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FINAL 01-06-2026
PINAL POWER PURCHASE AND ENERGY STORAGE AGREEMENT
BETWEEN
ARIZONA ELECTRIC POWER COOPERATIVE
AND
CITY OF MESA, ARIZONA
1
PINAL POWER PURCHASE AND ENERGY STORAGE AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INTERPRETATION ....................................................... 4
1.1
Definitions.............................................................................................................. 4
1.2
Usage of Certain Terms and Phrases ................................................................... 10
ARTICLE II. CONDITIONS, TERM, TERMINATION ...................................................... 11
2.1
Conditions Precedent; Replacement of Subscription Agreement; Step-up
Obligation ............................................................................................................ 11
2.2
Term ..................................................................................................................... 11
2.3
Termination .......................................................................................................... 11
ARTICLE III. INSTALLATION AND OPERATION OF THE GENERATION
FACILITY AND THE BESS ........................................................................ 12
3.1
Service Provider Agreement ................................................................................ 12
3.2
Commercial Operation ......................................................................................... 12
3.3
Interruption of Service – Scheduled Outages ...................................................... 12
3.4
Interruption of Service – Unscheduled Outages .................................................. 12
3.5
Operation and Construction Committee .............................................................. 13
3.6
Test Energy .......................................................................................................... 13
ARTICLE IV. POWER PURCHASE AND ENERGY STORAGE
REQUIREMENT ........................................................................................... 13
4.1
Purchase and Sale of the Product ......................................................................... 13
4.2
Generation Delivery ............................................................................................. 14
4.3
Discharge Energy Delivery .................................................................................. 14
4.4
Metering ............................................................................................................... 15
4.5
Billing and Payment ............................................................................................. 15
4.6
Audit Rights ......................................................................................................... 16
4.7
Liquidated Damages ............................................................................................ 17
4.8
Solar Forecast....................................................................................................... 17
4.9
Operation and Scheduling of BESS ..................................................................... 17
4.10
Participant’s Economic Curtailment .................................................................... 17
4.11
AEPCO’s Use of Participant BESS Capacity ...................................................... 18
ARTICLE V. REPRESENTATIONS AND WARRANTIES; TITLE AND RISK
OF LOSS ........................................................................................................ 18
5.1
Representations and Warranties ........................................................................... 18
5.2
Title and Risk of Loss .......................................................................................... 19
5.3
Legal and Financial Funding Opinion. ................................................................ 20
2
ARTICLE VI. EVENTS OF DEFAULT, REMEDIES ......................................................... 20
6.1
Events of Default ................................................................................................. 20
6.2
Remedies .............................................................................................................. 21
6.3
No Waiver ............................................................................................................ 21
6.4
Limitation of Liability.......................................................................................... 22
6.5
Participant Step-Up Obligations .......................................................................... 22
6.6
Subscriber Defaults .............................................................................................. 22
ARTICLE VII. FORCE MAJEURE ...................................................................................... 23
7.1
General ................................................................................................................. 23
7.2
Additional Effects of Force Majeure ................................................................... 23
ARTICLE VIII. INDEMNIFICATION ................................................................................. 23
8.1
Indemnification .................................................................................................... 24
8.2
Insurance .............................................................................................................. 24
ARTICLE IX. CREDITWORTHINESS ............................................................................... 24
9.1
Financial Information........................................................................................... 24
9.2
Credit Support ...................................................................................................... 24
9.3
Letter of Credit ..................................................................................................... 25
ARTICLE X. MISCELLANEOUS ....................................................................................... 26
10.1
Assignment .......................................................................................................... 26
10.2
Permitted Encumbrances ..................................................................................... 26
10.3
Taxes .................................................................................................................... 26
10.4
Governing Law and Venue .................................................................................. 26
10.5
Waiver of Trial by Jury ........................................................................................ 26
10.6
Dispute Resolution ............................................................................................... 27
10.7
Successors and Assigns........................................................................................ 27
10.8
Severability .......................................................................................................... 27
10.9
Compliance with Laws ........................................................................................ 27
10.10 Entire Agreement ................................................................................................. 27
10.11 Not to be Construed Against Drafter ................................................................... 27
10.12 No Personal Liability ........................................................................................... 27
10.13 Time of Essence ................................................................................................... 27
10.14 Counterparts ......................................................................................................... 28
10.15 Survival ................................................................................................................ 28
10.16 Confidentiality ..................................................................................................... 28
10.17 Third Party Beneficiary........................................................................................ 29
10.18 Waiver and Amendment ...................................................................................... 29
10.19 No Joint Venture .................................................................................................. 29
10.20 Exhibits ................................................................................................................ 29
10.21 Enforcement of Rights on Behalf of Participant .................................................. 29
3
10.22 Notice from Service Provider .............................................................................. 29
10.23 Registration of Environmental Attributes ............................................................ 29
10.24 Arizona Provisions ............................................................................................... 29
10.25 Participant Payment Limitation ........................................................................... 29
ARTICLE XI. NOTICES....................................................................................................... 30
EXHIBIT A - DESCRIPTION OF PROJECT ...................................................................... 32
EXHIBIT B – DELIVERY POINT ....................................................................................... 33
EXHIBIT C – RATES FOR SERVICE ................................................................................. 34
EXHIBIT D – DISCHARGE ENERGY DELIVERY CHARGE ......................................... 35
EXHIBIT E – FORM OF LETTER OF CREDIT ................................................................. 36
EXHIBIT F – PARTICIPANT’S AGENT ............................................................................ 38
EXHIBIT G – SUBSCRIPTION SHARES ........................................................................... 39
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This Pinal Power Purchase and Energy Storage Agreement ("Agreement") is made and
entered on __________, by and between Arizona Electric Power Cooperative, Inc., an Arizona
nonprofit generation and transmission cooperative corporation (hereinafter referred to as
“AEPCO”) and City of Mesa, Arizona (hereinafter referred to as “Participant”). AEPCO and
Participant are sometimes hereinafter referred to collectively as the "Parties" and individually as a
"Party."
RECITALS
A.
AEPCO offered its Class A, B, and D Members the opportunity to acquire Solar Output
from the Generation Facility and energy storage services (“Energy Storage Services” or
“ESS”) and related benefits from an approximately 400 MWAC, co-located battery energy
storage system (the “Battery Energy Storage System” or “BESS”). The Generation
Facility and the BESS (collectively the “Project”) located in Pinal County, Arizona, is
further described on Exhibit A attached hereto.
B.
AEPCO, Participant and other Subscribers entered into the Pinal Solar and Storage
Planning and Subscription Agreement, dated May 6, 2025 ("Subscription Agreement"),
to provide for a third party (“Service Provider”) to develop, own, operate, and sell the
output from the Project to AEPCO, pursuant to the Power Purchase and Energy Storage
Agreement, dated January 17, 2025, between AEPCO and Service Provider ("Service
Provider Agreement").
C.
AEPCO will, in turn, sell the Product to Participant based on Participant’s percentage
Subscription Share (as defined below) of the Generation Facility and of the BESS pursuant
to this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE I. DEFINITIONS AND INTERPRETATION
1.1
Definitions. As used in this Agreement, the following terms, when capitalized, shall have
the following meanings. Other capitalized terms used but not defined herein shall have
their respective meanings as set forth in the Subscription Agreement or the Service
Provider Agreement as defined herein. “AEPCO” has the meaning set forth in the
Preamble.
“AEPCO Permitted Mortgagee” has the meaning specified in Section 10.2(a).
“Affiliate” means, with respect to any person, any other person (other than an individual) that,
directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under
common control with, such person. For this purpose, “control” means the direct or indirect
5
ownership of fifty percent (50%) or more of the outstanding capital stock or other equity interests
having ordinary voting power.
“Agreement” means this Pinal Power Purchase and Energy Storage Agreement between
Participant and AEPCO, including all exhibits hereto, entered into between Participant and
AEPCO, for the purpose of facilitating the purchase and sale of Product from the Project.
“Ancillary Services” means operating reserves, regulation and automatic generator control,
reactive supply, voltage control, frequency response, and other products associated with the
electrical generation, capacity and energy that the Project is capable of providing and all other
beneficial outputs of the Project not required for the operation of the Project.
“Approvals and Permits” means all applicable approvals, consents, franchises, permits, licenses,
certificates, inspections, and authorizations required by any utility, Governmental Authority, or
any other entity, including any modifications thereto, arising out of, or related to, the design,
installation, operation, maintenance, and/or repair of the Project.
“Availability Guarantee” means the guarantee provided by Service Provider pursuant to Annex
B of the Service Provider Agreement.
“Bankrupt” means with respect to any entity, such entity (i) files a petition or otherwise
commences, authorizes or acquiesces in the commencement of a proceeding or cause of action
under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or
commenced against it, and such petition filed or commenced against it is not withdrawn or
dismissed within thirty (30) days after such filing; (ii) makes an assignment or any general
arrangement for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however
evidenced), (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official
appointed with respect to it or any substantial portion of its property or assets, or (v) is generally
unable to pay its debts as they fall due.
“Battery Energy Storage System” or “BESS” means the battery arrays, battery system controller,
inverters, transformers, thermal management system, and other equipment necessary to charge,
store, and subsequently deliver electricity to the Delivery Point and all associated equipment,
facilities, interconnection facilities, tangible assets, and contract rights associated with the ESS.
“Business Day” means any day other than Saturday, Sunday, or legal holidays for federally
chartered banks in the State of Arizona.
“Capacity Rights” means any current or future defined characteristic, certificate, tag, credit, or
accounting construct associated with the amount of power that the Project can generate at a
particular moment and that can be purchased and sold under market rules adopted in the region
where the Project is supplying to or located.
“Charging Energy” means all energy delivered to the Receipt Point for storage and later delivery
as Discharge Energy regardless of the source of such energy, inclusive of any energy used for
transformation and transmission losses.
