HomeMy WebLinkAbout8 CalPECO SPPC Support Agreement Agenda Item # 8
Public Utility District
CONSENT
To: Board of Directors
From: Stephen Hollabaugh
Date: May 05, 2010
Subject: Consideration of Approving a Reliability Support Agreement with
CaIPECO and SPPC
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 Reliability Support 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 the
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 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.
On February 17, 2010, the Board approved the final settlement agreement with Sierra
and CalPeco. This settlement agreement described the "Fringe Area Agreement" and
the "Reliability Support Agreement" that would follow the final settlement.
On April 7, 2010, the Board approved the Fringe Area Agreement with Sierra and
TDPUD.
3. NEW INFORMATION
The draft "Reliability Support Agreement" described in the settlement agreement as
the Mutual Assistance Agreement with Sierra and CalPeco is attached and have been
reviewed by counsel and staff. Item 4 in the Settlement Agreement is the "Mutual
Assistance Agreement" which has been changed to the Reliability Support
Agreement. This agreement has been reviewed by Staff and counsel and are ready
for signature.
The main points of this agreement are:
• Alternative Power Delivery Services
• TDPUD Alternative Transmission Delivery Service
• CalPeco Alternative Delivery Point Service
• No Charge for Use of Facilities to Provide Alternative Services
• System Operation and Maintenance by all parties using Good Utility Practice
• Indemnification
• Regulatory Approvals
4. FISCAL IMPACT
There is no financial impact associated with this item.
5. RECOMMENDATION
Authorize the Board President to sign the "Reliability Support Agreement" among
Sierra Pacific Power Company, California Pacific Electric Company, LLC and Truckee
Donner Public Utility District.
Stephen Hollabaugh Michael D. Holley
Assistant General Manager General Manager
Attachment 1
EXECUTION COPY
RELIABILITY SUPPORT AGREEMENT BETWEEN
SIERRA PACIFIC POWER COMPANY AND CALIFORNIA PACIFIC ELECTRIC
COMPANY,LLC
THIS RELIABILITY SUPPORT AGREEMENT(this"A Bement")is made and entered
into as of April 15,2010(the"Effective Date"),by and between Sierra Pacific Power Company
("Sierra") and California Pacific Electric Company,LLC("CalPeco"). Sierra and CalPeco are
referred to herein at times individually as a"party"and collectively as the"parties".
WHEREAS, Sierra owns and operates an electric distribution system and an electric
transmission system located in California(the"California Utility")and Truckee Donner Public
Utility District("TDPUD")owns and operates an electric distribution system located in
California;
WHEREAS, Sierra currently provides service to TDPUD and such service includes
delivering power from the Truckee Substation to TDPUD at the Glenshire Meter over the 608
Line and the 7400 Distribution Circuit,which are currently owned and operated by Sierra;
WHEREAS, Sierra and CalPeco entered into an Asset Purchase Agreement dated
April 22,2009(as amended or supplemented from time to time,the"APA"),pursuant to which
Sierra agreed to sell, and CalPeco agreed to purchase,the California Utility(the"Transaction");
WHEREAS,at the consummation of the Transaction(the"Closing") Sierra will convey
to CalPeco the 608 Line and the 7400 Distribution Circuit it currently uses to deliver power to
TDPUD at the Glenshire Meter;
WHEREAS, Sierra and CalPeco have entered into a Service Agreement dated April 22,
2009 (as amended or supplemented from time to time,the"PPA'),whereby Sierra will sell
CalPeco its entire electric supply requirements(subject to certain limited exceptions)to provide
retail electric service to its customers in the service territory of the California Utility and among
the delivery points designated in the PPA is the Truckee Substation;
WHEREAS, after the Closing, Sierra will deliver power to CalPeco pursuant to the PPA
at the Truckee Substation and then CalPeco will deliver such power through the 608 Line and its
other distribution facilities to its retail customers in the Glenshire area;
WHEREAS, CalPeco will not offer any FERC-regulated transmission services on the 608
Line or on any other line it is purchasing from Sierra and CalPeco's use of the 608 Line will be
subject exclusively to public utility regulation by the California Public Utilities Commission
("CPUC");
WHEREAS,on February 18,2010, Sierra, CalPeco and TDPUD entered into that certain
Settlement Agreement(the"Settlement Agreement")pursuant to which the parties agreed to
settle certain claims made by the parties regarding the Transaction and under which the parties
