HomeMy WebLinkAboutResolutions - No. 93-15RESOLUTION NO. 93-15
APPROVE EXECUTION OF THE
SOUTH OF TESLA AGREEMENT BETWEEN THE TRANSMISSION AGENCY
OF NORTHERN CALIFORNIA AND ITS MEMBERS (AGREEMENT)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
WHEREAS, the City Council, on May 20, 1992, approved the Midway -Sunset
Third Phase Agreement between Northern California Power Agency (NCPA) and the
Midway -Sunset Cogeneration Company (MSCC) enhanced oil recovery facility near
Bakersfield, California, which involves purchase and sale of a large quantity of
low cost energy for NCPA members, including Lodi; and
WHEREAS, the savings from the NCPA-MSCC power purchase agreement
attributable to Lodi's participation is estimated to be approximately $300,000 per
year; and
WHEREAS, to obtain the economic benefit of the NCPA-MSCC power purchase,
that power must be transferred over high-voltage transmission lines from the
Bakersfield site to each of the TANG member cities; and
WHEREAS, since PG&E owns the only high-voltage transmission system which
can transmit that power, a transmission agreement with PG&E is necessary; and
WHEREAS, the Transmission Agency of Northern California (TANC) is a joint
powers agency which constructed the California -Oregon Transmission Project (COTP)
and which has negotiated the necessary transmission rights between Tesla and Midway
Substations with PG&E; and
WHEREAS, the negotiation resolved into a regulatory Order issued by the
Federal Energy Regulatory Commission (FERC) requiring Tesla -Midway Transmission
Service to commence on March 1, 1992 pursuant to terms and conditions contained in
a statement of transmission principles between the parties; and
WHEREAS, the purpose of this Agreement is to set forth the arrangements
under which TANC will render Tesla -Midway Transmission Service to its Members; and
WHEREAS, this Agreement has been reviewed by FERC, IANC Counsel and
approved by the TAMC Commission; and
WHEREAS, the Agreement must now also be executed by the participating
members of TANC to ensure that the FERC commencement Order is met and the members
can begin utilizing this transmission service.
NOW, THEREFORE, BE IT RESOLVED that the City Council hereby authorizes
approval of the South of Tesla Agreement between the Transmission Agency of
Northern California and its Members.
BE IT FURTHER RESOLVED that the City Manager is authorized to execute the
Agreement.
Dated: January 20, 1993
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Resolution 93-15
January 20, 1993
Page Two
I hereby certify that Resolution No. 93-15 was passed and adopted by the
Lodi City Council in a regular meeting held January 20, 1993 by the following vote:
Ayes: Council Members - Davenport, Mann, Sieglock, and Snider
Noes: Council Members - None
Absent: Council Members - Pennino (Mayor) \
Wityifer
rrlerk
93-15
RES9315/TXTA.02J
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
SOUTH OF TESLA AGREEMENT
BETWEEN
THE TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
AND ITS MEMBERS
APPROVED BY TANC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
281
SOUTH OF TESLA AGREEMENT
BETWEEN
THE TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
AND ITS MEMBERS
TABLE OF CONTENTS
SECTION PAGE
i APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
Preamble............................................
1
Recitals...........:.................................
1
1
Definitions ...........................................
3
2
Authorization ........................................
6
3
Participation .........................................
6
4
Reallocations .........................................
7
5
Voting ..............................................
10
6
Reinforcement Costs ...................................
11
7
Authority of The TANC Treasurer and TANC Controller .......
13
8
Use of the Allocations ..................................
13
9
Withdrawal ..........................................
14
10
Default :............................................
14
11
Effective Date and Term ................................
15
12
Billing and Payment ...................................
16
13
Insurance ...........................................
17
14
Indemnification .......................................
17
15
Liability of TANC Officers ..............................
18
16
Notice ..............................................
18
17
Applicable Law .......................................
19
i APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
it
12
13'
14
is
16
18
19
20
21
22
23
24
25
26
27
2E
18 Severability .......................................... 19
19 Appendices ..........................................
19
20 Waiver .............................................
19
21 Captions ............................................
20
22 Counterparts .........................................
20
23 Signatures ...........................................
20
Principles for Tesla -Midway Transmission Service .........
APPENDIX A
Permanent Allocations ..............................
APPENDIX B-1
Long -Term Allocations ..............................
APPENDIX B-2
Addresses of the Parties for Billing .....................
APPENDIX C-1
Addresses of the Parties for Notices ....................
APPENDIX C-2
Pricing for SOT Transmission Service ...................
APPENDIX D
Initial Reinforcements Letter Agreement .................
APPENDIX E
ii APPROVED BY TAMC COMMISSION - DECEMBER lb, ]992
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
PREAMBLE
This Agreement is made and entered into as of , 1992, by and among the
Transmission Agency of Northern California, hereinafter referred to as "TANC",- and the Cities
of Alameda, Healdsburg, Lodi, Lompoc, Redding, Roseville, Santa Clara, and Ukiah; the
Sacramento Municipal Utility District; the Modesto Irrigation District, the Turlock Irrigation
District; and the Plumas-Sierra Rural Electric Cooperative.
WHEREAS:
A.
19
C.
20
21
22
23
D.
24
25
26
E.
27
28
RECITALS
On December 10, 1984, TANC was duly established as a joint powers agency,
pursuant to Section 65M et seq. of the California Government Code, by an
agreement among the Members entitled 'Joint Powers Agreement, Transmission
Agency of Northern California" (joint Powers Agreement or JPA); and
TANC executed the December 19, 1984, "Memorandum of Understanding,
California -Oregon Transmission Project" (MOU), among certain California entities
and the Western Area Power Administration (Western), which sets forth principles
for the development of the Californda-0regon Transmission Project (COTP) and
provides for certain transmission rights between Tesla and Midway Substations; and
TANC and the Pacific Gas and Electric Company (PG&E) entered into the Principles
for Tesla -Midway Transmission Service (Principles) dated August 25,1989, (attached
as Appendix A), which provide for transmission service that was described in
Section 2.3 of the MOU; and
TANG, in good faith, undertook negotiations with PG&E to develop a "definitive
agreement" for Tesla -Midway Transmission Service in accordance with the
Principles; and
TANC, after negotiating with PG&E for over two years, was not successful in
obtaining a reasonable, definitive successor agreement and, therefore, filed a
Complaint and Motion for Summary Disposition with the Federal Energy Regulatory
1 APPROVED BY TANG COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12
13I
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Commission (FERC) (FERC Docket No. EL91-8-000) seeking relief which would
enable TANC to utilize the transmission service provided for in the Principles; and
F. On June 12, 1991, FERC issued an Order in Docket No. EL91-8-000 which, inter Alia,
required PG&E to file the Principles with the FERC and rejected an alternative
transmission rate schedule previously filed by PG&E for Tesla -Midway Transmission
Service. On June 27, 1991, PG&E filed the Principles with FERC and TANC
requested the FERC to order the immediate commencement of Tesla -Midway
Transmission Service thereunder. On August 26,1991, the FERC ordered PG&E to
file, within thirty (30) days, a transmission rate schedule which is consistent with the
Principles, accompanied by appropriate cost support, and
G. On October 9, 1991, PG&E filed a "Replacement transmission rate schedule" which
is purported by PG&E to be consistent with FERC's August 26, 1991 order; and
H. On November 6, 1991, TANC filed a motion to reform on summary disposition
PG&E's Replacement transmission rate schedule so that the Replacement
transmission rate schedule will be consistent with the Principles and the FERC's
August 26, 1991 Order; and
I. On December 30,1991, TANC paid PG&E $5,000,000 as its contribution to the costs
of the Initial Reinforcements. The payment was made pursuant to a letter
agreement, dated December 30, 1991, between TANC and PG&E (attached as
Appendix E); and
J. On February 26, 1992, FERC issued an Order which, inter alis, required Tesla -
Midway Transmission Service to commence on March 1, 1992 pursuant to the terms
and conditions of the Principles as an interim rate schedule.
K. The purpose of this Agreement is to set forth the arrangements under which TANC
will render Tesla -Midway Transmission Service to its Members.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth in this
Agreement, TANC and the Members agree as follows:
2 APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5,
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
281
11
DEFINITIONS
Whenever used in this Agreement, the following terms, when initially capitalized, shall
have the following meanings. The singular of any definition shall include the plural and
the plural shall include the singular.
1.1 Agreement
This South of Tesla Agreement (SOTA), as amended and supplemented from time
to time in accordance with the terms hereof.
1.2 Allocation
All or part of a SOT Member's portion of the 300 MW of firm bidirectional Tesla -
Midway Transmission Service (measured at Midway Substation) that TANC obtains
from PG&E. The permanent Allocations, as shown in Appendix B-1, and the long-
term Allocations, as shown in Appendix B-2, are expressed as a percentage of
TANC's Tesla -Midway Transmission Service or expressed in megawatts, depending
upon the context of use.
1.3 Cash Call
A request for funds from one or more of the SOT Members by the TANC Treasurer
for services provided under this Agreement.
1.4 Cost Sharing Percentage
A percentage which is utilized by the TANC Treasurer to compute each Member's
obligation to pay for its share of the SOT Service Charge. Each SOT Member's Cost
Sharing Percentage shall be equal to its Allocation expressed as a percentage and as
set forth in Appendix B-2.
1.5 COTP
California -Oregon Transmission Project.
1.6 Curtailment
A temporary reduction in Tesla -Midway Transmission Service.
1.7 FERC
The Federal Energy Regulatory Commission, or its regulatory successor.
3 APPROVED BY TANC COMMISSION - DECEMBER 16, IM
11
21
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1.8 Initial Reinforcements
Those reinforcements to PG&E's transmission system that are specified in Section
4.1 of the Principles and as described in Appendix E of this Agreement.
1.9 Interest Charge
That charge against unpaid amounts due and owing, assessed at an annual interest
rate compounded monthly equal to the lesser of the following amounts: two percent
(2%) plus the applicable first -of -the -month reference rate of the Bank of America
N.T. & S.A., San Francisco, California, or its successor, corresponding to the period
during which the payment is overdue; or the maximum interest rate permitted by
law.
1.10 PA3
TANC Project Agreement No. 3 for the COTP.
1.11 Principles
The Principles for Tesla -Midway Transmission Service executed on August 29,1989,
by and between TANC and PG&E (attached as Appendix A).
1.12 Reallocation, Permanent Reallocation, Long -Term Reallocation, Short -Term
Reallocation
A voluntary transfer of all or a part of a SOT Member's Allocation hereunder. Such
transfer can be in one of the following forms:
a) Permanent Reallocation - Any permanent transfer of a SOT Member's
Allocation. Appendix B-1 shall be revised from time to time to reflect any
changes occasioned by such Permanent Reallocations.
b) Long -Term Reallocation - Any temporary transfer which is longer than six
(6) months in duration. Appendix B-2 shall be revised from time to time to
reflect any changes occasioned by Long -Term Reallocations or Permanent
Reallocations.
c) Short -Term Reallocation - Any temporary transfer which is six (6) months
or less in duration.
4 APPROVED BY TANC COMMISSION . DECEMBER 16, 1992
1
2
3
4
i
5
6
7
8'
91
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
When such a Reallocation occurs, the result shall be the new Allocation for that time
period.
1.13 SOT
South of Tesla.
1.14 South of Tesla Reinforcements (SOTR)
Those reinforcements to PG&E's transmission system that are described in Section
4.2 of the Principles.
1.15 SOT Member
A TANC Member or a former TANC Member which has withdrawn from TANC
pursuant to Section 9 of this Agreement which elects to participate in this
Agreement pursuant to Section 3 of this Agreement.
1.16 SOT Service Charze
The charge, as determined by the TANC Commission pursuant to the voting
provisions of Section 5, that shall be applied to the bills rendered by TAMC to its
SOT Members. The charge shall be based upon the rate determined pursuant to
Appendix D and applied in accordance with Section 12 of this Agreement.
1.17 SOT Short -Term Reallocation Rate
The rate, as determined pursuant to Appendix D, which shall be used as the
maximum rate for Short -Term Reallocations.
1.18 TANC Commission
The governing body of TANC as described in the Joint Powers Agreement.