“Claiming Party” has the meaning specified in Section 7.1.
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“Commercial Operation” means that: 1) the Project has met the requirements to achieve
commercial operation pursuant to the Service Provider Agreement, 2) the Project is capable of
providing energy from the Generation Facility and the BESS at the Delivery Point, and 3) AEPCO
has provided notice of achievement of commercial operation to Participant.
“Commercial Operation Date” means the date upon which the conditions have been met that
establish the “Commercial Operation Date” in the Service Provider Agreement.
“Costs” means, with respect to the Non-Defaulting Party, the actual and documented out-of-pocket
brokerage fees, commissions and similar transaction costs and expenses reasonably incurred in
terminating any arrangement under this Agreement or entering into new arrangements that replace
the Product as a result of, and all reasonable attorneys’ fees incurred by the Non-Defaulting Party
in connection with, the termination of this Agreement pursuant to Section 6.2.
“Defaulting Party” has the meaning specified in Section 6.1.
“Delivery Point” means the Delivery Point as further described in Exhibit B. For the avoidance
of doubt, Charging Energy delivered to the Receipt Point shall be deemed to have been delivered
at the Delivery Point.
"Discharge Energy” means all energy discharged by the BESS, as measured at the Metering Point,
less Station Use Energy for the BESS and less transformation and transmission losses.
“Economic Curtailment Energy” has the meaning set forth in Section 4.10.
“Economic Curtailment Schedule” has the meaning set forth in Section 4.10.
“Effective Date” means the date upon which this Agreement is executed between the Parties.
“Emergency Condition” refers to a situation in which AEPCO has exhausted all available
resource options and can no longer meet its expected load obligations, or when an abnormal system
condition exists that requires automatic or immediate manual action to prevent or limit the failure
of transmission facilities or generation resources that could adversely impact the reliability of the
electric system.
“Energy Storage Services” or “ESS” means the acceptance of Charging Energy at the Receipt
Point, the storing of energy in the BESS, and the delivery of Discharge Energy from the BESS at
the Delivery Point in compliance with the ESS Unit Capabilities (as that term is defined Service
Provider Agreement), and subject to the terms and conditions of the Service Provider Agreement.
“Environmental Attributes” means all attributes, aspects, characteristics, claims, credits,
benefits, reductions, offsets or allowances of an environmental nature, including Renewable
Energy Certificates, that, at any point during the Term, are created or otherwise arise from the
Generation Facility’s delivery of electricity from renewable energy resources in contrast with the
generation of electricity using nuclear or fossil fuels or other traditional resources. Forms of such
attributes include any and all environmental air quality credits, green credits, including carbon
credits, emissions reduction credits, certificates, tags, offsets, allowances, or similar products or
rights, howsoever entitled, (i) resulting from the avoidance of the emission of any gas, chemical,
7
or other substance, including mercury, nitrogen oxide, sulfur dioxide, carbon dioxide, carbon
monoxide, particulate matter or similar pollutants or contaminants of air, water or soil, gas,
chemical, or other substance, and (ii) attributable to the generation, purchase, sale or use of energy.
Environmental Attributes include those currently existing or arising after the Commercial
Operation Date under local, state, regional, federal, or international legislation or regulation
relevant to the avoidance of any emission described above under any governmental, regulatory or
voluntary program, including the United Nations Framework Convention on Climate Change and
related Kyoto Protocol or other programs, laws or regulations. Environmental Attributes include
the reporting rights related to any such attributes, aspects, characteristics, claims, credits, benefits,
reductions, offsets or allowances, including the right of a person to report the ownership thereof in
compliance with federal or state law, if applicable, or otherwise to a federal or state agency or any
other person.
“Equitable Defenses” means any bankruptcy, insolvency, reorganization and other laws affecting
creditors’ rights generally, and with regard to equitable remedies, the discretion of the court before
which proceedings to obtain same may be pending.
“Event of Default” has the meaning specified in Section 6.1 of this Agreement.
“Expected Commercial Operation Date” means December 1, 2027, as that date may be extended
by written agreement of the Parties or pursuant to the terms of the Service Provider Agreement.
“Force Majeure” means an event or circumstance which prevents one Party from performing its
obligations under this Agreement, which event or circumstance is not within the reasonable control
of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due
diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure
shall not be based on economic hardship, including, without limitation, (i) the loss of Participant’s
markets; (ii) Participant’s inability to economically use or resell the Product purchased hereunder;
(iii) AEPCO’s ability to sell the Product at a price greater than the rates set forth in Exhibit C, or
(iv) any amendment, modification, passage of a superseding act, or repeal of any applicable law
related to Environmental Attributes.
“Generation Facility” means the solar photovoltaic electric generation plant, including all electric
power generation equipment, controls, meters, switches, connections, conduit, wires and other
equipment connected to the transmission provider’s interconnection facilities and installed and
operated by Service Provider as a fixture on the Premises for the purposes of providing electric
power to Participant under the Agreement. If the final capacity of the Generation Facility is
different than 400 MWAC, the Parties shall adjust the Participant’s Subscription Share and final
capacity in accordance with Section 3.4 of the Subscription Agreement.
“Governmental Authority” means any federal, state, or local government exercising jurisdiction
over either Party or the Generation Facility, including any agency, court, or instrumentality of any
such government exercising executive, legislative, judicial, regulatory, or administrative functions.
Governmental Authority shall not include any entity that is a Party to this Agreement.
“Indemnified Party” has the meaning specified in Section 8.1.
“Indemnifying Party” has the meaning specified in Section 8.1.
8
“Interest Rate” means, for any date, the lesser of (a) the applicable rate of interest under AEPCO’s
Committed Line of Credit, or (b) the per annum rate of interest equal to the prime lending rate as
may from time to time be published in The Wall Street Journal under “Money Rates” on such day
(or if not published on such day on the most recent preceding day on which published) or (c) the
maximum rate permitted by applicable law.
“Metering Point” means the points as measured by metering devices as further described in
Section 4.4.
“MWAC” means megawatt alternating electric current.
“MWh” means megawatt-hour(s).
“Non-Defaulting Party” has the meaning specified in Section 6.2.
“OATT” means AEPCO’s Open Access Transmission Tariff, as it may be modified from time to
time.
“O&C Committee” has the meaning specified in Section 3.5.
“Participant” has the meaning set for in the Preamble.
“Participant’s Agent” means an individual or entity, other than AEPCO, if applicable, authorized
to act on behalf of a Participant within the scope of authority granted in writing by the Participant,
as may be identified in Exhibit F.
“Premises” means the land on which the Project is located.
“Product” means, collectively, the Solar Output and the Storage Product.
"Project” has the meaning set forth in the recitals.
“Prudent Utility Practice(s)” means the practices, methods, and acts (including the practices,
methods, and acts engaged in or approved by a significant portion of the solar power generation
industry serving public utilities, or approved by WECC and/or NERC) that, at a particular time, in
the exercise of reasonable judgment in light of the facts known or that should reasonably have
been known at the time a decision was made, would have been expected to accomplish the desired
result in a manner consistent with law, regulation, permits, codes, standards, reliability, safety,
environmental protection, economy, and expedition.
“Receipt Point” means the Project’s Energy Storage System Metering Point.
“Renewable Energy Certificate” or “REC” is the certificate that evidences the ownership of
Environmental Attributes that have been generated by the Project and certified by the Western
Renewable Energy Generation Information System (WREGIS).
“Replacement Price” means the price at which Participant, acting in a commercially reasonable
manner, purchases at the Delivery Point a replacement for any Solar Output not delivered by
9
AEPCO, or at Participant’s option, the market price at the Delivery Point for such Solar Output
not delivered as determined by Participant in a commercially reasonable manner; provided,
however, in no event shall such price include any penalties, ratcheted demand or similar charges,
nor shall Participant be required to utilize or change its utilization of its owned or controlled assets
or market positions to minimize AEPCO’s liability. For the purposes of this definition, Participant
shall be considered to have purchased a replacement to the Solar Output to the extent Participant
shall have entered into one or more arrangements in a commercially reasonable manner whereby
Participant repurchases its obligation to sell and deliver the Solar Output to another party at the
Delivery Point or any other mutually agreed upon delivery point in the instance that the Delivery
Point is not the most commercially reasonable delivery point at the time of replacement.
“Representative” means a Party’s employee, officer, director, member, manager, contractor,
agent, accountant, or attorney.
“Revised Subscription Share” has the meaning set forth in Section 6.5.
“Sales Price” means the price at which AEPCO, acting in a commercially reasonable manner,
resells at the Delivery Point any component of the Product not received by Participant (including
Economic Curtailment Energy), deducting from such proceeds any (i) costs reasonably incurred
by AEPCO in reselling such Product and (ii) additional transmission charges, if any, reasonably
incurred by AEPCO in delivering such Product to the third party purchasers, or at AEPCO’s
option, the market price at the Delivery Point for such Product not received as determined by
AEPCO in a commercially reasonable manner; provided, however, in no event shall such price
include any penalties, ratcheted demand or similar charges, nor shall AEPCO be required to utilize
or change its utilization of its owned or controlled assets, including contractual assets, or market
positions to minimize Participant’s liability. For purposes of this definition, AEPCO shall be
considered to have resold such Product to the extent AEPCO shall have entered into one or more
arrangements in a commercially reasonable manner whereby AEPCO repurchases its obligation to
purchase and receive the Product from another party at the Delivery Point. If the Delivery Point is
not the most commercially reasonable delivery point at the time of resale, the Parties may agree to
another delivery point.
“Scheduled Outage” has the meaning specified in Section 3.3.
“Service Provider” has the meaning set forth in the recitals.
“Service Provider Agreement” has the meaning set forth in the recitals and is expressly subject
to Section 10.16 in its entirety.
