HomeMy WebLinkAboutAgenda Report - March 16, 2011 C-07AGENDA ITEM C4PI
(1)CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: Adopt Resolution Approving Geothermal Agreements and Facilities Agreement
Amendment to Finalize Turlock Irrigation District's Withdrawal from the Northern
California Power Agency Joint Powers Agreement
MEETING DATE: March 16, 2011
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Adopt a resolution approving Geothermal Agreements and Facilities
Agreement Amendment to finalize Turlock Irrigation District's withdrawal
from the Northern California Power Agency (NCPA) Joint Powers
Agreement.
BACKGROUND INFORMATION: On June 2, 2009, Turlock Irrigation District (TID) providedformal notice
to NCPA and NCPA members of its intent to terminate its membership in
NCPA effective no laterthan April 1, 2011 in accordance with the two-
year notice requirements specified in the JPA. The NCPA commission established April 1, 2011 as the
effective termination date for TID's membership. Overthe past 18 months, NCPA staff combed through all
relevant agreements, policies, and procedures and updated or developed new agreements and policy
documents, as necessary, to effectuate Tl D's withdrawal.
The relevant NCPA agreements, policies and procedures deemed necessaryfor review and/or revision fall
into the following three categories:
1) Natural gas -related programs and projects;
2) Geothermal -related programs and projects; and
3) Obligations under existing governance agreements to be settled prior to exit.
Natural Gas Related Programs and Projects
All work associated with natural gas related programs and projects has been completed. Activity included
terminating the Natural Gas Purchase Program Third Phase agreement, removing TID from the natural gas
procurement and pipeline capacity management agreement, and modifying natural gas pipeline tariff
agreements to reflect a split of pipeline capacity between NCPA and TID. No further action by the City is
required at this time.
Geothermal Related Programs and Projects
TID decided that it will retain its interests in Geothermal Project No. 3 even after its withdrawal from NCPA.
However, TID is not a signatory to the Geothermal ProjectThird Phase Agreement and its rights and
entitlements flow instead from:
APPROVED:
Konradt Bartlam, City Manager
Adopt Resolution Approving Geothermal Agreements and Facilities Agreement Amendment to Finalize Turlock Irrigation
District's Withdrawal from the Northern California Power Agency Joint Powers Agreement
Page 2
Letter agreements between TID and geothermal project participants (Palo Alto, Gridley, and
Plumas) by which project entitlement percentages are transferred
Letter agreements between TI D and NCPA by which NCPA agreed to treat TID as a project
participant
NCPA governance documents such as the Facilities Agreement and the Geothermal Project
Operating Agreement
The letter agreements permit TID's commissionerto vote at Commission meetings and through its appointed
representative on the Facilities Committee. After April 1, 2011, TID will no longer have a commissioner on the
NCPA Commission nor have a representative on the Facilities Committee to formally represent its
entitlements in the geothermal project.
Likewise, while TID is a signatoryto the FacilitiesAgreement, that agreement provides that representation on
the Facilities Committee is contingent on being an NCPA member. As a result, NCPA and TID staff have
been negotiating agreements that will ensure that TID's rights and obligations as embodied in the letter
agreements are continued in successor agreements to be implemented upon TID's withdrawal and that
continuing NCPA member interests are protected in an equal fashion.
In order to finalize TID's withdrawal the Geothermal Project participants, including Lodi, will need to approve
amendmentsto the Geothermal ProjectThird Phase Agreement, Operating Agreement, and Facilities
Agreement to reflect Tl D's participation in the project as a non-NCPA member.
Obligations under Existing Governance Agreements to be Settled Priorto Exit
NCPA and TID have negotiated a settlement to satisfy provisions of the JPA specifying that any signatory to
the JPA terminating its membership in the JPA is obligated to pay itspro-rafa share of all encumbrances and
indebtedness of NCPA as of the date of termination.
The vehicle for settling all known and unknown claims has been titled the "Exit Agreement" and in addition to
settling all claims, would be used to terminate certain remaining agreements between the parties that require
termination due to the termination of membership and to establish dispute resolution scope limits and
processesfor disputed payments. This particular agreement requires approval by only the NCPA Commission
and TID.
Additionally, the Fourteenth Supplemental Indenture Of Trust and FacilitiesAgreement Schedule FA 10.00 —
Federal Tax Guidelines Relating To Private Business Use requires approval by only the NCPA Commission
and TID.
A detailed description of the above mentioned agreements, along with a summary of steps taken by NCPA
related to TID's withdrawal, is found in the NCPA Staff Report dated February 17, 2011 (Exhibit A).
The referenced agreements have been reviewed with the NCPA Facilities Committee, Utility Directors, Legal
Committee and Commission at various points of completion over the last three months. The Legal
Committee agreed in principlewith the agreements as drafted at the time of their review and recommended
that Commission approval of the exit agreement be conditioned on receipt of TID executed copies of all
agreements within seven days of the conditional approval of the agreements by the NCPA Commission.
Both the Facilities Committee and Legal Committee suggested eliminating language within the Amended
Geothermal Operating Agreement indicating that costs would be allocated according to "cost causation
principles" unless the term cost causation could be defined. TID and NCPA negotiating teams were unable to
come to agreement on a definition for cost causation, and TID was adamantthat this language should stay in
the agreement. After much discussion, the NCPA negotiating team recommended that the cost causation
language be left in the agreement without the definition citing sufficient case law on the subjectto referto in
the event there is ever a dispute over whether NCPA is properly allocating costs to the Project in accordance
with cost causation principles.
Adopt Resolution Approving Geothermal Agreements and Facilities Agreement Amendment to Finalize Turlock Irrigation
District's Withdrawal from the Northern California Power Agency Joint Powers Agreement
Page 3
The Facilities Committee reviewed the final set of agreements on February 17, 2011 and recommendedthat
the Commission approve the attached agreements as attached in Exhibits C, D, and E. The NCPA
Commission approved all the agreements on February 24, 2011 via the Resolution attached in Exhibit B.
Upon approval of the Geothermal Agreements and FacilitiesAgreement Amendment identified above, TID's
withdrawalfrom NCPAwill befinalized.
FISCAL IMPACT: The impactto Lodi of the negotiated settlement between NCPA and TI D will be
approximately $15,000 of TID's share of the currentfiscal year NCPA budget.
In future years, TID will pay its percentageshare of geothermal costs and
revenues. Costs currently paid by TID for NCPA JPA fees, judicial costs, and
regulatory costs will be reallocated to the remaining NCPA members in future
budgetyears.
FUNDING AVAILABLE: Not applicable.
Ef eth . KA -ley
Electric Utility Director
EXHIBITS:
A. NCPA Staff Report on TID Agreement Approvals Required for Withdrawal from the NCPA Joint Powers Agreement
B. NCPA Commission Resolution
C. Amendment NumberTwo to Agreement for Construction, Operation and Financing of Geothermal Generating Project
Number 3
D. Amended and Restated Geothermal Project Operating Agreement between Northern California Power Agency and the
Geothermal Project Participants
E. Amendment Number One to Northern California Power Agency Facilities Agreement
F. Membership Withdrawal and Exit Agreement between NCPA and TID
G. Fourteenth Supplemental Indenture of Trust
H. Facilities Agreement Schedule FA 10.00 — Federal Tax Guidelines Relating To Private Business Use Only
SR: 115:11
TID Agreement Approvals Recommended for Withdrawal from the NCPA Joint Powers Agreement.
February 22, 2011
Page 4
operating agreement would be completely replaced by Amended and Restated
Operating Agreement.
The Amended Operating Agreement will take precedence over the Facilities Agreement in
the event of conflicts between the two agreements. The Amended Operating Agreement
contains all of the.detail required to administer and operate the Geothermal Project on
behalf of the Project Participants and provides for the combined operation of Geothermal
Projects Number Two and Three in the most cost efficient manner due to the finite and
limited nature of the steam -.field supply. Definitions in the Amended Operating Agreement
were updated to-include`new terms ,that are relevant to operations 1oday, 20 years after the
first' Operating Agreement was adopted. The Amended.Operating Agreement clarifies how,
Administrative Costs wM be identified and allocated to the project as an addition to the prior
Operating Agreement that was limited to methodologies for allocating Project Costs.
A section on Surplus Capacity and Energy Sales was added that eliminates all Rights of
First Refusal with" regard to capacity, energy or other attributesassociated with the project,
irrespective of possible contradictorylanguage in the Third Phase Agreement. This
provision was the subject of extensive debate by the Facilities Committee and the. Utility
Directors and, ultimately, the Facilities Committee recommended adopting the proposed
language eliminating �R. ights of Refusal.
Annual budget processes were amended to be consistent with Third Phase Agreement
language. Project' Participant -Direction and Review sections were amended to clarify, how
Project Participants, and ,particularly TID as a Project Participant and >non-member, will be
able to participate at Commission meetings, Facilities Committee meetings;' and other,
meetings of NCPA committees` which are subject to the Brown Act. In particular, TID will not
have'a vote or participation rights (other than as a member of the public) at Commission
meetings. It will, however,, have the right to direct the vote of the permanently transferring
participants, and the right to demand -a "project vote" occur at the Commission. It will remain
a member cf the Facilities Committee where TID will have the right to participate in and vote
on matters that relate to the Geothermal Project. It will have the right to receive notices,
agendas and materials of other Brown Act committees of NCPA which have Geothermal
Project matters listed on their agendas.
Scheduling sections were updated to eliminate the ability to -store steam for later electricity
production and delivery, While retaining the ability to reduce output of the plant and the
participants' share of that output up to annually determined plant reduction' limits.'
Lastly, the Amended Operating Agreement is used to terminate agreements, including the
First and Second Transfer Agreements between TID and transferring Project Participants,
the Letter Agreement between TID and NCPA specifying TID's rights under the first Transfer
Agreement,the Layoff Equalization Agreement in'support of the combined refinancing of the
Geothermal Project and Hydroelectric Project, with rights and obligations of terminated,
agreements transferred to the Amended Operating Agreement, or eliminated, as
appropriate.
Approvals Required: NCPA Commission, TID Governing Board and Geothermal Project
Participant` Governing Boards
R: 115:11
TO Agreement Approvals Recommended for Withdrawal from the NCPA Joint Powers Agreement
February 22, 2011
Page 8
Respectfully sub ed,
Prepared by:
JYX H. PE
DAVID DOCKHAM
eneral Manager
Assistant General Manager
DDltlh
Attachments
SR: 115:11
01/28/2011,12:05:10 PM
TID Exit Agreement Staff Report
Exhibit 2 -Summary of Charges
Subject to True Up or Lump Sum
Settlement
Subject to
True Up ,
Budget
(yes/no)
Estimate
GENERATION RESOURCES
NCPA Plants
Hydroelectric
0
n/a
Geothermal Plant No. 1
0
n/a
Geothermal Plant No. 2
2,305;008
yes
Combustion Turbine No. 1 "
0
n/a
Combustion Turbine, No. 2 (STIG)
0
n/a
PPS+1-Phase I + Phase 11
Prepaid Debt Service
Member: Resources -
Member Contracts
0
n/a
Member Generation
0
` n/a
Western Resource
`. Western Costs.0
n/a
Market Power Purchases
NCPA Contracts
0
n/a
Market Purchases
0
n/a
Pool Energy Exchange
Pool Adjustments
0
n/a
Other Resources
Seattle City Light
0 _
n/a
Graeagle
0
n/a
ISO Energy Purchases
0
n/a
Subtotal Generation. Services
21305,008
TRANSMISSION\DISTRIBUTION :
NCPA Plant Transmission
Hydroelectric'(Bellota-Tesla),
0
n/a
Geo Plant 1(Geysers-Lakeville + Tap-line),
0 .
Geo Plant 2.(Geysers7Lakeville + Tap-line)
6-620,yes
TAN,C
COTP,
SOT '�0.
n/a
Independent"System Operator
ISO GMC Wheeling; Ancillary Services
75,686
yes
NCPA Charges
0
-_yes .
180 Adjustments
0
yes
Other 'Transmission
Biggs 60Kv
Bay Area Transmission Studies
Distribution
Subtotal Transmission0stribution
82,306
MANAGEMENT SERVICES:
Legislative +Regulatory
Legislative; Representation
301,111
no - lump sum
Regulatory Representation
140,030
no -lump sum
Western Representation
7,786
no - lump sum
Member Support' Services
2,533
no -lump sum
JPA Assessment
251;690
no - lump sum
Judicial' Action
107,759 "-'
no - lump sum
Subtotal Legislative +`Regulatory
810,909
Power Management
SCALD, Energy Risk Mgmt + Settlements
171,352
yes
Green Power Project
Market Power Purchase Project" _
Natural Gas Information Program ;
361432
no; -,"lump sum
RMR Mgmt ; net to GOR
Subtotal Management Services
1,018,693
*TOTAL' ANNUAL "ACTUAL'<COST"
3,406;007
LESS' THIRD PARTY'REVENUE
Market Power Sales
0
yes
TransmissionSales
-6987
yes
Ancillary Services Sales
0
yes
ISO Energy Sales
0
yes
Other Sales +Income (solarrebate drill rig,
effluent sales)
179022
yes
Net transfer (to) from GOR
0
Other Revenue Adjustments ;
0
yes
Displacement Revenue
0
n/a
Subtotal Third Party, Revenue
186,009
NET ANNUAL ACTUAL COST
3,219,998
N
Amendment Number Two to Agreeryient for Construction, Operation and Financing of
Geothermal Generating Project Number 3
Amended and Restated Geothermal -o
roject Operating Agt ement BetweenNorthern n
California Power -Agency and the Geothermal Project Participants
Amendment Number One,to Northern California Power Agency Facilities Agreement
and Exit'Ageeement between Northern California
Membership Withdrawal a' Power Agency
and Tur ock Irrigation District
b. A13617OVeS NC.PA Facilities Aqreement Schedule FA10.00..:,..
3. Supplemental rth&
whichapproves the 1.4.!h . lem6rit;4.1hdenture�of Trust �between:No
Adopt a resolution
Califohiii 06wetAg6ncy and US:BahkNati6naI .Association,:,as TrU..st6eRelating
to Geothermal
Project Number Re nue:B6nds:and authorizes Ahe General Manager to execute it on behalf of
ct,NUm er ve enet6
CPA,,subject to receipt of TID ap roval -of the agreements specified in Section 2 above.