1.19 TANC Member
Any of the Members of TANC including: Cities of Alameda, Biggs, Gridley,
Healdsburg, Lodi, Lompoc, Palo Alto, Redding, Roseville, Santa Clara, and Ukiah;
the Sacramento Municipal Utility District; the Modesto Irrigation District; the
Turlock Irrigation District; or the Plumas-Sierra Rural Electric Cooperative, which,
at any given point in time, is a party to the Joint Powers Agreement.
5 APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
1.20 TANC Treasurer and TANC Controller
The persons appointed by the Commission to serve respectively as TANC Treasurer,
and TANC Controller, as provided in the Joint Powers Agreement.
1.21 Tesla -Midway Transmission Service fTMTS)
Three hundred (300) megawatts of firm bidirectional transmission service provided
by PG&E to TAMC, which is allocable by TANC to its SOT Members, pursuant to
the Principles or a FERC accepted transmission rate schedule ('TRS).
1.22 Tesla -Midway Transmission Service Agreement (TMTS Agreement)
An agreement that may be made between TANC and PG&E, including the
Principles or a FERC accepted TRS, which provides for certain transmission and
other services over PG&E's facilities.
1.23 Tesla -Midway Transmission Service Charge CTMTS Charge)
Those charges that are made from time to time by PG&E to TANC pursuant to the
TMTS Agreement, including but not limited to, monthly transmission service
charges, mitigation charges, and special facilities charges related to TANC's share
of the Initial Reinforcements.
2. AUTHORIZATION
TANC is hereby authorized and directed to act on behalf of the SOT Members in any
fl®
281
activities necessary to fulfill its obligations or enforce its rights related to the Principles, a
successor TMTS Agreement, subject to procedures for SOT Member approval and
authorization established by the TANC Commission pursuant to this Agreement and the
terms and conditions of the Joint Powers Agreement.
PARTICIPATION
3.1 Subject to Sections 3.2 and 3.3 below, each SOT Member, by executing this
Agreement, hereby elects to receive an Allocation of TANC's TMTS. Such election,
and payment of its share of the SOT Service Charges, permits a SOT Member to
6 APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
21'
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
receive an Allocation in accordance with Appendices B-1 and B-2, as those
Allocations may be revised pursuant to this Agreement. Further, such election shall j
obligate the SOT Member to all terms and conditions provided for by this
Agreement
3.2 While Section 3.1 above permits SOT Members to participate in this Agreement, the
SOT Members recognize that the services and obligations under this Agreement are
contingent upon the TANC Commission's acceptance of TMTS provided by PG&E.
3.3 In the event that fewer than all of the SOT Members elect to accept an Allocation
from TANC once the TANC Commission accepts the TMTS Agreement, Appendix
B-1 shall, within thirty (30) days of the date that the TMTS Agreement is approved
by the TANC Commission, be revised to reflect the participation by those SOT
Members electing to take service. Such revision shall be determined in accordance
with the procedures as established in Section 4.3 of this Agreement.
4. REALLOCATIONS
TMTS may be reallocated among SOT Members consistent with the Principles or the TMTS
Agreement Such Reallocations shall be permitted, provided that the resulting total
Allocations equal 300 MW in each direction. Procedures for Reallocation shall be as
follows:
4.1 Short -Term Reallocations - A Short -Term Reallocation, to be in effect for no longer
than six (6) months, may be made pursuant to an agreement reached among the
SOT Members participating in the Short -Term Reallocation. Such Short -Term
Reallocation shall be made provided that such a reallocation is offered to one or
more SOT Members and such offer is at a price in accordance with Section 4.4.1
below. Such Short -Term Reallocations shall not relieve any SOT Member of its
responsibilities for payments or any other related obligations to TANG.
4.2 Long -Term Reallocations - A Long -Term Reallocation, which shall be effective upon
the first day of a future month and continue in effect for more than six (6) months,
7 APPROVED BY TAMC COMMISSION . DECEMBER 76, 7992
1D
11
12
13
14
15
16
17
1E
is
2C
21
22
23
24
V
2(
2,
2f
may be made by the TANC Commission. Such a Long -Term Reallocation shall be
made pursuant to a resolution approving a revised Appendix B-2 by the TANC
Commission, provided that such a Long -Term Reallocation is offered in the
following manner.
4.2-1 A SOT Member may make a written request to the TANC Commission to
offer a Long -Term Reallocation. The other SOT Members shall be notified
immediately of such a written request. All SOT Members shall have a pro -
rata right to the available Allocation in accordance with the Permanent
Allocations as shown in Appendix B-1. The pro rata right, in percent, of
each SOT Member, other than the SOT Member making the offer, shall be
equal to:
Pro rata right, in percent = SOT Members PA., in MW X 100%
(SLcm of all PA in MW) - (Amt. of PA of the SOT Member making the offer, in MW)
Where P.A. equals the Permanent Allocations, as shown in Appendix B-1, at the time the offer is made.
Within forty-five (45) days of the date of that written request, all SOT
Members must notify the TANC Commission of their desired amount of
such available Allocation.
4.2.2 To the extent that there remains a residual amount of the available
Allocation after following the procedures set forth in Section 4.2-1 above,
the remainder of the available Allocation may be offered, in accordance
with the TMTS Agreement, to third parties and any such Allocation shall
be made available at negotiated terms and conditions.
4.2.3 Such Long -Term Reallocations shall not relieve any SOT Member of its
ultimate responsibilities for payments or any other related obligations to
TANC.
4.3 Permanent Reallocations - A Permanent Reallocation shall be made by the TANC
Commission pursuant to the following procedures:
8 APPROVED BY TAMC COMMISSION . DECEMBER 16,1992
1'i
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
4.3.1 A SOT Member may make a written request to the TANC Commission to
offer a Permanent Reallocation. The other SOT Members shall be notified
immediately of such a request. All SOT Members shall have a pro rata
right to the available allocation in accordance with the Permanent
Allocations as shown in Appendix B-1. The pro rata right, in percent, of
each SOT Member, other than the SOT Member making the offer, shall be
equal to:
Pro rata right, in percent = SOT Members PA., in MW X 100%
(Stun of all PA, in MW) - (Amt of PA of the SOT Member making the offer, in MW)
Where P.A. equals the Permanent Allocations, as shown in Appendix B-1, at the time the offer is made.
4.3.2 To the extent that there remains a residual amount of the available
Allocation after following the procedures set forth in Section 4.3.1 above,
the remainder of the available Allocation may be offered, in accordance
with the TMTS Agreement, to third parties and any such Allocation shall
be made available at negotiated terms and conditions.
4.3.3 Such Permanent Reallocations to a SOT Member shall relieve the SOT
Member of its obligations under this Agreement to TANC with respect to
that Permanent Reallocation. Any SOT Member receiving such Permanent
Reallocation shall assume all rights and obligations under this Agreement
with respect to that Permanent Reallocation. Any third party to which a
Permanent Reallocation is made shall have only the right to receive and use
the portion of TMTS represented by that Permanent Reallocation. All
obligations under this Agreement with respect to a Permanent Reallocation
to a third party shall remain with the reallocating SOT Member.
4.3.4 The TANC Commission shall revise Appendices B-1 and B-2 to reflect the
Permanent Reallocation, with all third parties receiving Permanent
Reallocations shown as footnotes in Appendices B-1 and B-2.
4.4 Charges for Reallocations - Charges for Reallocations of SOT Members' Allocations
shall be as follows:
9 APPROVED BY TANC COMMISSION - DECEMBER 16, 1992
22'
23
24
25
26
27
28
1®
4.4.1 Short -Term Reallocations shall be charged an amount that is equal to the
price agreed to by the SOT Member providing the Short -Term Reallocation
and the SOT Member(s) receiving the Short -Term Reallocation, provided
that the price shall not exceed, but may be less than, 100 percent of the SOT
Short -Term Reallocation Rate pursuant to Appendix D. Such Short -Term
Reallocations shall be billed by the SOT Member(s) providing the
Reallocations to the SOT Member(s) receiving those Reallocations.
4.4.2 Long -Term Reallocations and Permanent Reallocations shall be charged an
amount, as described in Section 12.1, which reflects their pro -rata share of
the SOT Service Charge through a modification to Appendix B-1 or B-2, as
appropriate, that reflects such Reallocations. Such Long -Term Reallocations
and Permanent Reallocations shall be billed by TANC to its SOT Members
pursuant to Section 12 of this Agreement.
4.5 For purposes of this Agreement, the SOT Members hereby covenant and agree that
any Reallocation to third parties under this Agreement will not, in any way,
adversely affect the exclusion of the interest on any of the TANC indebtedness from
gross income for federal income tax purposes under Section 103 of the Internal
Revenue Code of 1986, as amended, and the applicable regulations thereunder (or
any successors to such statute and regulations), including without limitation, by
reason of classification of such TANC indebtedness as a "private activity bond"
within the meaning of said Code.
VOTING
Actions, approvals or authorizations required under this Agreement shall be given or
withheld by the TANC Commission using the general voting procedures described in the
Joint Powers Agreement, subject to the following provision:
5.1 The TANC Commission shall exercise all the powers of TANC and shall require (1)
for a quorum, the presence of TANC Commissioners who together represent a
10 APPROVED BY TANC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
it
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
majority of the Permanent Allocations, as shown in Appendix B-1, represented by
the TANC Commissioners of SOT Members not in default under this Agreement at
the time of the vote and (2) for any action requiring a vote of the TANC
Commission, votes totalling not less than sixty-five (65) percent of the Permanent
Allocations represented by the TANC Commissioners of SOT Members not in
default under this Agreement at the time of the vote and no fewer than four of the
SOT Members voting affirmatively.
6. REINFORCEMENT COSTS
6.1 Initial Reinforcements Cost Sharing - TANC's share of the capital cost for the Initial
Reinforcements has been provided for under the provisions of a letter agreement,
dated December 30,1991, between TANC and PG&E (attached as Appendix E). The
SOT Members shall reimburse TANC for those costs in the form of a monthly
payment as shown in Appendix D. To the extent that this Agreement terminates
prior to the completion of the repayment by the SOT Members for those costs, the
TANC Treasurer may be authorized by the TANC Commission to bill the SOT
Members for the remaining costs in a manner to be determined by the TANC
Commission,
6.2 SOTR (Los Banos -Gates) - In accordance with the voting provisions of Section 5 of
this Agreement, TANC may elect in the future to participate in the SOTR. If such
election is made, the following provisions shall apply:
6.2.1 TANC's participation in the SOTR shall be offered to TAMC Members as
follows:
(a) For the first three hundred megawatts (300 mw) of TANC's
participation, each SOT Member not then in default shall be
entitled to take up to at least an amount equal to its Permanent
Allocation expressed in megawatts as set forth in Appendix B-1,
which is in effect as of the date of TANC's election to participate
11 APPROVED BY TANG COMMISSION - DECEMBER 16, 7992
1
2
3
4
5
6
7
8
9
10
18
19.
20
21,
22
23
24
25
26
27
28
6.2.2
6.2.3
in any subsequent South of Tesla transmission service provided by
TANC to its SOT Members as a result of TANC's contribution to
the SOTR.
(b) For amounts of TANC's participation above the first three
hundred megawatts specified in part (a) above, TANC shall offer
such remainder to all TANC Members, including those not
currently SOT Members, on a pro -rata basis based on the
participation percentages shown in column B of Appendix C of the
TANC agreement entitled, 'Transmission Agency of Northern
California Project Agreement No. 3 for the Califon -da -Oregon
Transmission Project."
(c) To the extent there remains any additional TANC's
participation that has not been allocated after completion of the
process described in subsection (b) above, such remainder will be
offered to any other TANC Member(s) and third parties.
Those SOT Members who elect to take such service as a result of the SOTR
shall establish procedures for the administration and obligations of such
service.
Any SOT Member which elects not to take such service as a result of the
SOTR shall continue to receive an equivalent amount of service from TANC
for a period no longer than three (3) years from the date of the written
notification of TANC's election to participate in the SOTR. Such non -
electing SOT Member shall be financially obligated for its share of the costs,
excluding any costs related to the SOTR, that TANC incurs as a result of
continuing to provide this service during that period. In addition, at the
end of such service, the non -electing SOT Member shall be billed, as a one-
time lump -sum charge, for the remainder of its pro -rata share of the costs
for the Initial Reinforcements.
12 APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1C
11
12
13
14
15
if
17
1E
15
2(
21
Z
2Z-
24
-25
2!
20
2:
2E
6.2.4 No such election is required at the date of the execution of this Agreement;
therefore, this Agreement does not obligate either TANC, the SOT
Members, or any other TANC Members to participate in the SOTR.
