HomeMy WebLinkAbout10 SPPC CalPECO Settlement Agreement Agenda Item # 10
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ublic Utility District
CONSENT
To: Board of Directors
From: Stephen Hollabaugh
Date: February 17, 2010
Subject: Consideration of a Settlement with Sierra Pacific Power and
California Pacific Electric Co.
1. WHY THIS MATTER IS BEFORE THE BOARD
This matter is before the Board for possible approval of the Sierra Pacific Power
Corporation (SPPC), California Pacific Electric Company (CalPECO) and Truckee
Donner PUD settlement agreement. Board approval is required to enter into an
agreement.
2. HISTORY
Sierra and CalPeco entered into an Asset Purchase Agreement dated April 22, 2009
pursuant to which Sierra agreed to sell, and CalPeco agreed to purchase, certain
electric distribution and generation assets located in California. On October 16,
2009 ,Sierra and CalPeco filed with the California Public Utilities Commission
("CPUC") a Joint Application for Transfer of Control and Additional Requests Relating
to Proposed Transaction.
On November 23, 2009, TDPUD filed with the CPUC a Protest to the Application, in
which it made claims related to Sierra, CalPeco, and the transaction.
On January 19, 2010 the three parties executed a term sheet (Attachment 1) outlining
the principal terms and conditions to be memorialized in the final agreement, and in
which the three parties agreed to negotiate in good faith with the intent to execute a
binding settlement agreement.
3. NEW INFORMATION
The final settlement agreement will be provided to the Board on February 17, 2010.
4. FISCAL IMPACT
The final agreement will have a minimum positive fiscal impact over ten years of
$550,000 and a maximum of$2,225,000 over ten years to the District.
5. RECOMMENDATION
Authorize the Board President to sign the Settlement Agreement by and among Sierra
Pacific Power Company; California Pacific Electric Company, LLC; and Truckee
Donner Public Utility District.
Stephen Hollabaughn . Michael D. Holley
Assistant General Manager General Manager
Attachment 1
SUMMARY OF PRINCIPAL TERMS OF AGREEMENT AMONG
SIERRA,PACIFIC POWER COMPANY("SIERRA"),
CALIFORNIA PACIFIC ELECTRIC COMPANY("CALPECO")AND
TRUCKEE DONNER PUBLIC UTILITY DISTRICT("TDPUD")
This document (the"Term Sheet") summarizes the principal terms and conditions of a
proposed definitive agreement by and among Sierra, CalPeco and TDPUD in connection with the
settlement of certain claims made by the parties with respect to the matters addressed in this
document. Although this Term Sheet is not a binding commitment, the parties intend that this
Term Sheet set forth the principal terms on which they intend to immediately prepare the
necessary definitive documents to implement the terms set forth herein.
I. Glenshire Meter Issue
TDPUD is currently fed from a 14.4 kV line out of Glenshire substation to TDPUD's Glenshire
Meter.
Currently, a 14.4 kV line out of Sierra's Truckee Substation splits, with one segment serving to
an open switch near the Glenshire area and the other segment serves toward the Squaw Valley
area.
Sierra shall take the following actions (at its own expense) to install facilities that will directly
feed TDPUD's Glenshire Meter fi-om the facilities that Sierra shall retain following the close of
the transaction between Sierra and CalPeco, such actions to be completed by the date of the
closing of CalPeco's purchase of the Sierra electric distribution facilities within California(the
"Closing"):
• Install an additional breaker(or recloser) in the Truckee Substation and a new segment of
14.4 kV line to enable the 14.4 line serving Squaw Valley to be fed directly from the
Truckee Substation without need to utilize the 14.4 kV line that serves the Glenshire area,
• Mount an electronic recloser (or breaker) in Truckee Substation that ties to Sierra's
substation's SCADA system. This recloser will serve to the Glenshire area and the Point
of Receipt of TDPUD. This recloser shall be able to be operated from the SCADA
system and Sierra's dispatch in Reno.
Install line spacers so that the 14.4kV line does not contact the 60 kV 608 Line during
windy conditions. (This location is just south of the Glenshire Meter).
: Install a normally open switch to a location between the Glenshire Meter and the
Glenshire Substation. This switch shall be motor operated and shall be operated from
Sierra's dispatch center in Reno.
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+ The existing normal open 14.4 kV switch between the Glenshire Meter and Truckee
Substation shall be converted to motor operated and normally closed with the ability of
operation from Sierra's dispatch center in Reno.
