��
City Clerk
Seller CITY OF VERNON
By:��,�!�
Name: Hilario Gonzales
Title: Mayor
Date:
0
City Clerk
Willard G. Y
APPR V AST FO APPROVED AS TO FORM
,, i - ---4-
City At orney Ci Att ey
Lauren e S. Wiener
APPROVED:
(9�;� i
Chuck Buquet, Risk Manager
16
EXHIBIT A
EXHIBIT A
SAMPLE TRANSACTION CONFIRMATION
The following shall confirm the terms of the Transaction, entered into by electronic or telephonic communications on
2010, between the City of Victorville and the City of Vernon (collectively, the "Parties"), pursuant to
the Master Power Purchase and Sale Agreement entered into by the Parties on 2010 ("Agreement"), as it
is supplemented and modified below with respect to details of the Transaction, and not with respect to the general terms of
the Agreement.
Buyer: City of Victorville Seller: Vernon Light & Power Department
14343 Civic Drive 4305 Santa Fe Avenue
Victorville, CA 92392 Vernon, CA 90058
Attn: Attn:
Phone: Phone:
Fax: Fax:
Scheduling #: Scheduling #:
Quantity (MW): Quantity (MWhrs):
Price: Product: Firm
Start Date: End Date:
Day of Week: Hours:
(See Attachment for deliveries by hour)
Delivery Point: SP-15 EZ Gen Hub CAISO (IST)
Special Provisions: CAISO IST-enabled Product.
Enabling Agreement: The Transaction, as described in this Confirmation, shall be subject to the terms and conditions
set forth in the Agreement. This Confirmation may only be modified by a writing signed by both
Parties.
Other: If the above accurately reflects your understanding of our agreement, please
indicate your approval by signing a copy of this letter and returning it via fax
to
[All prices are in US Dollars]
City of Victorville
By: By:
City of Vernon
Name: Name:
Title: Title:
17
L
RECEIVED
Y JUN 0 1 2010
CITY CLERK'S OFFICE
STAFF REPORT
LIGHT & POWER
DATE: June 1, 2010
CIO,
0
TO: Honorable Mayor and City Council kk\
FROM: Donal O'Callaghan, Director of Light & Power
RE: MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN
THE CITY OF VERNON AND THE CITY OF VICTORVILLE
Purpose:
This Master Agreement for Power Purchase and Sale (the "Agreement") between the
City of Vernon, California and the City of Victorville, California is an enabling agreement
to allow the parties to enter into power transactions with each other. Under the
Agreement, the City of Victorville may purchase power from Vernon by entering into
individual transactions, the specific terms of which shall be negotiated and agreed upon
by email or recorded phone conversation. The parties shall execute a confirmation, in
substantially the form set forth in Exhibit A to the Agreement, to memorialize the specific
terms of each transaction.
Recommendation:
i
Staff recommends the City Council approve the Master Power Purchase and Sale
Agreement.
.I
JUN 01 2010
I,4Ay ? ej 2010
CITY ATTORNEYMPT,
DATE: may , - .26.2010
TOO Honorable : Mayor and City Coun.6111.
RECEIVED
MAY 2 6 2010
WY CLERK'S OFFICE
This Master Ag.-m6 i.'tor Power Purchase and
$0101the: "Agre0n*Wybetwpe).ithe
Vernon,:ia rn,
ia s : e City f .11 C
Citofl :r..non,. I f and --the y b fo i n.a.
.
to allow the Ater into.
o. e transactions with each other Ii�-parcuJ.sale
Eflmpqd;w 7 g slw-
I I
4mm ahtill be Im e-bet""..-N,
i.. _011 SL 13
-Aargemp-rd
Recommendation:
W recommends the City Council approve the Master Power Purchase and Sale IS a le
A 6"Ient.
Unknown. +lAe- �rQM UAk V
6%J
DOAXeo fw+tr,%\o5 wdro W4tkM &�*.j +r*.v\s&(,-hovts1 +i&
e ..Tec,;.Q;Z wWr-1A sitcxlk be V%P_Idicdvol
104f.VK OLd Or. recorded 1A&,V\r_
Par4ies $611 cxewk+e-
004_rmoLAe%ce\,%vk -5%&1os+wAAia\1.4 like- f6'%m
% - k vt EXVk\0%41
+0 -krFj
A-ro&A.SOLC�C>Y\ -
I MAY 2:5 2810
n
RECEIVED
MAY 2 6 2010
CITY CLERK'S OFFICE
LIGHT & POWER
DATE: May 25, 2010
TO: Honorable Mayor and City Council
FROM: Donal O'Callaghan, Director of Light & Power
RE: MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN
THE CITY OF VERNON AND THE CITY OF VICTORVILLE
Purpose:
This Master Agreement for Power Purchase and Sale (the "Agreement") between the
City of Vernon, -California and the City of Victorville, California is an enabling agreement
to allow the parties to enter into power transactions with each other. A particular sale
and purchase transaction is entered by the parties executing a transaction confirmation.
The confirmation shall be in substantially the form set forth in Exhibit A to the
Agreement.
Recommendation:
Staff recommends the City Council approve the Master Power Purchase and Sale
Agreement.
Fiscal Impact
Unknown.
DO:AA:eo
MAY 2 5 2010
INTEROFFICE ot� ��,��� MEMORANDUM
lF 1paa,
Light & Power Department
Date: May 25, 2010 Aq
�,�1�
To: Donal O'Callaghan
Director of Light and Power
From: Abraham Alemu A- A -
Electric Resources Planning & Development Manager
SUBJECT: MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN
THE CITY OF VERNON AND THE CITY OF VICTORVILLE
Staff has prepared a master enabling agreement to enable the cities of Vernon and
Victorville to transaction power with each other. A particular sale and purchase
transaction is entered by the parties executing a transaction confirmation in substantially
the form set forth in Exhibit A to the Agreement. The Agreement has been reviewed and
approved by the City Attorney's office.
Staff requests the City Attorney's Office to prepare a resolution and the Agreement to
be placed in the City Council meeting agenda for June 7, 2010.