N
p
4. Authorizelhe General Manager to pursueanyand all claims 40 - the full1extent allowed.: y -NC, PA
h herthrough�litigatioh or dispute.
governance. agreements, �w et resolution processes specified in
agencygovernan6eAocurOnts- in event.TID does :n t provide
vjde properl
y
! copies of
of 811
agreements identifiedabove within .the fo6keen(14) day period following this. ions
-conditional approval of the -referenced agreements.,
,.ebry.:201 1, 1: y the'following th day of frua6 iowl
Q9 yotd on roll
Phis TASSED. ADOPTED. :and APPROVE
-ball
OHS West:261085778 1 110217gk 0073503 2
EXHIBIT C
AMENDMENT NUMBER TWO TO
AGREEMENT FOR CONSTRUCTION, OPERATION AND FINANCING OF
GEOTHERMAL GENERATING PROJECT NUMBER 3
This Amendment Number Two to Agreement for Construction, Operation, and
Financing of Geothermal Generating Project Number 3 ("Amendment Number Two") is made
this 1st day of April, 2011 by and among the Northern California Power Agency ("NCPA"), a
California joint powers agency; the Cities of Alameda, Biggs, Gridley ("Gridley"), Healdsburg,
Lodi, Lompoc, Palo Alto ("Palo Alto"), Roseville, Santa Clara, and Ukiah; the Plumas Sierra
Rural Electric Cooperative ("Plumas"), a rural electrical cooperative; and the Turlock Irrigation
District ("TID"), a California irrigation district ( collectively the "Parties")
WITNESSETH:
WHEREAS,
A. Each of the Parties other than TID is a party to that certain Agreement for
Construction, Operation and Financing of Geothermal Generating Project Number 3, dated as
of July 1, 1983; and
B. Each of the Parties other than TID is a party to that certain Amendment Number
One to Agreement for Construction, Operation and Financing of Geothermal Generating
Project Number 3, dated as of August 1, 1983 ( "Amendment Number One"); and
C. The Agreement for Construction, Operation and Financing of Geothermal
Generating Project Number 3 as amended by Amendment Number One is hereafter referred to
as the "Original Agreement" and as amended and supplemented from time to time is hereafter
referred to as the "Agreement"; and
D. Pursuant to the Original Agreement, NCPA agreed to construct, operate, and finance
a certain geothermal generating proj ect located in Lake and Sonoma Counties constituting the
Project for the benefit of those parties other than NCPA executing it (the "Original Project
Participants"), each of whom is entitled to its Project Entitlement Percentage of Project
capacity and energy and is obligated to pay for the costs of said Project in accordance with
Section 5 of the Origmal Agreement; and
E. The Origmal Project Participants and TID entered into an Agreement for Transfer
of Rights to Capacity and Energy of Geothermal Generating Project Number 3, dated as of
October 1, 1984 (the "First Transfer Agreement") by which each Origmal Project Participant
transferred to TID specified and varying East Block Entitlement Percentages of Project capacity
and energy in each calendar year, to and including 2000, and, from calendar year 2001 until the
end of the life of the Project, Gridley permanently transferred 0.118% of its 0.456% of East
Block Entitlement Percentage of Project capacity and energy to TID, and Plumas permanently
transferred 0.227% of its 0.91% East Block Entitlement Percentage of Project capacity and
energy to TID; and
GEOTHERMALTHIRD PHASE AMENDMENT TWO
Execution Version
F. Palo Alto and TID entered into an agreement dated December 30,1985 (the "Second
Transfer Agreement") and pursuant to the First Transfer Agreement and the Second Transfer
Agreement, Palo Alto permanently transferred all of its 12.316%East Block Entitlement
Percentage of Project capacity and energy to TID; and
G. The First Transfer Agreement and the Second Transfer Agreement are hereafter
collectively referred to as the "Transfer Agreements", and resulted in Gridley having rights to a
0.3360% Project Entitlement Percentage of Proj ect capacity and energy, Palo Alto having rights
to a zero % Project Entitlement Percentage of Project capacity and energy, Plumas having rights
to a 0.7010% Project Entitlement Percentage of Project capacity and energy, and TID having
rights to a 6.3305% Project Entitlement Percentage of Project capacity and energy, together with
all additions thereto pursuant to section 7(d) of the Agreement, being referred to as the
"Transferred Project Entitlement Percentage" ;and
H. Gridley, Palo Alto and Plumas are hereafter collectively referred to as the
"Transferors"; and
I. The Transferors, while having permanently transferred all their respective rights to the
Transferred Proj ect Entitlement Percentage to TID pursuant to the Transfer Agreements,
remain liable to NCPA with respect to all payments under the Agreement related to the
Transferred Project Entitlement Percentage to the extent TID does not make such payments;
and
J. As of the effective date of this Amendment Number Two, the only outstanding bonds
relating to the Project are NCPA's Geothermal Project 3 Revenue Bonds, 2009 Series A (the
"2009 Series A Bonds") issued under the Indenture of Trust, dated as of November 1, 1983,
between NCPA and U.S. Bank Trust National Association, as successor Trustee (as amended
and supplemented, the "Indenture") and the Indenture is the only existing Bond Resolution for
purposes of the Original Agreement; and
I<. The Indenture provides that NCPA will not consent or agree to any amendment of
the Agreement which wi I I reduce the payments required thereunder or which wi I I in any manner
materially impair or materially adversely affect the rights of NCPA thereunder or the rights or
security of the holders of the bonds issued under the Indenture; provided that nothing in the
Indenture shall be construed so as to prohibit any other amendment of the Agreement; and
L. The Parties desire to amend the Original Agreement to, among other things, reflect
the terms of the Transfer Agreements by substituting T I D for the Transferors as the Project
Participant under the Agreement with respect to the Transferred Project Entitlement Percentage
while, in order to avoid the appearance of the impairment of the security of the holder of any
2009 Series A Bond, so long as any 2009 Series A Bond remains outstanding under the
Indenture, each of the Transferors shall continue to remain liable for all payment obligations
accruing under the Agreement which are related to the Transferred Proj ect Entitlement
Percentage such Transferor transferred to TID; and
GEOTHERMALTHIRD PHASE AMENDMENT TWO 2
Execution Version
M. The Parties also desire to amend the Odgmal Agreement to clarify that
environmental attributes associated with the Project capacity and energy are included within the
rights held by the Project Participants, including TID;
NOW, THEREFORE, the Parties hereto agree as follows:
1. Terms used in this Amendment Number Two and not defined herein have the
meaning given to them in the Original Agreement.
2. To provide that TID, and not the respective Transferors, is the Proj ect Participant
with respect to the Transferred Proj ect Entitlement Percentage, Appendix "A" of the
Agreement ("SCHEDULE OF PROJECT PARTICIPANTS AND PROJECT
ENTITLEMENT PERCENTAGES") is hereby amended in its entirety to read as provided in
Exhibit 1 hereto to include a 12.661%TID East Block Entitlement Percentage and a 6.3305%
Project Entitlement Percentage and to correspondmglyreduce the East Block Entitlement
Percentages and Project Entitlement Percentages of the Transferors.
3. To recognize that the 2009 Series A Bonds were issued when the Transferors were
the Project Participants with respect to the Transferred Project Entitlement Percentage, and to
increase the security for the 2009 Series A Bonds by adding TID as the Project Participant with
respect to the Transferred Project Entitlement Percentage while maintaining the respective
payment obligations of the Transferors under the Agreement with respect to the Transferred
Proj ect Entitlement Percentage so long as any 2009 Series A Bonds remain outstandingunder
the Indenture, Section 5 (f) of the Original Agreement is hereby supplemented by adding at the
end thereof the following:
"Notwithstanding anything in this Section 5 (9 or elsewhere in this Agreement to
the contrary, in the event the Turlock Irrigation District ("TID") should fail to timely pay
any amount payable by it under the Agreement, which payment obligation accrued while
any of NCPA's Geothermal Project 3 Revenue Bond, 2009 Series A ("the 2009 Series A
Bonds") remained outstanding under the Indenture of Trust, dated as of November 1,
1983,between NCPA and U.S. Bank Trust National Association, as successor Trustee, as
amended and supplemented (the "Indenture"), the City of Gridley ("Gridley"), the City
of Palo Alto ("Palo Alto") and the Plumas Sierra Rural Electric Cooperative ("Plumas"
and together with Gridley and Palo Alto the "Transferors") shall remain contingently
and secondarily obligated for each such payment in the following proportions, such that
the security of the holders of the 2009 Series A Bonds with respect to the Agreement is
not adversely affected by the addition of TID as a Project Participant and the reduction
of the Project Entitlement Percentages of the Transferors with respect to the
Transferred Project Entitlement Percentage:
Transferor
Gridley
Palo Alto
Plumas
GEOTHERMAL THIRD PHASE AMENDMENT TWO
Execution Version
Share of Amounts Not Paid by TID
0.932%
97.275%
1.793%
3
In the event TID fails to make a payment when due under the Agreement, which
payment obligation became due while any of the 2009 Series A Bonds remain
outstanding under the Indenture, NCPA shall, not more than ten (10) days after the due
date for such payment, send the written demand contemplatedby Section 7(a) of the
Agreement to TID and to the Transferors by electronic means or overnight delivery
service or by such other means as shall provide for delivery the next business day. Such
demand shall specify the amount due but not received by NCPA. If TID has not made
the missed payment by the twenty-fifth (25th) day following NCPA's sending the
demand for payment, each Transferor shall, not later than the thirtieth (301h) day from
the date of such demand, pay its respective share of the amount specified in the NCPA
notice of nonpayment from the sources specified in the Agreement for other payments
thereunder by the Project Participants. The Transferors' contingent and secondary
obligation for payments which TID fails to make when due under the Agreement shall
cease, and the Transferors shall be relieved of all obligations to make payments pursuant
to this Section 5(f), on the first date when no 2009 Series A Bonds remain outstanding
under the Indenture; provided, however, that nothing in this sentence shall relieve any
Transferor of its obligation to pay amounts which became due from TID under the
Agreement prior to such first date.
In addition to any other remedy available under the Agreement, each Transferor
may directly recover from TID any payments made pursuant to this section as well as
any costs or damages incurred by it as a consequence of the failure of TID to make
any payment under the Agreement, including the recovery of any attorneys fees."
4. The Original Agreement is hereby supplemented by adding a new Section 17 thereto
to read as follows:
"17. Attributes Associated with Project. A Project Entitlement Percentage of
Project capacity and energy includes not only the rights to electric capacity and energy,
but also the rights to a proportionate share of any associated attributes of the Project that
either exist or may exist in the future. This includes attributes such as environmental
credits, renewable energy credits, resource adequacy credits or other attributes associated
with the production of electricity from a renewable energy resource, along with ancillary
services. In all cases the right to a proportionate share of any associated attributes of the
Project is subject to the terms of this Agreement including the provisions hereof relating
to the loss by a Project Participant of the rights to Project capacity and energy including
the associated attributes
Upon the request of a Project Participant, evidence of the ownership of such associated
attributes will be provided by NCPA to the requesting Proj ect Participant (and may
thereafter be sold by the Proj ect Participant to third persons subject to the terms of
Section 18 of this Agreement and without being subject to a right of first refusal by
other Project Participants), in proportion to its respective Project Entitlement
Percentages of Project capacity and energy but subject to the provisions of Section 18 of
GEOTHERMAL. THIRD PHASE AMENDMENT TWO 4
Execution Version
this Agreement and such commercially reasonable conditions as may be imposed or
adopted by the NCPA Commission from time to time.
5. The Original Agreement is hereby supplemented by adding a new Section 18 thereto
to read as follows:
"18. Federal Tax Matters. Each Project Participant recognizes that Bonds
issued with respect to the Project may bear interest that is excluded from gross income
for federal income tax purposes or may be issued under circumstances that entitle NCPA
or Bondholders to subsidy payments from the United States or federal tax credits with
respect to such Bonds (such exclusion from gross income or entitlement to a subsidy or
tax credit being referred to herein as a "Tax Benefit") and subject to the provisions of
federal tax law that limit, among other things, the arrangements permitted with respect to
the sale, assignment, delegation, or other disposition of Project Entitlement Percentages
of Project capacity and/or energy, or environmental and other associated attributes of
the Project. Each Project Participant shall comply with the covenants relating to Tax
Benefits contained in the Bond Resolutions, including the limitations on private use
permitted under such covenants as if the Project Participant had made such covenant
with respect to its Project Entitlement Percentage of Project capacity and energy. No
sale, assignment, delegation or other disposition of all or any portion of a Project
Participant's rights or obligation under this Agreement, including Project Entitlement
Percentages of Project capacity and/or energy, or environmental and other Project
attributes, that have been financed in whole or part with Bonds which have a Tax Benefit
shall be effective until: (i) such Project Participant shall have given prior written notice
thereof to NCPA; and (ii) NCPA's bond counsel shall have rendered an opinion to the
effect that (A) such sale, assignment, delegation or other drsposition wi I I not adversely
affect the Tax Benefits associated with such Bonds; and (B) such sale, assignment,
delegation or other disposition is within any private use restriction or other limitation
with respect to the Tax Benefits associated with such Bonds applying such restrictions
and other limitations solely to the Proj ect Participant's Proj ect Entitlement Percentage of
Project capacity and energy and not to the Project as a whole. Notwithstanding the
immediately preceding sentence, each Project Participant may, without obtaining such
bond counsel opinion, sell, assign, delegate or make such other disposition to which it is
entitled hereunder in a transaction which complies with tax -related guidelines established
by the NCPA Commission from time to time which guidelines have been approved by
NCPA's bond counsel."
6. The Original Agreement is hereby supplemented by adding a new Section 19 thereto
to read as follows:
"19. "In -lieu" JPA Cost Assessment for Non -Members. Project Participants
may not necessarily be members of NCPA. NCPA members pay a joint powers
agreement cost assessment for NCPA administrative costs, pursuant to the joint powers
agreement by which NCPA is formed, and non-NCPA member Project Participants
hereby likewise agree to pay for a portion of those costs, but only as applied to the non-
GEOTHERMALTHIRD PHASE AMENDMENTTWO 5
Execution Version
NCPA member Project Participant's Project Entitlement Percentage of energy produced
on behalf of the Project Participant. In addition to other payments required by this
Agreement, non-NCPA member Project Participants shall pay the annual "in-lieu"JPA
Cost Assessment, invoiced by NCPA in twelve (12) equal billings, which will be
separately identified for each non-NCPA member Project Participant. If a non-NCPA
member Project Participant later becomes an NCPA member, such Project Participant
shall no longer be required to pay the in -lieu JPA Cost Assessment. If an NCPA
member Project Participant later withdraws from NCPA, and is no longer an NCPA
member, such Project Participant will thereafter be subject to the in-lieuJPA Cost
Assessment as described in this section.
