RPS Bidders Workshop 1 Guidance for Inputs to 2008 RPS PPAs April 11, 2008 Disclaimer: Not to be considered or construed as legal advice or counsel; in

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RPS Bidders Workshop

Guidance for Inputs to 2008 RPS PPAs

April 11, 2008

Disclaimer: Not to be considered or construed as legal advice or counsel; in the event of any inconsistency with the Protocol, the Protocol shall govern.

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Article One: General Definitions

Article Two: Governing Terms and Term

No Modification Allowed PG&E PPA ReferenceCPUC Approval Article One Definitions, “CPUC Approval”

Green Attributes Article One Definitions, “Green Attributes”, and Section 3.2, Conveyance of Green Attributes

CEC Certification Section 10.2(b) Seller Representations and Warranties

Governing Law Section 10.12

Articles One and Two: Definitions and Governing Terms

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• Section 3.1(a) – Product– Two forms (Attachments G and H): Select applicable PPA form for As-

Available or for Baseload, Peaking, or Dispatchable Product

• Section 3.1(c) – Delivery Term– Select 10, 15, or 20 Contract Years – Other is allowed – Use Attachment G or H for offers with Delivery Terms of 5 years or greater

from existing resources, and for all offers from new resources

• Section 3.1(d) – Delivery Point– PPA template set up for delivery to PG&E at NP15– Mark-up PPA for delivery outside of NP15 or at the busbar (cross-reference

Section 3.1(h))– Use best available information to complete Section 3.1(d)

Article Three: Obligations and Deliveries

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Article Three: Obligations and Deliveries (continued)

• Short Term Offer: Any offer with a term less than 10 years

– Minimum term = 1 month

• Offers less than 5 years in length from existing resources should use short term offer form (Attachment M)

– Price may be fixed or indexed • If indexed pricing is selected, TOD factors do not apply• If fixed pricing is selected, bidder can elect to apply TOD factors

• Offers of 5 years or greater from existing resources, and all offers from new resources should use long-term offer forms (Attachment G or H)

– Price must be fixed– TOD factors apply

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• Section 3.1(e) – Contract Quantity– Enter the expected annual energy output (annual MWh)– For As-Available, also enter % of Contract Quantity guaranteed over

consecutive 24 month period; this is Guaranteed Energy Production (GEP)• Required to deliver no less than GEP in any period of 24 consecutive

months

• Section 3.1(f) – Contract Capacity– Enter the maximum capacity available for delivery (in MW)

• Section 3.1(h) – Interconnection Facilities– Enter the interconnection point (substation or transmission line), or best

available information regarding location of interconnection point


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• Section 3.4(b) – EIRP Requirements (for As-Available only; does not apply to Baseload)

– Pick the applicable paragraph depending on EIRP eligibility as of Execution Date

• Section 3.4(c) – Option for PG&E to be Scheduling Coordinator– If Seller selects this option in Attachment D, PG&E may elect to perform the

administrative function of SC for Seller, which involves submitting Seller’s schedules to the CAISO (PG&E not responsible for determining schedules)

– Seller remains responsible for forecasting, scheduling and providing schedules to PG&E in accordance with the terms and conditions of the PPA

• Section 3.9(c)(iii) – Guaranteed Project Milestones– Enter the Guaranteed Construction Start Date and the Guaranteed

Commercial Operation Date• Up to 180 day allowance for early COD• Up to 90 day delay for Force Majeure• Up to 60 day cure period for missing Guaranteed Milestones

– Not applicable for existing resources


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• Section 4.1 – Contract Price– For each Contract Year, enter the price per MWh

• Price can be flat or vary by Contract Year• Add rows to table if price escalates annually• Include Contract Price that assumes and does not assume availability

of PTC or ITC

• Section 4.3 (As-Avail) or 4.4 (Baseload) – Monthly TOD Payment

– Sum of each hour’s Scheduled Energy times the Contract Price times the TOD Factor

– Example: 3-4 pm on a Tuesday in June• 50 MWh scheduled x ($80/MWh Contract Price x 2.01 TOD factor) =

50MWh x $160.8/MWh = $8,040

Article Four: Compensation; Monthly Payments

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• Section 4.6 (As-Avail) and 4.7 (Baseload) – Imbalance Energy– If in EIRP (As-Avail), all imbalances between Scheduled and Delivered