“Solar Output” means the Participant’s Subscription Share of all of the alternating current
electricity and VAR (KVar) output produced by the Generation Facility, less Station Use Energy
for the Generation Facility and less transformation and transmission losses, if any, on a unit-
contingent basis; Solar Output includes all Capacity Rights and Environmental Attributes
generated by the Generation Facility and shall be delivered either 1) as metered at the Delivery
Point in accordance with Section 4.4, or 2) delivered as Charging Energy to, and metered at, the
Receipt Point.
10
“Station Use Energy” means the energy used to power the lights, motors, temperature control
systems, control systems and other electrical loads that are necessary for operation of the Project
during periods in which the Project is idle (meaning that the Solar Facility is not generating and
the ESS is not charging or discharging, as applicable, in accordance with Service Provider
Agreement). Service Provider is solely responsible, at its sole cost and expense, for procuring and
providing all Station Use Energy.
“Storage Product” means the Energy Storage Services and all associated Capacity Rights,
Ancillary Services, and Environmental Attributes.
“Subscribers” shall mean all entities that have a Subscription Share of the Solar Output and/or
the Storage Product.
“Subscription Agreement” has the meaning set forth in the recitals.
“Subscription Share” shall mean a percentage share of the cost responsibility and right to the
Solar Output of the Generation Facility which for Participant is 6.25% and/or to the Storage
Product of the BESS which for Participant is 5.00%, as may be modified from time to time
pursuant to Section 2.1(c) and Section 6.5.
“Taxes” means any federal, state, and local ad valorem, property, occupation, generation,
privilege, sale, use, consumption, excise, transaction, and other taxes, regulatory fees, surcharges
or other similar charges, but shall not include any income taxes or similar taxes imposed on
AEPCO’s revenues due to the sale of any component of the Product under this Agreement, which
shall be AEPCO’s responsibility.
“Term” has the meaning specified in Section 2.2.
“Test Energy” means all Solar Output generated by the Generation Facility and delivered to
Participant and all Discharge Energy during the Test Period.
“Test Period” means the period commencing on the day the Generation Facility is energized for
a period of no more than one-hundred and twenty (120) days prior to the Commercial Operation
Date.
“Unscheduled Outage” has the meaning specified in Section 3.4.
“Western Electricity Coordinating Council” means the regional entity responsible for
coordinating and promoting bulk electric system reliability in the Western Interconnection
“WECC Preschedule Calendar” means the annual preschedule calendar set by WECC that
defines the timing for day-ahead trading and scheduling of energy around holidays and the
beginning of new months.
1.2
Usage of Certain Terms and Phrases. Unless the context or express provisions of this
Agreement otherwise requires, (a) words of any gender include each other gender; (b)
words using the singular or plural number also include the plural or singular number,
respectively; (c) the terms “hereof,” “herein,” “hereby” and derivative or similar words
11
refer to this entire Agreement; and (d) the terms “Article,” “Provision” or “Section” refer
to the specified Article, Provision or Section of this Agreement. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless Business Days
are specified. Any reference to a person or firm includes its successors and assigns.
References to articles, sections, exhibits, appendices, schedules, and attachments means
the articles, sections, exhibits, appendices, schedules, and attachments of this Agreement.
References to this “Agreement” include any relevant articles, sections, exhibits,
appendices, schedules, and attachments of this Agreement. If any payment, or performance
of any non-monetary obligation, is due on a day that is not a Business Day, it shall be
deemed due the next following Business Day. “Include” or “including” shall be deemed to
be followed by “without limitation.”
ARTICLE II. CONDITIONS, TERM, TERMINATION
2.1
Conditions Precedent; Replacement of Subscription Agreement; Step-up Obligation.
a) The effectiveness of this Agreement and the Parties’ obligations hereunder shall be expressly
conditioned upon approval by each Party’s governing board and receipt of all necessary
Approvals and Permits.
b) The Parties acknowledge and agree that on the Commercial Operation Date, the terms and
conditions of the Subscription Agreement shall be superseded in their entirety by the terms and
conditions of this Agreement, except that Section 7 of the Subscription Agreement and any
other provisions of the Subscription Agreement required to give effect to the intent of the
parties as to Section 7 shall survive and remain in full force and effect in accordance with the
terms thereof.
c) The Parties acknowledge and agree that Participant (and each Subscriber to any component of
the Product pursuant to the terms of such Subscriber’s power purchase and energy storage
agreement with AEPCO) is obligated to, and shall, increase its Subscription Share to the
Revised Subscription Share in the event that AEPCO experiences an event of default with a
Subscriber (“Step-up Obligation”), as provided in Section 6.5.
d) Intentionally Blank.
2.2
Term. This Agreement shall commence on the Effective Date and shall continue for a
period that is twenty (20) years from the Commercial Operation Date (“Term”). Upon
termination of the Agreement, Participant shall have no further obligations or rights related
to the Product.
2.3
Termination. In addition to a termination for an Event of Default under Article VI,
AEPCO may terminate this Agreement without liability to Participant if AEPCO
terminates the Service Provider Agreement due to a Service Provider event of default.
Participant may terminate this Agreement without liability to AEPCO if AEPCO
terminates the Service Provider Agreement due to a Service Provider event of default under
the Service Provider Agreement. In the event of a termination of this Agreement due to a
termination of the Service Provider Agreement, AEPCO shall pass through any damages,
liquidated damages or termination payments received from Service Provider, less any costs
12
reasonably incurred by AEPCO in collecting such payments or damages, to Participant,
based on Participant’s Subscription Share.
ARTICLE III. INSTALLATION AND OPERATION OF THE GENERATION
FACILITY AND THE BESS
3.1
Service Provider Agreement. As between the Parties, AEPCO shall be directly
responsible for all costs and the performance of all obligations under the Service Provider
Agreement.
3.2
Commercial Operation. AEPCO shall use commercially reasonable efforts to cause the
Project to achieve Commercial Operation on or before the Expected Commercial Operation
Date. If Commercial Operation will not be achieved by the Expected Commercial
Operation Date, AEPCO shall provide notice to Participant and shall work with Service
Provider to cause the Project to achieve Commercial Operation. Further, subject to Article
VII, to the extent failure to achieve Commercial Operation by the Expected Commercial
Operation Date entitles AEPCO to liquidated damages under the Service Provider
Agreement (“Delay Damages” as defined in the Service Provider Agreement), AEPCO
shall pass such liquidated damages through to Participant based on Participant’s
Subscription Share.
3.3
Interruption of Service – Scheduled Outages. The scheduled interruption from time to
time of the Project may be necessary in order to install, operate, maintain, or repair the
Project (“Scheduled Outages”). AEPCO shall provide Participant with a notice of the
Scheduled Outages on an annual basis and shall update such notice quarterly to reflect any
known changes to the Scheduled Outages. AEPCO shall consult with Participant regarding
any Scheduled Outage periods and shall use commercially reasonable efforts to
i) coordinate Scheduled Outages with Service Provider in a manner which minimizes cost
and disruption to Participant, and ii) minimize the length, duration, and scope of the
outages. AEPCO shall have no liability or otherwise have an obligation to deliver the
Product to Participant in the event of a Scheduled Outage.
3.4
Interruption of Service – Unscheduled Outages. The interruption from time to time of
the Project may be required in the case of an emergency or unexpected interruption of the
Project (“Unscheduled Outages”). In the event of an Unscheduled Outage, AEPCO will
use commercially reasonable efforts to respond within one (1) Business Day following
notification either by remote monitoring systems or by Participant of such Unscheduled
Outage, and will cause Service Provider to complete needed repairs as soon as reasonably
practicable and in accordance with Prudent Utility Practice and the terms of the Service
Provider Agreement to restore the Project to operation. AEPCO shall have no liability or
otherwise have an obligation to deliver the Product to Participant in the event of an
Unscheduled Outage. For the avoidance of doubt, Unscheduled Outages include
curtailments of the Solar Output or limitations of the BESS from accepting Charging
Energy or releasing Discharge Energy imposed by a transmission provider, balancing
authority area, reliability coordinator, or similar entity for reliability, emergency, or similar
purposes.
13
3.5
Operation and Construction Committee. The Pinal Operation and Construction
Committee (“O&C Committee”) formed pursuant to Section 7 of the Subscription
Agreement shall continue for the Term of this Agreement and shall have the same
representation and responsibilities with respect to the operation and maintenance of the
Generation Facility and the BESS as provided in the Subscription Agreement.
3.6
Test Energy. Participant shall purchase its Subscription Share of all Test Energy from the
Generation Facility provided at the Delivery Point at fifty percent (50%) of the rates
provided for in Exhibit C and Participant shall be responsible for costs and/or credits of
its Subscription Share of Discharge Energy associated with Test Energy from the
Generation Facility.
ARTICLE IV. POWER PURCHASE AND ENERGY STORAGE REQUIREMENT
4.1
Purchase and Sale of the Product.
a) Commencing on the Commercial Operation Date and continuing throughout the Term,
AEPCO shall sell to Participant and deliver to Participant at the Delivery Point, and Participant
shall receive and purchase from AEPCO, at the rates provided for in Exhibits C and D,
Participant’s Subscription Share of the Product, pursuant to the terms of this Agreement.
b) If AEPCO fails to deliver any component of the Product and such failure is not excused under
the terms of this Agreement or the Service Provider Agreement, AEPCO shall provide a credit
to the Participant for the cost difference, if the Replacement Price exceeds the applicable rate
in Exhibit C, but Participant shall not be entitled to terminate this Agreement or to withhold
payments required to be made pursuant to this Agreement except as provided in Section 6.1(a).