7. AUTHORITY OF THE TANC TREASURER AND TANC CONTROLLER
At the direction of the TANC Commission, the following authorities are granted:
7.1 The TANC Treasurer and the TANC Controller are hereby authorized to render
monthly bills, in accordance with Section 12 of this Agreement and Appendix D, to
the SOT Members for the SOT Service Charge and for any replacement power
provided by PG&E to the SOT Members.
7.2 The TANC Treasurer is hereby authorized to make payments for TMTS Charges
pursuant to the TMTS Agreement provided that such invoices are approved for
payment pursuant to the procedures or policies adopted by the TANC Commission
including any expedited payment procedures for payment of invoices.
7.3 The TANC Controller is hereby authorized to adjust previous bills rendered to SOT
Members when necessary to reflect changes in cost components of the SOT Service
Charge.
7.4 The TANC Treasurer and TANC Controller may be authorized to perform additional
duties, as appropriate, to carry out the responsibilities of TANC under this
Agreement.
8. USE OF THE ALLOCATIONS
8.1 Member Power Scheduling Rights - During any scheduling period, each SOT
Member or its designated agent shall have the right to schedule power transactions
up to its Long -Term Allocation as shown in Appendix B-2, adjusted for any Short -
Term Reallocation, and subject to any Curtailment.
8.2 SOT Transmission Service Use Information Coordination - Each SOT Member or its
designated agent shall provide the TANC Commission with information required
13 APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12
13'
14
15
1611
17
18
19
20
21
22
23
24
25
26
27
28
11a*
to meet TANC's obligations under the TMTS Agreement. The TANC Commission
shall submit such information to PG&E in accordance with the TMTS Agreement.
8.3 Curtailment - Curtailments, if any, of TMTS in either direction will be shared on a
pro -rata basis among the SOT Members, consistent with the TMTS Agreement.
8.4 Curtailment Procedures - Other specific procedures which implement the provisions
of this Section 8 shall be determined by the TANC Commission.
WITHDRAWAL
9.1 Withdrawal from TANC - TANC and the SOT Members hereby agree that the 300
MW of firm bidirectional TMTS is provided to TAMC. If a SOT Member should
withdraw from TAMC, TANC shall cease to allocate TMTS to a withdrawing SOT
Member, unless notified otherwise pursuant to Section 9.3 below.
9.2 The SOT Member withdrawing under Section 9.1 shall remain financially obligated
to TANC for all costs associated with that SOT Member's Allocation until such time
as another SOT Member(s) agrees to assume such financial responsibility.
9.3 A withdrawing SOT Member may, upon advance notice to the TANC Commission,
request to continue to receive an Allocation of TMTS after having withdrawn from
TANG. Such continued receipt of service will continue to be subject to the terms
and conditions of this Agreement.
10. DEFAULT
10.1 Upon the failure of any SOT Member to meet its obligations hereunder, TANC shall
give written notice of the failure to such SOT Member or former SOT Member and,
if such failure has not been cured within forty-five (45) days after the date of such
notice, it shall constitute a default at the expiration of that forty-five (45) day period.
10.2 If such default is not cured at that time, the SOT Member shall be considered to
have permanently waived any and all rights to receive an Allocation of TANC's
14 APPROVED BY TAMC COMMISSION -DECEMBER 16,1992
21
Z
212
24
2.'
2(
R
2f
TMTS. All SOT Members recognize and agree that no SOT Member has any
ownership rights to TMTS. To the extent that a SOT Member, which has defaulted,
has any remaining financial obligations to TANC for costs, including the TMTS
Charge, such obligations remain with that SOT Member unless the obligations are
satisfied by other SOT Member(s).
10.3 In the event that a SOT Member's default remains uncured, each SOT Member
severally agrees that the Allocation of each non- defaulting SOT Member shall be
increased by the product of the ratio of the non -defaulting SOT Member's Allocation
to the sum of all non -defaulting SOT Members' Allocations, expressed as a
percentage, times the Allocation of the defaulting SOT Member. Such an increase,
which is limited to a cumulative maximum of twenty-five percent (25%) above the
Permanent Allocations shown in Appendix B-1 as of the effective date of this
Agreement, shall not require the consent of the non -defaulting SOT Member(s). To
the extent that the Allocation of the defaulting SOT Member is greater than the
increase in the non -defaulting SOT Members' Allocations provided for in the
preceding sentence, any residual Allocation shall be offered in accordance with the
Reallocation provisions in Sections 4.2 and 4.3.
10.4 Upon a default, in addition to the rights and remedies available to TANC pursuant
to Section 10.3, TANC may protect and enforce its rights hereunder by suit or suits
in equity or at law, whether for the specific performance of any covenant herein or
for damages or in aid of the execution of any power granted herein or any other
remedy available under any provision of applicable law.
10.5 The term "SOT Member", when used in this Section 10, shall include a former SOT
Member that has withdrawn pursuant to Section 9.
11. EFFECTIVE DATE AND TERM
11.1 This Agreement shall become effective sixty (60) days after the date on which the
TANC Commission adopts a resolution authorizing execution of the Agreement on
15 APPROVED BY TAMC COMMISSION - DECEMBER ]6, 1992
10
11
12
13
14
15
U
17
1E
19
A
2]
22
23
24
2E
2E
2'
2f
behalf of TANC provided that SOT Members with Permanent Allocations totaling
at least 95 percent of TANC's TMTS have executed the Agreement on or before that
date.
11.2 If the SOT Members that have executed the Agreement total more than 95 percent
of the Permanent Allocations, but less than 100 percent, each of those SOT Members
severally agrees that the Permanent Allocation of each executing SOT Member shall
be automatically increased, on a pro -rata basis as shown in Appendix B-1, until all
of TANC's Permanent Allocations of TMTS have been completed, provided that the
SOT Members may otherwise agree to different increases so long as the total SOT
Members' Permanent Allocations equal 100 percent.
11.3 This Agreement shall remain in full force and effect as long as (A) the Joint Powers
Agreement, and (B) a TMTS Agreement remain effective, provided however that this
Agreement will no longer be in effect upon the date it is superseded by a successor
agreement.
11.4 A successor agreement, as referenced in Section 11.3 above, shall contain the
principles of Section 6.2 of this Agreement.
12. BILLING AND PAYMENT
12.1 Determination of Bills - Bills rendered by the TANC Treasurer to the SOT Members
shall reflect the basic cost sharing responsibility which is calculated by multiplying
the SOT Long -Term Allocation (as shown in Appendix B-2, expressed as a
percentage) by the SOT Service Charge. In addition, any SOT Member which
receives replacement power from PG&E pursuant to the TMTS Agreement shall
have the cost associated with its usage of replacement power reflected in its bill.
12.2 Monthly bills shall be rendered by the TANC Treasurer to SOT Members in -a timely
manner. Such bills shall be sent by either United States mail first class, postage
prepaid or its equivalent, or by facsimile to the billing address specified in
16 APPROVED BY TANC COMMISSION - DECEMBER 16, 7992
1
2
3
4
5
6
7
8
9
10
11
121
131
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Appendix C-1. The designation of any person specified in Appendix C-1 may be
changed at any time by advance notice given to the TANC Treasurer.
12.3 Billings for amounts payable shall be due on the twenty-fifth (25th) day after receipt
of the bill. If the due date falls on a non -business day of either party, then the
payment shall be due on the next following business day without interest.
12.4 Amounts of monthly billings not paid on or before the due date shall be payable
with an Interest Charge calculated from the due date to the date of payment.
12.5 In case any portion of any monthly bili is in dispute, the entire bill shall be paid
when due and the dispute referred to the TANC Commission for resolution. If the
TANC Commission determines that an overpayment was made, the overpayment
shall be refunded. If the refund exceeds five hundred dollars ($500.00) and is more
than one (1) month past due, it shall be paid with interest at a rate based on the
Interest Charge less two (2) percentage points.
13. INSURANCE
TANC shall maintain, or cause to be maintained in force, insurance as may be determined
prudent in the judgment of the TANC Commission to effect the purposes of this
Agreement.
14. INDEMNIFICATION
TANC shall indemnify, defend, and hold harmless each SOT Member, and its governing
board members, officers, employees, consultants, and agents, from any liability for personal
injury, death, or property damage arising out of the negligent or willful misconduct of
TANC pursuant to this Agreement, or the TMTS Agreement. TANC shall not be obligated
to indemnify, and shall not be liable to, any SOT Member for economic loss arising out of
any act or omission on the part of TANC while carrying out its obligations under this
Agreement.
17 APPROVED BY TANG COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
15. LIABILITY OF TANC OFFICERS
15.1 Release - Each SOT Member agrees that TANC's Commissioners, officers, and
employees shall not be liable to the SOT Members for direct, indirect or
110
consequential loss or damage suffered by the SOT Members as a result of: (i) the
performance or nonperformance by TANC under the TMTS Agreement or (ii) the
performance or nonperformance of TANC under this Agreement. Each SOT
Member releases TANC's Commissioners, officers, employees, the Treasurer and the
Controller from any claim or liability (whether based on negligence or otherwise)
as a result of any actions or inactions of TANC under this Agreement or the
performance or non-performance by TANC under the TMTS Agreement.
15.2 No Modification - The provisions of this Section 15 shall not be construed so as to
relieve TANC of any obligations under the TMTS Agreement and the provisions of
this Section 15 shall not be construed to modify or amend Paragraph 2 of the Joint
Powers Agreement.
NOTICE
16.1 Manner of Notice - Any notice or demand by a SOT Member to TANC under this
Agreement shall be deemed properly given if deposited in the United States mail
first class postage prepaid or its equivalent, or sent via facsimile or other electronic
media and confirmed by telephone or in writing within twenty-four (24) hours,
addressed to TANC at its operational office; any notice or demand by TANC to any
SOT Member under this Agreement shall be deemed properly given if deposited in
the United States mail first class postage prepaid or its equivalent, or sent via
facsimile or other electronic media and confirmed by telephone or in writing within
twenty-four (24) hours, addressed to the addressee as shown in Appendix C-2. The
designations of the name and address to which any such notice or demand is
directed may be changed at any time and from time to time by any party giving
notice as above provided in this Section.
18 APPROVED BY TANC COMMISSION - DECEMBER 16, 1992
1
2
3
4
5
6
7
8
9
10
11
12'
18
19
20
21
22
23
24
25
26
27
28
16.2 Time Comyutation - In computing any period of time from such notice, other than
for billing as specified in Section 12, such period shall commence on the date mailed
or, if sent via facsimile or other electronic media, on the date sent.
17. APPLICABLE LAW
This Agreement is made under and shall be governed by the laws of the State of California.
18. SEVERABIL=
If any section, paragraph, clause, or provision of this Agreement, or any part thereof, shall
be finally adjudicated by a court of competent jurisdiction to be invalid, the remainder of
this Agreement shall remain in full force and effect as though such section, paragraph,
clause, or provisions or any part thereof so adjudicated to be invalid had not been included
herein and the parties shall renegotiate the terms and conditions of this Agreement so as
to carry out the intent of the invalid provision.
19. APPENDICES
This Agreement includes Appendices A, B-1, B-2, C-1, C-2, D, and E attached hereto and
are incorporated herein by this reference. Appendices B-1, B-2, C-1, C-2, and D may be
amended, modified, or otherwise changed or rescinded by the TANC Commission in
accordance with the voting provisions of Section 5 without effect on the remainder of this
Agreement.
20. WAIVER
Any waiver at any time by any party of its rights with respect to a default under this
Agreement, or with respect to any other matters arising in connection with this Agreement,
shall not be deemed a waiver with respect to any subsequent default or other matter.
19 APPROVED BYTANC COMMISSION - DECEMBER 16, 1992
1
2
3
4
5
6I
7
8I
9
10
11
121
13
14'
15I
16I
17
18
19
20
21
22
23
24
25
26
27
28
21. CAPTIONS
Except as used for definitions, all indexes, titles, subject headings, section titles and similar
items are provided for the purpose of reference and convenience and are not intended to
be inclusive, definitive, or to affect the meaning or scope of this Agreement.
22. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall be deemed
to be an original and all of which, when taken together, shall constitute a single li
Agreement.
