2009 RPS Solicitation Workshop
Highlights of PG&E’s Form of Power
Purchase Agreement
August 3, 2009
1
2009 RPS Solicitation Workshop
Document Conflicts
2
•
This presentation is intended to be a summary level discussion of the
information and requirements established in the RFO materials (it does not
include all of the detailed information in the RFO Materials)
•
To the extent that there are any inconsistencies between the information
provided in this presentation and the requirements in the RFO Materials, the
RFO Materials shall govern
2009 RPS Solicitation Workshop
Non-Modifiable Standard Terms & Conditions
No Modification
PG&E PPA Reference
CPUC Approval
Article One Definitions, “CPUC Approval”
Green Attributes
Article One Definitions, “Green Attributes,”
and Section 3.2 Green Attributes
CEC Certification
Section 10.2(b) and Article One Definitions,
“Eligible Renewable Energy Resource”
Governing Law
Section 10.12
The above terms are highlighted in the online versions of the PPAs (see www.pge.com/rfo).
Notes:
• Non-modifiable STCs must appear exactly as they appear in the form PPA. No changes to
punctuation or typographical errors.
• Prior to execution of any PPA confirm with your transactional or regulatory attorney that the
above non-modifiable STCs are correct and that the CPUC has not made further changes to the
terms.
•In connection with the CPUC’s decision on TRECs, further non-modifiable STCs may be
applicable to RPS PPAs.
3
2009 RPS Solicitation Workshop
Articles One and Two: Definitions and Governing Terms and Term
4
•
Effective Date -- begins when Conditions Precedent are satisfied or waived in
writing by both Parties
•
Binding Nature
– Note that certain provisions are effective and binding as of the Execution
Date, others upon Effective Date
•
Conditions Precedent
– Term of PPA begins when:
– (1) PPA executed;
– (2) CPUC Approval obtained;
– AND
– (3) Seller documentation per Appendix XIII received; includes
documentation of CEC certification, site control, Seller’s articles of
incorporation and financial statements
– Either Party may terminate PPA if CPUC approval not obtained within 240
days of filing Advice Letter
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries
• Section 3.1(a) – Product
.
– As-Available or Baseload/Peaking/Dispatchable
As-Available: Wind, Solar, Run of River Hydro
Baseload: Biomass, Landfill gas, Geothermal
Dispatchable: Any technology for which the generator can guarantee
delivery of at least 95% in each of the months of June through
September with a minimum run time of eight hours per day
• Section 3.1(c) – Delivery Term
– TERM: 10, 15, 20, or Other contract years
– Seller to specify delivery term in PPA mark-up
5
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries
.
•
•
•
6
Section 3.1(d) – Delivery Point
– The PNode designated by the CAISO for the Seller’s generating facility.
Delivery Term beings after all of the following have been achieved:
– Commercial Operation Date
– Seller has posted Delivery Term Security
– Seller has received and provided PG&E evidence of CEC Certification for
the facility
– If the CAISO Participating Intermittent Resource Program (PIRP) is
available for the project, the facility has been PIRP-certified.
Section 3.1(e) – Contract Quantity and Guaranteed Energy Production
– Contract Quantity: Expected annual energy output; Seller to specify in PPA
mark-up
– The PPA includes a “Delivery Term Contract Quantity Schedule” to account
for degradation (Appendix V)
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
•
Guaranteed Energy Production (GEP): Minimum energy output
– As-Available other than Wind: 160% of Contract Quantity over two
(2) contract year period
– Wind, P-95 Value
– Baseload: 90% of Contract Quantity
•
GEP Shortfalls and Cure
– If Seller does not meet GEP, Seller may “Cure” energy shortfall
– Cure for GEP shortfalls is the same for all technologies
•
GEP: Physical Cure:
– If Seller fails to achieve GEP, the Seller must achieve 90% of
Contract Quantity in the following Contract Year. Then the normal
GEP calculation resumes the following Contract Year
7
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
8
•
GEP: Financial Cure
– If seller is unable to increase production in the “cure year,” (physical
cure) then Seller may pay liquidated damages to cure the GEP
deficiencies.