agreed to enter into this Agreement for purposes of satisfying their respective obligations under
Section 4 of the Settlement Agreement;
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WHEREAS, after the Closing, Sierra will no longer own the 608 Line and the 7400
Distribution Circuit and thus is obligated under the Settlement Agreement to construct and install
the Glenshire System Adjustments(as defined in the Settlement Agreement),which will enable
Sierra to continue to provide transmission services to TDPUD for the delivery of power to
TDPUD from the Truckee Substation to the Glenshire Meter,but without the use of the 608 Line
and the 7400 Distribution Circuit;
WHEREAS the Settlement Agreement obligates Sierra to use commercially reasonable
efforts to complete the Glenshire System Adjustments by the Closing; and
WHEREAS,the parties wish to enter into this Agreement in accordance with the
Settlement Agreement for the purposes of(a)enabling Sierra after the Closing to continue to
provide transmission services to TDPUD for the delivery of power from the Truckee Substation
to the Glenshire Meter in instances in which the Glenshire System Adjustments are not available
or otherwise not able to deliver power to the Glenshire Meter; and(b)obligating Sierra to deliver
power to CalPeco with the use of the Glenshire System Adjustments to the Glenshire Substation
in instances in which the 608 Line is inoperable and thus CalPeco is unable to use its own
facilities to deliver power that Sierra delivers under the PPA at the Truckee Substation to the
Glenshire Substation.
NOW,THEREFORE,the parties hereby agree as follows:
l. Definitions. For purposes of this Agreement,the following definitions are used:
(a) "FERC"shall mean the Federal Energy Regulatory Commission or any
successor organization.
(b) "Glenshire Meter"shall mean the metering point between the Sierra
system and the TDPUD system.
(c) "Glenshire Substation"shall mean the substation where the 608 Line
connects to the 7400 Distribution Circuit,which Sierra currently owns,but which shall be
conveyed to CalPeco at the Closing.
(d) "Good Utility Practice"shall mean practices,methods, standards, guides,
and acts that are generally accepted in the electric utility industry or commonly used in prudent
utility operations. Good Utility Practice is not limited to the optimum practices,methods,
standards, guides or acts to the exclusion of all others.
(e) "Governmental Entity'shall mean the United States of America and any
other federal, state or local governmental or regulatory authority, department, agency,
commission,body, court, or other governmental entity.
(f) "Law"shall mean any statutes,regulations,rules,ordinances, codes, and
similar acts or promulgations of any Governmental Entity, and any order,judgment,writ,
injunction,decree, directive, or award of a court, administrative judge,or other Governmental
Entity acting in an adjudicative or regulatory capacity,with jurisdiction over the subject matter.
(g) "OATT"shall mean Open Access Transmission Tariff.
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(h) "Truckee Substation"shall mean the substation which Sierra currently
owns and which it will retain ownership of after the Closing and where both the existing 608
Line and the existing 7204 distribution line that connects to TDPUD originate and where the
Glenshire System Adjustments will originate for connection to the 7400 Distribution Circuit and
to TDPUD.
(i) "608 Line"shall mean the 60 Kv line presently owned by Sierra,but to be
conveyed to CalPeco at the Closing,which delivers power from the Truckee Substation to the
Glenshire Substation and which Sierra also currently uses to deliver power to TDPUD at the
Glenshire Meter.
6) "7400 Distribution Circuit"shall mean the 14.4 kV distribution line
presently owned by Sierra,but to be conveyed to CalPeco at the Closing, which originates at the
Glenshire Substation and provides an interconnection with TDPUD at the Glenshire Meter and is
also used to serve Sierra's retail load.
2. Alternative Power Delivery Services.
(a) TDPUD Alternative Transmission Delivery,Service. During any period in
which the Glenshire System Adjustments have not been completed or are out of service for any
reason and thus Sierra is not able to transmit power from the Truckee Substation over the
Glenshire System Adjustments for delivery to TDPUD at the Glenshire Meter, Sierra shall have
the right to use the 608 Line and the 7400 Distribution Circuit for purposes of providing
transmission services to TDPUD, and CalPeco shall make the 608 Line and the 7400
Distribution Circuit available to Sierra for this purpose(the"TDPUD Alternative Transmission
Delivery Service").