23. SIGNATURES
TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
By:
Date:
CITY OF ALAMEDA
By:
Date:
CITY OF HEALDSBURG
By:
Date:
CITY OF LO %�
By: �L
Thomas A. Peterson, City Manager
Date: January 20, 1993
20 APPROVED BY TAMC COMMISSION - DECEMBER 16, 1992
1
2
3
4
5
6
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
CITY OF LOMPOC
By:
Date:
MODESTO IRRIGATION DISTRICT
By:
Date:
PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE
By:
Date:
CITY OF REDDING
By:
Date:
CITY OF ROSEVILLE
By:
Date:
SACRAMENTO MUNICIPAL UTILITY DISTRICT
By:
Date:
CITY OF SANTA CLARA
By:
Date:
21 APPROVED BY IANC COMMISSION - DECEMBER 16,1992
TURLOCK IRRIGATION DISTRICT
By:
Date:
CITY OF UKIAH
By:
Date:
1D
11
12
13
14
15
if
17
1E
19
2[
21
m
21
24
2?
2(
27
2f
22 APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
10
11
12
13
14
15
if
17
1E
15
2C
2]
22
23
24
25
2E
25
2f
APPENDDC A
PRINCII'LES FOR TESLA -MIDWAY TRANSMISSION SERVICE
APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
1010
i
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PRINCIPLES FOR TESLA -MIDWAY TRANSMISSION SERVICE
Whereas, certain California utilities and agencies signed the
Memorandum of Understanding - California -Oregon Transmission
Project dated December 19, 1984 (11MOU91) which relates to the
development of a new 500 kV AC transmission facility (#1COTP11)
between the California -Oregon border and the Tesla Substation;
Whereas, sections 2.2 and 2.3 of the MOU contemplate that Pacific
Gas and Electric Company (1tPG&Ef1) will provide firm bidirectional
transmission service between Tesla and Midway Substations under
reasonable rates, terms and conditions up to specified amounts
to: the cities of Anaheim, Azusa, Banning, Colton, Riverside,
and Vernon (#'Southern Cities"), San Diego Gas & Electric Company
(fISDG&Eft) , Southern California Edison Company ("Edisonfl) and the
Transmission Agency of Northern California (11TANC11) (collectively
11MOU Participants") ;
Whereas, certain MOU Participants and certain other Designated
Participants have executed the flRevised Principles", and IANC and
PG&E have determined that the Revised Principles as modified for
-TANC pursuant to the terms and conditions herein will form the
basis for negotiating a definitive transmission service agreement
under the terms and conditions contemplated by the MOU;
Now, therefore, these principles are agreed to as of 25 ,
1989 by and between PG&E and TAMC.
-1-
1
2
3
4
5
6
7
8
9
10�
11'
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1.0 DEFINITIONS
1.1 CPPA Board of Control - The Board of Control
established under the July 20, 1964 @'California Power
Pool Agreement's among PG&E, Edison, and SDG&E.
1.2 COTP Terminus - The southernmost point of change in
ownership of facilities between. PG&E and the COTP
Participants, or as otherwise agreed by the parties.
1.3 CPUC - The Public Utilities Commission of the state of
California or its regulatory successor.
1.4 Designated Participants - The parties receiving
transmission service in accordance with the Revised
Principles or like agreements, including TAMC under
these principles.
1.5 Entitlements - The firm and non-firm transmission
service to be provided to each Designated
Participant. For TANG, three hundred (300) megawatts
of firm, bidirectional transmission service provided by
PG&E according to the terms and conditions of these
principles unless increased in accordance with Section
5.3.
1.6 FERC - The Federal Energy Regulatory Commission or its
regulatory successor.
-2-
1
2
3
4
5
6
7
8
9
10
111
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
i
1.7 Initial Reinforcements - Those transmission system
reinforcements, other than South of Tesla
Reinforcements, installed by PG&E according to the
terms and conditions of Sections 4.1 and 5.2 to
increase the Transmission Capability over PG&E's system
between Tesla Substation/COTP Terminus and Midway
Substation to meet the transmission requirements of the
Designated Participants.
1.8 Mitigation Measures - Changes by PG&E in its operations)
in order to avoid or eliminate transmission service
curtailments even though these changes may be
uneconomic to PG&E, provided that PG&E in its sole
judgment determines that it can reasonably do so and is
fully compensated for such actions as provided herein.
Such actions shall include but not be limited to
curtailment of third party loads if appropriate,
uneconomic dispatch of hydro and pumped
storage/generation resources, operation of higher cost
generation and purchase of power from others. such
actions shall not include any change in the operation
of Diablo Canyon Nuclear Power Plant.
1.9 Pre -specified Mitigation - Mitigation Measures
consisting of switching PG&E's AC Intertie schedules to
PG&Els DC Intertie schedules when DC line capacity is
available and increasing or decreasing Morro Bay
C:�M
1
2
3
4
5
6
7
8
9
10
11
12I
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
generation to the extent available, for which PG&E is
compensated as provided in Section 5.4.
1.10 Priority Commitments - PG&EIS obligations to meet load
and load growth of its customers in northern
California, and to transmit electricity, by reason of
its status as a public utility and its existing
contracts, including but not limited to, its
interconnection contracts with utilities in northern
I
California and the California Power Pool Agreement,'
the Pacific Intertie Agreement and the PG&E-DWR
Comprehensive Agreement, and excluding transmission
service provided by PG&E to Third Parties, and to
Designated Participants under these principles, Revised
Principles, and like agreements.
2.11 Prudent Utility Practice - Those practices, methods,
and equipment, including provisions for contingencies
and reserves, as modified from time to time, that are
commonly used to operate electric power facilities (a)
reliably and safely to serve a utility's customers
dependably and economically, with due regard for the
state of the art in the electric power industry, (b) by
utilities which have at least 200 MW of peak load, own
or operate at least 100 MW of generation and are
members of the WSCC, and which are located either in
the retail service areas of PG&E and TAMC Members or in
the State of California, whichever represents the
-4-
..._ G._:.. _
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
2i
2E
better application of the considerations in subsection
(a) above. The practices, methods, and equipment
examined under this definition are not limited to those
Of PG&E.
1.12 Revised Principles - The $#Revised Principles for
Tesla -Midway Transmission Service,$$ executed by PG&E
and certain MOU Participants or incorporated as part of
agreements with other parties for such service, as they
may be modified.
1.13 South of Tesla Reinforcements - A new Los Banos -Gates
line and directly associated facilities, unless PG&E,
in accordance with Prudent Utility Practice, identifies
another set of reinforcements which are as cost
effective, comparable in scope with, and serve the same
purpose as the Los Banos -Gates line and directly
associated facilities, which may be installed by PG&E
in accordance with Section 4.2 to increase Transmission
Capability to meet the transmission requirements of the
Designated Participants and PG&E as set forth under the
terms and conditions of the Revised Principles, these
principles, and like agreements.
1.14 TAMC Member - Any of the Cities of Alameda, Biggs,
Gridley, 8ealdsburg, Lodi, Lompoc, Palo Alto, Redding,
Roseville, Santa Clara, and Ukiah; the Sacramento
Municipal Utility District; the Modesto Irrigation
1 District; the Turlock Irrigation District; or the
2 Plumas-Sierra Rural Electric Cooperative, Inc.;
3 provided that such entity has not relinquished or
4 assigned its rights and interests in TANC's entitlement
5 in the COTP or, if the COTP is not constructed, has not
6 relinquished or assigned its rights and interests in
7 TANC's Entitlement under these principles or the
8 definitive successor transmission service agreement.
9
10 1.15 Third Party - An entity, to the extent that it is
11 neither receiving services as a Designated Participant
12 nor served under Priority Commitments or PG&E's
13 entitlements referred to in Section 3.2. Nothing in
14 these principles shall create any expectation or
15 obligation of PG&E to provide any service to a Third
16 Party.
17
18 1.16 Transmission Capability - The transfer ability,
19 expressed in megawatts, of PG&EIS transmission
20 facilities to transmit electric energy between Midway
21 Substation and Tesla Substation/COTP Terminus, which is
22 determined by PG&E in its sole judgment, consistent
23 with Prudent Utility Practice, to be the maximum power
24 transfer ability of the transmission facilities' under
25 operating conditions existing at the time of
26 determination.
27
28
-6-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
26
26
27
28
2.0 GENERAL TERMS
2.1 Effective Date of Principles - These principles shall
become effective upon execution by PG&E and TAMC and
shall remain in effect until a definitive successor
transmission service agreement is executed by PG&E and
TAMC. PG&E and TAMC shall use best efforts to complete
a definitive successor transmission service agreement
by September 1, 1989. PG&E shall use good faith
efforts to file such agreement with FERC within sixty)
days after execution. TAMC and PG&E agree that such
definitive successor transmission service agreement
shall reflect and implement Section 2.3 of the HOU
fully, provided that any rights and obligations of the
parties under Section 2.3 of the MOU shall not be
satisfied fully until the South of Tesla Reinforcements
are completed or such definitive successor transmission
service agreement terminates in accordance with Section
8 of these principles.
2.2 Provision of Service - Beginning January 1, 1990, PG&E
shall provide firm bidirectional transmission service
in the amount of TANCIs Entitlement between Midway
Substation and points of receipt and delivery set forth
in section 2.4 pursuant to the definitive successor
transmission service agreement embodying the terms and
conditions of these principles, subject to the
conditions in section 2.6.
-7-
1
2
3
4
5
6
7
8
9
10
11
12
I
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
2.3 Effect on Other Agreements - PG&E and TAMC agree that
the present interconnection agreements and future
similar agreements between PG&E and TAMC Members and
between PG&E and the Northern California Power Agency
will be amended or will provide for receipt and
delivery of power transmitted hereunder at the backbone
level at no additional cost to IANC Members consistent
with Section 5.1.
2.4 Points of Receipt and Delivery - The points of receipt
and delivery by PG&E shall be:
2.4.1 Midway Substation to each TAMC Member, to
provide a complete transmission path from
Midway substation over system interconnect and
backbone subfunction transmission facilities
of PG&EIs electric system; provided that for a
given TAMC Member, transmission service
between PG&E's backbone facilities and that
TAMC Member shall be pursuant to an amendment
to the existing agreement between PG&E and
that TANC Member, if necessary, or a new
agreement if that TAMC Member does not have an
existing agreement with PG&E. For purposes of
Tesla -Midway transmission service for TAMC and
TAMC Members related to Sections 2.2 and 2.3
of the MOU, prior to January 1, 1999, or such
earlier date as may be applicable in
-8-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
191
20'
21
22
23
24
25
26
27
28
accordance with Section 5.6, if PG&E changes
the definition of backbone facilities, PG&E
will only charge TAMC whatever its charges
would have been with the definition of
backbone facilities in use as of January 1,
1989. PG&E also agrees that any changes in
its current definition of backbone facilities
prior to January 1, 1999, or such earlier date
as may be applicable in accordance with
Section 5.6, will not be used to require any
TAMC Member to obtain transmission service
between PG&E's backbone facilities and that,
TAMC Member which it would not have had tol
obtain without the change in definition of
backbone facilities.
2.4.2 Each TAMC Member to Midway Substation, to
provide a complete transmission path from each
TAMC Member's electric system over system
interconnect and backbone subfunction
transmission facilities of PG&E's electric
system; provided that for a given TAMC Member,
transmission service between that TAMC Member
and PG&Efs backbone facilities shall be
pursuant to an amendment to the existing
agreement between PG&E and that TAMC Member,
if necessary, or a new agreement if that TAMC
Member does not have an existing agreement
-9-
1
2
3
4
5
6
7
8
9
10
11
12
i
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
with PG&E. For purposes of Tesla -Midway
transmission service for TAMC and TAMC Members
related to Sections 2.2 and 2.3 of the MOU,
prior to January 1, 1999, or such earlier date
as may be applicable in accordance with
Section 5.6, if PG&E changes the definition of
backbone facilities, PG&E will only charge
TAMC whatever its charges would have been with
the definition of backbone facilities in use
as of January 1, 1989. PG&E also agrees that
any changes in its current definition of
backbone facilities prior to January 1, 1999,
or such earlier date as may be applicable in,
accordance with Section 5.6, will not be used
to require any TAMC Member to obtain
transmission service between PG&EIs backbone
facilities and that TAMC Member which it would
not have had to obtain without the change in
definition of backbone facilities.
2.4.3 Midway Substation to the COTP Terminus/Tesla
Substation, only for delivery onto the COTP.