Sierra, CalPeco and TDPUD shall make written and binding arrangements to address power
delivery to TDPUD under emergency conditions when Sierra's 14.4 kV line between the
Truckee Substation and the Glenshire Meter is out of service, at no additional cost to TDPUD.
2. Juniper Hills Neighborhood. Issue
• TDPUD shall either take over the existing Juniper Hills primary meter or install a new
meter at or close to that location. TDPUD will own this pole and CalPeco's facilities will
start one span east of this metering pole location.
• TDPUD shall sell power to CalPeco, delivered to the Juniper Hills location, at TDPUD's
commercial rate for a load of this size(rate 20), as such rate changes from time to time.
TDPUD shall provide CalPeco a cost estimate of the power sales on an annual basis.
CalPeco shall have the right to terminate the commercial electric service for any reason
by providing 60 days notice. The TDPUD commercial electric service shall become
effective upon the Closing and without the need for prior CPUC approval
CalPeco shall pay TDPUD the corresponding TDPUD facilities fee for this load. The
peak load for this location is approximately 180 kW and therefore the one time
corresponding facilities fee is$4500.
• Certain customers in the vicinity of Foxboro Drive,the Strand, Kent Drive, and other
locations are located within the TDPUD service territory boundaries but are currently
served by Sierra as an accommodation to TDPUD and through the use of Sierra's
facilities. As part of the Proposed Transaction, Sierra is selling the facilities used to serve
these customers to CalPeco. In addition, certain customers located within Sierra's
California service territory are currently served by TDPUD as an accommodation to
Sierra and through the use of TDPUD's facilities. Within 90 days of the execution of the
settlement agreement contemplated by this term sheet, TDPUD and Sierra shall execute
one or more agreements (i.e., a form of"borderline customer" or"fringe customer"
agreement)which shall confirm and memorialize these existing service arrangements.
Sierra shall assign such agreements to CalPeco, and CalPeco shall assume such
agreements, as of the Closing.
3. Power Sales by Sierra within its Control Area
Sierra shall make a filing at FERC to enable Sierra to make power sales to entities (including
TDPUD) within Sierra's balancing authority area(Zone A) from time to time at negotiated rates
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not to exceed a filed, cost-based cap. This filing could be either a general cost-based sales tariff
for Sierra or a filing to enable Sierra to make such sales pursuant to the WSPP Agreement
(Sierra's choice). Any filing to FERC required under this provision will be made after an
appropriate tariff and rates are prepared by Sierra. Sierra shall attempt in good faith to make this
filing with FERC no later than July 31, 2010.
4. Sierra and CalPeco will reimburse TDPUD Incremental CAISO Ch r es durm'
scheduled maintenance on 607 and 101 Transmission Line
If Sierra's scheduled maintenance on Sierra's 607 or 101 Transmission Line makes it impossible
for any portion of TDPUD's Network Load to be served through the Zone A transmission system
and as a result,TDPUD incurs incremental charges from the California Independent System
Operator("Incremental CAISO Charges")to have the power which would have been served
through the Zone A transmission system, Sierra shall reimburse TDPUD for Incremental CAISO
Charges("Sierra Reimbursement Obligation"). The Sierra Reimbursement Obligation shall be
capped at a total payment of no more than$75,000 for Incremental CAISO Charges in any one
year. The Sierra Reimbursement Obligation shall be paid once each year.
The Sierra Reimbursement Obligation shall become effective upon the Closing and shall
continue for a period of ten(10 years). Between the execution of the settlement agreement and
the Closing, Sierra shall not schedule any outages on either the 607 or 101 Transmission Lines
before May 1, 2010,provided,however,that Sierra may schedule an outage during this period if
it is required to avoid damage to the affected line. In addition,between the execution of the
settlement agreement and the Closing, Sierra will coordinate the scheduling of outages on the
607 and 101 Transmission Lines with TDPUD's scheduling of maintenance on its system so as
to minimize the incursion of CAISO charges by TDPUD.
5. Right of Way or easement for a new water line within the existing 608 Line right of
way from Stallion Way in Glenshire to Rirschdale
Sierra shall review its land records to determine if it is possible to grant TDPUD a water
easement(or other form of right of way) from Stallion Way in the Glenshire area to a point near
Hirschdale along one of the routes illustrated in the attached maps. (See attached maps,
"WaterEasement#1","WaterEasement#3", or"WaterEasement#2"in that order of preference).