DO:AA:eo
Attachment
c: Abraham Alemu
Document Control
MAY 2 5 2010
MASTER POWER PURCHASE
& SALE AGREEMENT
BETWEEN
THE CITY OF VERNON, CALIFORNIA
AND
THE CITY OF VICTORVILLE, CALIFORNIA
MASTER POWER PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
1.
PARTIES..........................................................................................
1
2.
RECITALS........................................................................................
1
3.
AGREEMENT....................................................................................
1
4.
DEFINITIONS....................................................................................
1
5.
TRANSACTION TERMS AND CONDITIONS ..........................................
5
6.
OBLIGATIONS AND DELIVERIES.......................................................
5
7.
REMEDIES FOR FAILURE TO DELIVER/RECEIVE................................
6
8.
EVENTS OF DEFAULT; REMEDIES......................................................
7
9.
PAYMENT.......................................................................................
8
10.
LIMITATIONS..................................................................................
9
11.
CREDITWORTHINESS........................................................................
10
12.
GOVERNMENTAL AND OTHER CHARGES ............................................
11
13.
MISCELLANEOUS..............................................................................
11
14.
SEVERABILITY.................................................................................
15
15.
RELATIONSHIP OF PARTIES..............................................................
15
16.
NO DEDICATION OF FACILITIES........................................................
15
EXHIBIT A: SAMPLE TRANSACTION CONFIRMATION .........................
17
i
MASTER POWER PURCHASE AND SALE AGREEMENT
1. PARTIES
This Master Agreement for Power Purchase and Sale (the "Agreement") is entered into by and
between the City of Vernon, a California charter city and municipal corporation having its principal
place of business at 4305 Santa Fe Avenue, Vernon, California 90058 (hereinafter referred to as
"Seller") and the City of Victorville, a California charter city and municipal corporation having a
principal place of business at 14343 Civic Drive, Victorville, California 92392 (hereinafter referred to
as "Buyer"), and shall be effective as of the Effective Date, as that term is defined in Section 4.14 of
this Agreement. Hereinafter Buyer and Seller may be referred to individually as a "Party", or
collectively as the "Parties". This Agreement enables, but does not obligate, the Parties to enter into
transactions with each other to purchase, sell and/or exchange power.
2. RECITALS
2.1 Whereas Seller and Buyer own and operate publicly -owned electric utilities in the
CAISO Balancing Authority Area.
2.2 Whereas Buyer desires and Seller is willing to enter into this Agreement to govern the
purchase of Products (as that term is defined in Section 4.26 hereof) to be delivered at the CAISO EZ
Gen Trading Hub delivery point, or such other delivery point agreed to by the Parties in writing.
3. AGREEMENT
In consideration of the mutual covenants set forth herein, the Parties agree as follows:
4. DEFINITIONS
4.1 "Agreement" means this Master Power Purchase and Sale Agreement.
4.2 "Bankrupt" means with respect to any entity, such entity (i) files a petition or otherwise
commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under
any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or
commenced against it, (ii) makes an assignment or any general arrangement for the benefit of
creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator,
administrator, receiver, trustee, conservator or similar official appointed with respect to it or any
substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due.
4.3 . "Business Day" means any day except a Friday, Saturday, Sunday or a Federal Reserve
Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for the relevant
Party's principal place of business. The relevant Party, in each instance unless otherwise specified,
shall be the Party from whom the notice, payment or delivery is being sent and by whom the notice or
payment or delivery is to be received.
4.4 "CAISO" means the California Independent System Operator Corporation or any
successor organization.
1
4.5 "Claiming Party" has the meaning set forth in Section 6.3.
4.6 "Claims" means all third party claims or actions, threatened or filed and, whether
groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an
indemnity, and the resulting losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to
or after the termination of this Agreement.
4.7 "Confirmation" has the meaning set forth in Section 5.4.
4.8 "Contract Price" means the price in U.S. Dollars (unless otherwise provided for) to be
paid by Buyer to Seller for the purchase of the Product, as determined by the Parties for each
Transaction and specified in the Confirmation.
4.9 "Costs" means, with respect to the Non -Defaulting Party, brokerage fees, commissions
and other similar third party transaction costs and expenses reasonably incurred by such Party either in
terminating any arrangement pursuant to which it has hedged its obligations or entering into new
arrangements which replace a Terminated Transaction; and all reasonable attorneys' fees and expenses
incurred by the Non -Defaulting Party in connection with the termination of a Transaction.
4.10 "Defaulting Party" has the meaning set forth in Section 8.1.
4.11 "Delivery Period" means the period of delivery for each Transaction.
4.12 "Delivery Point" means the point at which the Product will be delivered and received,
as specified for each Transaction.
4.13 "Early Termination Date" has the meaning set forth in Section 8.2.
4.14 "Effective Date" means the date on which the last Party to this Master Agreement has
executed same as indicated by the dates of the signature page hereof.
4.15 "Equitable Defenses" means any bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and with regard to equitable remedies, the discretion of the court
before which proceedings to obtain same may be pending.
4.16 "Event of Default" has the meaning set forth in Section 8.1.
4.17 "Force Majeure" has the meaning set forth in Section 6.3.2.
4.18 "Gains" means, with respect to any Party, an amount equal to the present value of -the
economic benefit to it, if any (exclusive of Costs), resulting from the termination of a Terminated
Transaction, determined in a commercially reasonable manner.
4.19 "Interest Rate" means, for any date, the lesser of (a) the per annum rate of interest equal
to the prime lending rate as may from time to time be published in The Wall Street -Journal under
"Money Rates" on such day (or if not published on such day on the most recent preceding day on
which published), plus two percent (2%) and (b) the maximum rate permitted by applicable law.
4.20 "IST" means "Inter -Scheduling Coordinator Trade" as defined in the CAISO Tariff.