It is TANC's intent to transmit power
delivered onto the COTP to various points,
including, but not limited to Tracy
Substation, Olinda Substation, and Malin
Substation utilizing TANC's COTP capacity.
Since TANC's rights . to use its COTP
-10-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
entitlement, like the rights of all COTP
Participants, will be defined in the COTP
Participation Agreement and perhaps other
project agreements, these principles do not
address the issue of rights to use the COTP.
2.4.4 COTP Terminus/Tesla Substation to Midway
Substation only for receipt from the COTP. It
is TANC's intent to transmit power received
from various points on the COTP including, but
not limited to Malin Substation, Olinda
Substation, and Tracy Substation to Midway
Substation utilizing TANCfs COTP capacity.
Since TANC's rights to use its COTP
entitlement, like the rights of all COTP
Participants, will be defined in the COTP
Participation Agreement and perhaps other
project agreements, these principles do not
address the issue of rights to use the COTP.
2.5 TAMC Members, acting through TAMC, and PG&E agree to
use best efforts to amend or enter into the agreements
described in Sections 2.3, 2.4.1 and 2.4.2 by September
1, 1989, and not to condition such amendments or
agreements on the inclusion of any other terms and
conditions which are unrelated to or inconsistent with
these principles.
-11-
1
2
3
4
5
6
7
8
9
10
11
121
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
2.6 Regulatory Approvals - Implementation of these
principles and the definitive successor transmission
service agreement is subject to and conditioned upon
PG&E obtaining in a form and manner satisfactory to it,
which determination shall be made in good faith and
shall not be arbitrary or capricious, all governmental
approvals, including rate filings, permits and
certificates required to carry out these principles and
such transmission service agreement. These principles
and the definitive successor transmission service
agreement will be reexamined and reconsidered by PG&E
and TAMC to the extent either is found by any court or
regulatory agency or body having competent
jurisdiction, to be unlawful, unjust, unreasonable,
imprudent or otherwise not in the public interest.
Nothing in this Section 2.6 shall be construed to
conflict with the time period specified in Section 6.3
during which transmission service hereunder is deemed
firm following PG&E's inability to install South of
Tesla Reinforcements.
2.7 These principles represent a compromise between PG&E
and TAMC concerning the meaning and implementation of
Section 2.3 of the MOO. The parties agree that these
principles establish no precedent with regard to any
other entity or agreement, or to the meaning and
implementation of Section 2.3 of the MOO if the
-12-
1
2
3
4
5
6
7
8
9
10
11.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
definitive successor transmission service agreement
does not become effective.
3.0 CONTINUITY OF SERVICE
3.1 General - PG&E shall maintain continuity of
transmission service for TAMC subject to PG&E's use of
Transmission Capability between Midway substation and
the points of receipt and delivery set forth in section
2.4 and transfer capability between PG&E and Edisonds
system (including PG&E's share of the Midway -Vincent #3
line) for its Priority Commitments, provided that PG&E
may as it determines necessary in its sole judgment
curtail service to TANC pursuant to this Section 3 to
maintain continuity of service to loads, system
reliability and stability and to avoid or remedy
conditions which may jeopardize its electric system or
service thereon, or as is otherwise required for
maintenance or Prudent Utility Practice. Any
curtailment pursuant to this Section 3.1 shall be made
in accordance with the priorities set forth in Section
3.2, except as modified below. It is recognized that
under system jeopardy conditions PG&E's priority will
be to maintain the integrity of its electric system and
there may be instances where it is not possible to
curtail strictly in accordance with the priorities set
forth in Section 3.2. In such cases, PG&E's system
-13-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
operators shall use good faith efforts to curtail
consistent with the priorities set forth in Section
3.2.
3.1.1 In conjunction with maintaining continuity of
service, PG&E shall coordinate with TAMC its
schedules for planned outages which would
affect service to TAMC.
3.1.2 Prior to completion of the South of Tesla
Reinforcements, PG&E shall implement Pre-
specified Mitigation to the extent available
up to a total of 200 MW south -to -north and 700
MW north -to -south for TAMC and other
Designated Participants under the terms and
conditions of these principles. Subsequent to
the completion of the South of Tesla
Reinforcements, the charges in Section 5.4
shall cease, and service to TAMC shall not be
curtailed if curtailments can be mitigated or
eliminated by PG&E implementing Mitigation
Measures for which PG&E shall bear the costs.
3.2 Curtailment Priorities - In the event that
transmission line loading, based on daily preschedules,
hourly schedules, or real time determination by PG&E
dispatchers, is in excess of the amount of Transmission
Capability, such excess loading may be curtailed by
-14-
1
2
3
4
5
6
7
8
9
10,
I
I1
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PG&E under the terms and conditions of these principles
for TAMC and like agreements for Designated
Participants and Third Parties in the following
sequence:
3.2.1 Non-firm and interruptible transmission
service commitments except as otherwise
specified below.
3.2.2 Any firm transmission service for or on behalf
of Third Parties who have not contributed to,
the Initial Reinforcements or the South of
Tesla Reinforcements.
3.2.3 Any use by PG&E in excess of PG&EIS 500 MW of
reserved Transmission Capability and Priority
Commitments which also exceeds the amount of
additional Transmission Capability PG&E has
obtained through its contribution to the South
of Tesla Reinforcements in accordance with
Section 5.3.
3.2.4 Non-firm Entitlements of the Designated
Participants and any interruptible
transmission service for or on behalf of Third
Parties who have contributed to the Initial
Reinforcements.
-15-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
2v
2E
2i
2E
3.2.5 Any use by PG&E of its 500 Mw of reserved
Transmission capability, the firm Entitlements
of the Designated Participants, and any firm
transmission service for or on behalf of Third
Parties when such entities (i) have
contributed to the Initial Reinforcements,
(ii) have not contributed to South of Tesla
Reinforcements and (iii) do not request
Mitigation Measures.
3.2.6 The firm Entitlements of Designated
Participants and any firm transmission service
for or on behalf of Third Parties when such
entities (i) have contributed to Initial
Reinforcements, (ii) have not contributed to
the south of Tesla Reinforcements and (iii) do
request Mitigation Measures or have agreed to
Pre -specified Mitigation according to Sections
3.1.2 and 5.4; and, prior to completion of the
South of Tesla Reinforcements, any use by PG&E
of its 500 KW of reserved Transmission
Capability for which it implements Mitigation
Measures.
3.2.7 Transmission service for Designated
Participants and Third Parties who have
contributed to South of Tesla Reinforcements,
any use by PG&E in excess of its 500 MW of
-16-
1
2
3
4
5
6
7
8
9
10
11
12
13
14'
15
16
17
18
19
20
21
22
23
24
25
26
27
28
reserved Transmission Capability for which it
has contributed to South of Tesla
Reinforcements, and any use by PG&E of its Soo
MR of reserved Transmission Capability.
3.2.8 Priority Commitments
Curtailments in accordance with any of the foregoing
categories shall be pro -rata among all entities in that
category based on Entitlements, contract rights of',
Third Parties, and the uses reserved to PG&E in this
Section 3.2.
3.3 PG&E shall give TAMC reasonable advance notice prior to
curtailing transmission service pursuant to section 3.1
or 3.2. Provisions for determination of transmission
line loading in excess of Transmission Capability shall
be included in the definitive successor transmission
service agreement.
4.0 REINFORCEMENTS
4.1 Initial Reinforcements - PG&E shall promptly complete
its study and propose a plan of service pursuant to the
terms and conditions of these principles for Initial
Reinforcements to its transmission system between Tesla
and Midway Substations. PG&E will meet with TAMC and
the other Designated Participants in order to discuss
-17-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
i=
any comments they may have on the proposed plan of
service and thereafter, giving due consideration to
their comments, adopt a plan of service and install
reinforcements necessary to implement it. TANG shall
accept its share of the cost responsibility for these
Initial Reinforcements in accordance with section 5.2.
4.2 South of Tesla Reinforcements - PG&E and TANC recognize
that reinforcements to PG&E's system may be required)
to maintain the adequacy of PG&E's transmission service'
for IANC and other Designated Participants. When PG&E
determines that South of Tesla Reinforcements are
necessary, PG&E shall give notice to the Designated
Participants at least six years in advance of the time
when such reinforcements are to be completed. Once
such determination is made, PG&E shall study and
propose a plan of service for the South of Tesla
Reinforcements. PG&E shall meet with the Designated
Participants in order to discuss any comments they may
have on the proposed plan of service and thereafter,
giving due consideration to their comments, adopt a
plan of service and install facilities and equipment
necessary to implement it. TAMC shall accept its share
of the cost responsibility for -South of Tesla
Reinforcements in accordance with Section 5.3, unless
(i) it elects not to contribute its share of the costs
in accordance with Section 8.2.1 or (ii) the definitive
successor transmission service agreement terminates in
-18-
1
2
3
4
5
6
7
8
9
10
11
12
I
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
accordance with Section 8.2.2, 8.2.3 or 8.2.4 before
TANG has made its election in accordance with Section
8.2.1 or contributed to the South of Tesla
Reinforcements. TAMC shall not be required to
contribute to the cost of the South of Tesla
Reinforcements prior to the time that the CPPA Board of
Control, as presently constituted, determines by
affirmative vote of at least PG&E and Edison that such
reinforcements are necessary. In the event that PG&E
has already initiated the South of Tesla Reinforcements)
when such determination is made by the CPPA Board of
Control, the timing of TANCIs cost contribution shall
be the same as if PG&E had initiated such
reinforcements after such determination was made by the
CPPA Board of Control.
4.3 Beneficial Use - To the extent TAMC can demonstrate
that PG&E or a Third Party is making beneficial use of
the additional Transmission Capability created by the
Initial Reinforcements, or that a Third Party is making
beneficial use of the Transmission Capability created
by the South of Tesla Reinforcements, and has not
contributed to the cost of such reinforcements, PG&E
or, if after PG&Efs use of best efforts that Third
Party agrees, that Third Party shall contribute a just
and reasonable share of the costs of such
reinforcements. To the extent TANC can demonstrate
that PG&E is making beneficial use of the additional
-19-
1
2
3'
4,
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Transmission Capability created by the South of Tesla
Reinforcements beyond the 300 MW or more of additional
Transmission Capability PG&E has paid for pursuant to
Section 5.3, PG&E shall contribute a just and
reasonable share of the cost of the South of Tesla
Reinforcements in addition to the contribution already
made pursuant to Section 5.3. If agreement on such
cost sharing cannot be reached, then the matter shall
be submitted to arbitration. Beneficial use shall not
include PG&E's use for its 500 MW of reserved)
Transmission Capability or for Priority Commitments.
4.4 Ownership - PG&E shall own, operate and maintain all
reinforcements to its electric system in connection
with these principles.
4.5 Diligence - After the South of Tesla Reinforcements are
determined by the CPPA Board of Control to be necessary
in accordance with Section 4.2, PG&E shall use due
diligence to install such reinforcements. In the event
that PG&E is unable to obtain any approvals required
for PG&E to install the South of Tesla Reinforcements,
PG&E shall make such proposals as are, in its judgment,
reasonable alternatives to installing such
reinforcements itself, including giving due
consideration to permitting TANC to install such
reinforcements.
-20-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
4.6 TAMC Alternative Project - In the event that TANC
terminates the successor definitive transmission
service agreement pursuant to Section 8.2.1 because
TAMC elects to construct facilities in lieu of
contributing to the cost of . South of Tesla 11
Reinforcements, TAMC shall offer PG&E the opportunity
for joint ownership of a substantial portion of the
amount of transmission capability from such facilities
in excess of TANC1s needs provided that (i) regulatory
or other approvals required for PG&E's participation in
TANCIs facilities do not result in a delay in
construction unsatisfactory to TAMC, (ii) such
participation by PG&E does not impair TANCOs ability to
finance such facilities or increase TANCts financing
costs, and (iii) such opportunity does not preclude
TAMC from giving other utilities and agencies the opp-
ortunity to participate in ownership of such
facilities. In the event that PG&E receives permission
from the CPUC to participate once construction of such
facilities has begun, TAMC shall afford PG&E the
opportunity to participate to the extent that there is
remaining capacity in excess of TANCfs and other
Participants$ needs, provided that such participation
by PG&E does not adversely impact TANC1s existing,
pending, or future financing for such facilities.