(b) CalPeco Alternative Delivery Point Service. During any period after the
Closing in which the 608 Line is out of service for any reason and thus CalPeco is not able to
transmit power that Sierra delivers to it at the Truckee Substation over the 608 Line to the
Glenshire Substation, Sierra shall use the Glenshire System Adjustments to deliver power to
CalPeco under the PPA at the point where the Glenshire System Adjustments interconnect to the
7400 Distribution Circuit near the Glenshire Meter in lieu of delivering power to CalPeco at the
Truckee Substation and for purposes of enabling CalPeco to serve its retail customers in the
Glenshire area(the"CalPeco Alternative Delivery Point Service"). At any time that CalPeco has
executed a Network Integration Transmission Service Agreement("NITSA")with Sierra in
accordance with the terms of the Sierra Pacific Resources Operating Companies Open Access
Transmission Tariff(the"Sierra OATT"),and CalPeco requests that Sierra deliver power
pursuant to the NITSA to the Truckee Substation,but CalPeco is not able to transmit power that
Sierra delivers to it at the Truckee Substation over the 608 Line to the Glenshire Substation,
Sierra shall use the Glenshire System Adjustments to provide CalPeco Alternative Delivery Point
Service and thereby deliver power to CalPeco under the NITSA at the point where the Glenshire
System Adjustments interconnect to the 7400 Distribution Circuit near the Glenshire Meter.
(c) No Charge For Use of Facilities to Provide Alternative Services. There
shall be no charge to any party for the use of any facilities used to provide the TDPUD
Alternative Transmission Delivery Service or the CalPeco Alternative Delivery Point Service.
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3. Term. The term of this Agreement shall commence on the Closing and will
continue until 11:59 p.m. Pacific time on the date upon which the parties mutually agree to
terminate this Agreement. Notwithstanding the foregoing,neither CalPeco's obligation to allow
Sierra to use the 608 Line and the 7400 Distribution Circuit for purposes of providing the
TDPUD Alternative Transmission Delivery Service,nor Sierra's obligation to provide the
CalPeco Alternative Delivery Point Service, shall be effective until the conditions set forth in
Section 6 have been satisfied.
4. S stem Operation and Maintenance. The parties shall work together with each
other with respect to the mechanics of providing the TDPUD Alternative Transmission Delivery
Service and CalPeco Alternative Delivery Point Service. CalPeco shall operate the 608 Line and
the 7400 Distribution Circuit, and Sierra shall operate the Glenshire System Adjustments, in
accordance with Good Utility Practice.
5. Indemnification. CalPeco shall,to the extent not prohibited under applicable law,
indemnify and save harmless Sierra from and against any and all claims for damages in favor of
any person or persons, corporation or corporations, founded upon or arising out of the CalPeco
Alternative Delivery Point Service under Section 2(b).
6. Reaato1y Mrovals;Conditions Precedent. CalPeco's obligation to allow
Sierra to use the 608 Line for purposes of Sierra providing the TDPUD Alternative Transmission
Delivery Service, and Sierra's obligation to provide the CalPeco Alternative Delivery Point
Service,under the terms of this Agreement is subject to and conditioned upon(a)CalPeco
having received a no-action letter,waiver,declaratory order,or other issuance from the FERC,
where the result of such no-action letter,waiver, declaratory order,or other issuance provides
sufficient assurance, as reasonably determined by CalPeco, that FERC will not require CalPeco
to file an OATT or otherwise be subject to FERC requirements applicable to transmission
providers subject to FERC's jurisdiction,based upon the TDPUD Alternative Transmission
Delivery Service; and(b) CalPeco having received a final nonappealable order from the CPUC
authorizing CalPeco to allow Sierra to use the 608 Line in accordance with the terms and
conditions set forth in this Agreement. Each party will cooperate with the other party,as the
other party will reasonably request,in connection with the procureement prior to Closing of the
regulatory approvlas described above. Nothing in this Agreement is intended to subject CalPeco
to regulation by FERC.
7. Compliance with Law. The obligations of each party under this Agreement are,
and the performance of any such obligation hereunder is, subject to applicable Law,including
the receipt of approvals from Governmental Entities,if any,required to amend, supplement,
terminate or otherwise modify the terms and conditions of this Agreement.