If Sierra is able to grant TDPUD such an easement or other right of way,there shall be no charge
to TDPUD for it,however,TDPUD shall reimburse Sierra for any out-of-pocket expenses
incurred by Sierra to grant and administer this easement or right of way, including but not
limited to recording fees. Such actions shall be completed by the date of the Closing.
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6. The parties will work in good faith to promptly develoR and execute formal bindin
contract terms.
The Parties agree to negotiate in good faith with the intent to execute a binding settlement
agreement incorporating the above terms by no later than February 16, 2010;. The binding
settlement agreement will obligate the relevant party(ies)to make all necessary filings required
to implement the terms and conditions of the settlement agreement.
7. TDPUD will withdraw its protest.
Upon execution of this term sheet, and pending execution of the settlement agreement
contemplated by this term sheet,TDPUD will announce at the January 20, 2010 prehearing
conference in CPUC Application No. 09-10-028 that TDPUD has reached an agreement with
Sierra and CalPeco in principle and executed a term sheet which contains such principles of
agreemment and that it will withdraw its protest of Application No. 09-10-028 upon execution of
a settlement agreement. further, pending execution of the settlement agreement,TDPUD will
suspend its participation in Application No. 09-10-028. If for any reason a settlement agreement
is not executed with 30 days of the execution of this term sheet,TDPUD will be free to resume
its participation.
Upon execution of the settlement agreement contemplated by this term sheet,TDPUD shall
immediately file a withdrawal of its protest in C;PUC Application No. 09-10-028 and in such
pleading will express its affirmative support for the Proposed Transaction.
This'Penn Sheet is intended to provide a summary of the principal terms upon which the
parties currently intend to prepare and execute definitive documents with respect to the matters
set forth herein. Each party shall be solely liable for all of its own fees, costs and other expenses
in conjunction with negotiation and preparation of a definitive agreement pursuant to this Tenn
Sheet.
Truckee Donner Public Utility Sierra Pacific Power Company California Pacific Electric
District Company,LLC
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6. The parties will work in good faith to promptly develop and execute formal.binding
contract terms.
The Parties agree to negotiate in good faith with the intent to execute a binding settlement
agreement incorporating the above terms by no later than February 16,2010;. The binding
settlement agreement will obligate the relevant party(ies)to make all necessary filings required
to implement the terns and conditions of the settlement agreement.
7. TDPUD will withdraw its protest.
Upon execution of this term sheet, and pending execution of the settlement agreement
contemplated by this term sheet,TDPUD will announce at the January 20,2010 prehearing
conference in CPU,C Application No. 09-10-028 that TDPUD has reached an agreement with
Sierra.and CalPeco in principle and executed a term sheet which contains such principles of
agreeement and that it will withdraw its protest of Application No. 09-10-028 upon execution of
a settlement agreement. Further,pending execution of the settlement agreement,TDPUD will
suspend its participation in Application No. 09-10-028. If for any reason a settlement agreement
is not executed with 30 days of the execution of this term sheet,TDPUD will be free to resume
its participation.
Upon execution of the settlement agreement contemplated by this term sheet,TDPUD shall
immediately file a withdrawal of its protest in CPUC Application No.09-10-028 and in such
pleading will express its affirmative support for the Proposed Transaction.
This Term Sheet is intended to provide a summary of the principal terms upon which the
parties currently intend to prepare and execute definitive documents with respect to the matters
set forth herein. Each party shall be solely liable for all of its own fees,costs and other expenses
in conjunction with negotiation and preparation of a definitive agreement pursuant to this Term
Sheet.
Truckee Donner Public Utility Sierra Pacific Power Company California Pacific Electric
District Company,LLC
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By - _ - . .. ._....... By Bye
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Date: Date: Date: 2 C'/
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DWT 13834073v2 0089731-000002
SETTLEMENT AGREEMENT BY AND AMONG SIERRA PACIFIC POWER
COMPANY, CALIFORNIA PACIFIC ELECTRIC COMPANY,LLC,
AND TRUCKEE DONNER PUBLIC UTILITY DISTRICT
This Settlement Agreement (this "Agreement"), dated as of February , 2010, is made
and entered into by and among Sierra Pacific Power Company ("Sierra"), California Pacific
Electric Company, LLC ("CalPeco"), and Truckee-Donner Public Utility District ("TDPUD")
(Sierra, CalPeco and TDPUD are referred to herein individually as a "party" and collectively as
the"parties").