4.7 Refund of Contribution to Reinforcements - In the event
-21-
1
2
3
4
5
6
7
8
9
10�
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
that the successor definitive transmission service
agreement terminates pursuant to Section 8 after TAMC
has contributed to the cost of the South of Tesla
Reinforcements, PG&E shall refund to TAMC its
contribution as follows:
4.7.1 TAMC shall receive no refund until ten
years after the commercial operation date of
the South of Tesla Reinforcements, except to
the extent that TANG demonstrates beneficial
use of the South of Tesla Reinforcements by
PG&E or a Third Party in accordance with
section 4.3.
4.7.2 After the first ten years of commercial
operation, or to the extent the demonstration
is made in accordance with Sections 4.3 and
4.7.1, PG&E shall pay TANC that portion of
TANC's contribution toward the cost of South
of Tesla Reinforcements equal to the book
value of TANC's contribution, not including
any adjustment for applicable taxes,
depreciated using a useful life of thirty
years.
5.0 RATES AND CHARGES
5.1 Transmission Service Charge - For transmission service
-22-
1
pursuant to Section 2.2, TAMC shall pay PG&E's current
2
rates on file with the FERC. The combined rates
3
(system interconnect and backbone) for each of the
4
years 1990 and 1991 shall be $0.74 per kA-month applied
5
to TANCIs Entitlement. Except as provided in Section
6
5.1.1, rates for subsequent periods shall be as
7
mutually agreed or as may be unilaterally filed by PG&E
8
with the FERC under Section 205 of the Federal Power
9
Act. TAMC shall have the right to intervene, protest,
10
or otherwise oppose any such unilateral filing. Zn
11
addition, after 1991 TAMC retains all rights it may
12
have under Section 206 of the Federal Power Act. Firm
13
transmission service will be billed on a contract
14
demand, take-or-pay basis for TANCIs Entitlement. The
15
parties acknowledge that PG&E and individual TAMC
16
Members have or may have separate agreements which
17
provide for area, backbone, and system interconnect
18
transmission charges. PG&E agrees to provide
19
bidirectional transmission service between Midway
20
Substation and the points of receipt and delivery as
21
set forth in Section 2.4 for the charges under these
22
principles and not to impose additional backbone or
23
-system interconnect charges in connection with service
24
under these principles and under such separate
25
agreements. Charges for area transmission- service,
26
where applicable, will be provided in accordance with
27
such separate agreements between PG&E and TAMC Members.
28
-23-
1
2
3
4
5
6
7
8
9
10
11
12,
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5.1.1 Except as provided in Section 5.6, the rates
applicable from January 1, 1992 through
December 31, 1998 shall be ME's backbone and
system interconnect charges reflecting
system -average cost based functionalized
rates, changed based only on changes in ME's
costs.
5.2 Initial Reinforcement Charge - TANC shall pay, as
further defined in the definitive successor
transmission service agreement, its proportionate share
of the costs of the Initial Reinforcements, adjusted
for applicable taxes, and associated annual ownership
charges. Such costs shall include the study costs, not
to exceed $2.6 million, associated with such
reinforcements and the Los Banos -Gates Project. Such
costs for Initial Reinforcements are estimated to be
approximately $7.21 million before taxes. This
estimate is based on transmission studies and subject
to revision following completion of such
reinforcements. Such total costs shall be shared
proportionately among the Designated Participants and
Third Parties based on total subscriptions for such
I This estimate is subject to modification for,
among other things, the installation of additional
shunt capacitors at Tesla Substation to the extent
these costs are not covered under separate projects.
-24-
1 service. Designated Participants and Third Parties who
2 contribute to the cost of the Initial Reinforcements
3 shall receive appropriate reimbursement subsequent to
4 similar contributions made at a later date by other
5 Designated Participants or Third Parties. The annual
6 ownership charge for the Initial Reinforcements is
7 estimated to be $386,400 in 1990 allocated
8 proportionately to all contributing Designated
9 Participants and Third Parties.
10
11 5.3 South of Tesla Reinforcement Charge - The parties
12 anticipate that the South of Tesla Reinforcements will
13 increase the Transmission Capability by approximately
14 1100 to 1200 NW. Subject to Section 8, TAMC, PG&E and,
15 subject to separate agreement with PG&E, Edison, each
16 agree to pay for a share of the cost of the South of
17 Tesla Reinforcements, adjusted as to TAMC and Edison
18 for applicable taxes, and associated annual ownership
19 charges, as follows: TAMC - 300 MW, PG&E - 300 MW,
20 Edison - 281 NW. Such shares shall be divided by the
21 total shares allocated to TAMC, PG&E, Edison, other
22 Designated Participants and Third Parties (e.g., for
23 TANG, 300/total allocation), whether or not the total
24 shares allocated to TAMC, PG&E, Edison, other
25 Designated Participants and Third Parties exceed the
26 increased Transmission Capability resulting from the
27 South of Tesla Reinforcements. To the extent that any
28 portion of the cost of such reinforcements is not
-25-
1
2
3
4
5
6
7
8
9
10
11
i
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
allocated to other Designated Participants or Third
Parties in accordance with Section 5.3.3, TAMC, PG&E
and Edison shall each pay its proportionate share of
such amount and receive a corresponding increase in
Entitlement or transmission use. TAMC, PG&E, and
Edison also shall each pay its proportionate share of
PG&Ets associated annual ownership charges for the
South of Tesla Reinforcements. PG&E shall amend the
October 12, 1987 Revised Principles with Edison to
reflect the provisions of this Section 5.3.
5.3.1 In the event that Edison is relieved of its
obligation to contribute to the cost of the
South of Tesla Reinforcements pursuant to
separate agreement with PG&E, PG&E and TAMC
shall remain obligated to pay for 300 MW
shares each; however, PG&E shall not be
obligated to install the South of Tesla
Reinforcements until and unless Edison's
previous share of such reinforcements is
assumed by PG&E, TAMC, other Designated
Participants or Third Parties.
5.3.2 In the event that PG&E's participation in the
COTP terminates, PG&E shall be relieved of its
obligation to contribute to the cost of the
South of Tesla Reinforcements. In such event,
TANC and, subject to separate agreement with
-26-
1
2
3
4
5
61
7,
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PG&E, Edison, shall remain obligated to pay
for 300 MA and 281 MW shares, respectively;
however, PG&E shall not be obligated to
install the South of Tesla Reinforcements
until and unless PG&E's previous share of the
cost of such reinforcements is assumed by
Edison, TAMC, other Designated Participants or
Third Parties.
5.3.3 Unless ordered otherwise by a court or
regulatory agency of competent jurisdiction,
PG&E agrees to condition any agreements for
new firm transmission service longer than 10
years, including contract renewals, between,
Tesla Substation/COTP Terminus and Midway
Substation to Designated Participants or Third
Parties on agreement to pay a corresponding
share of the costs of the Initial
Reinforcements and the South of Tesla
Reinforcements. Firm transmission service
provided by PG&E to Third Parties for 10 years
or less between Tesla Substation/COTP Terminus
and Midway Substation may be subject to
payment of an appropriate share of the costs
of such reinforcements in accordance with
section 4.3. Transmission service provided by
PG&E which does not include a requirement to
pay for Initial Reinforcements and South of
-27-
l
1
2
3
4
5
6
7
8
9
10
ilk
12
131
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Tesla Reinforcements shall not be considered
by the CPPA Board of Control in determining
the need for the South of Tesla
Reinforcements. PG&E and TAMC also agree to
use their best efforts to obtain agreement by
Designated Participants and Third Parties to
whom PG&E has already committed, after
execution of the MOU, to provide firm
Tesla -Midway transmission service to pay a
corresponding share of the costs of the
Initial Reinforcements and, for service beyond
1999, the South of Tesla Reinforcements.
5.4 Pre -Specified Mitigation Charge - In accordance with
Section 3.1.2, TAMC shall pay PG&E as full compensation
for Pre -specified Mitigation as follows:
5.4.1 January 1, 1990 through December 31, 1993 -
$0.10/kW-month;
5.4.2 January 1, 1994 through December 31, 1998
$0.20/kW-month;
5.4.3 January 1, 1999 through December 31, 2004 -
.$0.30/kW-month.
-28-
I Except as provided in Section 5.6, the foregoing rates
2 shall be applied to TANCIs Entitlement and shall not be
3 subject to change before January 1, 2005.
4
5 5.5 Losses - PG&E shall be compensated for transmission
6 losses by an appropriate reduction to TANCIs power
7 deliveries based on functionalized system -average loss
8 factors or as otherwise mutually.agreed. The parties
9 acknowledge that PG&E and individual TAMC Members have
10 or may have separate agreements Which provide for area,
11 backbone, and system interconnect transmission losses.
12 PG&E agrees to provide bidirectional transmission
13 service between Midway Substation and the points of
14 receipt and delivery as set forth in section 2.4 with
15 losses as set forth in these principles and not to
16 impose additional backbone or system interconnect
17 losses in connection with service under these
18 principles under such separate agreements. Losses for
19 area transmission service, where applicable, will be
20 assessed in accordance with such separate agreements
21 between PG&E and IANC Members. The loss factors for
22 the system interconnect and backbone subfunctions are
23 currently 0.999534 and 0.981547, respectively. The
24 combined loss factor is 0.9810896 (e.g., deliveries
25 over the system interconnect and backbone are reduced
26 to an amount equal to the amount of power scheduled at
27 the contract point of origin within PG&E's system
28 multiplied by 0.9810896). PG&E may revise these loss
-29-
I factors from time to time, as appropriate, and shall
2 submit an analysis to TANG supporting those revisions.
3 If the parties agree on those revisions, they shall
4 sign a separate letter agreement accepting those
5 revisions which shall become effective immediately
6 thereafter. If the parties cannot agree, PG&E shall
7 have the right to file a revision with the FERC and
I
8 such revision shall become effective on the date it is
9 accepted for filing by FERC.
10
11 5.6 Early Termination of Rates - In the event that the
12 COTP is terminated or there is not substantial progress
13 towards its completion by January 1, 1995, or PG&E's or
14 TANCIs participation in the COTP terminates, Sections
15 5.1.1 and 5.4.3 shall no longer be in effect.
16
17 6.0- FIRMNESS OF TRANSMISSION SERVICE PRIOR TO SOUTH OF TESLA
18 REINFORCEMENTS
19
20 6.1 General - Transmission service provided hereunder shall
21 be deemed firm by PG&E and, subject to separate
22 agreement with TAMC, by Edison, for purposes of imports
23 to or exports from their respective control areas.
24
25 6.2 Replacement Power - Replacement power pursuant to these
26 principles is provided as an accommodation and in order
27 to reach agreement on the package of terms and
23 conditions for Tesla -Midway transmission service in
-30-
1
2
3
4
5
6
7
8
9
10
11
12
13'
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
these principles. In accordance with Section 2.7, by
agreeing to these principles the parties do not intend
that anything in these principles requires, or may be
used as a basis for requiring, that any replacement
power or similar service be made available or supplied
(1) to any TAMC Member other than under the definitive
successor transmission service agreement, or (2) to any
other entity. The parties acknowledge that PG&E is
able to provide replacement power under the terms in
these principles only because: (1) this service is
expected to be needed only occasionally in off-peak
periods and infrequently, if at all, in on -peak periods
based on TANC's anticipated use of south -to -north
transmission service; (2) this service will be provided
only to TAMC Members and only in accordance with they
conditions and limitations of these principles; (3)
this service is to be provided in connection with
curtailment of Tesla -Midway transmission service and
not for unavailability of any power resource or other
transmission service; and (4) PG&E will not be required
to add or purchase power to its system, or reduce the
integrity and reliability of service to Priority
Commitments in order to supply replacement power to
TAMC.
South -to -north transmission service shall be deemed
firm by PG&E for all purposes under the various
interconnection, integration, and sales and service
-31-
L
1
2
3
4
5
6
7
8
9
10'
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
agreements between TAMC Members and PG&E; however,
before the South of Tesla Reinforcements are installed,
to the extent that Pre -specified Mitigation for
south -to -north service is insufficient and TANC's
Entitlement is curtailed in accordance with Section 3.1
or 3.2, PG&E shall provide replacement power, to the
extent available and up to the amount of TANC1s
Entitlement, if requested by a TAMC Member.