4.21 "IST-enabled Product" means any Scheduling Coordinator -to -Scheduling Coordinator
traded product for which an IST can be submitted and for which CAISO will make a payment or issue
an invoice, including Energy, Tier I IFM Bid Cost Recovery Obligations and Ancillary Service
Obligation trades, as each are defined in the CAISO Tariff.
2
4.22 "Letter(s) of Credit" means one or more irrevocable, transferable standby letters of
credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a
credit rating of at least A- from S&P or A3 from Moody's, in a form acceptable to the Party in whose
favor the letter of credit is issued. Costs of a Letter of Credit shall be borne by the applicant for such
Letter of Credit.
4.23 "Losses" means, with respect to any Party, an amount equal to the present value of the
economic loss to it, if any (exclusive of Costs), resulting from termination of a Terminated
Transaction, determined in a commercially reasonable manner.
4.24 "Non -Defaulting Party" has the meaning set forth in Section 8.2.
4.25 "Performance Assurance" means collateral in the form of cash, Letter(s) of Credit, or
other security acceptable to the First Party (as defined in Section 11.2).
4.26 "Product" means electric capacity, energy, ancillary services or other product(s) related
thereto as specified in each Transaction and includes IST-enabled Products.
4.27 "Quantity" means that quantity of the Product that Seller agrees to make available or
sell and deliver, or cause to be delivered, to Buyer, and that Buyer agrees to purchase and receive, or
cause to be received, from Seller as specified for each Transaction.
4.28 "Replacement Price" means the price at which Buyer, acting in a commercially
reasonable manner, purchases for delivery at the Delivery Point a replacement for any Product
specified in a Transaction but not delivered by Seller, plus (i) costs reasonably incurred by Buyer in
purchasing such substitute Product and (ii) additional transmission charges, if any, reasonably incurred
by Buyer to the Delivery Point, or absent a purchase, the market price at the Delivery Point for such
Product not delivered as determined by Buyer in a commercially reasonable manner; provided,
however, in no event shall such price include any penalties, ratcheted demand or similar charges, nor
shall Buyer be required to utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition, Buyer shall be considered
to have purchased replacement Product to the extent Buyer shall have entered into one or more
arrangements in a commercially reasonable manner whereby Buyer repurchases its obligation to sell
and deliver the Product to another Seller the Delivery Point.
4.29 "Sales Price" means the price at which Seller, acting in a commercially reasonable
manner, resells at the Delivery Point any Product not received by Buyer, deducting from such proceeds
any (i) costs reasonably incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the third party purchasers,
or absent a sale, the market price at the Delivery Point for such Product not received as determined by
Seller in a commercially reasonable manner; provided, however, in no event shall such price include
any penalties, ratcheted demand or similar charges, nor shall Seller be required to utilize or change its
utilization of its owned or controlled assets, including contractual assets, or market positions to
minimize Buyer's liability. For purposes of this definition, Seller shall be considered to have resold
such Product to the extent Seller shall have entered into one or more arrangements in a commercially
reasonable manner whereby Seller repurchases its obligation to purchase and -receive the Product from
another Seller the Delivery Point.
4.30 "Schedule" or "Scheduling" means the actions of Seller, Buyer and/or their designated
representatives, including each Party's Transmission Providers, if applicable, of notifying, requesting.
e3
and confirming to each other the quantity and type of Product to be delivered on any given day or days
during the Delivery Period at a specified Delivery Point.
4.31 "Settlement Amount" means, with respect to a Transaction, and the Non -Defaulting
Party, the Losses or Gains, and Costs, expressed in U.S. Dollars, which such party incurs as a result of
the liquidation of a Terminated Transaction pursuant to Section 8.2.
4.32 "Terminated Transaction" has the meaning set forth in Section 8.2.
4.33 "Termination Payment" has the meaning set forth in Section 8.3.
4.34 "Transaction" means the particular sale and purchase of a specific Quantity of
Product(s) for a particularly stated Contract Price, as determined by the Parties in electronic
communications or recorded telephonic communications, and as set forth in a Confirmation.
4.35 "Transmission Provider" means any entity or entities transmitting or transporting the
Product on behalf of Seller or Buyer to or from the Delivery Point in a particular Transaction.
4.36 "WECC" means the Western Electricity Coordination Council.
5. TRANSACTION TERMS AND CONDITIONS
5.1 Transaction. The Parties shall agree to the specific terms of each Transaction, including
the Contract Price, Quantity, Delivery Point, and Delivery Period, by communicating either
electronically (which for purposes of this Agreement shall mean electronic mail or "e-mail") or
through recorded telephonic communications. The Parties shall not contest or assert any defense to the
validity or enforceability of the agreed upon terms of a Transaction entered into in accordance with this
Agreement (i) based on any law requiring agreements to be in writing or to be signed by the Parties, or
(ii) based on any lack of authority of the Party or any lack of authority of any employee of the Party to
enter into a Transaction.
5.2 Governing Terms. Unless otherwise specifically agreed, each Transaction between the
Parties shall be governed by this Agreement. This Agreement (including all exhibits, schedules and
any written supplements hereto), any designated collateral, credit support or margin agreement or
similar arrangement between the Parties and all Transactions (including any Confirmations accepted in
accordance with Section 5.4) shall form a single integrated agreement between the Parties. Any
inconsistency between any terms of this Agreement and any terms of a Confirmation shall be resolved
in favor of the terms of such Confirmation.
5.3 Confirmation. Seller shall confirm the terms of each Transaction by forwarding to
Buyer a confirmation ("Confirmation") by facsimile within three (3) Business Days after the Parties
have come to an agreement regarding the terms of a Transaction via telephonic or electronic
communications, pursuant to Section 5.1 of this Agreement. The Confirmation shall be in
substantially the form set forth in Exhibit A, attached hereto and incorporated by this reference, and
shall only include commercial terms of the Transaction (e.g., Contract Price, quantity, etc.) and shall
not include terms that purport to modify or supplement the general terms and conditions of this
Agreement. If Buyer objects to any term(s) of such Confirmation, Buyer shall notify Seller in writing
of such objections within two (2) Business Days of Buyer's receipt thereof, failing which Buyer shall
be deemed to have accepted the terms of the Confirmation as sent. Failure by Seller to send an
executed Confirmation shall not invalidate the Transaction agreed to by the Parties pursuant to Section
5.1 of this Agreement.
r.!