Participant shall provide reasonable proof of the Replacement Price to AEPCO and thereafter,
AEPCO shall provide a credit to Participant on the next monthly billing statement.
c) If Participant fails to receive any component of the Product and such failure is not excused
under the terms of this Agreement, AEPCO shall make commercially reasonable efforts to
remarket the Product at a point of delivery that maximizes the net economic value of the
Product, but AEPCO shall not be entitled to terminate this Agreement or to withhold payments
required to be made pursuant to this Agreement, except as provided in Section 6.1(a). If
AEPCO can successfully remarket the Product to a Subscriber or other entity, AEPCO will
calculate the difference between the cost of the Product using the rates set forth in Exhibit C
and the Sales Price. If the rates set forth in Exhibit C exceed the Sales Price, AEPCO shall bill
and the Participant shall pay, the difference in the next monthly billing statement. If the rates
set forth in Exhibit C are less than the Sales Price, then AEPCO shall provide a credit for the
difference to Participant on the next monthly billing statement. If the Product is sold without
RECs pursuant to this Section 4.1(c), Participant shall be entitled to the RECs associated with
such sale.
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d) In the event that AEPCO cannot remarket the Product, the Sales Price shall be zero, unless
AEPCO implements a Buyer Curtailment under the Service Provider Agreement, in which
case, Participant shall pay AEPCO for its share of Deemed Energy for Participant’s failure to
receive per Article II of the Service Provider Agreement, plus applicable Production Tax Credit
(PTC) value, as defined in the Service Provider Agreement.
4.2
Generation Delivery.
a) Solar Output produced by the Generation Facility will be metered and allocated based on the
Subscription Share of Participant and delivered to either: (i) Participant at the Delivery Point;
or (ii) the BESS for storage and later delivery to Participant, each in accordance with
Participant’s or Participant’s Agent’s scheduling instructions or, in the absence of such
scheduling instructions, in accordance with AEPCO’s good faith business judgment.
b) Participant shall arrange and be responsible for any third-party transmission service required
to deliver power from the Delivery Point to Participant load and shall schedule or arrange for
scheduling services with all applicable transmission providers to accept scheduled energy from
the Delivery Point, and Participant shall be responsible for all costs or charges imposed on or
associated with the transmission service after the Delivery Point. In addition, Participant shall
provide AEPCO with timely and adequately detailed information necessary for AEPCO to
meet its responsibility to submit e-tags associated with delivery of the scheduled energy to the
Participant. Participant and AEPCO shall agree in writing upon the format and means of
communication of such information.
c) AEPCO shall provide Generator Imbalance Service, at the rates and terms provided in its
OATT, for any difference between scheduled energy and Participant’s allocated Solar Output.
d) In the event AEPCO incurs cost for ancillary services in accordance with the AEPCO OATT,
Participant shall be responsible to AEPCO for paying for such ancillary services pursuant to
the OATT.
e) AEPCO will schedule Discharge Energy in the overall best interest of the Subscribers based
on optimization of the aggregate schedules of Participant and all Subscribers and in accordance
with Prudent Utility Practice.
4.3
Discharge Energy Delivery.
a) Discharge Energy will be metered at the Metering Point and allocated based on the
Subscription Share of Participant and delivered to Participant at the Delivery Point.
b) AEPCO shall bill Participant for any Discharge Energy delivery charge as set forth in
Exhibit D.
c) Except as provided in this Section 4.3(c), Participant shall arrange and be responsible for any
third-party transmission service required to deliver power from the Delivery Point to
Participant load and shall schedule or arrange for scheduling services with all applicable
transmission providers to accept scheduled energy from the Delivery Point, and shall be
responsible for all costs or charges imposed on or associated with the transmission service after
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the Delivery Point. In addition, Participant shall provide AEPCO with timely and adequately
detailed information necessary for AEPCO to meet its responsibility to submit e-tags
associated with delivery of the scheduled energy to the Participant. Participant and AEPCO
shall agree in writing upon the format and means of communication of such information.
d) AEPCO shall provide imbalance services, at the rates and terms provided in its OATT, for
Participant’s Subscription Share of any difference between the Project’s scheduled and
metered energy.
e) In the event AEPCO incurs cost for other ancillary services in accordance with its OATT,
Participant shall be responsible to AEPCO for paying for such ancillary services pursuant to
the OATT.
4.4
Metering. AEPCO shall cause to be procured, installed, and maintained all meters that
may be necessary for measuring the Solar Output, Charging Energy, Discharge Energy,
and Station Use Energy pursuant to Section 5.1 of the Service Provider Agreement. Any
adjustment made for inaccurate meters pursuant to Section 5.3 of the Service Provider
Agreement shall be applied to Participant according to Participant’s Subscription Share.
Any correction in billings or payments resulting from a correction in the meter records
shall be made in the next monthly billing or payment rendered, in accordance with Section
4.6(d). Such correction, when made, shall constitute full adjustment of any claim between
AEPCO and Participant arising out of such inaccuracy of metering equipment.
4.5
Billing and Payment.
a) As soon as practicable after the end of each calendar month, AEPCO will render to Participant
and Participant’s Agent an invoice, or as a separate line-item on its existing monthly bill, for
the net payment obligations, if any, incurred hereunder during the preceding month. All
invoices shall be due and payable in accordance with AEPCO’s current billing procedures and
invoice instructions, or otherwise, on or before the later of the twentieth (20th) day of each
month, or the tenth (10th) day after receipt of the invoice by the Participant or the Participant’s
Agent. Participant will make payments by electronic funds transfer, or by other mutually
agreeable method(s), to the account designated by AEPCO. Any amounts not paid by the due
date will be deemed delinquent and will accrue interest at the Interest Rate, such interest to be
calculated from and including the due date but excluding the date the delinquent amount is
paid in full. Any discrepancies regarding amounts billed in an invoice shall be resolved in the
next month’s invoice, or as soon as possible thereafter.
b) Participant shall have an unconditional obligation to make all payments to AEPCO required
hereunder at the rates and charges and on the terms and conditions set forth herein and in
Exhibits C and D, based on Participant’s Subscription Share of the Product. Participant shall
make all payments of charges for the Product provided for under this Agreement, including
without limitation, rates and charges resulting from the default of one or more Subscribers or
otherwise, as the case may be, in a timely manner pursuant to and to the extent of AEPCO’s
obligations under the Service Provider Agreement. Payments by Participant hereunder, and the
obligation to pay, shall be absolute and unconditional and shall not be subject to any reduction,
whether by offset, set-off, recoupment or otherwise, and shall not be conditioned upon
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performance or limited by Participant under any other wholesale power sales, power purchase
or power marketing agreements entered into by AEPCO.
c) Notwithstanding anything to the contrary in this Agreement, AEPCO may review the rates and
charges for electric energy and capacity provided hereunder. If such rates are insufficient to
pay all of AEPCO’s costs and liabilities under the Service Provider Agreement and AEPCO’s
development costs, including legal fees (unless such legal fees relate to gross negligence by
AEPCO), in connection with the Project, AEPCO may revise such rates so that amounts paid
under this Agreement, together with amounts paid under all other Subscribers’ agreements, are
sufficient to enable AEPCO to pay all of such obligations. If such rates or charges are to be
revised, AEPCO shall cause a notice in writing to be provided to Participant at least ninety
(90) days prior to the effective date of such revisions, which notice shall set forth the proposed
revisions of the rates or charges with the effective date thereof, and the basis upon which the
rates or charges are proposed to be adjusted and set. Participant agrees that any such revised
rates and charges set by AEPCO pursuant to its authority herein shall be substituted for the
rates herein provided, and Participant agrees to pay for the Product provided by AEPCO
hereunder after the effective date of any such revised rates and charges pursuant to such revised
rates and charge.
d) Section 4.5 (b) and (c) shall not be construed to release AEPCO from the performance of any
of its obligations established in this Agreement or, except to the extent expressly provided in
this Agreement, prevent or restrict Participant from bringing suit for enforcement of, or
damages arising from, any rights that it may have against AEPCO under this Agreement or
under any provision of law, and to compel AEPCO to pay any damages awarded by a court
of competent jurisdiction as awarded in a final judgment.
4.6
Audit Rights.
a) Participant, through its authorized representatives, shall have the right to examine and copy the
records of AEPCO to the extent reasonably necessary to verify the accuracy of any statement,
charge or computation made hereunder. All costs and expenses of such audits will be the sole
responsibility of the Participant. Participant will have the right to conduct such an audit no
more frequently than once each calendar year.
b) Upon request, AEPCO shall provide to Participant statements evidencing the quantities of
Solar Output, Charging Energy, and Discharge Energy as metered at the Metering Point and
all costs contained within the rates set out in Exhibit C.
c) AEPCO will maintain adequate financial records and documents to support all costs billed to
Participant. Such financial records and documents will be maintained for a period of at least
three (3) years following the performance and/or satisfaction of obligations arising under this
Agreement or until any audit in progress is completed.
d) If any statement is found to be inaccurate, a corrected statement shall be issued within thirty
(30) days after resolution of the audit findings and any amount due by either Party to the other
Party thereunder will be promptly paid, without interest, no later than the thirtieth (30th) day
after receipt of the corrected statement. Notwithstanding the foregoing, no adjustment shall be
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made with respect to any statement or payment hereunder unless a Party questions the accuracy
of such payment or statement within three (3) years after the date of such statement or payment.
4.7
Liquidated Damages. To the extent AEPCO is entitled to liquidated damages due to a
failure of the Generation Facility or the BESS to meet the Availability Guarantee as defined
in the Service Provider Agreement, AEPCO shall pass such liquidated damages through to
Participant based on Participant’s Subscription Share. Liquidated damages shall be applied
as an offset to Participant’s payment obligations, if any, incurred and owing under this
Agreement and shall be reflected on Participant’s invoice once such liquidated damages
are received by AEPCO. In the event liquidated damages are expected to be greater than
Participant’s incurred and owing payment obligation for two monthly billing cycles under
this Agreement, the remaining liquidated damages shall be paid to Participant within thirty
(30) days of such determination. AEPCO shall use commercially reasonable efforts to
enforce its right to liquidated damages on behalf of the Subscribers and Participant. For the
avoidance of doubt, all liquidated damages recovered pursuant to the Availability
Guarantee shall be passed to Subscribers (and Participant) less any costs AEPCO
reasonably incurs to collect liquidated damages.