The In -lieu JPA Cost Assessment shall be:
In-lieuJPA Cost Assessment = QPA Cost Assessment Rate) x (MWh of Project energy
produced on behalf of the Project Participant in the prior calendar year as metered at the
point of delivery)
The "JPA Cost Assessment Rate" shall be the amount per MWh charged to NCPA
members in any given year by the NCPA Commission as a JPA assessment pursuant to
Article IV section 3(a) of the Amended and Restated Northern California Power Agency
Joint Powers Agreement, and shall in no event exceed 15 cents per megawatt hour."
7. The proviso contained in Section 7(d) of the Agreement is hereby amended to read as
follows:
"provided, however, that the sum of such increases for any nondefaulting Project
Participant shall not exceed, without the written consent of such nondefaulting Project
Participant, an accumulated maximum of 25% of the nondefaulting Project Participant's
Proj ect Entitlement Percentage set forth in Appendix A as in effect on April 1, 2011."
8. Section I l(e) of the Original Agreement is hereby amended in its entirety to read as
follows:
"Any Project Participant may veto a discretionary action of the Project
Participants relating to the Project that was not taken by a 65% or greater Project
Entitlement Percentage vote within 10 days following mailing of notice of such Proj ect
Participants' action by giving written notice of the veto to NCPA and the other Project
Participants unless at a meeting of the NCPA Commission called for the purpose of
considering the veto and held within 30 days after such veto notice, the holders of 65%
or greater of Project Entitlement Percentages shall vote to override the veto."
9. Subsection (a), (b) and (c) of Section 12 of the Original Agreement are hereby deleted.
Subsection (d) of Section 12 of the Original Agreement is hereby amended by deleting the
subsection designation (d) and amending the language of former subsection (d) in its entirety to
read as follows:
GEOTHERMALTH RD PHASE AMENDMENT TWO 6
Execution Version
"The term of this Agreement commenced on December 14,1983. The Term of
this Agreement shall continue until the later of: (i) the expiration of the useful life of the
Project, or (ii) the date on which all Bonds issued have been retired, or full provision
made for their retirement, including interest until their retirement date. In the event of
the termination of the existence of NCPA prior to the termination of this Agreement, it
is the intent of the Project Participants that this Agreement continue as an agreement
among the Proj ect Participants with the Proj ect Participants performing the duties and
obligations of NCPA as a group."
10. Section 14 of the Original Agreement is hereby amended in its entirety to read as
follows:
"This Agreement is a service schedule and a third phase agreement attached to
and incorporated into the Facilities Agreement by and among the Project Participants
and NCPA. "
11. By execution of this Amendment Number Two, TID shall be deemed to have
executed the Agreement and be considered a Project Participant for all purposes of the
Agreement.
12. Except as provided in this Amendment Number Two, the Original Agreement shall
remain in full force and effect.
13. This Amendment Number Two may be executed in several counterparts, all or any
of which shall be regarded for all purposes as one original and shall constitute and be but one
and the same instrument.
IN WITNESS WHEREOF, each Project Participant has executed this Amendment
Number Two with the approval of its governing body and NCPA has executed this Amendment
Number Two in accordance with the authorization of its Commission.
NORTHERN CALIFORNIA POWER AGENCY
Approved as to form:
CITY OF ALAMEDA CITY OF BIGGS
By: By:
Approved as to form: Approved as to form:
GEOTHERMALTHIRD PHASE AMENDMENT TWO %
Execution Version
CITY OF GRIDLEY
Approved as to form:
CITY OF HEALDSBURG
By:
Approved as to form:
CITY OF LODI CITY OF LOMPOC
By: By:
Approved as to form: Approved as to form:
CITY OF PALO ALTO
By:
Approved as to form:
CITY OF SANTA CLARA
Approved as to form:
PLUMAS-SIERRA RURAL
ELECTRIC COOPERATIVE
By:
Approved as to form:
CITY OF ROSEVILLE
Approved as to form:
CITY OF UKLAH
Approved as to form:
TURLOCK IRRIGATION DISTRICT
By:
Approved as to form:
GEOTHERMALTHIRD PHASE AMENDMENT TWO 8
Execution Version
Exhibit 1
APPENDIX A
In effect April 1, 2011
SCHEDULE OF PROJECTPARTICIPANTSAND PROJECTENTITLEMENT
PERCENTAGES
PROJECT
PARTICIPANT
City of Alameda
City of Biggs
City of Gridley*
City of Healdsburg
City of Lodi
City of Lompoc
City of Palo Alto*
City of Roseville
City of Santa Clara
City of Ukiah
Plumas Sierra Rural
Electric Cooperative*
Turlock Irrigation
District"
TOTALS
PROJECT NO. 2
ENTITLEMENT
PERCENTAGE
14.994%
0.000%
0.334%
3.252%
14.560%
3.266%
0.000%
3.252%
54.651%
4.972%
0.719%
0.000%
100.000%
EAST BLOCK
ENTITLEMENT
PERCENTAGE
18.771%
0.454%
0.338%
4.096%
6.000%
4.096%
0.000%
12.514%
34.13%
6.257%
0.683%
12.661%
100.000%
PROJECT
ENTITLEMENT
PERCENTAGE
16.8825%
0.227%
0.336%
3.674%
10.28%
3.681%
0.000%
7.883%
44.3905%
5.6145%
0.701%
6.3305%
100.000%
* Pursuant to Section 5(fl of the Agreement, the City of Gridley, the City of Palo Alto and the
Plumas Sierra Rural Electric Cooperative remain contingently and secondarily responsible for
all payment obligations of Turlock Irrigation District while the 2009 Series A Bonds remain
outstanding.
1590958.2
GEOTHERMALTHIRD PHASEAMENDMENTTWO 9
Execution Version
EXHIBIT D
AMENDED AND RESTATED
GEOTHERMAL PROJECT OPERATING AGREEMENT
BETWEEN
NORTHERN CALIFORNIA POWERAGENCY
.Lm
THE GEOTHERMAL PROJECT PARTICIPANTS
DATEDAS OFApril 1,2011
TABLE OF CONTENTS
RECITALS............................................................................................................ 4
AGREEMENT....................................................................................................... 6
Definitions......................................................................................................... 6
1.1 Agreement............................................................................................... 6
12 Cost-Effective.......................................................................................... 6
1.3 Efficiency................................................................................................. 7
1.4 Facilities Agreement................................................................................ 7
1.5 Facilities Committee................................................................................ 7
1.6 Legal Notice............................................................................................. 7
1.7 Modified Operational Plan........................................................................ 7
1.8 NCPA Management Services Costs ........................................................ 7
1.9 Operating Entity....................................................................................... 7
1.10 Operational Plan.................................................................................... 8
1.11 Power Plant...........................................................................................
8
1.12 Project....................................................................................................
8
1.13 Project Costs.........................................................................................
8
1.14 Project Entitlement Percentage.............................................................
8
1.15 Project No. 2 MemberAgreement.........................................................
8
1.16 Project No. 3 Third Phase Agreement ...................................................
9
1.17 Project Participants................................................................................
9
1.18 Prudent Utility Practice...........................................................................
9
1.19 Steamfield..............................................................................................
9
1.20 Substantial Deviation.............................................................................
9
Project as Single Shared Resource....................................................................
10
Term; Amendment; Termination of PriorAgreement..........................................
10
ContinuingMonitoring.........................................................................................
10
PlanAdoption.....................................................................................................
10
Planning..............................................................................................................
10
Steamfield and Power Plant Operations.............................................................
11
ProjectCosts......................................................................................................
11
2
Surplus Capacity and Energy Sales....................................................................
12
ProjectAnnualBudget........................................................................................
12
Project Participant Direction and Review............................................................
13
Scheduling..........................................................................................................
15
Reduced Steam Availability................................................................................
16
Reduced Transmission Capacity........................................................................
16
Power Plant Repair. Retirement. Replacementand Enhancement ....................
16
Power Plant Production Reduction. Suspension or Retirement ..........................
16
Notices................................................................................................................
17
FacilitiesAgreement...........................................................................................
18
Project Agreements—Precedence. Interpretation and Severability ....................
18
Agreements Terminated by this Agreement........................................................
19
Counterparts......................................................... Error! Bookmark not defined.
3
AMENDED AND RESTATED
GEOTHERMAL PROJECT OPERATING AGREEMENT
BETWEEN
NORTHERN CALIFORNIA POWERAGENCY
AND
THE GEOTHERMAL PROJECT PARTICIPANTS
This Agreement dated as of April 1, 2011 ("Effective Date"), by and among
the Northern California PowerAgency (NCPA), a joint powers agency and public
entity of the State of California, and certain of its Members, the Cities of
Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa
Clara, and Ukiah, the Turlock Irrigation District (TID), and the Plumas-Sierra
Rural Electric Cooperative (each of the foregoing being referred to individually as
a "Party" and all of the foregoing being referred to as the "Parties"), is made with
reference to these
RECITALS:
A. The Project No. 2 MemberAgreement provided for the construction,
operation, and financing of NCPA Geothermal Generating Project No. 2,
consisting of two nameplate -rated 55 -megawatt geothermal electric generating
units ("Project No. 2").
B. The Project No. 3 Third Phase Agreement provided for: (i) the
construction, operation, and financing of NCPA Geothermal Generating Project
No. 3, consisting of two nameplate -rated 55 -megawatt geothermal electric
generating units on the East Block ("Project No. Y); (ii) refinancing of Project No.
2; (iii)sharing of resources, facilities and costs between and among Project No. 2
and Project No. 3; and (iv) defining the term "Project" to include both Project No.
2 and Project No. 3.
C. Pursuantto section 4 of the Project No. 3 Third Phase Agreement, NCPA
agreed to provide to each Project Participant, and each Project Participant
agreed to take, or cause to be taken, such participant's Project Entitlement
Percentage of the capacity and energy of the Project.
D. Section 16 of the Project No. 3 Third Phase Agreement provides that
NCPA may, in accordance with the provisions on Project Participant direction
and review in section 11, enter into agreements for the transfer or sharing of
resources, facilities, and costs between and among the Project No. 3 and other
entities and projects (including without limitation Project No. 2), which
agreements may provide, among other things, for the transfer or sharing of
steam, transmission facilities, generating equipment, spare parts, staff,
4
insurance, taxes and other payments, and for the integrated operation of the
Project No. 3 and Project No. 2 by NCPA.
E. Section 16(c) of the Project No. 3 Third Phase Agreement constitutes
approval by the participants in Project No. 2 of, among other things, equal
sharing between Project No. 2 and the East Block portion of the Project of steam
from the Project No. 2 area and the East Block area.
F. Section 16(d) of the Project No. 3 Third Phase Agreement provides in part
that, subject to the specific terms of contemplated agreements for transfer or
sharing of resources, facilities and costs in subsections (a) and (b) of section 16,
Project No. 2 and the East Block portion of Project No. 3 shall be conducted for
the mutual benefit of all participants therein.
G. On July 28, 1983, NCPA on behalf of the Project Participants in Project
No. 2 and Project No. 3, declared in a Memorandum of Understanding Re: NCPA
Geothermal Projects, approved by the Project Participants for Project No. 2 and
Project No. 3 (1983 Memorandum of Understanding"), voting separately and in
accordancewith the procedures required of them, that the Project Participants
would negotiate a further agreement as authorized by the Project No. 3 Third
Phase Agreement, which would include concepts with reference to the operation
of the two projects.
H. In the Agreement for Transfer of Rights to Capacity and Energy of
Geothermal Generating Project Number 3, dated as of October 1, 1984, ("the
First Transfer Agreement"), as supplemented by the "Agreement Between the
Turlock Irrigation District and the City of Palo Alto", dated December 30, 1985
("the Second Transfer Agreement"), TI acquired a permanent transferred East
Block Entitlement Percentage of 12.661 %, consisting of 12.316% from Palo Alto;
0.118%from Gridley; and 0.227% from Plumas-Sierra Rural Electric
Cooperative.
I. On August 30, 1985 NCPA purchased the two federal geothermal
resources leases which are the source of steam supply for all four units of the
Project.
J. Project Participants in Project No. 3 have acquired the interest of Project
Participants in Project No. 2 in the drill -rig funded by the Development Fund
pursuant to the Memorandum of Understanding Re: NCPA Geothermal Projects
dated July 28, 1983.
K. The NCPA FacilitiesAgreement, dated September 22, 1993, was entered
into by the Cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo
Alto, Redding, Roseville, Santa Clara, and Ukiah, and the Plumas-Sierra Rural
Electric Cooperative. TID approved the Facilities Agreement on August 29,
1995.
5
L. In accordance with the Project No. 3 Third Phase Agreement and the
1983 Memorandum of Understanding, NCPA and the Project Participants
consider the Project as a single shared resource, because of the finite nature of
the steam reservoir, and have previously entered into a Geothermal Operating
Agreement dated as of October 29 ,1990 to provide the means to manage
Steamfield usage, to optimize that usage, and make appropriate reflections
thereof in cost accounting and budgeting, to modify or clarify some of the
understandings among them, including certain understandings in the
Memorandum of Understanding Re: NCPA Geothermal Projects, in order to
achieve those objectives, and to supersede the Memorandum of Understanding.
M. The Parties by this Agreement now intend to amend, restate and
supersede the prior Geothermal Project Operating Agreement.
NOW THEREFORE, in consideration of the premises described in the
recitals, and of the promises, covenants, terms and conditions in this Agreement,
NCPA and the Project Participants do hereby enter into this
AGREEMENT:
1. Definitions. Unless the context requires otherwise, the definitions
contained in the Project No. 3 Third Phase Agreement shall be used in this
Agreement and the additional capitalized terms in this Agreement shall have the
following meanings:
1.1. "Agreement" means this Amended and Restated Geothermal Project
Operating Agreement by and among NCPA and the Project Participants.
1.2. "Bid" means an offer for the Supply or Demand of Energy or Ancillary
Services, including Self- Schedules, submitted by Scheduling Coordinatorsfor
specific resources, conveyed through several components that apply differently
to the different types of service offered to or demanded from any of the CAISO
markets. All capitalized terms in this section 1.2 have the meaning as defined in
Appendix A — Master Definition Supplement of the CAISO Tariff, and are
implemented in accordance with Article 30 — Bid and Self Schedule Submission
for All CAISO Markets, as the referenced sections of CAISO Tariff may be
amended from time to time.
1.3. "CAISO" means the California Independent System Operator, a non-
profit public benefit corporation established by AB1890 which acts as a balancing
authority for the California electrical grid and wholesale electric markets, or a
successor agency or entity.