5.4 Recording. Unless a Party expressly objects to a Recording at the beginning of a
telephone conversation, each Party consents to the creation of a tape or electronic recording
'("Recording") of all telephone conversations between the Parties to this Agreement, and that any such
Recordings will be retained in confidence, secured from improper access, and may be submitted in
evidence in any proceeding or action relating to this Agreement. Each Party waives any further notice
of such monitoring or recording, and agrees to notify its officers and employees of such monitoring or
recording and to obtain any necessary consent of such officers and employees. The Recording, and the
terms and conditions described therein, if admissible, shall be the controlling evidence for the Parties'
agreement with respect to a particular Transaction in the event a Confirmation is not fully executed (or
deemed accepted) by both Parties. Upon full execution of a Confirmation by both Parties (or deemed
acceptance), such Confirmation shall control in the event of any conflict with the terms of a Recording,
or in the event of any conflict with the terms of this Agreement.
6. OBLIGATIONS AND DELIVERIES
6.1 Seller's and Buyer's Obligations. With respect to each Transaction, Seller shall sell and
deliver, or cause to be delivered, and Buyer shall purchase and receive, or cause to be received, the
Quantity of the Product at the Delivery Point, and Buyer shall pay Seller the Contract Price. Seller
shall be responsible for any costs or charges imposed on or associated with the Product or its delivery
of the Product up to the Delivery Point. Buyer shall be responsible for any costs or charges imposed
on or associated with the Product or its receipt at and from the Delivery Point.
6.2 Transmission and Scheduling.
6.2.1. Seller shall arrange and be responsible for transmission service to the Delivery
Point and shall Schedule or arrange for Scheduling services with its Transmission Providers, as
specified by the Parties in the Transaction, or in the absence thereof, in accordance with the practice of
the Transmission Providers, to deliver the Product to the Delivery Point. Buyer shall arrange and be
responsible for transmission service at and from the Delivery Point and shall Schedule or arrange for
Scheduling services with its Transmission Providers to receive the Product at the Delivery Point.
6.2.2. Unless otherwise agreed by the Parties and set forth in a Confirmation, the
Parties shall preschedule all deliveries of the Product on the Business Day that both parties observe as
a Business Day preceding the date of delivery or at such time as required by the CAISO's tariff.
6.2.3. Unless otherwise agreed by the Parties and set forth in a Confirmation, energy
sold as a Product shall mean energy without Ancillary Services (as defined in the CAISO tariff) that is
or will be scheduled as a Scheduling Coordinator -to -Scheduling Coordinator. Transaction pursuant to
the CAISO's tariff and for which the only excuse for failure to deliver or receive is Force Majeure.
6.3 Force Majeure.
6.3.1. To the extent either Party is prevented by Force Majeure (as defined in Section
6.3.2) from carrying out, in whole or part, its obligations under a Transaction and such Party (the
"Claiming Party") gives notice and details of the Force Majeure to the other Party as soon as
practicable, the Claiming Party shall be excused from the performance of its obligations with respect to
such Transaction (other than the obligation to make payments then due or becoming due with respect
to performance prior to the Force Majeure). The Claiming Party shall remedy the Force Majeure with
67
all reasonable dispatch. The non -Claiming Party shall not be required to perform or resume
performance of its obligations to the Claiming Party corresponding to the obligations of the Claiming
Party excused by Force Majeure.
6.3.2. For the purposes of this Agreement, "Force Majeure" means an event or
circumstance which prevents one Party from performing its obligations under one or more
Transactions, which event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the negligence of, the Claiming
Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid
or cause to be avoided. "Force Majeure" may include, but is not restricted to flood, drought,
earthquake, storm, fire, lightning, epidemic, war, riot, act of terrorism, civil disturbance or
disobedience, labor dispute, sabotage, restraint by court order or public authority, and action or
nonaction by, or failure to obtain the necessary authorizations or approvals from, any governmental
agency or authority. "Force Majeure" shall not be based on (i) the loss of Buyer's markets; (ii)
Buyer's inability economically to use or resell the Product purchased hereunder; (iii) the loss or failure
of Seller's supply; or (iv) Seller's ability to sell the Product at a price greater than the Contract Price.
Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a
Transmission Provider unless (i) such Party has contracted for firm transmission with a Transmission
Provider for the Product to be delivered to or received at the Delivery Point and (ii) such curtailment is
due to "force majeure" or "uncontrollable force" or a similar term as defined under the Transmission
Provider's. tariff; provided, however, that existence of the foregoing factors shall not be sufficient to
conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts
and circumstances which in the aggregate with such factors establish that a Force Majeure as defined
in the first sentence hereof has occurred.
6.3.3 No Party shall be relieved of liability for failure of performance to the extent
that such failure is due to causes arising out of its own negligence or due to removable or remediable
causes which it fails to remove or remedy within a reasonable time period.
7. REMEDIES FOR FAILURE TO DELIVER/RECEIVE
7.1 Seller Failure. If Seller fails to schedule and/or deliver all or part of the Product pursuant to
a Transaction, and such failure is not excused under the terms of such Transaction, Force Majeure, or
by Buyer's failure to perform, then Seller shall pay Buyer, on the date payment would otherwise be
due in respect of the month in which the failure occurred an amount for such deficiency equal to the
positive difference, if any, obtained by subtracting the Contract Price from the Replacement Price. The
invoice for such amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
7.2 Buyer Failure. If Buyer fails to schedule and/or receive all or part of the Product pursuant
to a Transaction and such failure is not excused under the terms of such Transaction, Force Majeure, or
by Seller's failure to perform, then Buyer shall pay Seller, on the date payment would otherwise be due
in respect of the month in which the failure occurred an amount for such deficiency equal to the
positive difference, if any, obtained by 'subtracting the Sales Price from the Contract Price. The
invoice for such amount shall include a written statement explaining in reasonable detail the
calculation of such amount.
ral
8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. An "Event of Default" shall mean, with respect to a Party (a "Defaulting
Party"), the occurrence of any of the following:
a. the.failure to make, when due, any payment required pursuant to this Agreement if such
failure is not remedied within three (3) Business Days after written notice;
b. any representation or warranty made by such Party herein is false or misleading in any
material respect when made or when deemed made or repeated;
c. the failure to perform any material covenant or obligation set forth in this Agreement
(except to the extent constituting a separate Event of Default, and except for such Party's obligations to
deliver or receive the Product, the exclusive remedy for which is provided in Section 7) if such failure
is not remedied within three (3) Business Days after written notice;
d. such Party becomes Bankrupt.