WHEREAS, Sierra and CalPeco entered into an Asset Purchase Agreement dated April
221 2009 (as amended or supplemented from time to time, "APA"), pursuant to which Sierra
agreed to sell, and CalPeco agreed to purchase, certain electric distribution and generation assets
located in California("Transaction");
WHEREAS, on October 16, 2009, Sierra and CalPeco filed with the California Public
Utilities Commission ("Commission") a Joint Application for Transfer of Control and Additional
Requests Relating to Proposed Transaction (Application. 09-10-028) ("Application"), in which
they requested authorization of the Transaction and certain matters related thereto;
WHEREAS, on November 23, 2009, TDPUD filed with the Commission a Protest
("Protest") to the Application, in which it made claims related to Sierra, CalPeco, and the
Transaction;
WHEREAS, on January 19, 2010, the parties executed a term sheet ("Term Sheet")
outlining the principal terms and conditions to be memorialized in this Agreement and in which
they agreed to negotiate in good faith with the intent to execute a binding settlement agreement
by no later than February 16, 2010; and
WHEREAS, the parties desire to enter into this Agreement in accordance with and on
the schedule agreed to in the Term Sheet and for the purpose of resolving the claims made by
TDPUD in the Protest,upon the terms and conditions set forth in this Agreement.
In consideration of the representations, warranties and agreements contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Settlement; Withdrawal of Protest. TDPUD agrees that this Agreement settles
and resolves any and all claims made by TDPUD in the Protest. Within five business days of the
execution of this Agreement by all Parties, TDPUD will file a pleading with the Commission to
withdraw the Protest in the Application, and in such pleading express its affirmative support for
the Transaction and the Application. Prior to making such filing, TDPUD shall provide CalPeco
and Sierra a reasonable opportunity to review and comment upon such filing.
2. FERC Proceedings. Sierra and CalPeco will file a joint application to the Federal
Energy Regulatory Commission ("FERC') under Section 203 of the Federal Power Act seeking
authorization for the Transaction (the "203 Application"). Sierra and CalPeco agree that in the
203 Application, they will describe this Agreement and the respective obligations undertaken by
DWT 14042692v1 0089731-000002
the Parties pursuant to it, including the Glenshire System Adjustments described in Section 3
below. TDPUD may intervene in the proceedings at FERC for authorization of the 203
Application; provided, however, that TDPUD agrees that it will not protest the 203 Application
or the related filings made by Sierra or CalPeco for FERC authorization of the Transaction
unless (a) the description of the respective obligations included in the 203 Application does not
accurately reflect the terms of this Agreement, and/or (b) the 203 Application raises any new
issues that are materially different than the issues raised in the Application or this Agreement.
3. Glenshire System Adjustments (Glenshire Meter). Sierra will, at its own expense,
install facilities that directly feed TDPUD's Glenshire Meter from transmission facilities that
Sierra will retain after the Closing (as defined in the APA) and which are not being sold to
CalPeco in the Transaction. Sierra will satisfy its obligation under this Section 3 by completing
the following actions (collectively, the"Glenshire System Adjustments"):
(a) installing a new line segment on Sierra's 14.4 kV line that enables the
portion of its existing 14.4 kV line that serves certain Sierra customers in Martis Valley
to be fed directly from the Truckee Substation without utilizing the portion of the existing
14.4 kV line that serves the Glenshire area;
(b) mounting an electronic recloser(or breaker) in the Truckee Substation that
ties to Sierra's substation SCADA system, which will serve to the Glenshire area and
TDPUD's Point of Receipt and which will able to be operated from the SCADA system
and Sierra's dispatch center in Reno,Nevada;
(c) installing line spacers so that Sierra's 14.4 kV line does not contact the 60
kV 608 Line (located just south of the Glenshire Meter) during windy conditions;
(d) installing a normally-open switch at a location between the Glenshire
Meter and the Glenshire Substation, which will be motor operated and which will be
operated from Sierra's dispatch center in Reno,Nevada; and
(e) converting the normally-open 14.4 kV switch between the Glenshire
Meter and Truckee Substation into a normally-closed, motor-operated switch that can be
operated from Sierra's dispatch center in Reno,Nevada.
The Glenshire System Adjustments described above are illustrated on the one-line diagram that
is attached to this Agreement as Exhibit "A". Because the Glenshire System Adjustments will
require installing a larger transformer in the Truckee Substation, Sierra will have to obtain
certain permits prior to initiating construction of the Glenshire System Adjustments. Sierra will
make commercially reasonable efforts to complete the Glenshire System Adjustments by the
Closing, provided, however, that if despite its commercially reasonable efforts, Sierra is unable
to complete the Glenshire System Adjustments by the Closing, from the date of the Closing until
the Glenshire System Adjustments are completed TDPUD will be served at the Glenshire Meter
pursuant to the Mutual Assistance Agreement described in Section 4 below.