Energy are settled between Seller and CAISO

– If not in EIRP (As-Avail and Baseload), true-up between Seller and Buyer based on price differences for Imbalance Energy and the TOD-adjusted Contract Price

– If Delivered > Scheduled (defined as Positive Imbalance Energy) and if the Imbalance Price > (Contract Price x TOD factor), Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance times the price difference [Imbalance Price – (Contract Price x TOD)]

– If Delivered < Scheduled (defined as Negative Imbalance Energy) and if the Imbalance Price < (Contract Price x TOD factor), Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance times the price difference [Imbalance Price – (Contract Price x TOD)]

Article Four: Compensation; Monthly Payments (continued)

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• Example: Positive Imbalance Energy– 50 MWh scheduled, 55 MWh delivered– Contract Price is $80/MWh, TOD factor is 2.037– Applicable Imbalance Price is $200/MWh– Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance

times the price difference [Imbalance Price – (Contract Price x TOD)]• (55 MWh – 50 MWh) x [$200/MWh – ($80/MWh x 2.037)]= $185.20

– If Imbalance Price < ($80/MWh x 2.037), then no true up

• Example: Negative Imbalance Energy– 50 MWh scheduled, 45 MWh delivered– Contract Price is $80/MWh, TOD factor is 2.037– Applicable Imbalance Price is $100/MWh– Buyer’s monthly payment to Seller is reduced by the amount of the Imbalance

times the price difference [Imbalance Price – (Contract Price x TOD)]• (45 MWh – 50 MWh) x [($100/MWh - $80/MWh x 2.037)]= $314.80

– If Imbalance Price > ($80/MWh x 2.037), then no true up


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Performance Adjustments for Baseload/Peaking PPA only• Section 4.3 - Capacity Factor

– To avoid incurring any Performance Adjustments, Seller must deliver no less than the specified Capacity Factors over all hours in each TOD Period (Performance Requirements)

• Section 4.6 –Settlement of Performance Adjustments

– For each of the TOD periods (Super-Peak, Shoulder, Night) within each of the months of Period A (June, July, August, and September), performance measured and settled monthly

– For each of the TOD periods in Period B (Oct-Feb) and Period C (Mar-May), performance measured and settled monthly, but then trued up on an aggregated basis for each Period B or C


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• The first table (from Attach. H Baseload Section 4.5) shows minimum required Capacity Factors (including maintenance allowance) for each TOD Period

• The second table (from Attach. H Baseload Section 4.6) shows the % adjustment for each 1% that the actual Capacity Factor is below the minimum Performance Requirement

Performance Adjustments for Baseload/Peaking PPA

Monthly Period 1. Super-Peak 2. Shoulder 3. NightA. June – September 95% 90% 80%

B. Oct. – Dec.; Jan. & Feb. 90% 85% 65%C. Mar. – May 80% 75% 65%

Performance Requirements: Capacity Factor For Each TOD Period

Monthly Period 1. Super-Peak 2. Shoulder 3. NightA. June – September 3.00 2.00 1.25

B. Oct. – Dec., Jan. & Feb. 2.50 1.75 1.25

C. Mar. – May 1.50 1.25 1.00

Performance Adjustment Factors For Each TOD Period

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• Example: Super-Peak period in June– 10 MW Contract Capacity, 1554 MWh Delivered– 176 hours in TOD period, 8 Seller Excuse Hours– Contract Price $80/MWh, TOD factor 2.037

• Capacity Factor = Delivered Energy / [Contract Capacity x (Hours in TOD Period minus Seller Excuse Hours)] = 1554 MWh / [10 MW x (176 hours – 8 hours)] = 92.5%

• Maximum Performance Adjustment = Contract Price x TOD Factor x 1.0000 x Contract Capacity x (Hours in applicable TOD Period minus Seller Excuse Hours) = $80/MWh x 2.01 x 1.0000 x 10 MW x (176 hours – 8 hours) = $270,144

• Performance Adjustment = (Performance Requirement - Capacity Factor) x Performance Adjustment Factor x Maximum Performance Adjustment = (95% - 92.5%) x 3.00 x $270,144= $20,261

Performance Adjustments for Baseload/Peaking PPA (cont’d)

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Payments and Performance Adjustments for Dispatchable PPA