1.4. "Cost -Effective" means that the benefits to the Project outweigh the
costs taking into account the uncertainty of projected costs and benefits and the
6
time value of money
1.5. "Efficiency" means the ratio of the net electric energy produced by a
generator to the energy of the steam supplied to that generator from the
steamfield.
1.6. "Facilities Agreement" means the agreement between NCPA and
certain of its Members and non-NCPA members, including the Project
Participants, dated as of September 22, 1993 and providing for the manner in
which NCPA operates projects on behalf of project participants, as such
agreement exists or may hereafter be amended.
1.7. "Facilities Committee" means the committee of project participants in
the various NCPA projects, including the Project, established by Article 4 of the
Facilities Agreement.
1.8. "Fiscal Year" means a one year period ending on June 30 of each
year.
1.9. "Legal Notice" means sufficient notice under the California open
meeting laws.
1.10. "Modified Operational Plan" means an Operational Plan amended
by the NCPA Commission upon the advice of the Facilities Committee from time
to time.
1.1 V'NCPA Administrative Services Costs" means that portion of Project
Cost reflected in the NCPA Annual Budget including administrative, general and
occupancy costs and expenses, including those costs and expenses associated
with the operations, direction and supervision of the general affairs and activities
of NCPA, general management, treasury operations, accounting, budgeting,
payroll, human resources, information technology, facilities management,
salaries and wages (including retirement benefits) of employees, facility
operation and maintenance costs, taxes and payments in lieu of taxes (if any),
insurance premiums, fees for legal, engineering, financial and other services,
power management costs, scheduling and load dispatch costs, energy risk
management and settlements costs that are charged directly or apportioned to
the development, financing, construction, improvement, maintenance, operation
or decommissioning of the Project. The cost of NCPA legislative and regulatory
efforts, unless directly related to the Project, shall not be considered to be NCPA
Administrative Services Costs.
1.12. "Operating Entity" means an operating entity as defined in Facilities
Schedule FA 3.02 of the Facilities Agreement.
7
1.13. "Operational Plan" means the five or more -year plan for the operation
of the Steamfield and Power Plants adopted pursuant to this Agreement. An
Operational Plan shall set objectives and parameters for operation of the
Steamfield and the Power Plants. The Operational Plan (i) shall establish the
maximum, and otherwise describe the, annual and monthly capacity and energy
output of the Power Plant and the associated Project Participants' annual
capacity and energy entitlement, based on Project Entitlement Percentages and
(ii) shall include operating guidelines for Power Plant operations`and scheduling,
Steamfield operations and development, minimum operating levels, Project
maintenance schedules, Project enhancement schedules, and related cost
information. The Operational Plan shall provide for avoiding, correcting, and
addressing Substantial Deviations. The general goals of an Operational Plan
shall be the Cost -Effective optimization of Steamfield and Power Plant usage.
1.14."Power Plant" means one or more of the electric generating units at
the Project originally nameplate -rated at 55 megawatts each.
1.15. "Project" means Project No. 2 and Project No. 3, including, but not
limited to, the Steamfield and the Power Plants, and all improvements, including
reclaimed water facilities, pipelines, appurtenances and pumping equipment
installed to arrest steamfield degradation, photovoltaic systems, and other
existing and future additions, betterments, equipment, materials, and
appurtenances necessary or convenient for the generation, transformation, and
transmission of electric power (including utilization of the NCPA Tap Lines and
the Castle Rock -Lakeville 230kV Transmission lines) from Project No. 2 and
Project No. 3 controlled or funded by NCPA.
1.16. "Project Costs" means all the costs described in Section 5a of the
Project No. 3 Third Phase Agreement and Section 8 of this Agreement.
1.17. "Project Entitlement Percentage" means, with respect to each
Project Participant, the percentage so identified and set forth opposite the name
of such Project Participant in Appendix A to the Project No. 3 Third Phase
Agreement, as amended, as such percentage shall be revised from time to time
in accordance with sections 7(d) and 13 thereof. "East Block Entitlement
Percentage" and "Project No. 2 Entitlement Percentage" mean, with respect to
each Project Participant the percentages so identified and set forth opposite the
name of such Project Participant in the same Appendix A, as such percentages
shall be revised from time to time in accordance with sections 7(d) and 13
thereof.
1.18. "Project No. 2 Member Agreement" means the "Amended and
Restated Agreement for Construction, Operation and Financing of NCPA
Geothermal Generating Unit # 2 Project," dated as of January 1, 1980,as
supplemented by the "Shell Member Supplement 1" dated as of May 1, 1980
and the "Shell Member Supplement 2" dated as of July 1, 1980, by and among
8
NCPA and certain of its Members, to wit: the Cities of Alameda, Biggs, Gridley,
Healdsburg, Lodi, Lompoc, Roseville, Santa Clara, and Ukiah, and the Plumas-
Sierra Rural Electric Cooperative, which provided for the construction, operation,
and financing of Project No. 2.
1.19. "Project No. 3 Third Phase Agreement" means the Agreementfor
Construction, Operation and Financing of Geothermal Generating Project
Number 3, dated as of July 1, 1983, as amended and supplemented, by and
among NCPA and certain of its Members, to wit: the Cities of Alameda, Biggs,
Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa Clara, and Ukiah,
and the Plumas-Sierra Rural Electric Cooperative, which provided for the
construction, operation, and financing of Project No. 3.
1.20. "Project Participants" means all of the signatories to this
Agreement, excluding NCPA, each of whom is also a signatory to the Project No.
3 Third Phase Agreement.
1.21. "Prudent Utility Practice" means any of the practices, methods and
acts engaged in or approved by a significant portion of the electric utility industry
during the relevant time period, or any of the practices, methods and acts which,
in the exercise of reasonable judgment in light of the facts known at the time the
decision was made, could have been expected to accomplish the desired result
at the lowest reasonable cost consistent with Northern American Electric
Reliability Corporation ("NERC") and Western Electric Coordinating Council
("WECC") approved business practices, reliability, safety and expedition. Prudent
Utility Practice is not intended to be limited to the optimum practice, method, or
act to the exclusion of all others, but rather to be acceptable practices, methods,
or acts generally accepted in the WECC region.
1.22. "Self -Schedule" means the Bid component that indicates the
quantities in megawatt hours ("MWhs") with no specification of a price that the
Scheduling Coordinator is submitting to the CAISO, which indicates that the
Scheduling Coordinator is a Price Taker, Regulatory Must Run Generation or
Regulatory Must Take Generation, which includes existing transmission contracts
(" ETC') and transmission ownership rights ("TOR") Self- Schedules and Self -
Schedules for Converted Rights. All Capitalized terms in this section 1.21 have
the meaning as defined in Appendix A — Master Definition Supplement of the
CAISO Tariff as that Tariff may be amended from time to time.
1.23. "Steamfield" means the geothermal steam resource available to the
Project from federal Geothermal Resources Leases CA 949 and CA 950 held by
NCPA, and other arrangements which may make a geothermal steam resource
available to the Project.
1.24. "Substantial Deviation" means a variation from a major objective or
parameter in an Operational Plan or Modified Operational Plan of plus or minus
9
five (5%) percent or more, unless otherwise provided in a plan.
2 Project as Single Shared Resource. The Project shall be considered as a
single shared resource to be operated in accordance with the Project No. 3 Third
Phase Agreement and this Agreement. This Agreement implements Article 16 of
the Project No. 3 Third Phase Agreement and supersedes and replaces the 1983
Memorandum of Understanding and the 1990 Geothermal Project Operating
Agreement.
3. Term; Amendment; Termination of PriorAgreement
a. This Agreement shall remain in force and effect from the Effective
Date until this Agreement is superseded by another agreement among the same
parties for the operation of the Project as a facility or until the Project Participants
terminate or cancel this Agreement with the same formality as its execution, as
provided in this section 3.
b. Any action to amend, supersede, terminate or cancel this Agreement
shall require the written consent and approval of all Project Participants.
c. The 1983 Memorandum of Understanding and the 1990 Geothermal
Project Operating Agreement are hereby terminated and superseded by this
Agreement.
4. Periodic Reporting. NCPA shall report to the Project Participants each
month in a form or forms approved by the Facilities Committee, on the
operational status of the Steamfield and the Power Plants and attainment of the
Operational Plan and any Modified Operational Plan, such report or reports at a
minimum shall contain a monthly and Fiscal Year-to-date summary of activities,
expenditures compared to the Annual Budget, and monthly and Fiscal Year-to-
date summary of plant availability, energy production, capacity levels, minimum
and maximum operating levels compared to forecast.
5. OperafionalPlanAdoption. In cooperation with the Project Participants,
NCPA staff shall each year prepare a draft Operational Plans for the Projectfor
review by the Facilities Committee and adoption by the NCPA Commission.
Adoption of the annual Operation Plan by the NCPA Commission shall occur not
laterthan September30th of each year, unless otherwise agreed by the Facilities
Committee NCPA shall conduct Steamfield and Power Plant operations in
accordance with the adopted Operational Plan (or any adopted Modified
Operational Plan). Provided, however, that NCPA shall have the authority to
make or adjust to a Substantial Deviation as may be required by Prudent Utility
Practice.
6. Modified Operational Plan. In cooperation with the Project Participants,
NCPA staff shall prepare Modified Operational Plans as may be required and
10
shall present such Modified Operational Plan to the Facilities Committee. If the
Facilities Committee determines to recommend changes in the Operational Plan,
the Facilities Committee shall present a draft Modified Operational Plan to the
NCPA Commission as soon as practical which may adopt such Modified
Operational Plan.
7. Steamfield and Power Planf Operations. Pursuant to section 11 of the
Project No. 3 Third Phase Agreement, entitled Member Direction and Review,
the Project Participants do hereby direct NCPA to operate the Steamfield and
Power Plants in accordance with Operational Plans and Modified Operational
Plans adopted by the NCPA Commission, and as a single shared resource
between Project No. 2 and Project No. 3. The Project Participants may schedule
energy in compliance with such plans. The Project Participants may reduce, but
not increase, the amount of their scheduled monthly energy subject to limitations
specified in the Operation Plan. For example, for CY 2011, the limitation is 15
Megawattstotal, allocated among all Project Participants in any scheduling hour.
If NCPA encounters a Substantial Deviation or determines there is a need to
make a Substantial Deviation from an Operational Plan or Modified Operational
Plan, NCPA staff shall take such action as may be required by Prudent Utility
Practice and promptly notify the Facilities Committee and the Project Participants
in writing. NCPA staff shall give such prompt notification of any Substantial
Deviation which NCPA: (i) determines needs to be taken or made at least seven
(7) days in advance, unless emergency conditions and Prudent Utility Practice
require action beforehand; or (ii) encounters, within seven (7) days of the
Substantial Deviation. Special meetings of the Facilities Committee may be
called to consider the Substantial Deviation and such changes of the Operational
Plan and the Modified Operational Plan as may be appropriate under the
circumstances.
8. Project Costs.
a. NCPA shall account for Project Costs under the Federal Energy
Regulatory Commission Uniform System of Accounts for Public Utilities Subject
to the Federal Power Act. Project Cost elements classified as fixed costs shall
be assigned to capacity and variable costs shall be assigned to energy. Fixed
and variable costs shall be determined in accordance with the schedules
attached to the Facilities Agreement. The variable price for steam and such
other costs which vary with energy output shall be allocated to the Project
Participants at the same price per unit of energy output without regard to which
Power Plant is the source of the energy. Project Participants shall pay for
capacity and energy from the Project and Project Costs associated with the
Project in accordance with this Agreement and the Project No. 3 Third Phase
Agreement.
b. The Parties acknowledge that section 5(a) of the Project No. 3 Third
Phase Agreement provides, in part, that:
11
"NCPA shall fix charges to the Project Participants to produce revenues
to NCPA from the Project to meet the costs described in (i) and (ii) above
based on East Block Entitlement Percentages applied to such costs
allocable to the East Block portion of the Project and Project No. 2
Entitlement Percentages applied to such costs allocable to the Project No.
2 portion of the Project; and to meet the costs described in (iii) above ,
based on the anticipated energy sales of the East Block portion of the
Project and, on the anticipated energy sales of the Project No. 2 portion of
the Project, respectively,"
and the Parties further acknowledgethat such provision is not consistentwith the
treatment of Project No. 2 and Project No. 3 as a single resource as provided in
this Agreement. Solely among themselves and NCPA, the Project Participants
waive as the price for steam and the costs of Steamfield operation, maintenance,
and development that sentence of section 5(a) of the Project No. 3 Third Phase
Agreement as recited above,
C. The annual budget shall reflect monthly estimates of fixed and
variable costs of the Project. Monthly billings by NCPA to the Project
Participants shall compare the actual fixed and variable costs with the annual
budget estimates.
9. Surplus Capacity and Energy Sales.
a. Section 9 of the Project No. 3 Third Phase Agreement, which relates
to sales of surplus capacity and energy by NCPA upon the request of a Project
Participant, does not apply to any transfers under Section 8 of the Project No. 3
Third Phase Agreement. The term "rights" under Section 8 shall be deemed to
include attributes as defined in Section 17 of the Project No. 3 Third Phase
Agreement.
b. When, pursuant to a Project Participant's request, NCPA sells surplus
energy or capacity on the day ahead of the delivery date or during the active day
for delivery, prices for capacity, energy, and ancillary services (all as defined in
the CAISO tariff shall be established at the Geothermal Project generator
location in accordancewith the Bid and Self -Schedule provisions contained in the
CAISO tariff for the market into which the capacity, energy and ancillary services
were sold. When NCPA sells surplus energy or capacity for Project Participants
on any other forward basis, the price will be as specified by the Project
Participant selling the surplus with such pricing communicated to NCPA in
advance of the transaction scheduling date and the Project Participant shall
assume responsibility for any additional CAISO costs, including those identified
in Section 12(b).
10. Project Annual Budget.
121
a. The Project No. 3 Third Phase Agreement requires, in section 6, that
prior to the beginning of each Fiscal Year, the NCPA Commission will adopt an
annual budget for the Fiscal Year covering all costs and expenses relating to the
Project.
The Project annual budget may be part of a multi-year budget. NCPA shall use
the same cost allocation formula or method for allocating each category of NCPA
Administrative Costs to the Project and other NCPA projects and programs.
Such cost allocation formulas and methodologies shall be based upon cost
causation principles and provide for fair and equitable allocation of such costs to
the Project and avoid placing an unfair burden of such costs on the Project.