4.8
Solar Forecast. AEPCO shall share the forecast delivered by Service Provider or Service
Provider’s agent to Participant as soon as practical.
4.9
Operation and Scheduling of BESS. Participant or Participant’s Agent shall provide
AEPCO with an hourly schedule of targeted charging quantities and discharging quantities
for a future time period (“Participant Requested BESS Schedule”) in accordance with
the WECC Preschedule Calendar for any day during which the Participant Requested
BESS Schedule will be dispatched.
a) Participant or Participant’s Agent may purchase or otherwise procure or supply any energy
from the wholesale market or other resources for delivery to and storage in the BESS and shall
retain title to and risk of loss of any such energy while it is stored in the BESS, unless such
loss is occasioned by AEPCO’s or Service Provider’s negligence, gross negligence or willful
misconduct in operating and maintaining the BESS. For avoidance of doubt, Participant is
responsible for transmission to import Charging Energy from sources other than the Generating
Facility to the Receipt Point.
b) In the absence of sufficient supply scheduled to the BESS, AEPCO will adjust the Participant
Requested BESS Schedule down to match the total supplied quantity.
4.10
Participant’s Economic Curtailment. Participant or Participant’s Agent may provide
AEPCO with an hourly schedule of targeted reductions (“Economic Curtailment
Schedule”) of Solar Output (“Economic Curtailment Energy”) for a future time period
no later than one (1) day prior, and in accordance with the WECC Preschedule Calendar,
to any day during which the targeted reductions of Solar Output will take place.
a) AEPCO will first attempt to remarket Economic Curtailment Energy to other Subscribers, then
attempt to remarket the Economic Curtailment Energy to other entities. If AEPCO can
successfully remarket the Economic Curtailment Energy to a Subscriber or other entity,
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AEPCO will calculate the difference between the cost of the Economic Curtailment Energy
calculated using the rates set forth in Exhibit C and the Sales Price of the Economic
Curtailment Energy. If the cost of the Economic Curtailment Energy calculated using the rates
set forth in Exhibit C exceeds the Sales Price of the Economic Curtailment Energy, AEPCO
shall bill and the Participant shall pay, the difference in the next monthly billing statement. If
the Sales Price of the Economic Curtailment Energy exceeds the cost of the Economic
Curtailment Energy calculated using the rates set forth in Exhibit C, then AEPCO shall
provide a credit to Participant on the next monthly billing statement. If the Economic
Curtailment Energy is sold without RECs pursuant to this Section 4.10(a), Participant shall be
entitled to the RECs associated with such Economic Curtailment Energy.
b) In the event that AEPCO cannot remarket the Economic Curtailment Energy, the Sales Price
shall be zero, unless AEPCO implements a Buyer Curtailment under the Service Provider
Agreement, in which case, Participant shall pay AEPCO for its share of Deemed Energy for
Participant’s curtailment per Article II of the Service Provider Agreement, plus applicable
Production Tax Credit (PTC) value, as defined in the Service Provider Agreement.
4.11
AEPCO’s Use of Participant BESS Capacity. For any day that Participant elects not to
charge or discharge any or all of its Participant Share of the BESS Capacity, AEPCO shall
not utilize Participant’s Share of BESS Capacity without Participant’s express written
permission, unless there is an energy or transmission Emergency Condition. If AEPCO
utilizes Participant’s Share of the BESS Capacity in an Emergency Condition, AEPCO
shall pay Participant for such use of energy and/or capacity at the replacement cost for the
hours the BESS Capacity was originally scheduled by Participant or at the applicable real-
time locational marginal price if Participant’s BESS Capacity was not scheduled.
ARTICLE V. REPRESENTATIONS AND WARRANTIES; TITLE AND RISK OF LOSS
5.1
Representations and Warranties. On the Effective Date and on the Commercial
Operation Date, each Party represents and warrants to the other Party that:
a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of
its formation;
b) neither the execution, delivery or performance of this Agreement nor compliance herewith will
(a) violate any provision of the certificate of formation or operating agreement (or other
comparable governing documents) of such Party, (b) result in a violation, breach, or
termination of, or constitute (with or without notice or lapse of time or both) a default under
(or give rise to any right of termination, cancellation, acceleration, or any obligation to repay),
any of the terms, conditions, or provisions of any indenture, mortgage, note, bond,
encumbrance, license, contract, lease, franchise, permit, or other agreement to which such
Party is a party, or (c) violate any order, writ, judgment, injunction, decree, statute, ordinance,
rule, or regulation of any Governmental Authority applicable to such Party;
c) the execution, delivery and performance of this Agreement is within its powers, has been duly
authorized by all necessary action, and does not violate any of the terms and conditions in its
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governing documents, any contracts to which it is a party or any law, rule, regulation, order or
the like applicable to it;
d) this Agreement and each other document executed and delivered in accordance with this
Agreement constitutes its legally valid and binding obligation enforceable against it in
accordance with its terms, subject to any Equitable Defenses;
e) it is not Bankrupt and there are no proceedings pending or being contemplated by it or, to its
knowledge, threatened against it, which would result in it being or becoming Bankrupt;
f) there is not pending or, to its knowledge, threatened against it or any of its Affiliates any legal
proceedings that could materially adversely affect its ability to perform its obligations under
this Agreement;
g) no Event of Default with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its obligations under
this Agreement;
h) it is acting for its own account, has made its own independent decision to enter into this
Agreement and as to whether this Agreement is appropriate or proper for it based upon its own
judgment, is not relying upon the advice or recommendations of the other Party in so doing,
and is capable of assessing the merits of and understanding, and understands and accepts, the
terms, conditions and risks of this Agreement;
i) it has entered into this Agreement in connection with the conduct of its business and it has the
capacity or ability to make or take delivery of the Product referred to;
j) the material economic terms of this Agreement are subject to individual negotiation by the
Parties; and
k) it has the financial capacity, including sufficient funds available, to perform all of its
obligations under this Agreement.
5.2
Title and Risk of Loss.
a) Title to and risk of loss related to the Solar Output shall transfer from AEPCO to Participant
at the Delivery Point. AEPCO warrants that Solar Output will be free and clear of all liens,
security interests, claims and encumbrances or any interest therein or thereto by any person
arising prior to the Delivery Point.
b) Title to and risk of loss related to Charging Energy and Discharge Energy shall remain at all
times with Participant, subject to the provisions of Section 4.9(a). Title to and risk of loss
related to all other components of the Storage Product shall transfer from AEPCO to
Participant at the Delivery Point. AEPCO warrants that it will deliver to Participant the Storage
Product free and clear of all liens, security interests, claims and encumbrances or any interest
therein or thereto by any person arising prior to the Delivery Point, except to the extent such
liens, security interests, claims or encumbrances are attached to the Charging Energy when
purchased by Participant.
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5.3
Legal and Financial Funding Opinion. Prior to the execution of this Agreement,
Participant shall provide an opinion from its legal counsel affirming subsection a and b
below, and an opinion of its chief financial officer, legal counsel, senior financial officer,
or department director (or similar position overseeing the utility) affirming subsection c
below:
a) Participant has obtained proper authorization under its governance documents for entering into
and performing this Agreement;
b) Participant, pursuant to the Agreement, can be sued and held liable for damages for its breach
or non-performance of contractual obligations under this Agreement, and
c) Based on its current financial position and resources as well as future economic forecasts,
Participant anticipates having sufficient available, unrestricted funds to satisfy its payment
obligations under this Agreement.
ARTICLE VI. EVENTS OF DEFAULT, REMEDIES
6.1
Events of Default. An “Event of Default” shall mean, with respect to a Party (the
“Defaulting Party”), the occurrence of any of the following:
a) the failure to make, when due, any payment required pursuant to this Agreement if such failure
is not remedied within three (3) Business Days after receipt of written notice of the failure to
make payment;
b) any representation or warranty made by such Party herein is false or misleading in any material
respect when made or when deemed made or repeated, and such representation or warranty is
not cured within sixty (60) calendar days after the other Party (the “Non-Defaulting Party”)
gives the Defaulting Party a notice of the default;
c) the failure to perform any material covenant or obligation set forth in this Agreement (except
to the extent constituting a separate Event of Default), if such failure is not remedied within
sixty (60) calendar days after written notice, unless, upon receiving such written notice, the
receiving Party notifies the other Party that a Dispute exists as to whether an Event of Default
under this Section 6.1(c) has occurred, in which case the Parties shall follow the procedures in
Section 10.6 prior to either Party declaring an Event of Default;
d) such Party becomes Bankrupt;
e) such Party consolidates or amalgamates with, or merges with or into, or transfers all or
substantially all of its assets to, another entity and, at the time of such consolidation,
amalgamation, merger or transfer, the resulting, surviving or transferee entity fails to assume
all the obligations of such Party under this Agreement to which it or its predecessor was a party
by operation of law or pursuant to an agreement reasonably satisfactory to the other Party;
f) Service Provider terminates the Service Provider Agreement due to an AEPCO event of
default.
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g) AEPCO fails to provide a bill credit to Participant when due under Section 6.2(a).