• GEP damages based on the difference between
( a) the Contract Price on a megawatt/hour (“MWh”) basis and
(b) the applicable spot market price for the energy at the PNode
and $50, which is the contract proxy for the REC value for the
green attribute.
• The GEP Damage calculation on a MWh basis cannot be less
than $20.
•
Default: Regardless of the “cure”, if Seller fails to achieve the GEP
target and consequently fails to deliver a cumulative amount of MWhs
over the Delivery Term in excess of the Contract Quantity amount, then
PG&E will have a default right.
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
9
•
Section 3.1(f) – Contract Capacity
– Seller specifies maximum capacity available for delivery
•
Section 3.1(h) – Interconnection Facilities
– Seller responsible for arranging interconnection and complying with interconnection
procedures
•
Section 3.1(j): Greenhouse Gas Emissions Reporting
– Seller must assist PG&E in complying with future climate change tracking requirements.
•
Section 3.1(k) WREGIS
– Seller is responsible for registering with and using WREGIS and taking all action to
transfer WREGIS Certificates to PG&E.
– Seller must register with before PG&E begins to pay for the Product being delivered to
PG&E under the PPA.
•
Sections 3.1(l) - Access to Data and Installation and Maintenance of Weather Station
– Equipment to be installed by Seller
– Seller duty to maintain and repair
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
•
Section 3.1(n) Obtaining and Maintaining CEC Certification and
Verification
– Facility must receive CEC pre-certification as a closing condition for
execution of the PPA. See Section 2.4(a)(iv) list of closing documents.
•
Section 3.2 Conveyance of Green Attributes (Non Modifiable)
•
Section 3.3 Resource Adequacy (RA)
– Seller commits to providing any RA capacity to PG&E as part of PPA and
complying with the CAISO’s RA protocols
•
Section 3.4(b) – Eligible Intermittent Resource Protocol (EIRP)
Requirements
– If available for the project type, Seller must certify project as Participating
Intermittent Resource, in PIRP.
– Seller must pay all fees and take all actions required to certify the Project in
PIRP and continue to keep the Project certified throughout the Delivery
Term.
10
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
Section 3.4(b) for Baseload; 3.4(c) for As-Available- Scheduling
PG&E is the Scheduling Coordinator
– PG&E will provide forecasting function
– PG&E will submit schedules
– PG&E will be responsible for imbalance charges, with exception
– PG&E will determine whether the energy will be scheduled through
EIRP or not.
– Forecasting Penalties apply if Seller fails to provide data to PG&E
for forecasting and resource availability.
11
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
12
•
Section 3.7 Outage Notification
– Provides protocols for the CAISO approval of outages, planned and
prolonged outage, force majeure
•
Section 3.9 New Generation Facility/Construction Milestones
– Guaranteed Project Milestones: Seller specifies Guaranteed Construction
Start Date and Guaranteed Commercial Operation Date
– Monthly Progress Reports to be provided by the generator on monthly basis
from the execution date of the PPA until the commercial operation date.
• Attachment A to Appendix III contains Monthly Progress Report format.
• Appendix III Milestone Schedule: Seller must list the key project
development milestone schedule.
– Section 3.9(a)(vii): Special requirements for wind and geothermal to
establish the likely output capability of the facility.
•
Final Output Report from wind facilities
•
Geothermal Reservoir Report for geothermal
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
•
Section 3.9(c) Permitted Extensions prior to Construction Start
Date
– Delays in construction start allowed for:
• Permitting-360 days
• Transmission-540 days
• ITC or PTC (if applicable)-540 days
• Force Majeure-360 days
– Permitting, Transmission and ITC/PTC delays may not cumulatively exceed
540 days.
– Generator must give notice of a delay and the extent of the delay
•
Permitted Extensions after the Construction Start Date
• Day for day delay of Guaranteed Commercial Operation Date based
upon the delays permitted for the Guaranteed Construction Start Date.
• If a separate Force Majeure event occurs after the Construction Start
Date, the generator will be given up to another 360 days to cure.
13
2009 RPS Solicitation Workshop
Article Three: Obligations and Deliveries (continued)
• Short Term Offer: Any offer with a term less than 10 years
– Minimum term = 1 month
• Form PPA includes “adjustments” for short terms contracts
with existing Eligible Renewable Resources (ERRs).