The existing cost allocation methodologyfor allocating power management costs,
including risk management, settlements, and dispatching and scheduling costs to
the Project resultingfrom the NCPA Power Management Cost Allocation Study
(known as "the Nexant Study") shall continue in effect until changed by vote of
the NCPA Commission. Any change to that methodology shall be based on cost
causation principles and shall not discriminate against any Project Participant.
If a non-NCPA member Project Participant pays an In -lieu JPA Cost Assessment
(pursuant to section 19 of the Project No. 3 Third Phase Agreement), then
payment of such assessment shall be deemed to cover all costs incurred by
NCPA which are not included within the Project annual budget or NCPA
Administrative Services Costs or which in any way relates to the non-NCPA
member's activities or characteristics not related to its participation in the Project
(including, but not limited to, the amount of the non-NCPA member's native
electric loads or demands or revenues or any other similar characteristic). No
other non -Project Costs shall be assessed to a non-NCPA member without its
written consent. Nothing herein is intended in anyway to limit or restrict the uses
to which the proceeds from the In -lieu JPA Cost Assessment may be applied by
NCPA.
b. The annual budget, as it relates to the Project and any amendment
affecting Project Costs, shall not go into effect until it has been reviewed by the
Facilities Committee and received the approval of the NCPA Commission.
11. Project Participant Direction and Review.
a. Project Participant Direction and Review in General.
L All directionsto NCPAwith respectto the Project, and all meetings
of NCPA in connection therewith, shall be as provided in accordance
with section 11 of the Project No. 3 Third Phase Agreement and this
Agreement.
13
ii. NCPA shall comply with all lawful directions of the Project
Participants with respectto the Project, including relating to this
Agreement, to the fullest extent authorized by law. Actions,
authorizations and approvals of Project Participants, including giving
directions to NCPA, shall be taken only at meetings of authorized
representatives of Project Participants sitting as the NCPA
Commission or the Facilities Committee duly called and held pursuant
to applicable law.
b. Participation at NCPA Commission Meetings.
L A non-NCPA Member Project Participant may not vote or
participate directly as if it had an NCPA Commission representative
in meetings of the NCPA Commission, other than as a member of
the public or as otherwise permitted by this section.
. Notwithstanding the provisions of subsection (c) of Section 11 of
the Project No. 3 Third Phase Agreement, Article 8(b) of the
Amended and Restated Northern California PowerAgency Joint
Powers Agreement, or sub -subsection b (i) of this section, at any
meeting of the NCPA Commission upon the demand of any Project
Participant, including a non-NCPA Member Project Participant, the
vote on any issue relating to the Project shall be by Project
Entitlement Percentage. In any case where such a demand is
made, sixty-five (65%) percent or greater affirmative vote shall be
required to take action.
iii. Nothing herein is intended to prevent or prohibitTID from directing
the vote of the NCPA Commission representatives for the City of
Palo Alto, the City of Gridley, and the Plumas-Sierra Rural Electric
Cooperative to vote TI D's Permanent Transferred East Block
Entitlement Percentages in Project No. 3 acquired from those
agencies in the manner directed by TO pursuantto section 21(b).
iv. Any Project Participant, including a non-NCPA member Project
Participant, may veto a discretionary action of the Project
Participants relating to the Project that was not taken by a sixty-five
(65%) percent or greater Project Entitlement Percentage vote
within 10 days following mailing of notice of such action, by giving
written notice of veto to NCPA and other Project Participants,
unless at a meeting of the NCPA Commissioners called for the
purpose of considering the veto and held within 30 days after such
veto notice, the holders of 65% or greater of the Project
Entitlement Percentage shall vote to override the veto, The sixty-
five (65%) percent of the Project Entitlement Percentage specified
in this subsection shall be reduced by the amount that the Project
14
Entitlement Percentage of any Project Participant shall exceed
thirty-five (35%) but such sixty-five (65%) shall not be reduced
below a majority in interest.
c. Representation of Project Participants on Facilities Committee. Each
Project Participant, whether or not an NCPA member, shall be entitled to
designate one member of the Facilities Committee, who shall have voting rights
only with respect to matters relating to the Project to provide it representation
with respect to the Project. The Facilities Committee shall advise NCPA on
matters relating to the Project in accordance with the terms of the Facilities
Agreement, and shall have such other authority as may be delegated to it by the
NCPA Commission or the Project Participants.
The Parties agree to cooperate in the amendment of the facilities
Agreement to the extent necessary to effectuate this subsection.
d. Rights of Non-NCPA Member Project Participants.
L Meetings in General. Exceptfor meetings of the NCPA
Commission covered in Subsection (b) and of the Facilities
Committee covered in Subsection (c), attendance and participation
at all other NCPA meetings by any Project Participant that is not a
NCPA member is limited to those meetings which are subject to the
Ralph M. Brown Act.
ii. NCPA shall ensure that all Project Participants, including Project
Participants that are not NCPA members, timely receive copies of
notices, agendas, staff reports (relating to the Project), and minutes
of any meeting of any committee, subcommittee, or working group
which is subject to the Ralph M. Brown Act and at which the Project
is an agenda item. In addition, all Project Participants, including
Project Participants that are not NCPA members, have the right to
inspect and to obtain copies of documents that are public records
pursuant to the California Public RecordsAct.
12. Scheduling
a. Each Operating Entity may direct NCPAto Bid, including Self -Schedule, its
Project Entitlement Percentage of the Project in any manner and for delivery to
any scheduling point on the CAISO controlled grid, provided that such Bid,
including Self -Schedule, shall be consistent with licensing and regulatory criteria,
including obligations of NCPA under interconnection agreements, the CAISO
tariff and the NCPA Second Amended and Restated Metered Subsystem
Aggregator Agreement ("MSSA Agreement"), as each of those documents may
be amended from time to time.
15
b. The Operating Entity directing NCPA to Bid, including Self -Schedule, its
Project Entitlement Percentage of the Project to any scheduling point on the
CAISO controlled grid, is financially responsiblefor all costs incurred by NCPA in
complying with such direction, including but not limited to the costs of losses,
congestion, scheduling fees and any other charges allocated to NCPA by the
CAISO related to NCPAs obligation to Bid and deliver the Operating Entity's
Project Entitlement Percentage of the Project between the generator scheduling
point (i.e. point of interconnection)and the point of delivery requested by the
Operating Entity.
c. All Scheduling direction to NCPA by an Operating Entity shall utilize NCPAs
web services and be performed in accordancewith the procedures contained in
the NCPA Power Schedule Guide, as may be amended from time to time.
Provided, however, that until appropriate software (as reasonably determined by
NCPA's Assistant General Manager for Power Management) is available to TID,
TID may Bid or Self -Schedule by providing written notice or direction to NCPA via
fax or electronic means.
13. Reduced Steam Availability. In the event of an extended period of reduced
steam availability, the available steam from the Steamfield shall be allocated to
maximize the Efficiency of the Project, and operated pursuant to the Operational
Plan, or Modified Operational Plan, to best meet all Project Participant
requirements from the Project and to achieve the most Cost -Effective use of the
Project, within the objectives and parameters of such plans, so that available
capacity and energy are allocated to the Project Participants in accordance with
their Project Entitlement Percentages.
14. Reduced Transmission Capacity. In the event of an extended period of
reduced transmission capacity, the Power Plants shall be operated pursuant to
the Operational Plan, or Modified Operational Plan, to best meet all Project
Participant requirements from the Project and to achieve the most Cost -Effective
use of the Project, within the objectives and parameters of such plans, so that
available capacity and energy are allocated to the Project Participants in
accordance with their Project Entitlement Percentages.
15. Power Plant Repair, Retirement, Replacement and Enhancement. NCPA
shall allocate the costs of repair, retirement, replacement, or enhancement of the
Project to the Project Participants in accordance with their Project Entitlement
Percentages without regard to which part of the Projector Power Plant is
affected by the need for repair, retirement, replacement, or enhancement.
16. Power Plant Production Reduction, Suspension or Retirement. An
Operational Plan or a Modified Operational Plan may include objectives and
parameters for the reduction of production of any Power Plant, and the
suspension of production, or retirement of any Power Plant from service in the
Project. In the event of a long-term reduction or production, suspension, or
16
retirement of any Power Plant in the Project, (i) the selection of the Power Plant
for reduction, suspension, or retirement shall be made on the basis of which
remaining Power Plant or Power Plants will result in the most Cost -Effective
operation of the Project, and (ii)the Project Participants shall remain responsible
for any debt service remaining on Bonds issued to support the acquisition,
construction, completion, or refinancing of the Power Plants in accordance with
their Project No. 2 Entitlement Percentages and East Block Entitlement
Percentages, except as provided in section 14 of this Agreement. All other debt
service responsibility and costs, and the capacity and energy from the remaining
Power Plants shall be allocated to the Project Participants in accordance with
their Project Entitlement Percentages.
17. Notices. Notices shall be in writing and shall be delivered by hand effective
upon receipt or by over -night or express mail effective upon receipt or by
facsimile effective the first business day after receipt, addressed as follows:
NORTHERN CALIFORNIA POWER AGENCY
Attn: General Manager
651 Commerce Drive
Roseville, CA 95678
FAX (916) 783-7603
TURLOCK IRRIGATION DISTRICT
Attn: General Manager
333 E. Canal Drive
Turlock, CA 95381
FAX (209) 656-2143
CITY OF ALAMEDA CITY OF BIGGS
Attn: Utility Director Attn.: City Administrator
2000 Grand Street 465 "C" Street
Alameda, CA 94501 Biggs, CA 95917
FAX (510) 748-3956 FAX (530) 868-5239
CITY OF GRIDLEY CITY OF HEALDSBURG
Attn.: Utility Director Attn.: City Administrator
685 Kentucky St. 401 Grove St.
Gridley, CA 95948 Healdsburg, CA 95448
FAX (530) 846-3229 FAX (707) 431-2710
CITY OF LODI CITY OF LOMPOC
17
Attn.: Utility Director
1331 South Ham Lane
Lodi, CA 95242
FAX (209) 333-6839
CITY OF PALO ALTO
Attn: Directorof Utilities
250 Hamilton Avenue
Palo Alto, CA 94301
FAX (650) 321-0651
CITY OF SANTA CLARA
Attn: Utility Director
1500 Warburton Avenue
Santa Clara, CA 95050
FAX (408) 249-0217
Attn.: Utilities Director
P.O. Box 8001
100 Civic Center Plaza
Lompoc, CA 93438
FAX (805) 875-8399
CITY OF ROSEVILLE
Attn: Electric Utility Director
2090 Hilltop Circle
Roseville, CA 95747
FAX (916) 784-3797
CITY OF UKIAH
Attn.: Utility Director
300 Seminary Avenue
Ukiah, CA 95482
FAX (707) 463-6740
PLUMAS SIERRA RURAL ELECTRIC COOPERATIVE
Attn: General Manager
73233 Highway 70
Portola, CA 9612218.
FAX (530) 832-6070
Any Party to this Agreement may amend either its address for notice or facsimile
number at any time by providing written notice to the other Parties.
18. Facilities Agreement. This Agreement is a Facilities Schedule pursuant to
section 1.5 of the Facilities Agreement; provided, notwithstanding Section 21.2
of the Facilities Agreement, that this Facilities Schedule may not be amended
except in accordance with Section 3b of this Agreement.
19. Project Agreements—Precedence, Interpretation and Severability. This
Agreement is a further statement and modification of the agreements by and
among NCPA and the Project Participants in Project No. 2 Agreement, Project
No. 3 Third Phase Agreement, and the FaciIitiesAgreement, which is intended to
be harmonized with those agreements so as to eliminate conflict. This
Agreement shall not be deemed to modify or change any obligation of NCPA or
the Project Participants arising out of the Project No. 2 Agreement or the Project
No. 3 Third Phase Agreement to the holders of bonds, including but not limited to
the 2009 Series A Bonds relating to the Project. Nothing in this Agreement shall
in any way alter or diminish the obligations of the Project Participants pursuant to
IM
section 5(b) of the Project No. 3 Third Phase Agreement. In the event of a
conflict between those agreements and this Agreement which does not adversely
affect the rights of a holder of bonds, including the 2009 Series A Bonds, this
Agreement shall take precedence. In the event of a conflict between this
Agreement and the Facilities Agreement, this Agreement shall take precedence.
Any provision of this Agreement found invalid by a court of competentjurisdiction
shall be severed from this Agreement if the remaining provisions will effectuate
the intent of the parties.
20. Agreemenfs Terminated by this Agreement The following agreements
relating to the Project are hereby terminated:
a. The Turlock Transfer Agreement (the "First Transfer Agreement').
b. The letter agreement dated August 6, 1985 signed by TID and NCPA
with respectTID's rights underthe Turlock Transfer Agreement.
c. The "Agreement Between the Turlock Irrigation Districtand the City of
Palo Alto" dated December 30, 1985 (the "Second Transfer Agreement').
d. The "Layoff Equalization Agreement By and Between City of Biggs, City
of Gridley, City of Healdsburg, City of Lodi, Plumas-Sierra Rural Electric
Cooperative, City of Roseville, City of Palo Alto, and Turlock Irrigation District In
Support of the 1998 Hydroelectric and Geothermal Revenue Refunding Bonds of
the Northern California Power Agency," ("the Layoff Equalization Agreement')
with respect to the sharing of benefits from the refinancing of the Project and the
NCPA hydroelectric project, provides that it terminates upon termination of the
Turlock Transfer Agreement (referred to in the Layoff Equalization Agreement as
the "Layoff Agreement'). The Turlock Transfer Agreement is terminated by this
Agreement, and hence the Layoff EqualizationAgreement is also terminated.
21. Rights and Obligations under Me First and Second TransferAgreemenfs.
a. Notwithstanding the termination of the First and Second Transfer
Agreements pursuant to Section 20 of this Agreement, the Parties agree that the
City of Gridley, City of Palo Alto, and the Plumas-Sierra Rural Electric
Cooperative permanently transferred all of their rights, title, interests, and
benefits in the Permanent Transferred East Block Entitlement Percentage to TID
and that TID assumed all of the obligations, duties, and burdens associated with
the Permanent Transferred East Block Entitlement Percentage transferred to
TID, including but not limited to, financing, construction, operation, maintenance,
replacement, additions and betterments, and decommissioning costs associated
with the Permanent Transferred East Block Entitlement Percentage.
b. Under Section 11 of the First Transfer Agreement, the City of Gridley,
City of Palo Alto, and the Plumas-Sierra Rural Electric Cooperative agreed "that
19
the [TID] may vote at meetings of the Project Participants pursuantto Section 11
of the Third Phase Agreement as if it had the East Block Entitlement Percentage
equal to the Transferred East Block Entitlement Percentages, and the voting
rights of the Transferring Participants shall be reduced accordingly."