8. Representations and Warranties. Each party represents and warrants to the other
party that(a)it has the power and authority to execute and deliver this Agreement and to perform `
its obligations under this Agreement,provided that CalPeco's obligation to perform the TDPUD
Alternative Transmission Delivery Service is subject to the satisfaction of the conditions set forth
in Section 6 hereof; (b)upon the execution and delivery hereof,this Agreement will be valid,
binding and enforceable upon it in accordance with the terms and conditions set forth herein,
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
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have executed this Agreement on its behalf. Sierra represents and warrants to CalPeco that as of
the completion of the Glenshire System Adjustments Sierra will have the capability and authority
to deliver power to CalPeco,at the point where the Glenshire System Adjustments interconnect
to the 7400 Distribution Circuit as contemplated by Section 2(b) of this Agreement through the
exclusive use of Sierra-owned facilities and without the need to utilize any facilities owned or
operated by TDPUD.
9. Delay P@Ment.The Settlement Agreement obligates Sierra to make
commercially reasonable efforts to complete the Glenshire System Adjustments by the Closing.
In the event that despite its exercise of such commercially reasonable efforts, Sierra is not able to
complete construction of the Glenshire System Adjustments within nine(9)months after the
Closing,then Sierra shall pay CalPeco$2500.00 per month starting with the tenth(1 Oth)month
after the Closing("Delay Payment')and continuing each month until Sierra confirms in writing
to CalPeco that the Glenshire System Adjustments are operational and,subject to the satisfaction
of the conditions precedent in Section 6, available to provide the CalPeco Alternative Delivery
Point Service in accordance with Section 2(b)of this Agreement. To the extent that the Delay
Payments set forth in this Section 9 are liquidated, CalPeco and Sierra acknowledge that the
damages to CalPeco for Sierra's failure to complete the Glenshire System Adjustments are
difficult or impossible to determine, or otherwise obtaining an inadequate remedy is
inconvenient and the Delay Payments calculated hereunder constitute a reasonable
approximation of the harm or loss. Nothing in this Section 9 shall limit the remedies which may
be available to CalPeco in the event that Sierra fails to use commercially reasonable efforts to
complete the Glenshire System Adjustments by the Closing or at any time thereafter.
10. Waiver of Consequential Damages. Notwithstanding any other provision of this
Agreement,in no event will a party be liable to the any other party,whether in contract,
warranty,tort,negligence, strict liability,or otherwise,for special,indirect,incidental,
consequential(including lost profits or revenues,business interruption damages and lost business
opportunities),exemplary or punitive damages related to, arising out of, or resulting from
performance or non-performance of this Agreement. The limitation on damages under this
Section 10 will not apply with respect to claims brought by third persons for which Sierra is
entitled to indemnification under Section 5 of this Agreement.
11. Binding Effect:Assigment. This Agreement will be binding upon and will inure
to the benefit of each party's permitted successors and assigns. This Agreement may not be
assigned by any party without the other party's prior written consent(such consent not to be
unreasonably withheld, conditioned or delayed), and an assignment of this Agreement will not
relieve the assigning party of its obligations and liabilities hereunder. Notwithstanding the
foregoing, Sierra consents to CalPeco's assignment of this Agreement for collateral security
purposes to aid in providing financing for the Transaction.
12. Governinj Law;Venue. This Agreement(including 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. 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. The parties agree that any and all claims, controversies or
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disputes arising from or relating to this Agreement will be submitted to federal or state courts
located in California for resolution.
13. Specific Performance; Attorneys' Fees. The parties expressly agree that a breach
of this Agreement by any of the parties will cause irreparable harm to the non-breaching party
for which damages would not be an adequate remedy and therefore,the non-breaching party will,
in addition to any other rights and remedies available hereunder or at Law,have the right to
enforce this Agreement by obtaining an order compelling specific performance of the breaching
parry's obligations to provide the reliability support provided for under this Agreement. If any
party institutes legal proceedings to enforce this Agreement,the prevailing party will be entitled
to recover all reasonable costs incurred by such party(including reasonable attorneys' fees)in
addition to any other relief to which such party may be entitled. EACH PARTY HEREBY
IRREVOCABLY WAIVES,TO THE FULLEST EXTENT PERMITTED BY LAW,ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING
OUT OF A CLAIM FOR SPECIFIC PERFORMANCE BROUGHT BY A PARTY
PURSUANT TO THIS SECTION 13.