Replacement power under this Section 6.2 shall not be
provided by PG&E to the extent that curtailments are
required and implemented by PG&E during on -peak periods
as a result of: (1) emergency conditions, including
Tesla -Midway transmission facility outages and partial
outages; or (2) actions taken by PG&E during system
jeopardy pursuant to Section 3.1. On -peak periods
shall be designated by PG&E, consistent with general
industry definitions and the load characteristics of
PG&E's electric system, and shall include 50% of the
hours in a week. Initially, on -peak periods shall be
Monday -Friday 7 a.m. to 10 p.m., Saturdays 1 p.m. to 10
p.m., subject to change with adequate notice given to
TAMC.
The price formula used in any given month through
December 31, 2004 shall be the quantity of replacement
power provided in kWh in a given month times 10,500
Btu/kWh times PG&E's monthly average fuel cost
(weighted average of oil and gas) for electric
-32-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
generation at PG&Egs conventional steam plants. PG&E's
average fuel cost for electric generation is currently
defined as the sum of:
(i) The annual average G-IIEG transportation rate
calculated based on the currently effective
G-IIEG gas transportation tariff or its
successor. (The annual average G-IIEG
transportation rate . is the current
CPUC -adopted annual revenues for utility
generation divided by the current CPUC -adopted
annual utility electric generation volumes);
and
(ii) The core and/or non-core gas procurement rates
(G -PC and/or G -PN, or their successor rates,
as applicable based on the gas procurement for
the month concerned), except when PG&E uses
oil rather than gas for some or all of its
power plants. In the latter case, PG&E may
use its weighted average price of oil and gas
instead of the applicable gas procurement
rate.
After December 31, 2004, replacement power shall be
priced as agreed by PG&E and TAMC or as filed with the
FERC by PG&E pursuant to Section 205 of the Federal
Power Act.
6.3 Term of Firmness - For purposes of Sections 6.1 and
-33-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
221
23
24
25
26
27
28
6.2, transmission service hereunder shall be deemed
firm prior to the completion date of the South of Tesla
Reinforcements; if, however, after the South of Tesla
Reinforcements are determined by the CPPA Board of
Control to be necessary in accordance with Section 4.2,
PG&E is unable to install such reinforcements after
exercising due diligence in accordance with section
4.5, transmission service hereunder shall be deemed
firm only until the later of (i) January 1, 2004 or
(ii) 8 years following the date the CPPA Board of
Control makes such determination.
6.4 Limited Effect on Nature of Power Resources - Nothing
in these principles shall be construed to define or
determine that any power resource is firm except to the
extent that firm transmission is an element of such
definition or determination.
7.0 UNCONTROLLABLE FORCES
The obligations of any party under these Principles and successor
agreements thereto, except for payment obligations, shall be
subject to uncontrollable forces. Further, such obligations
shall be subject to PG&E's discretion in allocating time and
materials during periods of shortage in order to avoid jeopardy
to its retail customers.
-34-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8.0 TERM OF SUCCESSOR DEFINITIVE TRANSMISSION SERVICE AGREEMENT
8.1 General - The successor definitive transmission service
agreement shall become effective when permitted to do
so by FERC and shall remain in effect for the longer of
(i) the term of the COTP Participation Agreement or
(ii) the date specified in Section 8.2.31 unless
terminated in accordance with Section 8.2.
8.2 Early Termination - The successor definitive
transmission service agreement shall terminate upon the
earliest of the following events or dates:
8.2.1 The later of (i) the completion of the South
of Tesla Reinforcements or (ii) three years
after the CPPA Board of Control makes the
determination that such reinforcements are
necessary in accordance with Section 4.2;
provided that South of Tesla Reinforcements
are determined to be necessary by the CPPA
Board of Control pursuant to Section 4.2 and
TANC gives written notice to PG&E within
ninety (90) days of such determination that it
elects not to contribute to the cost thereof
in accordance with Section 5.3.
8.2.2 The termination date specified in a written
-35-
1
notice given by TAMC to PG&E at least sixty
2
(60) days in advance of termination, following
3
a change by PG&E, accepted or approved by
4
FERC, in its methodology for computing or
5
developing transmission service charges, rates
6
or prices under Section 5.1 if such change in
7
methodology is reasonably estimated toi
8
increase charges, rates or prices for
g
transmission service under Section 5.1 by 35
10
percent over four years or less from the date
11
such changed methodology becomes effective.
12
If TAMC has contributed to the cost of South
13
of Tesla Reinforcements in accordance with
14
Section 5.3, TAMC shall have the option to
15
continue service until the date on which TAMC
16
receives a refund in accordance with Section
17
4.7, or any shorter period when the
18
termination date specified in written notice
19
given by TAMC to PG&E is at least 180 days
20
after such notice is given, in which case PG&E
21
agrees not to increase the transmission
22
service charges, rates or prices under section
23
5.1 by more than 35 percent in any four year
24
period prior to the expiration of the ten year
25
period described in Section 4.7; provided,
26
however, for purposes of Section 4.7, TAMC
27
shall be entitled to receive its refund at the
28
-36-
1
2
3
4
5
6
7
8
9
10
111
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
same time as it would have if TAMC had notl
elected to continue service.
8.2.3 The later of (i) January 1, 2010 or (ii) 10
years after completion of the South of Tesla
Reinforcements if TAMC contributes to the cost
of such reinforcements in accordance with
Section 5.3; provided . that the COTP is
terminated or is not in commercial operation
by January 1, 2000, or PG&E's or TANC's
participation in the COTP terminates. PG&E
shall not unreasonably withhold its consent to
extend for up to one year the above January 1,
2000 trigger date if substantial progress
toward completion of the COTP has been made
and is then underway.
8.2.4 The termination date specified in a written
notice given by TAMC to PG&E at least ninety
(90) days in advance of termination; provided
that PG&E does not initiate installation of
the South of Tesla Reinforcements within two
years of the determination by the CPPA Board
of Control that such reinforcements are
necessary in accordance with Section 4.2,
because (i) either PG&E or Edison has been
relieved of its obligation to contribute to
the cost of such reinforcements pursuant to
-37-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Section 5.3.1 or Section 5.3.2 and (ii) PG&Eos
or Edison's previous share of the cost of such
reinforcements is not assumed by PG&E, Edison,'
Designated Participants or Third Parties.
9.0 SIGNATURES
The signatories to these principles represent that they have been
appropriately authorized to enter into this agreement on behalf
of the party for whom they sign.
Pacific Gas and Electric Company
By:
Vice Pr side t
Power Planning and Contracts
Transmission Agency of Northern California
By: (I"t
P
Ch f,rman
-38-
1
2
3
4
5
6
7
8
9
10
11
12
13,
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
APPENDIX B-1
PERMANENT ALLOCATIONS
City of Alameda
City of Healdsburg
City of Lodi
City of Lompoc
Modesto Irrigation District
Plumas-Sierra Rural Electric
Cooperative
City of Redding
City of Roseville
Sacramento Municipal Utility District
City of Santa Clara
Turlock Irrigation District
City of Ukiah
TOTAL
B-1
(A) (B)
Expressed Expressed
in m
Percentages Megawatts
2.104
6.31
0.236
0.71
2.069
6.21
0.266
0.80
34.000
102.00
0.235
0.70
10.333
31.00
1.786
5.36
15.333
46.00
27.000
81.00
6.334
19.00
0.304
0.91
100.000
300.00
APPROVED BY TAMC COMMISSION • DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12'
13
14
15
16
17
18
19
20
21
22
23
24
25
26
28
APPENDIX B-2
LONGTERM ALLOCATIONS'
' This Appendix represents a summary of the impacts of Long -Term Reallocations upon
Permanent Allocations for the period beginning March 1, 1992 and ending December 31, 1993.
B-2 APPROVED BY TAMC COMMISSION . DECEMBER 16,1992
(A)
(B)
Expressed
Expressed
in
in
Percentages
Megawatts
City of Alameda
5.000
15.00
City of Healdsburg
0.236
0.71
City of Lodi
5.788
17.37
City of Lompoc
0.266
0.80
Modesto Irrigation District
34.000
102.00
Plumas-Sierra Rural Electric
0.235
0.70
Cooperative
City of Redding
0.000
0.00
City of Roseville
5.504
16.51
Sacramento Municipal Utility District
15.333
46.00
City of Santa Clara
27.000
81.00
Turlock Irrigation District
6.334
19.00
City of Uldah
0.304
0.91
TOTAL
100.000
300.00
' This Appendix represents a summary of the impacts of Long -Term Reallocations upon
Permanent Allocations for the period beginning March 1, 1992 and ending December 31, 1993.
B-2 APPROVED BY TAMC COMMISSION . DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
121
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
APPENDIX C-1
ADDRESSES OF THE PARTIES FOR BILLING
City of Alameda
Bureau of Electricity
P. O. Box H
Alameda, CA 94501
FAX #: 510/748-3975
City of Healdsburg
c/o Northern California Power Agency
180 Cirby Way
Roseville, CA 95678
FAX # 916/783-7693
City of Lodi
P. O. Box 3006
Lodi, CA 95241-1910
FAX #: 209/333-6795
City of Lompoc
100 Civic Center Plaza
Lompoc, CA 93438
FAX #: 805/736-5347
Modesto Irrigation District
P. O. Box 4060
Modesto, CA 95352
FAX #: 209/526-7575
City of Redding
Attention: Electric Department
760 Parkview Avenue
Redding, CA 96001-3396
FAX #: 916/224-4389
City of Roseville
Electric Department
2090 Hilltop Circle
Roseville, CA 95678
FAX #: 916/784-3797
Sacramento Municipal Utility District
Attention: Accounts Payable MS -27
P., O. Box 15830
Sacramento, CA 95852-1830
FAX #: 916/732-6587
C -la APPROVED BY TANC COMMISSION . DECEMBER 16, 1992
2
3
4
5
6
7
8
0
10
11
12
13
14
15
16
17
U
19
A
21
22
23
24
2°
2(
25
2i
City of Santa Clara
Electric Department
Attention: Accounts Clerk
1500 Warburton Avenue
Santa Clara, CA 95050
FAX #: 408/241-8291
Turlock Irrigation District
Attention: Power Resources Department
P. O. Box 949
Turlock, CA 95381
FAX #: 209/632-8181
City of Uldah
300 Seminary Avenue
Ukiah, CA 95482
FAX,#: 707/463-6204
Plumas-Sierra Rural Electric Cooperative
P. O. Box 2000
Highway 70,3 Miles West of Portola
Portola, CA 96122-2000
FAX #: 916/832-5761
Transmission Agency of Northern California
P. O. Box 15129
Sacramento, CA 95851-0129
FAX #: 916/852-1073
C -lb APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
71
8
9
10
11
12'i
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
APPENDIX C-2
ADDRESSES OF THE PARTIES FOR NOTICES
General Manager
City of Alameda
Bureau of Electricity
P. O.Box H
Alameda, CA 94501
FAX #: 510/748-3975
General Manager
City of Healdsburg
c/o Northern California Power Agency
180 Cirby Way
Roseville, CA 95678
FAX #: 916/783-7693
Electric Utility Director
City of Lodi
P. O. Box 3006
Lodi, CA 95241-1910
FAX #: 209/333-6762
Public Works Director
City of Lompoc
100 Civic Center Plaza
Lompoc, CA 93438
FAX #: 805/736-1261
Chief Operations Officer
Modesto Irrigation District
P. O. Box 4060
Modesto, CA 95352
FAX #:- 209/526-7574
Director, Electric Department
City of Redding
760 Parkview Avenue
Redding, CA 96001-3396
FAX #: 916/224-4389
Electric Utility Director
City of Roseville
Electric Department
2090 Hilltop Circle
Roseville, CA 95678
FAX #: 916/7843737
C -2a APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10'
11,
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Assistant General Manager
Sacramento Municipal Utility District
MS -41
P. O. Box 15830
Sacramento, CA 95852-1830
FAX #: 916/732-6562
Director of Electric Utility
City of Santa Clara
1500 Warburton Avenue
Santa Clara, CA 95050
FAX #: 408/241-8291
General Manager
Turlock Irrigation District
P. O. Box 949
Turlock, CA 95381
FAX #: 209/632-8181
City Manager
City of Uldah
300 Seminary Avenue
Ukiah, CA 95482
FAX #: 707/463-6204
General Manager
Plumas-Sierra Rural Electric Cooperative
P. O. Box 2000
Highway 70, 3 Miles West of Portola
Portola, CA 96122-2000
FAX #: 916/832-5761
Executive Director
Transmission Agency of Northern California
P. O. Box 15129
Sacramento, CA 95851-0129
FAX #: 916/852-1073
C -2b APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
APPENDIX D
PRICING FOR SOT TRANSMISSION SERVICE
1. The TANC Commission shall determine, from time to time, the SOT Service Charge and
the SOT Short -Term Reallocation Rate to be in effect for SOT transmission service to SOT
Members. The SOT Service Charge shall be used for billing purposes by the TANC
Treasurer when preparing the monthly bill to SOT Members. The SOT Short -Term
Reallocation Rate shall be used as the maximum rate for Short -Term Reallocations pursuant
to Section 4.4.1 of the Agreement.