Notwithstanding the termination of the First and Second Transfer Agreements
pursuantto Section 20 of this Agreement, the City of Gridley, City of Palo Alto,
and the Plumas-Sierra Rural Electric Cooperative agree to vote at any NCPA
Commission meeting Tl D's Permanent Transferred East Block Entitlement
Percentages in Project No. 3 acquired from those agencies under the First and
Second Transfer Agreement in the manner directed by TID.
c. The Parties agree that nothing in this Section 21 is intended to apply to
the East Block Entitlement Percentages permanently retained by the City of
Gridley and the Plumas-Sierra Rural Electric Cooperative, and that nothing in this
Section 21 is intended to apply to the Transferred East Block Entitlement
Percentages not permanently transferred to TID.
22. Counterparts. This Agreement may be executed in several counterparts, all
or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
WHEREFORE, NCPA, upon authorization by its Commission sitting as a whole,
at a duly and regularly called meeting, and the Project Participants, after all due
authorization by their governing bodies, have executed this Agreement, as
evidenced by the signatures of their authorized representatives below.
SIGNATURE PAGES FOLLOW
Remainder of this Page is Blank
KC
FIRST SIGNATURE PAGE
AMENDED AND RESTATED GEOTHERMAL OPERATING AGREEMENT
NORTHERN CALIFORNIA POWER TURLOCK IRRIGATION
AGENCY DISTRICT
Its: General Manager
Date:
Approved as to form:
General Counsel
CITY OF BIGGS
Bv:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF HEALDSBURG
Bv:
Its: City Manager
Date:
Approved as to form:
is
Its: General Manager
Date:
Approved as to form:
General Counsel
CITY OF GRIDLEY
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF LODI
By:
Its: City Manager
Date:
Approved as to form:
City Attorney City Attorney
SECOND SIGNATURE PAGE
AMENDED AND RESTATED GEOTHERMAL OPERATING AGREEMENT
21
CITY OF LOMPOC
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF ROSEVILLE
Bv:
Its: City Manager
Date:
Approved as to form:
City Attorney
PLUMAS SIERRA
RURAL ELECTRIC COOPERATIVE
BY:
Its: General Manager
Date:
Approved as to form:
General Counsel
22
CITY OF PALO ALTO
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF UKIAH
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF SANTA CLARA
Bv:
Its: City Manager
Date:
Approved as to form:
City Attorney
EXHIBIT E
AMENDMENT NO. 1
TO
NORTHERN CALIFORNIA POWER AGENCY
FACILITIES AGREEMENT
This Amendment no. 1 is made as of April 1, 2011 by and between the Northern
California Power Agency, a joint powers agency ("NCPA"), certain of its member agencies, and
the Turlock Irrigation District, a California Irrigation District ("TID "), with reference to the
following:
A. NCPA and certain of its members, consisting of the Cities of Alameda, Biggs,
Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa Clara and Ukiah; [the Port of
Oakland]; TID; and associate NCPA member Plumas Sierra. Rural Electric Cooperative have
entered into a Facilities Agreement dated as of September 22,1993.
B. The Facilities Agreement provides for the means by which NCPA provides services
to the NCPA generatingprojects, allocates costs to and among such projects, and by which the
project participants can provide direction to NCPA with respect to the governance and
operation of such projects.
C. At the time of its approval, the signatories to the Facilities Agreement did not
contemplate that a participant in an NCPA generatingproject could be a non-NCPA member.
Hence, the Facilities Agreement provides in section 1.17 that a "participant" in the Facilities
Agreement is a member of NCPA which is signatory to the Facilities Agreement, and in Article
4 that the Facilities Committee by which project participants in NCPA projects provide
direction to NCPA is composed of participants.
D. TID has given notice to NCPA of its withdrawal from NCPA effective April 1,2 011,
but w I I remain a project participant in the Geothermal Project no. 3. In an Amended and
Restated Geothermal Operating Agreement dated as of April 1,2011, the participants in that
project, including TID, and NCPA have agreed to amend the Facilities Agreement as necessary
to provide TID the ability to remain a signatory to the Facilities Agreement and to have an on-
going participation on the Facilities Committee.
NOW, THEREFORE, the Parties agree as follows:
1. Section 4.9 is hereby added to Article 4 ("Facilities Committee") of the Facilities
Agreement to read as follows:
114.9 Notwithstanding any other provision of this Agreement to the contrary, Turlock
Irrigation District shall be entitled to designate one member of the Facilities
Committee for so long as Turlock Irrigation District shall remain a project
participant in Geothermal Project No. 3, which member shall have voting rights
only with respect to those matters directly relating to said project."
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
2. Amendments to the Facilities Agreement which do not impair the rights of TID as
provided in section 1 shall not require the consent of TID, provided that TID shall be given
written notice of any amendment to the Facilities Agreement.
3. In all other respects the Facilities Agreement shall remain in -ffI force and effect.
WHEREFORE, NCPA upon authorization of its Commission, and the Facilities
Agreement participants, after all due authorization by their respective governing bodies, have
executed this First Amendment as evidenced by the signatures of their authorized
representatives below.
NORTHERN CALIFORNIA POWER
AGENCY
By:
Its: General Manager
Date:
Approved as to form:
General Counsel
CITY OF BIGGS
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF HEALDSBURG
By.
Its: City Manager
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
TURLOCK IRRIGATION
DISTRICT
By:
Its: General Manager
Da
Approved as to form:
General Counsel
CITY OF GRIDLEY
By.
Its: City Manager
Approved as to form:
City Attorney
CITY OF LODI
By:
Its: City Manager
Approved as to form:
City Attorney
CITY OF LOMPOC
Bv:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF ROSEVILLE
Bv:
Its: City Manager
Date:
Approved as to form:
Date:
Approved as to form:
City Attorney
CITY OF PALO ALTO
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
CITY OF UKIAH
By:
Its: City Manager
Approved as to form:
City Attorney City Attorney
PLUMAS SIERRA RURAL ELECTRIC COOPERATIVE
By:
Its: General Manager
Date:
Approved as to form:
General Counsel
EXECUTION VERSION
AMENDMENT 1 TO FACILITIESAGREEMENT
CITY OF SANTA CLARA
By:
Its: City Manager
Date:
Approved as to form:
City Attorney
1586612.3
1586612.2
EXECUTION VERSION
AMENDMENT 1 TO FACILITIES AGREEMENT
EXHIBIT F
MEMBERSHIP WITHDRAWAL AND EXITAGREEMENT BETWEEN
NORTHERN CALIFORNIA POWERAGENCY
AND
TURLOCK IRRIGATION DISTRICT
This Membership Withdrawal and Exit Agreement ("this Agreement") is
entered into as of April 1, 2011 ("Effective Date"), by and between the Northern
California PowerAgency ("NCPA), a California joint powers authority, and the
Turlock Irrigation District ("TID"), a California irrigation district, (collectively, the
"Parties" or individually, "Party"), and
WITNESSETH:
A. NCPA was created by a joint powers agreementfirst made on July 19,
1968, and which was most recently amended and restated on January 1,2008
("the Joint Powers Agreement"); and
B. On September 27,1984, the NCPA Commission approved
Supplement No. Ito the Joint Powers Agreement, revised as of April 1, 1973,
admitting the TID as a member of NCPA, which Supplement became effective on
March 24, 1987, the date of TI D's execution of it; and
C. The Joint Powers Agreement provides in Article IV section 2(a) that
any member may terminate its membership upon two (2) years prior written
noticeto all other members. TID has provided such two (2) year noticewhich
notice is effective on April 1,201land TID shall no longer be a member of NCPA
from and after that date; and
D. This Agreement sets forth and resolves all outstanding issues between
the Parties; and
E. The Project Participants in the Geothermal Generating Project Number
3 and TID have entered into an Agreement for Transfer of Rights to Capacity
and Energy of Geothermal Generating Project No. 3, dated as of October 1,
1984 (the "First Transfer Agreement") by which the Project Participants
transferred to TID specified and varying Entitlement Percentages of Project
capacity and energy in each calendar year, and, from calendar year 2001 until
the end of the life of the Geothermal Generating Project Number 3, Gridley, Palo
Alto, and Plumas each permanently transferred certain Entitlement Percentages
of Project capacity and energy to TID. In addition, Palo Alto and TID entered into
an agreement dated December 3,1985 ("the Second Transfer Agreement") by
which Palo Alto permanently transferred the remainder of its East Block
Entitlement Percentageto TID. The First Transfer Agreement and the Second
Transfer Agreement are collectively referred to as the "Transfer Agreements."
F. TI D and NCPA have entered into a letter agreement dated August 6,
1985 ("the Letter Agreement") by which NCPA's obligations to TID relative to
Geothermal Generating Project No. 3 in light of the First Transfer Agreement
were specified; and
G. The on-going rights and obligations of TID as a participant in NCPA
Geothermal Generating Project No. 3, subsequent to TID's withdrawal as a
member of NCPA, are separately resolved and agreed to in Amendment Number
Two to Agreement for Construction, and Financing of Geothermal Generating
Project Number 3 and in an Amended and Restated Geothermal Project
Operating Agreement (collectively, the "Geothermal Project Agreements"), and
Amendment No. 1 to Northern California Power Agency Facilities Agreement,
each of which is entered into concurrently with this Agreement; and
H. The Parties intend to provide each other mutual releases for all claims
and matters that have been resolved to date or are unknown.
NOW, THEREFORE, the Parties agree as follows:
1 _ Effective Date. This Agreement shall take effect on April 1, 2011.
2. Termination of Membership. On and after April 1,2011, TID shall no longer
be a member of NCPA or a party to the Joint Powers Agreement, and shall be
deemed to have withdrawn from NCPA.
3. Claims Arising Priorto TID's Termination of Membership.
a. The following known claims between NCPA and TID have arisen prior
to TID's termination of membership.
(1) The amount owed by TID to NCPA pursuant to Article IV
section 2 (b) of the Joint Powers Agreement for TID's pro -rata share of all debts,
liabilities and obligations of NCPA as of the date of termination. These debts
represent TID's share of obligations of NCPA for non -Geothermal Project No. 3
employees, including both pension and retiree medical benefits.
(2) The amounts invoiced by NCPA to TID in its "All Resources
Bills" for costs allegedly attributable to TID through March 31, 2011, which
invoices TID has paid under protest beginning in July 2010.
(3) NCPA's claim that TID is required to pay the full amount of the
2010-2011 annual cash contribution pursuant to Article IV section 3 of the Joint
Powers Agreement even though TID has only been a member of NCPA for nine
of the twelve months during that period.
K
(4) NCPA's claim that it has inadvertently failed to bill TID for
certain transmission costs relating to Geothermal Project No. 3, and that TID
must pay all such costs to NCPA upon presentation of the bill to TID.
(5) TID's claim for damages relating to the sale of renewable
energy credits from Geothermal Project No. 3 as set forth in the August 20, 2010
letter from James Farrar of TID to James Pope of NCPA.
b. The Parties acknowledge that $219,819.00 is the current amount
owing from TID to NCPA with respect to the claim listed in section 3(a)(1). This
amount has been included in the calculation of the "net" amount to be paid by
TID pursuant to section 3(d). The amount owed for the claim listed in section
3(a)(1) is not final, and shall be twice subject to "true -up" as provided in this
subsection and in accordance with the methodology in Exhibit "A", and may
therefore be either increased or decreased, as a consequence of anticipated
actuarial reports requested by NCPA (at its cost). The Parties agree that amount
shall be subject to true -up such that TID shall be responsible for 11.347% of the
4.181% legislative and regulatory share share of all actuarially determined cost
increases or decreases in NCPAS unfunded actuarial accrued liability
attributable to non-NCPA Project employees, including legislative and regulatory
staff for pension and retiree medical benefits. As of June 30, 2011 the unfunded
liabilities were calculated to be $46,335,308 ($41,374,505 retirement, $4,960,803
medical) as of June 30, 2009.
(1) The amount shall be subject to true up in approximately
August, 2011 when the medical retiree report for the fiscal year ending
June 30,201 1 is provided to NCPA.
(2) The amount shall be further subject to true up in
approximately October, 2012 when the CaIPERS retiree pension report for
the fiscal year ending June 30, 2011 is provided to NCPA.
NCPA shall provide notice to TID within ten (10) days following receipt of
each actuarial report as to any additional amounts due, as well as the
calculations by NCPA supporting the TID share. TID shall be entitled to review
the report and NCPA's calculations. The Parties agree to mutually resolve any
significant inaccuracies in the report or in NCPA's calculations. TID shall pay any
increase, or NCPA shall refund any decrease, in TID's share within 30 days after
each such notice.
(c) Amounts paid by TID that are Project Costs during FY2011, as
defined in the Amended and Restated Geothermal Project Operating Agreement
between NCPA and the Geothermal Project Participants, will be subject to the
annual true -up and settlement process by the NCPA Commission in accordance
with NCPA's standard procedures, at the same time and on an equal basis with
remaining NCPA members. Such true -up is estimated to occur in February,
3
2012, and may result in a payment by NCPA to TID or by TID to NCPA in
addition to the net settlement amount stated in section 3(d). Non Project Costs,
including Legislative and Regulatory Program Costs and Natural Gas Information
Program Costs are settled as part of the net settlement amount described in
section 3d and will not be trued up.
NCPA shall provide notice and copies of all related staff reports to TID not less
than ten (10) days prior to the NCPA Commission meeting at which the true -up
and settlement is to occur. Following NCPA Commission action, NCPA shall
provide notice to TID of any increase or decrease in its power management costs
which have been determined. TID shall pay any increase, or NCPA shall refund
any decrease, in TI D's share of power management costs within 30 days after
such notice.
(d) Subject to the true -up provisions of sections 3(b) 3(c) in full settlement
of all claims by NCPA againstTID, and in full settlement of all claims by TID
against NCPA, NCPA acknowledges payment of $213,000 by TID which the
Parties agree is the net of the known claims by one against the other.
4. Mutual General Release.
The Parties hereby mutually waive and release each other from any and all
claims, debts, or obligations arising out of TID's membership in NCPA, the
Transfer Agreements, the Letter Agreement or the other agreements terminated
by the Amended and Restated Geothermal Project Operating Agreement,
whether such claims are known or unknown to them.
The Parties acknowledge that California Civil Code section 1542 provides as
follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his or her favor at the time of execution of the
release, which if known by him or her must have materially affected his or
her settlement with the debtor."
The Parties waive the provisions of Civil Code section 1542.