8.2 Declaration of an Early Termination Date. If an Event of Default with respect to a
Defaulting Party shall have occurred and be continuing, the other Party (the "Non -Defaulting Party")
shall have the right (i) to designate a day, no earlier than the day such notice is effective and no later
than 20 days after such notice is effective, as an early termination date ("Early Termination Date") to
accelerate all amounts owing between the Parties and to liquidate and terminate all, but not less than
all, Transactions (each referred to as a "Terminated Transaction") between the Parties, (ii) withhold
any payments due to the Defaulting Party under this Agreement and (iii) suspend performance.
8.3 Early Termination Payments. The Non -Defaulting Party shall calculate, in a commercially
reasonable manner, a Settlement Amount for each Terminated Transaction as of the Early Termination
Date (or, to the extent that in the reasonable opinion of the Non -Defaulting Party certain of such
Terminated Transactions as are commercially impracticable to liquidate and terminate or may not be
liquidated and terminated under applicable law on the Early Termination Date, then each such
Transaction (individually, an "Excluded Transaction" and collectively, the "Excluded Transactions")
shall be terminated as soon thereafter as reasonably practicable), and upon termination shall be deemed
to be a Terminated Transaction and the Termination Payment payable in connection with all such
Transactions shall be calculated in accordance with the following. The Gains and Losses for each
Terminated Transaction shall be determined by calculating the amount that would be incurred or
realized to replace or to provide the economic equivalent of the remaining payments or deliveries in
respect of that Terminated Transaction. The Non -Defaulting Party (or its agent) may determine its
Gains and Losses by reference to information either available to it internally or supplied by one or
more third parties including, without limitation, quotations (either firm or indicative) of relevant rates,
prices, yields, yield curves, volatilities, spreads or other relevant market data iri the relevant markets.
Third parties supplying such information may include, without limitation, dealers in the relevant
markets, end -users of the relevant product, information vendors and other sources of market
information; provided, however, such third parties shall not be affiliates of either Party. Only in the
event the Non -Defaulting Party is not able, after using commercially reasonable efforts, to obtain third
party information, then the Non -Defaulting Party may calculate its Gains and Losses for such
Terminated Transaction in a commercially reasonable manner using relevant market data it has
7
available to it internally. The Non -Defaulting Party shall aggregate all Settlement Amounts into a
single amount by: netting out (a) all Settlement Amounts that are due to the Defaulting Party, plus, at
the option of the Non -Defaulting Party, any cash or other form of security then available to the Non -
Defaulting Party pursuant to Section 11, plus any or all other amounts due to the Defaulting Party
under this Agreement against (b) all Settlement Amounts that are due to the Non -Defaulting Party, plus
any or all other amounts due to the Non -Defaulting Party under this Agreement, so that all such
amounts shall be netted out to a single liquidated amount (the "Termination Payment") payable by one
Party to the other.
8.4 Notice of Payment of Termination Payment. As soon as practicable after a liquidation,
notice shall be given by the Non -Defaulting Party to the Defaulting Party of the amount of the
Termination Payment and whether the Termination Payment is due to or due from the Non -Defaulting
Party. The notice shall include a written statement explaining in reasonable detail the calculation of
such amount. The Termination Payment shall be made by the Party that owes it within seven (7)
Business Days after such notice is effective.
8.5 Disputes With Respect to Termination Payment. If the Defaulting Party disputes the Non -
Defaulting Party's calculation of the Termination Payment, in whole or in part, the Defaulting Party
shall, within seven (7) Business Days of receipt of Non -Defaulting Party's calculation of the
Termination Payment, provide to the Non -Defaulting Party detailed written explanation of the basis for
such dispute; provided, however, that if the Termination Payment is due from the Defaulting Party, the
Defaulting Party shall first transfer Performance Assurance to the Non -Defaulting Party in an amount
equal to the Termination Payment.
8.6 Closeout Setoffs. After calculation of a Termination Payment in accordance with Section
8.3, if the Defaulting Party would be owed the Termination Payment, the Non -Defaulting Party shall
be entitled, at its option and in its discretion, to (i) set off against such Termination Payment any
amounts due and owing by the Defaulting Party to the Non -Defaulting Party under any other
agreements, instruments or undertakings between the Defaulting Party and the Non -Defaulting Party
and/or (ii) to the extent the Transactions are not yet liquidated in accordance with Section 8.3 withhold
payment of the Termination Payment to the Defaulting Party. The remedy provided for in this Section
shall be without prejudice and in addition to any right of setoff, combination of accounts, lien or other
right to which any Party is at any time otherwise entitled (whether by operation of law, contract or
otherwise).
8.7 Suspension of Performance. Notwithstanding any other provision of this Agreement, if an
Event of Default shall have occurred and be continuing, the Non -Defaulting Party, upon written notice
to the Defaulting Party, shall have the right (i) to suspend performance under any or all Transactions;
provided, however, in no event shall any such suspension continue for longer than ten (10) Business
Days with respect to any single Transaction unless an early Termination Date shall have been declared
and notice thereof pursuant to Section 8.2 given, and (ii) to the extent an Event of Default shall have
occurred and be continuing to exercise any remedy available at law or in equity.