6.2
Remedies. The following remedies are available pursuant to this Agreement upon an Event
of Default:
a) If AEPCO fails to provide any component of the Product as required hereunder, AEPCO shall
promptly provide notice to Participant upon learning of a failure to deliver such component of
the Product and use its best efforts to restore service to Participant. If AEPCO is, in AEPCO’s
reasonable discretion, unable to restore or provide substitute service, AEPCO shall provide a
bill credit to Participant for the reasonable direct and verifiable costs incurred by Participant
to obtain and replace such component of the Product that AEPCO was unable to restore or
provide, but Participant shall not be entitled to terminate this Agreement or to withhold
payments required to be made pursuant to this Agreement. In the event AEPCO’s failure to
provide any component of the Product is due to any action or inaction by the Developer, the
bill credit shall be limited to the amounts that AEPCO can recover from the Developer, less
AEPCO’s costs of recovering such amounts. A failure by AEPCO to provide a bill credit to
Participant when due under this Section 6.2(a) shall be an Event of Default.
b) If an Event of Default under Section 6.1(a) shall have occurred and be continuing, the Non-
Defaulting Party shall have the right but not the obligation to (i) withhold any payments due
to the Defaulting Party under this Agreement, (ii) suspend performance, and (iii) terminate this
Agreement. The rights of the Non-Defaulting Party are cumulative.
c) Upon the occurrence of an Event of Default by Participant, and consistent with subsection (e)
below, AEPCO shall have the right to sell any component of the Product to a third person
(including any Subscribers) free and clear of any claims by Participant for the period during
which AEPCO suspends performance hereunder, and Participant will make commercially
reasonable efforts to facilitate AEPCO’s access to any transmission rights or facilities that may
be required to make such sales, provided the net proceeds of such sales shall be credited against
any setoff amounts owing from Participant to AEPCO.
d) Upon termination of the Agreement, the Non-Defaulting Party shall have the right to receive
from the Defaulting Party direct damages incurred by the Non-Defaulting Party in connection
with an Event of Default, including during any applicable cure period. Such damages shall
include the present value of the economic loss to it, including Costs, resulting from termination
of this Agreement (if applicable).
e) Each Party agrees that it has a duty to mitigate damages and covenants that it will use
commercially reasonable efforts to minimize any damages it may incur as a result of the other
Party’s performance or non-performance hereof. In the event the Product is not purchased or
accepted by Participant, “commercially reasonable efforts” by AEPCO shall require AEPCO
to use commercially reasonable efforts to maximize the value of the Product.
6.3
No Waiver. No waiver of any Event of Default by either Party shall be construed as a
waiver of any subsequent Event of Default, and the failure to exercise any right or remedy
hereunder shall not waive the right to exercise such right or remedy thereafter.
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6.4
Limitation of Liability. The Parties confirm that the express remedies and measures of
damages provided in this Agreement satisfy the essential purposes hereof. For breach of
any provision for which an express remedy or measure of damages is provided, such
express remedy or measure of damages shall be the sole and exclusive remedy, the Party’s
liability shall be limited as set forth in such provision and all other remedies or damages at
law or in equity are waived. If no remedy or measure of damages is expressly provided
herein, the Party’s liability shall be limited to direct damages only. Such direct damages
shall be the sole and exclusive remedy and all other remedies or damages at law or in equity
are waived. Unless expressly herein provided, neither Party shall be liable for
consequential, incidental, punitive, exemplary or indirect damages, lost profits or other
business interruption damages, by statute, in tort or contract, under any indemnity provision
or otherwise. It is the intent of the Parties that the limitations herein imposed on remedies
and the measure of damages be without regard to the cause or causes related thereto,
including the negligence of any Party, whether such negligence be sole, joint or concurrent,
or active or passive. To the extent any damages required to be paid hereunder are
liquidated, the Parties acknowledge that the damages are difficult or impossible to
determine, or otherwise obtaining an adequate remedy is inconvenient and the damages
calculated hereunder constitute a reasonable approximation of the harm or loss.
Notwithstanding anything to the contrary, the Parties retain their rights to injunctive or
equitable relief to the extent such relief is expressly permitted under this Agreement.
6.5
Participant Step-Up Obligations. If an Event of Default has occurred with respect to a
Subscriber under such Subscriber’s power purchase and energy storage agreement with
AEPCO related to the Project, a) AEPCO shall first use any available working capital or
letter of credit from the defaulting Subscriber to cover any losses resulting from the Event
of Default, b) AEPCO shall next attempt to remarket the Subscription Share of such
Subscriber to other Subscribers, c) AEPCO shall then attempt to remarket any remaining
portion of the Subscription Share of such Subscriber to third parties, and d) if there is any
remaining portion of the Subscription Share of such Subscriber after such remarketing
efforts, then Participant, pursuant to its obligations under this Agreement, has an obligation
to purchase additional Product to make up for any such purchase shortfalls by the
defaulting Subscriber. Upon thirty (30) days written notice from AEPCO, Participant
(along with each other Subscriber pursuant to the terms of their power purchase and energy
storage agreements with AEPCO), shall increase its Subscription Share in the applicable
Product, if any, to an amount equal to its then-current Subscription Share multiplied by the
capacity of the defaulting Subscriber’s subscription share (less any amount that has been
successfully remarketed), such that Participant’s new Subscription Share, together with the
subscription shares of all non-defaulting Subscribers, shall equal 100% (“Revised
Subscription Share”). AEPCO shall provide in the notice the increased amount of
applicable Product that Participant and each Subscriber shall purchase due to the
Subscriber Event of Default, and Participant shall purchase and pay for its increased
allocation in accordance with the terms of this Agreement without the need for further
action on behalf of AEPCO or Participant. For all purposes of this Agreement, the
Participant’s Subscription Share shall thereafter equal the Revised Subscription Share.
6.6
Subscriber Defaults. If an Event of Default has occurred with respect to a Subscriber
under such Subscriber’s power purchase and energy storage agreement with AEPCO
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related to the Project, AEPCO shall use commercially reasonable efforts to recover
damages from the defaulting Subscriber on behalf of the non-defaulting Subscribers and
Participant. For the avoidance of doubt, all damages recovered from the defaulting
Subscriber, less any costs AEPCO reasonably incurs to collect such damages, shall be
credited to the non-defaulting Subscribers and Participant based on Subscription Shares.
ARTICLE VII. FORCE MAJEURE
7.1
General. To the extent either Party is prevented by Force Majeure from carrying out, in
whole or part, its obligations under this Agreement and such Party (the “Claiming Party”)
gives notice and details of the Force Majeure to the other Party as soon as practicable, then
the Claiming Party shall be excused from the performance of its obligations (other than the
obligation to make payments then due or becoming due with respect to performance prior
to the Force Majeure). The Claiming Party shall remedy the Force Majeure with all
reasonable dispatch. The non-Claiming Party shall not be required to perform or resume
performance of its obligations to the Claiming Party corresponding to the obligations of
the Claiming Party excused by Force Majeure. Except as otherwise provided herein, all of
the provisions of this Agreement shall remain in full force and effect during Force Majeure.
The Parties agree that for purposes of this Agreement, the obligation of Participant to make
payments when due under this Agreement shall not be excused by any claim of Force
Majeure, subject to AEPCO’s obligation to use commercially reasonably efforts to
minimize Participant’s payment obligation, including AEPCO’s efforts to remarket the
Product that maximizes the net economic value of the Product.
7.2
Additional Effects of Force Majeure.
a) If a Force Majeure event is anticipated to prevent the Project from achieving Commercial
Operation for a period of more than three hundred sixty-five (365) days, the Parties shall meet
to determine the appropriate course of action. Either Party may terminate this Agreement,
without liability to the other Party, for a Force Majeure event that prevents the Project from
being placed into Commercial Operation later than three hundred sixty-five (365) days after
the Expected Commercial Operation Date.
b) If an event or events of Force Majeure prevents a Claiming Party from substantially performing
its obligations under this Agreement for a consecutive period exceeding three hundred ninety-
five (395) days (despite the Claiming Party’s diligent efforts to remedy its inability to perform),
then the other Party may terminate this Agreement by giving ten (10) days prior notice to the
affected Party.
c) Upon termination pursuant to this Section 7.2, neither Party will have any liability to the other
Party with respect to the period following the effective date of such termination; provided,
however, that this Agreement will remain in effect to the extent necessary to facilitate the
settlement of all liabilities and obligations arising under this Agreement before the effective
date of such termination.
ARTICLE VIII. INDEMNIFICATION
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8.1
Indemnification. To the fullest extent permitted by Arizona law, each Party
(“Indemnifying Party”) agrees to indemnify, defend, and hold the other Party and its
Representatives and Affiliates (each, an “Indemnified Party”) harmless, from and against
any and all claims, actions, costs (including reasonable attorneys’ fees), expenses,
damages, and liabilities, arising out of or in connection with the Indemnifying Party’s or
its Representatives’ respective activities to the extent that they are caused by the
Indemnifying Party’s (a) material breach of any obligation, representation, or warranty
created by this Agreement; or (b) negligent or willful acts or omissions in the conduct and
performance under this Agreement including, but not limited to, liabilities attributable to
breach of law or violation of Approvals and Permits applicable to the Premises and/or the
Project, as the case may be. Notwithstanding the foregoing or anything expressed or
implied herein to the contrary, an Indemnifying Party is excused from any indemnity
obligation to each Indemnified Party and is not required to reimburse or indemnify any
Indemnified Party for any claim to the extent such claim is due to the negligence or willful
misconduct of the Indemnified Party.
a) The Indemnified Party shall promptly notify the Indemnifying Party of any notice of a claim
received that may result in a claim against the Indemnified Party along with a copy of any
documents received. The Indemnifying Party may assume the defense of any claim, at its sole
cost and expense, with counsel designated by the Indemnifying Party. The Indemnified Party
will cooperate and consult with the Indemnifying Party in responding to and defending any
such claim. If the potential Indemnifying Party does not assume the defense of the claim by
providing notice to the Indemnified Party within thirty (30) days after notice of a claim is
received, the Indemnified Party may provide notice to the Indemnifying Party of its intent to
assume the defense of the claim. If the Indemnifying Party does not assume the defense within
seven (7) days of such notice, the Indemnified Party may assume the defense of the claim at
the sole cost and expense of the Indemnifying Party. Neither Party shall settle any claim
covered by this Section 8.1 without prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed.
b) The duty to indemnify will continue in full force and effect notwithstanding the expiration or
termination of this Agreement.