5. Notice. Any notice required by this Agreement shall be in writing and shall be
either delivered to or mailed by U.S. Mail, first class postage prepaid, addressed
as follows:
NORTHERN CALIFORNIA POWERAGENCY
Attn: James H. Pope, General Manager
651 Commerce Drive
Roseville, CA 95678
0
And
Attn: Michael F. Dean, NCPA General Counsel
Meyers Nave
555 Capitol Mall, suite 1200
Sacramento, CA 95814
TURLOCK IRRIGATION DISTRICT
Attn: General Manager
333 E. Canal Drive
Turlock, CA 95381
And
Attn: Roger Masuda, TID General Counsel
Griffith & Masuda, A Professional Law Corporation
517 East Olive Street
Turlock, CA 95380
6. Dispute Resolution. Notwithstanding the dispute resolution provisions which
may exist in the Joint Powers Agreement or in any other agreement between the
Parties to the contrary, the Parties agree that any dispute arising out of or in
connection with the provisions of this Agreement shall be resolved as provided in
this section. All such disputes shall be submitted to arbitration in accordance
with J.A.M.S./Endispute ("JAMS"), unless otherwise agreed by the Parties.
The Parties further agree:
a. Either Party may submit a matter to binding arbitration by
JAMS within sixty (60) days of the dispute arising. In all cases submitted
to JAMS for arbitration, the Parties agree: to a single arbitrator, who shall
be experienced in both the electric industry and public agency law); to
advance their respective administrative fees; and to advance in equal
shares the arbitrator's fee.
b. The Parties incorporate the provisions of California Code of
Civil Procedure section 1283.05 into their agreement to arbitrate their
disputes, without the limitations as to depositions set forth in subdivision
(e) of section 1283.05.
C. Notwithstanding any rules or procedures of JAMS to the
contrary, the arbitrator shall be bound to render a decision in accordance
with applicable state and federal laws and shall issue written findings of
fact and conclusions of law (the "written opinion"). In any petition to
confirm, correct or vacate the arbitration award, the arbitrator's written
opinion shall be subject to judicial review for the purpose of ensuring that it
conforms to applicable state and federal laws. Except for this limited right
of judicial review and other statutory grounds for correcting or vacating the
arbitrator's award, the Parties agree that the decision of the arbitrator shall
be binding upon them. All costs associated with arbitration, including the
arbitrator's fees, shall be recovered by the prevailing party who shall be
designated by the arbitrator for this purpose. Each party shall bear its own
attorney's fees and expert witness fees.
d. This Agreement shall be construed in accordance with
California law. The venue for any mediation or arbitration underthis
Agreement shall be Stockton, California, unless otherwise agreed by the
Parties.
7. Prior Agreements.
a. The following agreements between the Parties are hereby terminated:
L The "Energy Exchange Agreement" dated September 6, 1988.
ii.. The "Member Services Agreement" dated September 25, 1990.
iii.. The "Agreement for Sale of Capacity and Energy of Combustion
Turbine Project NumberTwo-Unit Two" dated August 1, 1992.
b. The Parties acknowledge that the Facilities Agreement, dated
September 22, 1993, provides that signatories to it are members of NCPA. The
Parties agree to cooperate in good faith to amend the Facilities Agreement as
may be necessary to permit TID to continue to participate in the Facilities
Committee established by the Facilities Agreement as contemplated by the
Amended and Restated Geothermal Operating Agreement entered into
concurrently with this Agreement.
c. The Parties acknowledge that the Facilities Agreement, as amended
pursuant to subsection b hereof to permit TID's participation in the Facilities
Committee, the Amended and Restated Geothermal Operating Agreement, and
the Agreement for Construction, Operation and Financing of Geothermal Project
Number 3, as amended by Amendment Number Two, entered into concurrently
with this Agreement, shall remain in full force and effect.
8. Interpretation. Each Party to this Agreement has been represented by its
counsel in the negotiation of this Agreement. In the event of any uncertainty, this
D
Agreement shall not be construed in favor or against any individual Party by
reason of California Civil Code section 1654.
IN WITNESS WHEREOF, the parties have caused this agreement to be
approved and executed.
NORTHERN CALIFORNIA POWER TURLOCK IRRIGATION
AGENCY DISTRICT
0
Its: General Manager
Date:
Approved as to form:
General Counsel
Ire
as
Its: Assistant General Manager
Date:
Approved as to form:
General Counsel
ExhibitA
Methodology for Determining True Up in Section 3b
The methodology for determining the TO share of any increased or decreased
liability pursuantto Section 3(b) shall be:
MedicaI Retiree Adjustment
(2011 unfunded medical liability determined by medical retiree actuarial reports -
$4,960,803) x (0.04181 Legislative & Regulatory Share of unfunded liability) x
(0.11347TID Share) = True up of TO Share of NCPAs Unfunded Actuarial
Accrued Liabilityfor retiree medical
CalPERS Pension Adjustment
(2011 unfunded retirement liability determined by pension actuarial reports -
$41,374,505) x (0.04181 Legislative & Regulatory Share of unfunded liability)x
(0.11347 TID Share) = True up for TID Share of NCPAs Unfunded Actuarial
Accrued Liabilityfor CaIPERS Pension
1572100.10
FOURTEENTH SUPPLEMENTAL
INDENTURE OF TRUST
between
NORTHERN CALIFORNIA POWER AGENCY
and
U.S. BANK NATIONAL ASSOCIATION, as TRUSTEE
relating to
Geothermal Project Number 3 Revenue Bonds
Dated as of April 1, 2011
OHS West:261076045.2
EXHIBIT G
TABLE OF CONTENTS
Page
ARTICLE I
AUTHORITY AND DEFINITIONS............................................................... 2
101.
Supplemental Indenture of Trust.......................................................................... 2
102.
Authority for the Fourteenth Supplemental Indenture of Trust ............................ 2
103.
Definitions............................................................................................................. 2
104.
Rules of Construction............................................................................................ 3
ARTICLE II
AMENDMENTS TO ORIGINAL INDENTURE ........................................... 4
201.
Amendments to Section 712................................................................................. 4
ARTICLE III
MISCELLANEOUS........................................................................................ 4
301.
Effectiveness.......................................................................................................... 4
302.
Bondholder Consent............................................................................................... 4
303.
Indenture of Trust to Remain in Effect .................................................. :............... 5
304.
Counterparts........................................................................................................... 5
OHS West:261076045.2 1 '
FOURTEENTH SUPPLEMENTAL INDENTURE OF TRUST
THIS FOURTEENTH SUPPLEMENTAL INDENTURE OF TRUST, made
and entered into as of April 1, 2011, by and between Northern California Power Agency, a joint
exercise of powers agency established pursuant to the laws of the State of California ("NCPA"),
and U.S. Bank National Association, a national banking association, incorporated under the laws
of the United States of America and authorized to accept and execute trusts of the character
herein set out, as successor trustee (the "Trustee");
WITNESSETH:
WHEREAS, NCPA has heretofore entered into an Indenture of Trust, dated as of
November 1, 1983 (the "Original Indenture of Trust"), as supplemented and amended by the
First Supplemental Indenture of Trust, dated as of November 1, 1983 (the "First Supplemental
Indenture of Trust"), the Second Supplemental Indenture of Trust, dated as of October 1, 1984
(the "Second Supplemental Indenture of Trust"), the Third Supplemental Indenture of Trust,
dated as of October 1, 1985 (the "Third Supplemental Indenture of Trust"), the Fourth
Supplemental Indenture of Trust, dated as of November 1, 1986 (the "Fourth Supplemental
Indenture of Trust"), the Fifth Supplemental Indenture of Trust, dated as of January 30, 1987 (the
"Fifth Supplemental Indenture of Trust"), the Sixth Supplemental Indenture of Trust, dated as of
May 1, 1993 (the "Sixth Supplemental Indenture of Trust"), the Seventh Supplemental Indenture
of Trust, dated as of September 1, 1994 (the "Seventh Supplemental Indenture of Trust"), the
Eighth Supplemental Indenture of Trust, dated as of April 1, 1996 (the "Eighth Supplemental
Indenture of Trust"), the Ninth Supplemental Indenture of Trust, dated as of April 1, 1996 (the
"Ninth Supplemental Indenture of Trust"), the Tenth Supplemental Indenture of Trust, dated as
of April 1, 1996 (the "Tenth Supplemental Indenture of Trust"), the Eleventh Supplemental
Indenture of Trust, dated as of August 1, 1998 (the "Eleventh Supplemental Indenture of Trust"),
the Twelfth Supplemental Indenture of Trust, dated as of August 1, 1998 (the "Twelfth
Supplemental Indenture of Trust"), and the Thirteenth Supplemental Indenture of Trust, dated as
of March 1, 2009 (the "Thirteenth Supplemental Indenture of Trust"), each by and between
NCPA and the Trustee (such Original Indenture of Trust, as amended and supplemented the
"Indenture of Trust"),to provide for the securing of Bonds (capitalized terms used herein and not
otherwise defined shall have the meanings given such terms pursuant to Section 103 hereof); and
WHEREAS, the only Bonds which remain Outstanding under the Indenture of
Trust are the $35,610,000 aggregate principal amount of Geothermal Project Number 3 Revenue
Bonds, 2009 Series A; and
WHEREAS, NCPA and the Parties have entered into Amendment Number Two
to the Project Number 3 Member Agreement; and
WHEREAS, Amendment Number Two provides, among other things, for the
Novation of TID for- the Transferors with respect to the Transferred Project Entitlement
Percentage on the terms and conditions specified therein, including the Novation going into
effect only when no 2009 Series A Bonds remain Outstanding; and
WHEREAS, NCPA desires to amend Section 712 of the Original Indenture of
Trust to provide for the Project Number 3 Member Agreement being amended to permit the
Novation of TID for the Transferors with respect to the Transferred Project Entitlement
Percentage; and
OHS West:261076045.2
WHEREAS, Section 1001(7)) of the Original Indenture of Trust provides that at
any time and from time to time, NCPA and the Trustee may enter into a Supplemental Indenture
of Trust which, upon the filing with the Trustee of a copy thereof certified by an Authorized
NCPA Representative, shall be fully effective in accordance with its terms, to modify any of the
provisions of the Indenture of Trust in any respect whatever provided that such modification
shall be, and shall expressed to be, effective only after all Bonds of each Series Outstanding at
the date of execution and delivery of such Supplemental Indenture of Trust shall cease to be
Outstanding; and
WHEREAS, this Fourteenth Supplemental Indenture of Trust provides that the
amendments to Section 712 of the Original Indenture to permit the amendments of the Project
Number 3 Member Agreement with respect to the Novation shall go into effect when no 2009
Series A Bonds remain Outstanding; and
WHEREAS, all acts and things have been done and performed which are
necessary to make this Fourteenth Supplemental Indenture of Trust a valid and binding
agreement;
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS
FOURTEENTH SUPPLEMENTAL INDENTURE OF TRUST WITNESSETH:
That, in consideration of the premises, the acceptance by the Trustee of the trusts
hereby created and originally created by the Original Indenture of Trust, the mutual covenants
herein contained and the purchase and acceptance of the Bonds by the Holders thereof, and for
other valuable consideration, the receipt whereof is hereby acknowledged, and in order to secure
the payment of the principal of, Redemption Price, if any, and interest on the Bonds according to
their tenor and effect, and the performance and observance by NCPA of all the covenants and
conditions contained in the Indenture of Trust and the Bonds on its part to be performed, it is
agreed by and between NCPA and the Trustee as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
101. Supplemental Indenture of Trust. This Fourteenth Supplemental Indenture of
Trust is supplemental to the Original Indenture of Trust as heretofore amended and
supplemented.
102. Authority for the Fourteenth Supplemental Indenture of Trust. This
Fourteenth Supplemental Indenture of Trust is entered into in accordance with Article X of the
Original Indenture of Trust.
103. Definitions.
(a) Except as provided by this Fourteenth Supplemental Indenture of Trust, all
terms which are defined in Section 101 of the Original Indenture of Trust, Section 103 of the
First Supplemental Indenture of Trust, Section 103 of the Second Supplemental Indenture of
Trust, Section 103 of the Third Supplemental Indenture of Trust, Section 103 of the Fourth
Supplemental Indenture of Trust, Section 103 of the Fifth Supplemental Indenture of Trust,
Section 103 of the Sixth Supplemental Indenture of Trust, Section 103 of the Seventh
Supplemental Indenture of Trust, Section 103 of the Eighth Supplemental Indenture of Trust,
OHS West:261076045.2 2
Section 103 of the Ninth Supplemental Indenture of Trust, Section 103 of the Tenth
Supplemental Indenture of Trust, Section 103 of the Eleventh Supplemental Indenture of Trust,
Section 103 of the Twelfth Supplemental Indenture of Trust, or Section 103 of the Thirteenth
Supplemental Indenture of Trust, shall have the same meanings, respectively, in this Fourteenth
Supplemental Indenture of Trust as such terms are given in said Section 101 of the Original
Indenture of Trust, Section 103 of the First Supplemental Indenture of Trust, Section 103 of the
Second Supplemental Indenture of Trust, Section 103 of the Third Supplemental Indenture of
Trust, Section 103 of the Fourth Supplemental Indenture of Trust, Section 103 of the Fifth
Supplemental Indenture of Trust, Section 103 of the Sixth Supplemental Indenture of Trust,
Section 103 of the Seventh Supplemental Indenture of Trust, Section 103 of the Eighth
Supplemental Indenture of Trust, Section 103 of the Ninth Supplemental Indenture of Trust,
Section 103 of the Tenth Supplemental Indenture of Trust, Section 103 of the Eleventh
Supplemental Indenture of Trust, Section 103 of the Twelfth Supplemental Indenture of Trust, or
Section 103 of the Thirteenth Supplemental Indenture of Trust, respectively.
(b) Amendment Number Two Definitions. Except as provided by this
Fourteenth Supplemental Indenture of Trust, all terms which are defined in Amendment Number
Two (as defined in subsection (c) of this Section 103) shall have the same meanings,
respectively, in this Fourteenth Supplemental Indenture of Trust as such terms are given in
Amendment Number Two.
(c) Additional Definitions. The following terms shall, for all purposes of the
Indenture of Trust, have the following meanings set forth below:
Amendment Number Two means Amendment Number Two to Agreement for
Construction, Operation, and Financing of Geothermal Generating Project Number 3, dated April
1, 2011, by and among NCPA, the Cities of Alameda, Biggs, Gridley, Healdsburg, Lodi,
Lompoc, Palo Alto, Roseville, Santa Clara, and Ukiah, the Plumas Sierra Rural Electric
Cooperative, and the Turlock Irrigation District in the form attached hereto as Exhibit A.