4. Mutual Assistance Agreement. Sierra, CalPeco and TDPUD will, prior to the
Closing, enter into one or more written agreements that address the maintenance of power
deliveries under the following conditions: (i) if Sierra's new 14.4 kV line between the Truckee
DWT 140426920 0089731-000002 2
Substation and the Glenshire Meter is not yet in service as of the Closing or thereafter is out of
service, CalPeco will make its 608 Line and Glenshire 7400 Distribution Circuit available to
TDPUD for purposes of delivering power to TDPUD's facilities; and (ii) when CalPeco's 608
Line or 7400 Distribution Circuit is out of service, Sierra will make its new 14.4 kV line
available to CalPeco for purposes of delivering power to CalPeco's facilities. Any temporary
use of another party's facilities under such agreements will be at no cost to the party utilizing
such facilities under the conditions described in this Section 4. The parties will work together in
good faith to timely obtain any regulatory approvals required in connection with such
agreements. Nothing in this provision is intended to subject TDPUD to the jurisdiction of the
CPUC.
5. Primary Meter (Juniper Hills). TDPUD will (at TDPUD's cost) replace Sierra's
existing Juniper Hills primary meter with a meter owned by TDPUD effective as of Closing.
TDPUD will own this meter and any pole or other facilities on which it is mounted and
CalPeco's distribution facilities will begin one span east of this metering facilities location.
6. Commercial Electric Service (Juniper Hills). Effective as of the Closing, the
existing arrangement between Sierra and TDPUD, under which Sierra moves power across the
TDPUD system to serve certain Sierra retail customers within its service territory, will terminate.
Effective as of the Closing, TDPUD will commence providing electric service to CalPeco
pursuant to a written agreement (to be executed by TDPUD and CalPeco prior to the Closing)
which shall contain the following terms and conditions: (a) TDPUD will sell power to CalPeco,
delivered at the Juniper Hills location, at TDPUD's commercial rate for a load of that size
(presently, TDPUD Rate 20), as such rate may change from time to time; provided that CalPeco
shall have the full rights of any TDPUD customer to challenge any change in rates or other terms
and conditions of service (b) TDPUD will provide CalPeco with a cost estimate of the power
sales on an annual basis; (c) CalPeco will have the right to terminate the wholesale electric
service agreement for any reason upon 60 days advance written notice to TDPUD; and (d)
CalPeco will pay a one-time facilities fee to TDPUD as provided for in the TDPUD application
process, which is anticipated to be approximately $4,500 assuming a peak load of approximately
180 kW for this location.
7. Fringe Customer Agreement. Sierra and TDPUD acknowledge that (a) a limited
number of retail customers within TDPUD's service territory (located principally in the vicinity
of Foxboro Drive, the Strand, and Kent Drive) are currently served by Sierra and its distribution
facilities, (b) a limited number of retail customers within Sierra's California service territory are
currently served by TDPUD and its distribution facilities, and (c) the Sierra facilities used to
serve retail customers within TDPUD's service territory will be sold to CalPeco in the
Transaction. To facilitate the continuation of these existing service arrangements after the
Closing, Sierra and TDPUD will, within 60 days of the date hereof, execute an agreement (the
"Fringe Customer Agreement") that confirms and memorializes the existing service
arrangements. Prior to Closing, Sierra will submit the Fringe Customer Agreement to the
Commission for approval (effective as of or prior to the Closing) and use commercially
reasonable efforts to obtain such approval prior to Closing. TDPUD acknowledges that Sierra
intends to assign to CalPeco, and CalPeco intends to assume, the Fringe Customer Agreement
effective as of the Closing, and TDPUD consents to such assignment and assumption. Nothing
in this provision is intended to (a) subject TDPUD to the jurisdiction of the CPUC, or (b) result
DWT 140426920 0089731-000002 3
in a party opening its service territory to retail electric service competition by another party or
any third party.
8. Power Sales by Sierra Within Its Balancing Area Authority. Sierra will make a
filing with the FERC requesting authority for Sierra to make power sales to entities (including
TDPUD) within Sierra's Balancing Authority Area (Zone A) from time to time at negotiated
rates not to exceed a filed, cost-based cap. This filing may take the form of a general cost-based
sales tariff for Sierra or, at Sierra's election, a filing to enable Sierra to make such sales pursuant
to the Western Systems Power Pool Agreement. The filing contemplated by this paragraph will
be made by Sierra after it prepares an appropriate tariff (if applicable) and rate. Sierra shall
attempt in good faith to make this filing on or before July 31, 2010.