8.2
Insurance. Throughout the Term, AEPCO shall maintain the types and amounts of
insurance coverage as would be maintained in accordance with Prudent Utility Practice.
ARTICLE IX. CREDITWORTHINESS
9.1
Financial Information. AEPCO may require and Participant shall make available
financial information reasonably needed to ascertain Participant’s ability to perform under
this Agreement or to meet any other obligation which may accrue, including without
limitation the obligation to pay damages in the event of failure to perform.
9.2
Credit Support. No later than the Commercial Operation Date, Participant shall fund and
AEPCO shall maintain a working capital fund equal to three (3) months’ estimated charges
under Sections 4.1, 4.2, and 4.3. All such estimates shall be prepared by AEPCO on the
basis of the sum of the following: (i) the average of monthly estimated charges across the
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next twelve (12) months, assuming full dispatch of Solar Output for all reasonable solar
production hours during each month of the year, multiplied by three (3), and (ii) the
monthly estimated charge of Participant’s Subscription Share of the Storage Product,
multiplied by three (3). Estimates shall be reviewed annually. The working capital fund
shall be available to AEPCO to make timely payments of monthly invoices to Service
Provider prior to receipt of payments from Participant of Participant’s invoices from
AEPCO for its Subscription Share and to pay for losses as a result of an Event of Default,
as provided in Section 6.5. Following any such drawdown of the working capital fund, the
fund shall be replenished no later than the fifth (5th) Business Day of the following month.
AEPCO shall provide the initial working capital fund requirement no later than ninety (90)
calendar days before the Commercial Operation Date. Should the required working capital
fund requirement increase upon annual review, each Party shall have sixty (60) calendar
days after AEPCO provides notice to increase or decrease the account balance to the
required level. Upon termination of this Agreement, AEPCO will refund the any unused
amounts in the working capital fund to Participant.
9.3
Letter of Credit.
a) Notwithstanding anything contained in this Section 9.3 to the contrary, as an alternative to
cash, Participant may fund its required contribution to the working capital fund in the form of
a letter of credit in an amount up to the working capital requirement calculated in Section 9.2,
that AEPCO may utilize to make payments to Service Provider if Participant fails to make
timely payment to AEPCO, up to the amount Participant fails to pay, and to pay for losses as
a result of an Event of Default, as provided in Section 6.5. Any letter of credit provided by
Participant hereunder shall be an irrevocable, nontransferable standby letter of credit issued by
(1) the National Rural Utilities Cooperative Finance Corporation, or (2) a U.S. commercial
bank or a U.S. branch of a foreign bank with such bank having (A) a Credit Rating of at least
“A-“ from S&P and “A3” from Moody’s, and (B) total assets (determined in accordance with
GAAP) of at least $10,000,000,000 (Ten Billion Dollars), substantially in the form of Exhibit
E and reasonably acceptable to AEPCO. All letter of credit costs shall be borne by Participant.
b) Participant funding its required contribution to the working capital fund in the form of a letter
of credit shall: (A) take all actions necessary to ensure that the issuing bank permits automatic
renewal as provided in the relevant letter of credit, and (B) if the issuing bank has indicated its
intent not to renew such letter of credit, provide a substitute letter of credit acceptable to
AEPCO that complies with the requirements of this Section 9.3(ii) (or cash) at least twenty
(20) Business Days prior to the expiration of the outstanding letter of credit
c) Upon the occurrence of a letter of credit default with respect to a letter of credit provided by
Participant under this Section 9.3, Participant shall provide a substitute letter of credit
acceptable to AEPCO that complies with the requirements of this Section 9.3 (or cash) within
five (5) Business Days after such occurrence.
d) Failure of Participant to provide a substitute letter of credit (or cash) as required under this
Section 9.3 shall be considered an Event of Default for purposes of Section 6.1.
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9.4
Credit Support of Service Provider Agreement. Participant shall not, except as required
by Section 9.2 and 9.3, be responsible for funding any holding account, letter of credit or
other expense associated with AEPCO’s obligation to the Service Provider to maintain
AEPCO’s creditworthiness requirements of the Service Provider Agreement.
ARTICLE X. MISCELLANEOUS
10.1
Assignment. Except as otherwise provided herein, neither Party may assign its rights and
obligations under this Agreement without prior written consent of the non-assigning Party,
which consent shall not be unreasonably withheld, conditioned, or delayed, provided that
a Party may assign this Agreement to an Affiliate or to a successor with prior notice, but
without consent of the other Party.
10.2
Permitted Encumbrances.
a) AEPCO may from time to time, with notice to but without consent of the Participant, mortgage,
pledge, encumber, or collaterally assign AEPCO’s interest in this Agreement (an “AEPCO
Permitted Mortgage”) in favor of a lender or its designee (“AEPCO Permitted
Mortgagee”). Upon request by AEPCO, from time to time, Participant will provide written
confirmation of this Agreement, including reasonably requested factual confirmations. Subject
to the terms of this Agreement, Participant will permit the AEPCO Permitted Mortgagee to
cure or correct any omission or violation or this Agreement by AEPCO or on behalf of AEPCO.
Any foreclosure of an AEPCO Permitted Mortgage or transfer in lieu thereof shall be deemed
a permitted assignment.
b) Participant may mortgage, pledge, encumber, or collaterally assign Participant’s interest in this
Agreement in favor of a lender or its designee.
10.3
Taxes. Participant shall be responsible for its Subscription Share of any and all Taxes
assessed on the generation, sale, delivery or consumption of Solar Output produced by the
Generation Facility or the interconnection of the Generation Facility to the electric
distribution system, or on the generation, sale, delivery or consumption of the Storage
Product or the interconnection of the BESS to the electric distribution system.
10.4
Governing Law and Venue. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Arizona, without giving effect to its conflicts of
law principles. The proper venue for any proceeding at law or in equity shall be Maricopa
County, Arizona, and the Parties waive any right to object to the venue.
10.5
Waiver of Trial by Jury. Any suit, action or proceeding, whether claim, counterclaim or
cross claim, brought or instituted by any Party against another Party hereto on or with
respect to this Agreement or any event, transaction or occurrence arising out of or in any
way connected with this Agreement shall be tried only by a court and not by a jury. EACH
PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY SUCH SUIT, ACTION OR PROCEEDING. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH
PARTY AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
27
JURY WOULD OTHERWISE ACCRUE. A PARTY MAY FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF A
PARTY’S WAIVER OF RIGHT TO TRIAL BY JURY.
10.6
Dispute Resolution. Any disagreement between Parties related to the Generation Facility
or this Agreement shall be deemed a “Dispute”. Any Party with a Dispute shall notify the
O&C Committee and the other Party in writing of the issue that the alleging Party believes
is taking place and that a Dispute exists. Upon receipt of a notice of a Dispute, the chair of
the O&C Committee shall refer the Dispute to the Parties involved, who shall in good faith
seek to resolve the Dispute arising hereunder through negotiation. For disputes that cannot
be resolved by the Parties involved with in sixty (60) days, such Parties may pursue any
remedy available at law or in equity. This provision does not apply to circumstances
necessitating emergency injunctive relief, in which event the timeframes in this Section
10.6 will not apply.
10.7
Successors and Assigns. Subject to the provisions of Section 10.1 above, this Agreement
and the requirements and conditions herein contained shall inure to the benefit of and be
binding upon successors, legal representatives and permitted assigns of the Parties.
10.8
Severability. In case any one or more of the provisions contained herein shall for any
reason be held to be wholly or partially illegal, invalid, or unenforceable in any respect,
such illegality, invalidity or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such illegal, invalid, or
unenforceable provisions had not been contained herein. Furthermore, in lieu of any illegal,
invalid or unenforceable provision in the Agreement, there shall be automatically added to
this Agreement a provision as similar to such illegal, invalid, or unenforceable provision
as may be possible and be legal, valid, and enforceable.
10.9
Compliance with Laws. Both Parties agree to comply and exercise reasonable diligence
to require all others engaged by it to comply with all applicable laws, permits, decrees,
orders, judgments, rules and regulations.
10.10 Entire Agreement. This Agreement constitutes the entire agreement between the Parties
hereto with respect to the matters addressed herein.
10.11 Not to be Construed Against Drafter. Each Party has had an adequate opportunity to
review each and every provision of this Agreement and to submit the same to legal counsel
for review and advice. Based on the foregoing, the rule of construction, if any, that a
contract be construed against the drafter shall not apply to interpretation or construction of
this Agreement.
10.12 No Personal Liability. Except as otherwise expressly provided in this Agreement, no
Representative of either Party, or Representative of an Affiliate or assignee of either Party,
shall have any liability to the other Party in connection with this Agreement.
10.13 Time of Essence. Time is of the essence of this Agreement and each and all of its
provisions.
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10.14 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the
same instrument.
10.15 Survival. All provisions of this Agreement which by their express terms survive
termination of this Agreement or expiration of the Term or which by the operation of their
terms are intended to be performed, in whole or in part, after termination of this Agreement
or expiration of the Term, and all obligations of indemnification contained in this
Agreement shall survive any termination of this Agreement or the expiration of the Term,
as applicable.
10.16 Confidentiality. Neither Party shall disclose the terms or conditions of this Agreement or
the Service Provider Agreement to a third party (other than the Party’s employees, lenders,
counsel, accountants or advisors who have a need to know such information and have
agreed to keep such terms confidential) except in order to comply with any: (1) applicable
law; (2) regulation; (3) rule adopted by an exchange, reliability coordinator, resource
adequacy administrator, balancing area authority, control area, independent system
operator, or any similar entity; or (4) in connection with any court or regulatory proceeding;
provided, however, each Party shall, to the extent practicable, use commercially reasonable
efforts to prevent or limit the disclosure. In the event any Party receives a request to
disclose the terms or conditions of this Agreement, or a copy of the Agreement itself, to a
third party, the Party in receipt of a request for disclosure shall notify the other Party as
promptly as possible, but in no event more than two (2) business days after receipt of such
request, or, if earlier, before the deadline for disclosure. The Parties shall be entitled to all
remedies available at law or in equity to enforce, or seek relief in connection with, this
confidentiality obligation, and the Parties shall cooperate with efforts of any other party to
limit or prevent disclosure of this Agreement or its terms and conditions.