9. PAYMENT
9.1 BillingPeriod. eriod. The calendar month shall be the standard period for all payments due for
Transactions entered into under this Agreement. As soon as practicable after the end of each month,
8
each Party will render to the other Party an invoice for the payment obligations, if any, incurred
hereunder during the preceding month.
9.2 Timeliness of Payment. All invoices under this Agreement shall be due and payable in
accordance with each Party's invoice instructions on or before the later of the twentieth (20th) day of
each month, or tenth (1Oth) day after receipt of the invoice or, if such day is not a Business Day, then
on the next Business Day. Each Party will make payments by electronic funds transfer, or by other
mutually agreeable method(s), to the account designated by the other Party. Any amounts not paid by
the due date will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be
calculated from and including the due date to but excluding the date the delinquent amount is paid in
full.
9.3 Disputes and Adjustments of Invoices. A Party may, in good faith, dispute the correctness
of any invoice or any adjustment to an invoice, rendered under this Agreement or adjust any invoice
for any arithmetic or computational error within twelve (12) months of the date the invoice, or
adjustment to an invoice, was rendered. In the event an invoice or portion thereof, or any other claim
or adjustment arising hereunder, is disputed, payment of the undisputed portion of the invoice shall be
required to be made when, due, with notice of the objection given to the other Party. Any invoice
dispute or invoice adjustment shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is resolved. Upon resolution of
the dispute, any required payment shall be made within two (2) Business Days of such resolution along
with interest accrued at the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the Party receiving such
overpayment from subsequent payments, with interest accrued at the Interest Rate from and including
the date of such overpayment to but excluding the date repaid or deducted by the Party receiving such
overpayment. Any dispute with respect to an invoice is waived unless the other Party is notified in
accordance with this Section 9.3 within twelve (12) months after the invoice is rendered or any specific
adjustment to the invoice is made. If an invoice is not rendered within twelve (12) months after the
close of the month during which performance of a Transaction occurred, the right to payment for such
performance is waived.
10. LIMITATIONS
Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH HEREIN, THERE
IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS
AGREEMENT SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY
PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS
PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE
AND EXCLUSIVE REMEDY, THE. OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET
FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN
EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE
LIMITED TO DIRECT ACTUAL DAMAGES` ONLY, SUCH DIRECT ACTUAL DAMAGES
SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR
DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN
0J
PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY
INDEMNITY PROVISION OR OTHERWISE; PROVIDED, HOWEVER, NOTHING IN THIS
SECTION SHALL AFFECT THE ENFORCEABILITY OF THE PROVISIONS OF THIS
AGREEMENT RELATING TO REMEDIES FOR FAILURE TO DELIVER/RECEIVE IN
SECTIONS 7.1 AND 7.2, AND CALCULATION AND PAYMENT OF THE TERMINATION
PAYMENT IN SECTION 8.3. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS
HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE
NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED
TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE
DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE
OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES
CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE
HARM OR LOSS AND ARE NOT PENALTIES.
11. CREDITWORTHINESS
11.1 Financial Information. If requested by either Party, the other Party shall deliver (i) within
10 Business Days following its presentation to and approval by the City Council, a copy of its annual
report containing audited consolidated financial statements for such fiscal year. The statements shall be
for the most recent accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available on a timely basis due
to a delay in preparation or certification, such delay shall not be an Event of Default so long as each
Party diligently pursues the preparation, certification and delivery of the statements.
11.2 Should a Party's creditworthiness, financial responsibility, or performance viability change
such that the other Party ("First Party") has reasonable grounds to believe that other Party's ("Second
Party") creditworthiness or performance under this Agreement has become unsatisfactory, the First
Party may require the Second Party to provide Performance Assurance in an amount determined in the
succeeding sentence. The amount of the Performance Assurance required under this Section 11.2 shall
be limited to a reasonable estimate of the damages to the First Party (consistent with Section 8.3 of this
Agreement) if the Second Party were to fail to perform its obligations under this Agreement. Events
which may trigger the First Party questioning the Second Party's creditworthiness, financial
responsibility, or performance viability include, but are not limited to, the following:
a. The First Party has knowledge that the Second Party (or its guarantor if applicable) is
failing to perform or defaulting under other contracts.
b. The Second Party has exceeded any credit or trading limit set out in any Confirmation
or other agreement between the Parties.
c. Other material adverse changes in the Second Party's financial condition occur.
10
If the Second Party fails to provide such Performance Assurance within seven (7) Business
Days of demand therefore, that will be considered an Event of Default under Section 8 of this
Agreement and the First Party shall have the right to exercise any of the remedies provided for under
that Section 8. Nothing contained in this Section 11 shall affect any credit agreement or arrangement,
if any, between the Parties.
12. GOVERNMENTAL AND OTHER CHARGES
12.1 Governmental Charges. Seller shall pay or cause to be paid all taxes imposed by any
government authority ("Governmental Charges") on or with respect to the Product or a Transaction
arising prior to the Delivery Point. Buyer shall pay or cause to be paid all Governmental Charges on or
with respect to the Product or a Transaction at and from the Delivery Point (other than ad valorem,
franchise or income taxes which are related to the sale of the Product and are, therefore, the
responsibility of the Seller). In the event Seller is required by law or regulation to remit or pay
Governmental Charges which are Buyer's responsibility hereunder, Buyer shall promptly reimburse
Seller for such Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may deduct the amount of
any such Governmental Charges from the sums due to Seller under Section 9 of this Agreement.
Nothing shall obligate or cause a Party to pay or be liable to pay any Governmental Charges for which
it is exempt under the law.
12.2 Costs and Other Charges. Seller shall be responsible for any costs or charges imposed
on or associated with the Product or delivery thereof, including transmission and congestion costs, up
to the Delivery Point. Buyer shall be responsible for any costs or charge imposed on or associated
with the Product or receipt thereof, including transmission and congestion costs, from the Delivery
Point.