2. SOT Service Charee - The SOT Service Charge shall be determined by including all costs
that TANC incurs to provide the service, provided however, that charges for replacement
power provided pursuant to the TMTS Agreement shall be billed by the TANC Treasurer
directly to the SOT Member which uses that service. The SOT Service Charge shall
include, but not be limited to, (i) the TMTS Charge plus, (ii) an amortized monthly amount
designed to fully recover the SOT costs for SOT -related litigation and the Initial
Reinforcements plus, (iii) any routine TANC administrative, legal, consulting, and other
costs related to SOT transmission service that TANC has occurred during the billing period.
For illustrative purposes, the SOT Service Charge shall be determined as follows:
SOT Service Charge =
(A+B+C)
Where: A= The total dollars that TANC has been charged by PG&E during the
current billing period, pursuant to the TMTS Agreement, excluding
any replacement power.
D-1 APPROVED BY TAMC COMMISSION - DECEMBER 16, 1991
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1®
B = The monthly charge which reflects the amortization of certain SOT
costs. Those costs shall include, but are not limited to, (i) all SOT
litigation costs as accrued, capitalized, and placed into debt serviceI
by TANC and (ii) TANC's contribution for the Initial Reinforcements.
The amortization period for those accrued costs shall be over a time
period beginning March 1, 1992 and ending May 1, 2024. The
interest rate shall reflect TANC's true interest costs as determined by
the appropriate bonds or their successor(s).
C = TANC's routine administrative, legal, consulting costs related to SOT
transmission service, and other SOT costs, based on TANC's annual
budget.
The SOT Service Charge shall be applied to any Long -Term Reallocations or Permanent
Reallocations pursuant to Section 4 of the Agreement.
SOT Short -Term Reallocation Rate - The SOT Short -Term Reallocation Rate shall be
determined using the most recent monthly SOT Service Charge as its basis. For illustrative
purposes, the rate shall be determined as follows:
SOT Short -Term Reallocation Rate'" SOT Service Charge'`
($/kW -day) 300,000 kW * 30.42
Where k = is the most recent billing period
The TANC Commission shall review the rate design for the SOT Short -Term Reallocation
Rate in Section 3 of this Appendix D by December 1st of each year. Any revision to the
rate design shall be in effect beginning January 1 of the following year, or as otherwise
determined by the TANC Commission.
D-2 APPROVED BY TAMC COMMISSION - DECEMBER 16, 1992
1
2
3
4
5
6
7
8
9
10
11
12
13
15
16
17
18
19
20
21
22
23
24
25
26
27
28
APPENDDC E
INITIAL REINFORCEMENTS LETTER AGREEMENT
APPROVED BY TAMC COMMISSION - DECEMBER 16,1992
December 30, 1991
Mr. Joseph B. Marcotte, Chairman
Transmission Agency of Northern California
P.O. Box 15129
Sacramento, CA 95851-0129
Dear Mr. Marcotte:
This letter sets forth the agreement between Pacific Gas and Electric Company
(PG&E) and the Transmission Agency of Northern California (IANC) regarding
the construction by PG&E of the South -of -Tesla Initial Reinforcements and the
contribution by TANC in aid of construction of such Initial Reinforcements as
contemplated by Sections 4.1 and 5.2 of the Principles for Tesla -Midway
Transmission Service (TANC Principles) entered into between PG&E and
TANC on August 25, 1989. Nothing in this letter agreement shall represent
agreement on any other issues currently the subject of settlement discussions
between the parties in conjunction with FERC proceedings (Docket Nos. EL91-
8-000, ER91-344-000, and ER91-505-000)) regarding South -of -Tesla
transmission service for TANC.
Payment: TANC shall pay to PG&E a lump sum of $5,000,000 before
the close of business on December 31, 1991. This amount consists of a
$3,906,250 capital contribution to the Initial Reinforcements, and
$1,093,750 (28 percent) for federal tax on Contributions In Aid of
Construction (CIAC). It is intended and agreed that the payment made
by TANC hereunder for its pro -rata share of the Initial Reinforcements
shall constitute payment in full of TANC's obligation in connection with
the construction and installation thereof. to the event that PG&E
subsequently constructs the more extensive project referred to as the
South -of -Tesla Reinforcements (SOTR), and TANC elects to contribute
to the cost of the SOTR, none of the costs related to the Initial
Reinforcements shall be included or assessed to TANC as part of its pro -
rata share of the costs of the SOTR unless the Parties agree at the time
to include such costs. If payment of the $5 million is received after
December 31, 1991, a six percent surcharge to account for state taxes
on CIAC shall be added to the lump sum amount and TANC shall pay
such additional amount. In addition, payment received in 1992 shall
include interest at 10 percent on an annualized basis accruing from
January 1, 1992 up to and including the date payment is received by
PG&E. TANC will receive no tax depreciation benefits associated with
the Initial Reinforcements that may accrue to PG&E.
Mr. Joseph B. Marco. , Chairman
December 30, 1991
Page 2 of 4
2. Conditional Refund of Payment for Tax on CIAO: Should TANC choose
to challenge the application of the federal or state tax on the CIAC made
by TANG, PG&E agrees to cooperate with TANC in preparing and
supporting such application. TANC shall bear the expenses of any such
filing. If such a ruling is received from the appropriate federal or state
authority, PG&E shall apply to the appropriate authority for a refund. If
PG&E makes such an application, TANC shall reimburse PG&E for a
pro -rata part of the actual administrative and clerical costs incurred.
Should it be determined that PG&E is not required to pay federal or state
tax on the CIAC made by TANC and such tax is not collected or is
refunded, PG&E shall return TANC's pro -rata share of such refund. In
the event that PG&E receives a refund of such tax which includes
interest to PG&E, PG&E shall return TANC's pro -rata share of any
associated interest on such payment to TANC. However, TANC shall
pay PG&E an amount to make it whole (on a net present value, after tax
basis) for any taxes and interest PG&E may incur at a later date, which
are attributable to TANC's contribution. Because this amount will be
difficult to compute, and its determination will be subject to significant
controversy, the parties agree that*FANC shall pay PG&E the following
sum, such amount being a reasonable approximation of the amount
described in the preceding sentence: the sum of (i) the total amount
includable in PG&E's gross income attributable to TANC's contribution
multiplied by the "gross -up" percentage for contributions -in -aid -of -
construction, as set forth in PG&E's CPUC Electric Tariffs, as applicable
to contributions received on the last day of the taxable year for which
such amount is so includable in PG&E's gross income, plus (ii) interest
with respect to the total amount described in (i) computed at the "CPUC"
Rate" from the due date (without extensions) of the federal tax return for
the taxable year in which such amount is includable, until the date TANC
pays to PG&E the total amount described herein. The "CPUC rate" is
interest at the average three-month commercial paper rate as published
in the Federal Reserve Bulletin, or such other rate as the CPUC may
establish from time to time to replace the rate in paragraph 18 of its
conclusions of law in Decision 87-09-026.
3. Refunds for Future Contributions: TANC shall be entitled to
reimbursement from contributions made at a later date by other
participants in the Initial Reinforcements Project. Such contributions
may be made by existing participants who increase their participation, or
new participants, who may make a capital contribution to the cost of the
Initial Reinforcements to obtain service. In calculating the equivalent
contribution for such a reimbursement, neither interest nor the six
percent state tax on CIAC shall be included (if TANC's payment is
received by PG&E on or before December 31, 1991), but federal tax on
CIAC at 28 percent shall be included unless a determination is made by
the IRS that the CIAC is non-taxable, in which case, the contribution will
include no tax component. Reimbursement to TANC shall be pro -rata,
Mr. Joseph B. Marc a, Chairman
December 30, 1991
Page 3 of 4
based on the MW share of each participant, and shall be limited to
contributions actually received by PG&E from new participants or
existing participants who increase their Initial Reinforcements Project
participation. To the extent that a new participant pays for a pro -rata
share of the entire study costs (without a $2.6 million study cost cap), the
portion contributed above the cap (including tax gross -up) will not be
reimbursed to TANG since TANG has not paid such costs. PG&E and
TANC will make good faith efforts to collect a full pro -rata contribution
from any new participant or any existing participant which requests or
obtains firm South -of -Tesla transmission service.
4. No Audit Rights: In return for PG&E's agreeing to accept a lump sum
from TANG as payment in full for TANG's share of the costs of the Initial
Reinforcements, TANG agrees to waive, for the limited purpose of this
Initial Reinforcements settlement, all claims it may have to an audit, a
final construction accounting, and a review of supporting documents for
a final cost accounting if PG&E undertakes such an accounting for the
Initial Reinforcements -- and PG&E shall have no obligation to provide
such rights to TANC in connection with the Initial Reinforcements.
5. Completion of Construction: PG&E agrees to construct the Initial
Reinforcements, as described in the Project Plan of Service attached
hereto as Appendix A, and to complete and have the same ready for
service within twenty-eight (28) months from date of the full execution of
this letter agreement. PG&E shall be responsible for obtaining all
necessary governmental and regulatory permits and approvals to
construct and operate the Initial Reinforcements. In the event the initial
Reinforcements are not completed and ready for service within twenty-
eight (28) months after the full execution of this letter agreement, unless
TANG otherwise agrees, PG&E shall refund to TANG its full contribution
made hereunder with interest at 10 percent on an annualized basis
accruing from January 1, 1992; provided that, PG&E has made a good
faith effort to complete the Initial Reinforcements and has failed to do so,
the refund would be pro rata based on actual benefits versus anticipated
benefits. TANG shall not unreasonably withhold its consent to extend for
up to four (4) months the time period for completion of construction
without refund if substantial progress toward completion of the Initial
Reinforcements has been made and is then underway.
6. TANC's Monthlv Pavment for Special Facilities for the Initial
Reinforcement: TANG's monthly payment for Special Facilities (also
sometimes referred to as Annual Ownership Charge) shall begin on the
first of the month following commercial operation of the Initial
Reinforcements. The amount of this monthly payment shall be as set
forth in the settlement agreement currently being negotiated by the
Parties or the TRS, whichever becomes effective.
Mr. Joseph B. Marcc , Chairman
December 30, 1991
Page 4 of 4
If you agree with the terms set forth above, please sign both duplicate originals
and return one to me.
Sincerely,
PACIFIC AS AND ELECTRIC COMPANY
Robert -J. Haywood
Vice President
Power Planning and Contracts
Accepted:
/�1--?v�/
Date
TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
N:Y)of
-•B. Marcoffe,
December 30, 1991
Date
Attachment a
PLAN OF SERVICE
SOUTH OF TESLA INITIAL REINFORCEMENTS PROTECT
The project has three construction components, as follows:
(1) Upgrade Existing Series Capacitors At Los Banos Substation
Upgrading the existing series capacitors at Los Banos Substation, in the Los
Banos -Midway #1 and #2 500 kV lines from 1,600 amp to 1,800 amp. This
upgrade includes:
a) Installing capacitor units at Los Banos Substation.
b) Rebalancing capacitor groups and strings.
c) Installing bracing for the capacitor bank platform.
(2) 230 W Station and Line Work
Establish two separate 230 kV circuits between Gates and Panoche Substations.
This upgrade includes:
a) Connecting to 230 kV the section of the Gates-Panoche 230 kV DCTL
currently used for the Gates -Coalinga No. 2 70 W line.
b) Installing new 230 kV circuit breakers at Gates and Panoche
Substations.
c) -Reconductoring the 230 kV bus at Panoche Substation.
d) Relocating the Panoche-Kearney 230 kV line termination.
(3) 70 kV Line Work
Replace the 70 W line currently using the Gates-Panoche 230 W DCTL. This
includes:
a) Acquire right-of-way for construction of the line.
b) Construct 11 miles of 70 kV line section to make available the
section of the Gates-Panoche 230 kV DCTL being operated at 70 kV.