• Contracts with existing ERRs delete references to
construction, commercial online date milestones, and
resource adequacy requirements.
• Projects outside CAISO may substitute provisions in
Attachment N as appropriate
14
2009 RPS Solicitation Workshop
Article Four: Compensation; Monthly Payments
•
Section 4.1 – Contract Price
–
•
Section 4.3– Monthly TOD
Payment
–
–
•
Sum of each hour’s delivered
Energy times the Contract Price
times the TOD Factor
Example: 3-4 pm on a Tuesday in
June
• 50 MW scheduled * $246/MWh
contract price * 2.21 TOD
factor = $27,183
Section 4.4 Excess Delivered
Energy (as-available product)
–
15
Contract Price is specified by seller
If Seller delivers more than 120% of
annual Contract Quantity, payment
for excess energy shall be at 75% of
Contract Price
2009 TOD FACTORS FOR EACH TOD PERIOD
Period
Super-Peak
Shoulder
Night
A. June –
Septem
ber
2.21
1.12
0.69
B. Oct. –
Dec.;
Jan. &
Feb.
1.06
0.94
0.76
C. Mar. –
May
1.15
0.85
0.64
2009 RPS Solicitation Workshop
Article Five: Events of Default
•
16
Events of Default by Either Party
– Failure to make a payment if not remedied within 5 Business Days after Notice
– False or misleading representation or warranty
(1) When made; or
(2) during Delivery Term by Seller regarding ERR certification and RPS
qualification, unless due to a change in Law and Seller uses commercially
reasonable efforts to comply.
– Failure to perform any material covenant or obligation if not remedied within 30
days after Notice.
– Becoming Bankrupt
– Surviving entity fails to assume all PPA obligations (see also Assignment
provision)
2009 RPS Solicitation Workshop
Article Five: Events of Default (continued)
•
17
Events of Default by Seller
– Delivery or attempted delivery of Energy that was not generated by
the Project
– Failure to meet either Guaranteed Project Milestone after
expiration of Permitted Extensions and applicable cure periods
• But, no Event of Default if Force Majeure prior to CSD or COD
(see "Force Majeure Development Failure" in Section
11.2(a)(ii))
• Damages capped at Project Development Security if Seller
uses commercially reasonable efforts and misses:
(1) GCSD because of inability to obtain permits,
interconnection agreement
(2) (2) GCOD because of inability to achieve
interconnection or Electric System Upgrades
– Failure to satisfy credit/collateral requirements
2009 RPS Solicitation Workshop
Article Five: Events of Default (continued)
•
•
•
•
18
Failure to achieve Guaranteed Energy Production if:
(1) Seller fails to deliver GEP Cure or pay GEP Damages; or
(2) Cumulative amount of MWhs by which Seller missed GEP over
entire Delivery Term equals or exceeds Contract Quantity
– Exclusion for major equipment failure reducing Contract
Quantity by at least 60%
Failure to meet or maintain Net Rated Output Capacity or Capacity
Factor (Baseload, Peaking, Dispatchable)
Failure to maintain Availability Factor (Dispatchable)
Note: Prolonged FM post-COD no longer an Event of Default if "Force
Majeure Project Failure" (see Section 11.2(a)(i))
– 40% of Contract Quantity for 12 consecutive months due to FM
– Buyer termination right as specified in Section 11.2(a)(i)
2009 RPS Solicitation Workshop
Article Eleven: Force Majeure Termination
•
19
Section 11.2: Buyer’s right to terminate PPA following prolonged event
of FM
– Time period and threshold for Contract Quantity
– Mitigation Plan and Third Party Determination of Ability to Repair
– Unilateral Right to Terminate
– Buyer Right of First Offer
• Seller bound to a right of first offer to Buyer in the event that
Seller is able to place the project into commercial operational
within 3 years from the date of termination.
• Seller will only be allowed to increase the Contract Price to
provide for incremental costs to generator in overcoming force
majeure.
• If Buyer does not exercise right, Seller can sell to a third party
but must provide evidence that such sale does not provide a
lower rate of return to Seller than Seller would have yielded
based on Contract Price and terms in PPA offered to Buyer.