12.3 Cooperation. Each Party shall use reasonable efforts to take any specific action
requested by the other party to implement the provisions of and to administer this Agreement in
accordance with the intent of the Parties to minimize all taxes, so long as neither Party is materially
adversely affected by such efforts.
13. MISCELLANEOUS
13.1 Term of Agreement. The term of this Agreement shall commence on the Effective Date
and shall remain in effect until terminated by either Party upon (thirty) 30 days' prior written notice;
provided, however, that such termination shall not affect or excuse the performance of either Party
under any provision of this Agreement that by its terms survives any such termination and, provided
further, that this Agreement and, any other documents executed and delivered hereunder shall remain in
effect with respect to the Transaction(s) entered into prior to the effective date of such termination until
both Parties have fulfilled all of their obligations with respect to such Transaction(s), or such
Transaction(s) that have been terminated under Section 8.2 of this Agreement.
13.2 Representations and Warranties. On the Effective Date, and the date of entering into each
Transaction, each Party represents and warrants to the other Party as follows, and agrees to provide
such documents as may be reasonably requested by the other Party for the purpose evidencing such
representations and warranties:
11
a. it is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation;
b. it has all regulatory authorizations necessary for it to legally perform its obligations
under this Agreement and each Transaction;
c. the execution, delivery and performance of this Agreement and each Transaction are
within its powers, have been duly authorized by all necessary action and do not violate
any of the terms and conditions in its governing documents, any contracts to which it is
a party or any law, rule, regulation, order or the like applicable to it;
d. this Agreement, each Transaction, and each other document executed and delivered in
accordance with this Agreement constitutes its legally valid and binding obligation
enforceable against it in accordance with its terms; subject to any Equitable Defenses.
e. it is not Bankrupt and there are no proceedings pending or being contemplated by it or,
to its knowledge, threatened against it which would result in it being or becoming
Bankrupt;
f. there is not pending or threatened against it, to its knowledge, any legal proceeding that
has not been disclosed to the other Party and could materially adversely affect its
ability to perform its obligations under this Agreement and each Transaction;
g. no Event of Default with respect to it has occurred and is continuing and has not been
disclosed to the other Party and no such event or circumstance would occur as a result
of its entering into or performing its obligations under this Agreement and each
Transaction;
h. it is acting for its own account, has made its own independent decision to enter into this
Agreement and each Transaction and as to whether this Agreement and each such
Transaction is appropriate or proper for it based upon its own judgment, is not relying
upon the advice or recommendations of the other Party in so doing, and is capable of
assessing the merits of and understanding, and understands and accepts, the terms,
conditions and risks of this Agreement and each Transaction;
i. it is a "forward contract merchant" within the meaning of the United States Bankruptcy
Code;
j. it has entered into this Agreement and each Transaction in connection with the conduct
of its business and it has the capacity or ability to make or take delivery of all Products
referred to in the Transaction to which it is a Party;
k. with respect to each Transaction involving the purchase or sale of a Product, it is a
producer, processor, commercial user or merchant handling the Product, and it is
entering into such Transaction for purposes related to its business as such; and
1. the material economic terms of each Transaction are subject to individual negotiation
by the Parties.
12
13.3 Title and Risk of Loss. Title to and risk of loss related to the Product shall transfer from
Seller to Buyer at the Delivery Point. Seller warrants that it will deliver to Buyer the Quantity of the
Product free and clear of all liens, security interests, claims and encumbrances or any interest therein or
thereto by any person arising prior to the Delivery Point.
13.4 Indemnity. Each Party shall indemnify, defend and hold harmless the other Party from
and against any Claims arising from or out of any event, circumstance, act or incident first occurring or
existing during the period when control and title to Product is vested in such Party provided in Section
13.3. Each Party shall indemnify, defend and hold harmless the other Party against any Governmental
and Other Charges for which such Party is responsible under Section 12.
13.5 Assignment. Neither Party shall assign this Agreement or its rights hereunder without the
prior written consent of the other Party, which consent may be withheld in the exercise of its sole
discretion; provided, however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement
or the accounts, revenues or proceeds hereof in connection with any financing or other financial
arrangements, (ii) transfer or assign this Agreement to a third party whose creditworthiness is equal to
or higher than that of such Party, or (iii) transfer or assign this Agreement to any person or entity
succeeding to all or substantially all of the assets whose creditworthiness is equal to or higher than that
of such Party; provided, however, that in each such case, any such assignee shall agree in writing to be
bound by the terms and conditions hereof and so long as the transferring Party delivers such tax and
enforceability assurance as the non -transferring Party may reasonably request.
13.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND
PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS
RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT.
13.7 Notices. All notices, approvals, and consents between the Parties shall be in writing, and
shall be sent by certified mail (return receipt requested) or other delivery service which provides
evidence of delivery, using the address set forth for the Parties below, or at such other address as may
be furnished by either Party to the other in writing. Mailed notices will be deemed communicated as
of the day of receipt.
To Buyer: City of Victorville
To Seller: City of Vernon
14343 Civic Drive
4305 Santa Fe Avenue
Victorville, California 92392
Vernon, California 90058
Attention:
Attention:
Telephone No.:
Telephone No.:
Facsimile No.:
Facsimile No.:
13
13.8 General Provisions.
13.8.1. This Agreement (including the exhibits, schedules and any written supplements
hereto), any designated collateral, credit support or margin agreement or similar arrangement between
the Parties and all Transactions (including Confirmations accepted in accordance with Section 5.4)
constitute the entire agreement between the Parties relating to the subject matter. Notwithstanding the
foregoing, any collateral, credit support or margin agreement or similar arrangement between the
Parties shall, upon designation by both Parties in writing, be deemed part of this Agreement and shall
be incorporated herein by reference.
13.8.2. This Agreement shall be considered for all purposes as prepared through the
joint efforts of the parties and shall not be construed against one party or the other as a result of the
preparation, substitution, submission or other event of negotiation, drafting or execution hereof.
13.8.3. Except to the extent herein provided for, no amendment or modification to this
Agreement shall be enforceable unless reduced to writing and executed by both Parties.