• Section 4.10– Capacity Payments based on Time

of Availability (TOA) Factor and actual availability

– Monthly Capacity Payment = Capacity Price x TOA Factor x Contract Capacity

• For months with minimum of 90% and 95% availability, 4% Capacity Payment reduction for each 1% that actual is below minimum

• For months with minimum of 70% availability, 1.5% Capacity Payment reduction for each 1% that actual is below minimum

Jan 4.70% 90%Feb 2.90% 90%Mar 2.30% 70%Apr 3.20% 70%May 4.20% 70%Jun 7.10% 95%Jul 15.70% 95%

Aug 17.80% 95%Sep 16.90% 95%Oct 10.30% 90%Nov 7.60% 90%Dec 7.30% 90%

Month TOA FactorMinimum

Availability

100.00%

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Article Five: Events of Default

– The failure to pay an amount due, if not remedied within 5 Business Days after written Notice

– A representation or warranty made by a Party that was materially false or misleading when made or with respect to Section 10.2(b), becomes materially false or misleading during the Delivery Term

• Non-modifiable Section 10.2(b) Seller Representations and Warranties regarding ERR eligibility

• Change in Law after Execution Date and Seller’s use of commercially reasonable efforts to comply with change in Law

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– The failure to perform a material covenant, if not remedied within 30 days after written Notice

– Becoming Bankrupt or Insolvent – cross reference definition of “Bankrupt”

– A surviving/transferee/resulting entity of a Party fails to assume all of the Party’s obligations under the PPA

• Cross Reference Section 10.6, Assignment

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• For As-Available Products, the failure to achieve the Guaranteed Energy Production requirement

• For Baseload and Peaking Products, Capacity deficiency or Capacity Factor deficiency

– Net Rated Output Capacity is less than specified amount at COD or specified percent after COD

– Capacity Factor is less than specified percent for 12 consecutive months (for reasons other than Seller Excuse Hours)

• For Dispatchable Products only, Availability Factor deficiency


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• Any delivery or attempted delivery of Energy for sale under the PPA that was not generated by the Project, except with respect to Imbalance Energy

• An outage resulting from Force Majeure that prevents the Project from delivering at least 60% of Contract Quantity to the Delivery Point for a consecutive 12 month period

• Failure to meet either of the “Guaranteed Project Milestones” after the 60-day cure period has expired

• Failure to meet credit or collateral requirements in Sections 8.3, 8.4 or 8.5 (Note: if submitting alternative credit proposals, clearly identify each

proposal in PPA mark-up; do not submit multiple PPA mark-ups)• Granting and perfecting of first-priority security interest• Posting of Project Development Security and Delivery Term Security

(Performance Assurance)• Letter of Credit obligations, if applicable

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• Article Six: Payment• Article Seven: Limitation (Remedies, Liability and Damages)• Article Eight: Credit and Collateral Requirements

– Choose Option A (Seller’s financial information) or Option B (financial information for specified entity, i.e., a guarantor)

– Specify security amounts per Protocol standards and any alternative proposals, and form of security

• Article Nine: Governmental Charges

Articles Six through Nine

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• Article Ten: Miscellaneous– Production Tax Credit (“PTC”)/Investment Tax Credit (“ITC”)

termination

– Representations, Warranties and Covenants

– Indemnities

– Assignment

– Confidentiality (check box)

– Audit

– Insurance

– Access to Financial Information

– Governing Law (non-modifiable)

Article Ten

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• Article Eleven: Conditions Precedent/CPUC Approval

• Article Twelve: Dispute Resolution

• Article Thirteen: Notices

Articles Eleven through Thirteen

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Appendix I Form of Letter of Credit

Appendix II Initial Energy Delivery Date Confirmation Letter

Appendix III Milestones Schedule (propose Schedule)

Appendix IV Project Description Including Description of Site (Seller to complete)

Appendix V Form of Certification

Appendix VI Commercial Operation Certification Procedure and Procedure for Subsequent Capacity Terms

Appendix VII Form of Monthly Progress Report

Appendix VIII Outage Notification Form (do not alter)

Appendix IX Counterparty Notification Requirements for Outages and Generation Schedules

Appendix X Resource Adequacy

Appendix XI Notices (Seller to complete its respective Sections)

Appendices

Documents

RPS Bidders Workshop 1 Guidance for Inputs to 2008 RPS PPAs April 11, 2008 Disclaimer: Not to be considered or construed as legal advice or counsel; in