2009 RPS Solicitation Workshop
Article Five: Termination Payment
•
Termination
– Non-Defaulting Party sends Notice of Early Termination Date of PPA
– In addition to terminating PPA, Non-Defaulting Party has the right to:
(1) collect applicable damages (liquidated or Termination Payment);
(2) accelerate amounts owing between Parties and withhold any
payments due to Defaulting Party;
(3) suspend performance;
(4) draw on and retain Performance Assurance; and
(5) exercise any other available rights and remedies.
•
Termination Payment (when damages not liquidated):
– Calculate "Settlement Amount" as of Early Termination Date
• The Settlement Amount = sum of the Losses, Gains and Costs that the
Non-Defaulting Party incurs as a result of PPA termination
• No replacement transaction required to establish Settlement Amount
If the non-defaulting would owe a settlement amount to the defaulting party then
the settlement is deemed to be zero.
•
20
2009 RPS Solicitation Workshop
Article Six
•
•
21
Article Six: Payment
– Section 6.1 identifies what Seller shall provide to Buyer;
• Monthly verification reports;
• Monthly invoices
– Buyer to pay the undisputed amount
• If any amount disputed, Buyer to provide Notice stating basis of dispute
• Payment of disputed amount not required until dispute resolved
Any invoice dispute is waived unless Notice provided within 12 months after
invoice rendered or adjustment made.
2009 RPS Solicitation Workshop
Article Eight: Credit and Collateral
8.4 (b)-(e)
•
Initial Project Development Security
– Due within 5 business days of execution
– $15/kw times project capacity
– Posting in the form of Cash or Letter of Credit only
•
Project Development Security (PDS)
– Due within 30 days of CPUC approval
– $100/kw times greater of 50% or project capacity factor
– Posting in the form of Cash or Letter of Credit only
•
Delivery Term Security (DTS)
– Due upon Commercial Operation Date
– Amount is based on expected revenues
• 12 months output @guaranteed minimum energy production
(about 4% of total revenues)
– Posting in the form of cash, L/C, guarantee, or combination thereof
22
2009 RPS Solicitation Workshop
Article Eleven
• Section 11.1: Production Tax Credit (“PTC”)/Investment Tax
Credit (“ITC”) termination
– PTC extended through December 31, 2012 (wind) and December
31, 2013 (geothermal, biomass and other qualified technologies)
– ITC extended through December 31, 2016
– Amount
• $10 or $20/MWh for PTC depending on technology, or
• 30% ITC for solar, 10% for geothermal
– Seller right to terminate PPA, if (a) Commercial Operation date will
occur after the applicable “placed in service date” for the above
listed federal tax benefits and (b) PTC and ITC legislation is not
extended or alternate equal benefit provided to Seller.
23
2009 RPS Solicitation Workshop
Other
•
•
•
•
•
•
•
24
Article Seven: Limitation (Remedies, Liability and Damages)
Article Nine: Governmental Charges
Article Ten: Miscellaneous
– Confidentiality
– Audit
– Insurance
– Access to Financial Information
– Governing Law
Article 11: Conditions Precedent
Article 12: Dispute Resolution
Article 13: Notices
Appendices
2009 RPS Solicitation Workshop
Appendices
25
Appendix I
Form of Letter of Credit
Appendix II
Initial Energy Delivery Date Confirmation Letter
Appendix III
Milestones Schedule and Form of Monthly Progress Report
Appendix IV
Project Description Including Description of Site
Appendix V
Delivery Term Contract Quantity Schedule
Appendix VI
Commercial Operation Certification Procedure and Procedure for Subsequent
Capacity Terms
Appendix VII
GEP Damages Calculation
Appendix VIII
Outage Notification Form
Appendix IX
Certification of Third Party Agreement
Appendix X
Resource Adequacy
Appendix XI
Notices List
Appendix XII
Form of Consent to Assignment
Appendix XIII
Seller Documentation Condition Precedent
Appendix XIV
Additional Dispatch Product Provisions and Capacity Terms (Dispatchable) or Form of
Availability Report (As- Available)