9. Reimbursement of CAISO Charges.
(a) If scheduled maintenance on Sierra's 607 or 101 Transmission Line makes
it impossible for any portion of TDPUD's Network Load to be served through the Zone
A transmission system and, as a result, TDPUD incurs incremental charges ("Incremental
CAISO Charges") from the CAISO to have the power delivered that would have been
delivered through the Zone A transmission system, Sierra will reimburse TDPUD for
Incremental CAISO Charges ("Sierra Reimbursement Obli a� tion") in accordance with
the provisions of this Section 9, provided, that Sierra shall have no obligation to
compensate TDPUD for any CAISO charges TDPUD incurs as a result of an
unscheduled outage on these transmission lines. Notwithstanding anything herein to the
contrary, the maximum amount of the Sierra Reimbursement Obligation shall not exceed
$75,000 in any one Year. For purposes of this Agreement, "Year" means each one-year
period (i) initially, commencing on the Closing Date (as defined in the APA) and ending
at 11:59 pm Pacific time on the day immediately preceding the first annual anniversary of
the Closing Date, and (ii) thereafter, commencing on the applicable annual anniversary of
the Closing Date and ending at 11:59 pm Pacific time on the day immediately preceding
the first annual anniversary of such commencement date.
(b) The Sierra Reimbursement Obligation will become effective upon the
Closing and will terminate on the 101h anniversary of the Closing Date.
(c) Within six (6) months following the end of each Year, or within sixty(60)
days following the receipt by TDPUD from CAISO or TDPUD's CAISO scheduling
coordinator, of Incremental CAISO Charges for such Year, whichever occurs later,
TDPUD will submit a claim to Sierra evidencing the amount owed to TDPUD for the
preceding Year under clause (a) above and provide to Sierra documentation reasonably
supporting such claim. If TDPUD fails to timely provide such claim and documentation
to Sierra pursuant to this clause (c), TDPUD will be deemed to have waived its right to
request such amounts for such Year from Sierra under this Section 9. A claim timely
submitted to Sierra will, subject to clause (d) below, be paid by Sierra within 90 days
after the date on which Sierra receives such claim and documentation from TDPUD.
(d) Sierra may, in good faith, dispute the correctness of any claim for
reimbursement submitted by TDPUD under this Section 9. Notwithstanding any dispute,
DWT 140426920 0089731-000002 4
the undisputed amount of any such claim shall be reimbursed as invoiced. If Sierra
disputes any portion of a claim, Sierra must notify TDPUD in writing of the basis for the
dispute within 45 business days after receipt of the claim. If Sierra and TDPUD are not
able to resolve such dispute within 30 days after delivery of Sierra's dispute notice, either
party may refer such dispute for resolution in accordance with Section 9(e) hereof. Upon
resolution of the dispute, any required reimbursement by Sierra shall be made within two
business days of such resolution along with interest accrued at then applicable FERC-
approved rate from the original due date for payment through and including the date of
actual payment.
(e) The provisions of this Section 9(e) will govern the resolution any dispute
between Sierra and TDPUD arising under Section 9(d) of this Agreement, to the extent
such dispute is not resolved by those parties prior to the expiration of the 30-day period
by Section 9(d).
(i) With respect to any such dispute or claim, the disputing party will
provide the other party with written notice of the dispute or claim ("Notice of
Dispute"). Such dispute or claim will be referred to a senior representative of
each party for resolution on an informal basis as promptly as practicable after
receipt of the Notice of Dispute by the other party. If designated representatives
are unable to resolve the claim or dispute through unassisted or assisted
negotiations within 30 days following receipt of the Notice of Dispute, such claim
or dispute will be submitted to mediation and resolved in accordance with the
mediation procedures set forth below.
(ii) The parties agree to mediate any dispute or claim arising between
them out of this Agreement before resorting to court action. The parties shall use
their best good faith efforts to complete the mediation with sixty (60) days of the
date that a party makes a written request to the other party(s) to mediate.