14. Mediation. 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,each party will 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. Should the parties be unable to resolve the dispute through
mediation,they will be free, subject to Section 12 above,to file an action to adjudicate the
dispute. Notwithstanding the foregoing,a claim by a party for specific performance shall not be
subject to the mediation procedures and requirements set forth in this Section 14.
15. Notices. Written notice provided under this Agreement should be sent to 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 CalPeco: with a copy to:
California Pacific Electric Company, LLC Emera Incorporated
c/o Algonquin Power&Utilities Corp. Attn: Corporate Secretary
Attn: President 1894 Barrington Street
2845 Bristol Circle Halifax,Nova Scotia
Oakville, Ontario, Canada L6H 7H& B3J 2A8
Fax: (905)465-4514 Fax: (902)428-6171
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with a copy to:
Davis Wright Tremaine LLP
Attn: Steven F. Greenwald
505 Montgomery Street, Suite 800
San Francisco, CA
Fax: (415)276-6599
If to Sierra: with a copy to:
Sierra Pacific Power Company Sierra Pacific Power Company
Attn: Office of the General Counsel Attn: Christopher A. Hilen
6226 West Sahara Avenue 6100 Neil Road
Las Vegas,Nevada 89146 Reno,Nevada 89520-3150
Fax: (702)402-2069 Fax: (775)834-4811
16. Rules of Interpretation. Unless a clear contrary intention appears,this Agreement
will be construed and interpreted as follows: (a)the singular number includes the plural number
and vice versa; (b)reference to any person includes such person's permitted successors and
assigns; (c)reference to any agreement(including this Agreement),document,instrument or
tariff means such agreement,document, instrument or tariff as amended or modified and in effect
from time to time in accordance with the terms thereof; (d)reference to any Law means such
Law as amended,modified,codified or reenacted, in whole or in part, and in effect from time to
time; (e)"hereunder,"hereof,""herein,""hereto"and words of similar import will be deemed
references to this Agreement as a whole and not to any particular Article, Section or other
provision hereof or thereof; and(f) "including"(and with correlative meaning"include")means
including without limiting the generality of any description preceding such term.
17. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with reference to the subject matter hereof, and supersedes all prior and contemporaneous
understandings or agreements,oral or written,among the parties with respect to the subject
matter of this Agreement. Nothing in this Agreement modifies,supersedes,or otherwise alters
any other agreements between the parties.
18. No Third Party Beneficiaries. This Agreement is not intended to and does not
create rights,remedies,or benefits of any character whatsoever in favor of any person or entity
not a party hereto, and the obligations herein assumed are solely for the use end benefit of the
parties to this Agreement and their permitted successors and assigns.
19. Amendment: Counterparts. The parties may by mutual agreement amend this
Agreement by a written instrument duly executed by each party. This Agreement may be
executed in multiple counterparts (each of which will be deemed an original,but all of which
together will constitute one and the same instrument),and may be delivered by facsimile or
email transmission.
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Signature page follows immediately below]
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IN WITNESS WHEREOF,the parties have executed this Agreement effective as of the
Effective Date.
SIERRA PAC IC POWER OMPANY
d/b/a NV E Y
By. 0 t
Name: Roberto R. Denis
Title: Senior Vice President—Energy Delivery
CALIFORNIA PACIFIC ELECTRIC
COMPANY,LLC
By: California Pacific Utility Ventures,LLC,
Its: Sole Member
By:
Name: Ian-E. Robertson
Title: Manager
[SIGNATURE PAGE TO RELIABILITY SUPPORT AGREEMENT]
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IN WITNESS WHEREOF,the parties have executed this Agreement effective as of the
Effective Date.
SIERRA PACIFIC POWER COMPANY
d/b/a NV ENERGY
By:
Name:Roberto R.Denis
Title: Senior Vice President—Energy Delivery
CALIFORNIA PACIFIC ELECTRIC
COMPANY,LLC
By: California Pacific Utility Ventures,LLC,
Its: Sole Member
By: - �.
Name on
Title:Man e
[SIGNATURE PAGE TO RirLIABILITY SUPPORT AGREEMENT]
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