Effective Time means the initial time when no 2009 Series A Bond of any
maturity remains Outstanding.
Fourteenth Supplemental Indenture of Trust means this Fourteenth
Supplemental Indenture of Trust, amending and supplementingthe Original Indenture of Trust as
heretofore amended and supplemented.
Novation means: the release and discharge of the obligation of each of the
Transferors to make payments with respect to the Transferred Project Entitlement Percentage
pursuant to Section 5(f) of the Project Number 3 Member Agreement (as amended by
Amendment Number Two) to the extent the obligation to make such payments accrues after the
Effective Time.
104. Rules of Construction. Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter genders. Unless the context
shall otherwise indicate, words importing the singular number shall include the plural number
and vice versa, and words importing persons shall include corporations and associations,
including public bodies, as well as natural persons. Defined terms shall include any variant of
the terms set forth in this Article I.
OHS West:261076045.2 3
The terms "hereby," "hereof," "hereto," "herein," "hereunder," and any similar
terms, as used in this Fourteenth Supplemental Indenture of Trust, refer to this Fourteenth
Supplemental Indenture of Trust as a whole and not to any particular Article or Section hereof.
ARTICLE II
AMENDMENTS TO ORIGINAL INDENTURE
201. Amendments to Section 712. Subsection 1 of Section 712 of the Original
Indenture of Trust is amended in its entirety, as of the Effective Time, to read as follows:
NCPA shall receive and forthwith deposit in the Revenue Fund all amounts
payable to it pursuant to the Project Number 3 Member Agreement and the Project Number 2
Member Agreement or payable to it pursuant to any other contract for the use of NCPA Capacity
or any part thereof. NCPA shall enforce or cause to be enforced the provisions of the Project
Number 3 Member Agreement and the Project Number 2 Member Agreement and duly perform
its covenants and agreements thereunder. Except for the Novation, NCPA will not consent or
agree to or permit any rescission of or amendment to or otherwise take any action under or in
connection with the Project Number 3 Member Agreement and the Project Number 2 Member
Agreement which will reduce the payments required thereunder or which will in any manner
materially impair or materially adversely affect the rights of NCPA thereunder or the rights or
security of the Bondholders under the Indenture of Trust; however, nothing herein shall be
construed so as to prohibit any other amendment of the Project Number 3 Member Agreement
and the Project Number 2 Member Agreement. A copy of the Project Number 3 Member
Agreement and the Project Number 2 Member Agreement certified by an Authorized NCPA
Representative shall be filed with the Trustee, and a copy of any such amendment certified by an
AuthorizedNCPA Representative shall be filed with the Trustee.
ARTICLE III
MISCELLANEOUS
301. Effectiveness. This Fourteenth Supplemental Indenture of Trust shall be in full
force and effect from and after the execution and delivery hereof by NCPA'and the Trustee and
the satisfaction of the requirements of subsection 7 of Section 1001 of the Original Indenture of
Trust with respect to this Fourteenth Supplemental Indenture of Trust; provided that the
amendment to Section 712 of the Original Indenture of Trust pursuant to Section 201 hereof
shall not go into effect until the Effective Time.
302. Reference in Bonds. Pursuant to subsection 7(ii)(b) of Section 1001 of the
Original Indenture of Trust, this Fourteenth Supplemental Indenture of Trust shall be specifically
referred to in the text of all Bonds of any Series authenticated and delivered after the date of
execution and delivery of this Fourteenth Supplemental Indenture of Trust and of Bonds issued
in exchange therefor or in place thereof.
303. Indenture of Trust to Remain in Effect. Save and except as heretofore
amended and supplemented and as amended and supplementedby this Fourteenth Supplemental
Indenture of Trust, the Indenture of Trust shall remain in full force and effect.
OHS West:261076045.2 4
304. Counterparts. This Fourteenth Supplemental Indenture of Trust may be
executed in any number of counterparts, each of which, when so executed and delivered, shall be
an original; but such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, Northern California Power Agency has caused these
presents to be signed in its name and on its behalf by its General Manager and to evidence its
acceptance of the trusts hereby created, the Trustee has caused these presents to be signed in its
name and on its behalf by one of its authorized officers, all as of the first day of April, 2011.
NORTHERN CALIFORNIA POWER
AGENCY
By:
Name: James H. Pope
Title: General Manager
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
By:
Authorized Officer
OHS West:261076045.2
EXHIBIT H
NCPA Facilities Agreement
Facilities Agreement Schedule FA 10.00
Federal Tax Guidelines Relating to Private Business Use
A. Scope
NCPA has issued a number cf Bond issues (the "Bonds")for the NCPA Projects
which have been "traditional" tax exempt bond or Build America Bond
obligations, which are "tax advantaged" under provisions cf the Internal
Revenue Code (the "Tax Status"). This Facilities Schedule summarizes and
documents the various federal tax restrictions approved by the Commission to be
used as guidelines relating to private business use cf the NCPA Projects and the
capacity and enery from the NCPA Proiects required to qualify and maintain
ax Status of the Bonds. 1 Failure to comply with the private business use
rements set forth in this Facilities Schedule may adversely affect the Tax
s of the Bonds.
a. Bonds means bonds, notes or other evidences cf indebtedness of
NCPA (including, without limitation, contracts relating to letters cf
credit or other credit enhancement devises, interest rate swap and
other agreements relating to interest rate or other cash-flow
exchanges such as those authorizedby the Public Finance Contracts
Law, and other contracts which are characterized as debt by NCPA
at or prior the execution thereof) issued to finance or refinance a
NCPA Project and to finance or refinance any contributions -in -aid -
of -construction for construction necessary for the adjacent electric
system to interconnect with a NCPA Project and includes
additionalbonds to complete a NCPA Project and may consist of
that portion cf an issue cf NCPA bonds, notes or other evidences CC
indebtedness issued to finance the costs cf a NCPA Project, which
portion is specifically identified as Bonds.
FA 1000- 1 TBD, 2011
b. Build America Bonds ("BABs") means taxable municipalbonds
that feature tax credits and/or federal subsidies for bondholders
and state and local governmentbond issuers.
c. Internal Revenue Code means all federal tax laws.
d. Internal Revenue Service means the federal agency responsible for
administering and enforcing the Treasury Department's revenue
laws, through the assessment and collection cC taxes, determination
of pension plan qualification, and related activities.
e. Treasury Regulations means tax regulations issued by the Internal
Revenue Service.
"Use" includes the sale of -power (whether consisting cC capacity, energy, or both,
including the sale cC ancillary services) to non -governmentally owned utilities
(including e.g., the federal government, Bonneville Power Administration and
Western Area Power Administration) pursuant to output or requirements
contracts as well as any other arrangements for the sale cC power on terms
differentfrom those available to the general public. Such may include contracts
with retail customers that contain provisions which obligate a customer to make
payments that are not contingent on the output requirements cf the customer or
that obligate the customer to have output requirements (including provisions
which obligate the customer not to cease operations). The private business use
restrictions are applied by taking into account any arrangementsNCPA or any cf
the Participants have with non-exempt persons (generally, for these purposes
any entity or person other than a municipally owned utility) for the sale cf power
from a NCPA Project. Use also includes providing a non-governmental person
with control, whether direct or indirect, over the operations, maintenance or
decision making as to when to run or not run a particular NCPA Project (in tax
FA 1000 - 2 TBD, 2011
parlance such rights would be called "special legal entitlements"). Such special
legal entitlements also may create private business use.
Applicable Treasury Regulations provide an exception to private business use if
the non-governmental person uses the property (or the capacity or energy for the
property) as a member of the general public. This occurs if the "property is
intended to be available and in fact is reasonably available for use on the same
basis by natural persons not engaged in a trade or business." Use on the same
basis as the general public may include a fee or charge for use, so long as the
rates charged are generally applicable and uniformly applied. These rates may
vary in certain respects, such as different rates based on volume, so long as the
difference in rates is customary and reasonable. Any arrangement that gives the
non-exempt person special priority rights or preferential benefits is not use on
the same basis as the zeneral Dublic.
Specific Private Business Use Exceptions Relating to the NCPA Proj
limitations on private business use and private security or payments, or NCPA
or the Participants obtain an opinion cC Bond Counsel to the effect that the
arrangementwill not adversely affect the Tax Status cf the Bonds:
1. in the case cf sales cf electric generation or distribution service, the term of
such transaction will not exceed three (3)years (includingrenewal
options) and will be negotiated, arm's length arrangements that provide
for compensation at fair market value or are based on generally applicable
and uniformly applied rates, and the related facility (e.g. a NCPA Project)
was not financed with a principal purpose cC providing that facility for
use by that non-governmental person;
2. in the case cf sales cf electric generation or distribution service, the
compensation for such service and any other payments in respect CC such
use will not exceed NCPA's or the Participant's, as applicable, properly
allocable cost cC ordinary and necessary expenses that are directly
FA 1000-3 TBD, 2011
attributable to the operation cf the financed property used by the non-
governmentalperson;
3. in the case of sales cf electric generation or distribution service, the output
is sold (i)to a retail customer pursuant to a requirements contract that
does not require the customer to make payments unless it actually has
requirements, (ii)under a contract pursuant to which the average annual
payments made under the contract do not exceed the amount permitted
under the de minimis rule contained in the applicable regulations, (iii)
under a contract the terms of which comply with (l)above, or (iv)from
non -bond financed system resources of the Participant which are
physically capable of supplying the output being sold;
:)lve use of the Project (e g , nozi born
is involving the resale of generation
to
7e been re
1141',-12 (or
business use is
I in ;their entirety), or j
or h issues of bonds
swapping or pooling of output
or more non-governmental persons to the extent that: (i)the swapped
output is reasonably expected to be approximately equal in value
(determined over periods of one year or less), and (ii) the purpose of the
agreement is to enable each of the parties to satisfy differentpeak load
demands, to accommodate temporary outages, to diversify supply, or to
enhance reliability in accordance with prudent reliability standards; and
7. the use cf the NCPA Project is by an entity that qualifies as an agency or
instrumentality cf NCPA approved by the Internal Revenue Service or
Bond Counsel.
E. Sale of Renewable Energy Certificates
In a private letter ruling, the Internal Revenue Service concluded that under
certain circumstances the sale of renewable energy certificates ("RECs") does not
create any private business use. Y a Participant transacts to sell some or all cf the
FA 1000 - 4 TBD, 2011
RECs resulting from the generation at one or more of the NCPA Projects to non-
governmental person with contract terms longer than three (3) years (contractscf
three (3) years or less would meet one cf the exceptions from private business
use described in Section C) such transaction must satisfy the followingbasic
requirements to satisfy the Internal Revenue Service:
1. that the purchase of RECs does not entitle the REC purchaser to any
electric energy from the NCPA Project;
2. the Participant will retain exclusive control over its entitlement to the
NCPA Project, its operations and any decision regarding how or whether
to operate the NCPA Project;
3 the: Participant will,rnot be under any obligation to produce, or c
produced, any renewable energy onto operate, or cause the Pro;
operated at all or at any particular level•
4. the REC contracts will not give the REC purchaser any director
voice ir( how any component of the NCPA Project will be operas
maintained.
Private. business use limitations set forth in this Facilities Schedule apply in
aggregate to all actions by NCPA and the Participants. Accordingly, NCPA will
implement internal procedures and requirements necessary to assure compliance
with the private business use limits as specified in this Facilities Schedule,
including:
1. contractual obligations of the Participants to comply with private business
use limits and other requirements of the Internal Revenue Code, and
2. regularly surveying the Participants to determine compliance with the
private business use limits and other requirements of the Internal Revenue
Code.
Participants are required to comply with private business use limits and other
requirements cf the Internal Revenue Code pursuant to applicable Project
Agreement, and Participants are strongly encouraged to established internal
procedures and requirements necessary to assure compliance.
FA 1000 - 5 TBD, 2011
RESOLUTION NO. 2011-31
A RESOLUTION OF THE LODI CITY COUNCIL
APPROVING GEOTHERMALAGREEMENTS AND
FACILITIES AGREEMENT AMENDMENT TO FINALIZE
TURLOCK IRRIGATION DISTRICT'S WITHDRAWAL
FROM THE NORTHERN CALIFORNIA POWER AGENCY
JOINT POWERS AGREEMENT
WHEREAS, the Turlock Irrigation District (TID) has provided the required two-
year notice of termination of membership in the Northern California Power Agency
(NCPA) Joint Powers Agreement (JPA), and the NCPA Commission has accepted that
two-year notice to be effective April 1, 2011; and
WHEREAS, TID's termination of membership in the JPA affected its rights and
obligations under various agreements between TID and NCPA members and between
TID and NCPA, requiring those agreements to be either terminated, clarified, or
amended in some fashion; and
WHEREAS, any signatory to the JPA terminating its membership in the JPA is
obligated to pay its pro -rata share of all debts, liabilities, and obligations of NCPA as of
the date of termination as a condition precedent to such termination and withdrawal; and
WHEREAS, TID and NCPA staffs have worked together to identify all
agreements needing to be either terminated, clarified, or amended and have arrived at a
recommended settlement amount that would satisfy TID's obligation to pay its pro -rata
share of all debts, liabilities, and obligations of NCPA as of the date of termination; and
WHEREAS, the agreements requiring NCPA member approval to effectuate
TID's withdrawal from the JPA are as follows:
Amendment Number Two to Agreement for Construction, Operation, and
Financing of Geothermal Generating Project Number 3
Amended and Restated Geothermal Project Operating Agreement Between
Northern California Power Agency and the Geothermal Project Participants
Amendment Number One to Northern California Power Agency Facilities
Agreement.
WHEREAS, the NCPA Commission has approved all the necessary Geothermal
Agreement and Facilities Agreement modifications and approved the Membership
Withdrawal and Exit Agreement between NCPA and TID on February 24, 2011.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
approve: (1) Amendment Number Two to Agreement for Construction, Operation, and
Financing of Geothermal Generating Project Number 3; (2) Amended and Restated
Geothermal Project Operating Agreement Between Northern California Power Agency
and the Geothermal Project Participants; and (3) Amendment Number One to Northern
California PowerAgency Facilities Agreement.
Dated: March 16, 2011
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I hereby certify that Resolution No. 2011-31 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held March 16, 2011, by the following
vote:
AYES: COUNCIL MEMBERS — Hansen, Katzakian, Mounce, Nakanishi,
and MayorJohnson
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAI N: COUNCIL MEMBERS — None
L
City Clerk
2011-31