Mediation fees, if any, shall be divided equally among the parties involved. Other
than mediation fees, Sierra and TDPUD will each be responsible for its own costs
incurred during the mediation process. The mediation shall be conducted in
Reno, Nevada, unless the parties agree to conduct it in a different location. The
mediator chosen shall be knowledgeable in electric utility matters and will not
have any current or past substantial business or financial relationships with any
disputing party. If, for any dispute or claim to which this paragraph applies, any
party commences an action without first attempting to resolve the matter through
mediation or refuses to mediate after a written request has been made, then that
party shall not be entitled to recover attorney fees, even if they would otherwise
be available to that party in any such action.
(iii) Should Sierra and TDPUD be unable to resolve the dispute
through mediation, they will be free to file an action in any court with jurisdiction
to adjudicate the dispute.
10. Scheduling (Transmission Outages). Sierra will not schedule any outages on its
607 or 101 Transmission Line before May 1, 2010, provided that Sierra may schedule one or
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more outages if Sierra deems it necessary to avoid damage to the affected transmission line.
Sierra will at all times use commercially reasonable efforts to coordinate the scheduling of
outages on its 607 and 101 Transmission Lines with TDPUD's scheduling of maintenance on its
system with the intention of minimizing the incurrence of CAISO charges by TDPUD. In order
to accomplish this coordination, TDPUD and Sierra shall each notify the other of their respective
scheduled work.
11. Right of Way Water Line). Sierra will review its land records to determine if it
is entitled or permitted to grant TDPUD a water easement (or other right-of-way) from Stallion
Way in the Glenshire area to a point near Hirschdale along one of the routes illustrated in maps
(named "WaterEasement#1", "WaterEasement#3", or "WaterEasement#2", in that order of
preference) previously exchanged by Sierra and TDPUD. If Sierra is entitled or permitted to
grant TDPUD such an easement or other right-of-way, Sierra will make such grant, of the
broadest possible rights for TDPUD purposes, at no charge to TDPUD; provided that TDPUD
will reimburse Sierra for any out-of-pocket expenses incurred by Sierra to grant and administer
such easement or right-of-way (including recording fees). The actions contemplated by this
paragraph will be completed at or prior to the Closing.
12. Representations and Warranties. Each party hereby represents and warrants to the
other parties that (a) it has the power and authority to execute and deliver this Agreement, and to
perform its obligations under this Agreement; (b) upon the execution and delivery hereof, this
Agreement will be a valid, binding and enforceable upon it in accordance with its terms and
conditions, except as enforceability may be limited by bankruptcy and similar laws affecting or
relating to general principles of equity; and (c) its duly-authorized officers, managers or
representatives have executed this Agreement on its behalf.
13. Entire Agreement. This Agreement will not be a valid and binding agreement
unless it is fully executed and delivered by all parties, and no legal obligation will be created by
virtue hereof until such execution and delivery. This Agreement embodies the entire agreement
and understanding of the parties in respect of the subject matter hereof, and supersedes all prior
discussions, understandings and agreements (including the Term Sheet) relating to the subject
matter of this Agreement. There are no restrictions, promises, representations, warranties,
covenants, or undertakings in respect of the agreements contemplated hereby, except as
expressly set forth herein.
14. No Admission or Precedent. Nothing in this Settlement Agreement shall
constitute an admission of liability by any party or of the validity or applicability of any claim,
defense, rule, or interpretation of law. All parties deny any such liability or validity. Nothing in
this Settlement Agreement shall resolve any principle or establish any precedent or settled
practice.
15. Effective Date; Termination of Agreements, Rights and Obligations. This
Agreement will be effective as of the date first written above. Notwithstanding anything herein
to the contrary, in the event the Transaction is not closed, by reason of termination of the APA or
otherwise, the agreements, rights and obligations set forth herein, other than the obligations
imposed on Sierra in Section 8, will terminate and have no force and effect.
DWT 14042692v 1 0089731-000002 6
16. Regulatory Support. In the event any party is actively pursuing a regulatory
approval required to effect or implement this Agreement or an agreement or action contemplated
hereby, the other parties (or, with respect to agreements or actions involving only two of the
parties, the other party) will reasonably cooperate and support such proceeding and not contest or
protest such proceeding. Nothing in this provision is intended to subject TDPUD to the
jurisdiction of the CPUC.
17. Miscellaneous.
(a) This Agreement will be binding upon and will inure to the benefit of each
party, and to its respective heirs, successors, executors, administrators and assigns. This
Agreement may be executed simultaneously in one or more counterparts, including
facsimile or PDF counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
(b) This Agreement (as well as any claim or controversy arising out of or
relating to this Agreement) will be governed by and construed in accordance with the
laws of the State of California, without regard to the conflicts of laws rules thereof that
would otherwise require the laws of another jurisdiction to apply. Subject to the
alternative dispute resolution procedures set forth in Section 9(e), each party irrevocably
submits to the exclusive jurisdiction of the federal and state courts located in the State of
California, waives any objection which it may have to the laying of venue of any
proceedings brought in any such court, and waives any claim that such proceedings have
been brought in an inconvenient forum.