13.8.4. This Agreement shall not impart any rights enforceable by any third party
(other than a permitted successor or assignee bound to this Agreement).
13.8.5. Waiver by a Party of any default by the other Party shall not be construed as a
waiver of any other default.
13.8.6. Any provision of this Agreement declared or rendered unlawful by any
applicable court of law or regulatory agency or deemed unlawful because of a statutory change
(individually or collectively, such events referred to as "Regulatory Event") will not otherwise affect
the remaining lawful obligations that arise under this Agreement; and provided, further, that if a
Regulatory Event occurs, the Parties shall use their best efforts to reform this Agreement in order to
give effect to the original intention of the Parties.
13.8.7. The term "including" when used in this Agreement shall be by way of example
only and shall not be considered in any way to be in limitation. The headings used herein are for
convenience and reference purposes only.
13.8.9. All indemnity and audit rights shall survive the termination of this Agreement
for twelve (12) months. This Agreement shall be binding on each Party's successors and permitted
assigns.
13.9 Audit. Each Party has the right, at its sole expense and during normal working hours, to
examine the records of the other Party to the extent reasonably necessary to verify the accuracy of any
statement, charge or computation made pursuant to this Agreement. If requested, a Party shall provide
to the other Party statements evidencing the Quantity delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments in such statement and
the payments thereof will be made promptly and shall bear interest calculated at the Interest Rate from
the date the overpayment or underpayment was made until paid; provided, however, that no adjustment
for any statement or payment will be made unless objection to the accuracy thereof was made prior to
the lapse of twelve (12) months from the rendition thereof, and thereafter any objection shall be
deemed waived.
14
13.10 Forward Contract. The Parties acknowledge and agree that all Transactions constitute
"forward contracts" within the meaning of the United States Bankruptcy Code.
13.11 Confidentiality. Neither Party shall disclose the terms or conditions of a Transaction
under this Agreement to a third party (other than the Party's employees, lenders, counsel, accountants
or advisors who have a need to know such information and have agreed to keep such terms
confidential) except in order to comply with any applicable law (including the Ralph M. Brown Act
and/or the California Public Records Act), regulation, or any exchange, control area or independent
system operator rule or in connection with any court or regulatory proceeding; provided, however,
each Party shall, to the extent practicable, use reasonable efforts to prevent or limit the disclosure. The
Parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in
connection with, this confidentiality obligation. The Parties acknowledge and agree that each are
public entities and that nothing contained in this Section 13.11 shall be construed or interpreted to
prevent or restrain the Parties' compliance with the provisions of the California Public Records Act or
the Ralph M. Brown Act. The Parties acknowledge and agree that this Agreement is not considered a
confidential or non-disclosable document.
14. SEVERABILITY
In the event that any of the terms, covenants or conditions of this Agreement or any
Confirmation, or the application of any such term, covenant or condition, shall be held invalid as to
any person or circumstance by any court, regulatory agency, or other regulatory body having
jurisdiction, all other terms, covenants or conditions of this Agreement and the Confirmation and their
application shall not be affected thereby, but shall remain in force and effect unless a court, regulatory
agency, or other regulatory body holds that the provisions are not separable from all other provisions
of this Agreement or such Confirmation (s).
15. RELATIONSHIP OF PARTIES
Nothing contained in this Agreement or in any Confirmation shall be construed to create an
association, joint venture, trust, or partnership, or agency relationship between or among the Parties, or
to impose a trust or partnership covenant, obligation, or liability on or with regard to any of the Parties.
Each Party shall be individually responsible for its own covenants, obligations, and .liabilities under
this Agreement and under any applicable Confirmation. All rights and obligations of the Parties under
this Agreement are several and are not joint.
16. NO DEDICATION OF FACILITIES
Any undertaking by one Party to another Party under any provision of this Agreement shall not
constitute the dedication of the electric system or any portion thereof of the undertaking Party to the
public or to the other Party, and it is understood and agreed that any such undertaking under any
provision of this Agreement by a Party shall cease upon the termination of such Party's obligations
under this Agreement.
[Signatures begin on next page]
15
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed on
behalf of each by and through their authorized representatives as of the dates written below.
Buyer CITY OF VICTORVILLE Seller CITY OF VERNON
By:
Name:
Title: Mayor
Date:
ATTEST:
City Clerk
APPROVED AS TO FORM
By:
Name:
Title: Mayor
Date:
ATTEST:
City Clerk
APPROVED AS TO FORM
City Attorney City Attorney
APPROVED:
Chuck Buquet, Risk Manager
16
EXHIBIT A
SAMPLE TRANSACTION CONFIRMATION
The following shall confirm the terms of the Transaction, entered into by electronic or telephonic communications on
2010, between the City of Victorville and the City of Vernon (collectively, the "Parties"), pursuant to
the Master Power Purchase and Sale Agreement entered into by the Parties on _, 2010 ("Agreement"), as it
is supplemented and modified below with respect to details of the Transaction, and not with respect to the general terms of
the Agreement.
Buyer: City of Victorville Seller: Vernon Light & Power Department
14343 Civic Drive 4305 Santa Fe Avenue
Victorville, CA 92392 Vernon, CA 90058
Attn: Attn:
Phone: Phone:
Fax: Fax:
Scheduling #: Scheduling #:
Quantity (MW):
Quantity (MWhrs):
Price:
Product: Firm
Start Date:
End Date:
Day of Week:
Hours:
(See Attach'iment for deliveries by hour)
Delivery Point: SP-15 EZ Gen Hub CAISO (IST)
Special Provisions: CAISO IST-enabled Product.
Enabling Agreement: The Transaction, as described in this Confirmation, shall be subject to the terms and conditions
set forth in the Agreement. This Confirmation may only be modified by a writing signed by both
Parties.
Other: If the above accurately reflects your understanding of our agreement, please
indicate your approval by signing a copy of this letter and returning it via fax
to
[All prices are in US Dollars]
City of Victorville
LE
Name:
Title:
Name:
Title:
City of Vernon
17