(c) Any notice provided pursuant to this Agreement shall be provided in
writing and sent to the address indicated below (or at such other address as a party may
specify, provided that notices of a change of address will be effective only upon receipt
thereof):
if to Sierra:
Sierra Pacific Power Company
c/o NV Energy
Attn: Office of the General Counsel
6226 West Sahara Avenue
Las Vegas, Nevada 89146
Fax: (702) 402-2069
with a copy to:
Sierra Pacific Power Company
Attn: Christopher A. Hilen
6100 Neil Road
Reno, Nevada 89520-3150
Fax: (775) 834-4811
DWT 14042692v1 0089731-000002 7
if to CalPeco:
California Pacific Electric Company, LLC
c/o Algonquin Power&Utilities Corp.
Attn: President
2845 Bristol Circle
Oakville, Ontario, Canada L6H 7H7
Fax: (905) 465-4514
with a copy to:
Emera Incorporated
Attn: Corporate Secretary
1894 Barrington Street
Halifax,Nova Scotia
B3J 2A8
Fax: (902) 428-6171
with a copy to:
Davis Wright Tremaine LLP
Attn: Steven F. Greenwald
505 Montgomery Street, Suite 800
San Francisco, CA 94111
Fax: (415) 276-6599
if to TDPUD:
Truckee-Donner Public Utility District
Attn: General Manager
P.O. Box 309
Truckee, California 96160
Fax: (530) 587-1189
with a copy to:
Porter Simon
Attn: Steven C. Gross
40200 Truckee Airport Road, Suite One
Truckee, California 96161
Fax: (530) 587-1316
(d) The parties have participated jointly in the negotiation and drafting of this
Agreement and, in the event an ambiguity or question of intent or interpretation arises,
this Agreement will be construed as jointly drafted by the parties hereto and no
DWT 140426920 0089731-000002 8
presumption or burden of proof favoring or disfavoring any party will exist or arise by
virtue of the authorship of any provision of this Agreement. Furthermore, this
Agreement, unless a clear contrary intention appears, will be construed and interpreted as
follows: (i) the singular number includes the plural number and vice versa; (ii)reference
to any party includes such party's successors and assigns; (iii) "hereunder," hereof,"
"herein," "hereto" and words of similar import will be deemed references to this
Agreement as a whole and not to any particular Section or other provision hereof,
(iv) "including" (and with correlative meaning "include") means including without
limiting the generality of any description preceding such term.
(e) This Agreement is not intended to and does not create rights, remedies, or
benefits of any character whatsoever in favor of any party other than the parties to this
Agreement, and the obligations herein assumed are solely for the use end benefit of the
parties to this Agreement.
(f) Each party will, subject to Section 9(e) in the case of Sierra and TDPUD,
be responsible for its own costs and expenses incurred during the negotiation and
performance of this Agreement.
[Remainder of this page intentionally left blank;
Signature page follows immediately below]
DWT 14042692vl 0089731-000002 9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
SIERRA PACIFIC POWER COMPANY TRUCKEE-DONNER PUBLIC UTILITY
d/b/a NV ENERGY DISTRICT
By: By:
Name: Name: Jeff Bender
Title: Title: Board President
CALIFORNIA PACIFIC ELECTRIC
COMPANY, LLC
By: California Pacific Utility Ventures, LLC,
Its: Sole Member
By:
Name: Ian Robertson
Title: Manager
[Signature page to Settlement Agreement]
DWT 14042692vl 0089731-000002
Exhibit"A"
One Line Diagram Illustrating Glenshire System Adjustments
DWT 14042692vl 0089731-000002
TDPUD Glenshire Interconnection Project
608 Line 60kV
,---------------------
r------------•-------------•--•---•-----------•-••-----•----•-----••----•-----•---•---•-•--•_-•-•••--•------------•----- ' '
7400 Underbuilt on the 608 Line 14.4kV R ; Glenshire Sub
14 ...
i c
l 1 Primary Meter
Y
7203
I TDPUD
Truckee Sub
i Ownership
Existing CalPeco
Future Upgrade Facility — TDPUD
--�-- -- Existing to be Removed NV Energy