The Parties acknowledge and agree that: (a) Participant is a political subdivision of the
State of Arizona and, as such, may be subject to Arizona law related to open meetings,
public records (including A.R.S. § 39-101, et seq.), and record retention; (b) Participant is
governed by a board of directors and is required by law to conduct meetings of the board
that are open to the public; and (c) most documents and electronic information provided to
Participant will be considered public records and must be made available to members of
the public upon request. As such, provided the receiving Party complies with any
applicable procedural requirements set forth in this section, a receiving Party may disclose
information identified as confidential by this Agreement to the extent necessary to comply
with such laws.
Notwithstanding the foregoing, in the event that any demand or request for disclosure of
the terms or conditions of this Agreement is made to Participant, Participant shall as soon
as practicable notify AEPCO of the existence of such request or demand and shall (A)
provide AEPCO with a reasonable opportunity to seek an appropriate protective order or
other remedy, which both Parties will cooperate in seeking to obtain, and (B) Participant
and AEPCO shall use reasonable efforts to seek redaction of any commercially sensitive
information in this Agreement. In the event that such appropriate protective order or other
29
remedy is not obtained, Participant shall disclose that portion of the Agreement that is
legally required to be disclosed.
10.17 Third Party Beneficiary. Unless expressly provided in this Agreement, nothing herein is
intended or shall be construed to confer any benefit upon a third party.
10.18 Waiver and Amendment. Any waiver or amendment of this Agreement must be in writing
and executed by both Parties. A waiver or failure to enforce any terms of this Agreement
shall not affect or waive a Party’s right to enforce any other term of this Agreement.
10.19 No Joint Venture. Nothing contained herein shall be construed as creating any joint
venture, partnership, or agency, or as making any Party the fiduciary of any other.
10.20 Exhibits. The exhibits to this Agreement, as they may be amended or revised from time to
time by mutual agreement of the Parties, are attached and incorporated by this reference.
10.21 Enforcement of Rights on Behalf of Participant. AEPCO shall make commercially
reasonable efforts to enforce all rights within the Service Provider Agreement that are inure
to the benefit of Participant including, but not limited to the reliable delivery of solar
energy, battery storage capacity and Environmental Attributes from the Project, and
damages owed to Participant for Service Provider’s failure to provide any of those benefits.
10.22 Notice from Service Provider. Except for instances of confidential information, any
material notice that is provided from Service Provider to AEPCO shall also be provided
from AEPCO to Participant.
10.23 Registration of Environmental Attributes. Per Section 4.2(c) of the Service Provider
Agreement, AEPCO and Service Provider shall register the Project in WREGIS, or its
successor, by the Commercial Operation Date. After successful transfer of Renewable
Energy Credits from Service Provider to AEPCO, AEPCO shall transfer all Renewable
Energy Credits produced by the Project in proportion to the Solar Output to Participant’s
WREGIS account on no less than an annual basis. Participant shall not be responsible for
any expenses involved in the creation or transfer of RECs other than Participant’s own cost
to register itself with WREGIS.
10.24 Arizona Provisions. Notice is hereby provided of Arizona Revised Statutes Sections 38-
511, 23-214, 35-393,01, 35-394, 41-4401, and 42-17106 to the extent such provisions are
applicable to contracts of the nature of this Agreement.
10.25 Participant Payment Limitation. Notwithstanding any other provision of this
Agreement, no part of the amounts payable by Participant pursuant to this Agreement shall
be payable out of any ad valorem taxes imposed by Participant or from bonds or other
obligations, the payment of which Participant’s general taxing authority is pledged, unless
(i) the same shall have been duly budgeted by Participant according to law, (ii) such
payment or payments shall be within the budget limitations of the statutes of the State of
Arizona, and (iii) any such bonded indebtedness or other obligation is within the debt
limitations of the Constitution of the State of Arizona. Participant’s payment of any
amounts due under this Agreement, including amounts due after default or termination
30
hereof, shall in no circumstances constitute a general obligation of, or a pledge of the full
faith and credit of, Participant, the State of Arizona, or any of its political subdivisions, or
require the levy of, or be payable from the proceeds of, any ad valorem taxes. In no way
does this Agreement create any constraint, obligation or limitation of Participant to transfer
certain electric utility system revenues from the electric utility system to the general fund
of the Participant. This Agreement is an agreement by Participant to purchase the Product,
and Participant’s payments made hereunder shall be designated by Participant as operating
expenses of Participant in a manner similar to payments made by Participant pursuant to
other agreements of Participant to purchase electric utility system inputs and supplies. This
Agreement is not a debt, financial obligation, parity obligation, or subordinate obligation
for any purpose of Participant’s resolutions, ordinances, agreements or instruments
pertaining to Participant’s currently outstanding and future bonds and obligations paid in
whole or in part from revenues of the electric utility system. No lien on the revenues of
Participant’s electric system is created by this Agreement. Any ability of Participant to pay
such amounts demanded by AEPCO is subject to applicable law.
ARTICLE XI. NOTICES
Whenever AEPCO or Participant shall make any demand or serve any notice, consent, approval,
authorization or other communication which is under the terms of this Agreement upon the other
Party, the same shall be in writing and shall be deemed given and received upon receipt confirmed
in writing (which may be by recipient or a third party delivery service) or, if earlier, three (3)
business days following electronic mail transmission, receipt confirmed in writing or via “read
receipt” or deposit in a regularly maintained receptacle for the United States mail, registered or
certified mail, return receipt requested, postage prepaid, addressed to the intended recipient as
follows:
If to AEPCO:
Arizona Electric Power Cooperative, Inc.
Attention: General Counsel
PO Box 670, 1000 S. Highway 80
Benson, AZ 85602
Email: legal@azgt.coop
If to Participant:
Energy Resources Director
_________________________________
_________________________________
Either Party may, at any time and from time to time, change the address to which notices are to be
sent to such Party by delivering at least ten (10) days’ prior written notice of such change to the
other Party. Each Party, as a courtesy to the other Party, shall provide any notice described herein
by electronic mail to the electronic mailboxes identified above as well.
[SIGNATURE BLOCKS ON NEXT PAGE]
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IN WITNESS WHEREOF, the Parties have executed this Pinal Power Purchase and Energy
Storage Agreement.
ARIZONA ELECTRIC POWER COOPERATIVE, INC.
By: ______________________________
Name: Patrick F. Ledger
Title: Executive VP and CEO
CITY OF MESA, ARIZONA
By: ______________________________
Name: ____________________________
Title: _____________________________
32
EXHIBIT A - DESCRIPTION OF PROJECT
1. Project:
Pinal Solar and Storage
2. Location: Pinal County, Arizona
3. Owner:
Eloy Valley Energy Center III, LLC
4. Operator: NextEra Energy Resources, LLC or its designee
5. Scheduling Coordinator: Arizona Electric Power Cooperative, Inc.
6. Generating Facility:
a. Type of facility and conversion equipment: Solar Photovoltaic
b. Total nameplate capacity (MWAC): 400
c. Total co-located capacity at Delivery Point: 462.5
d. Additional technology-specific information: Single axis trackers
7. Battery Energy Storage System:
a. Type of facility and conversion equipment: Energy Storage
b. Total nameplate capacity (MWAC): 400
c. Total capacity at Point of Delivery: 462.5
d. Additional technology-specific information: AC-connected battery energy storage
system
8. Transmission Provider: Western Area Power Administration
9. Other: Any wheeling costs after the Delivery Point to move the power to the load will be the
responsibility of the individual Participants.
33
EXHIBIT B – DELIVERY POINT
Delivery Point: Western Administration Power Authority ED5 Substation
Any other delivery and/or receipt point, or other type of arrangement, as mutually agreed to in
writing by AEPCO, the Participant, and third-party transmission provider(s), if any.
34
EXHIBIT C – RATES FOR SERVICE
1 Solar Output Rate:
2 Owner Solar
Output Price/MWh
3 A&G and
Margin /MWh
4 S&T Fee
/MWh
Implementation
Fee /MWh
Total /MWh
$27.48
$1.65
$0.47
$0.03
$29.63
1 Storage Product Rate:
2 Owner BESS
Rate/KW-month
3A&G and Margin
/KW-month
S&T Fee/KW-
month
Implementation
Fee/ KW-month
5 Total
/KW-month
$10.98
$0.66
N/A
$0.01
$11.65
1 Rate is based on not qualifying for energy community and domestic content classifications under
the Inflation Reduction Act of 2022 (IRA) and/or Empowering Rural America (New ERA)
program benefits. For avoidance of doubt, the Parties agree to modify the rates if any of the
anticipated program benefits are received from IRA or New ERA.
2 Rate is subject to change under certain contractual conditions set forth in Service Provider
Agreement, and for avoidance of doubt, such changes will be passed to Participants.
3A&G refers to administrative and general costs. Rate may be subject to change after a future
ACC-approved rate case.
4 S&T Fee refers to scheduling and trading services and is subject to an annual budgetary rate
process. S&T is applicable if not recovered under a separate energy and management services
agreement or scheduling and trading agreement with AEPCO.
5 Total/KW-month rate does not include Charging Energy. Participant is responsible for
transmission to import Charging Energy from sources other than the Generating Facility.
Total/KW-month rate does not include Discharge Energy Delivery Charge. Participant is
responsible for such charge as set forth in Exhibit D.
Above rates exclude cost of transmission service.
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EXHIBIT D – DISCHARGE ENERGY DELIVERY CHARGE
1. This Exhibit D is effective under and as a part of Pinal Power Purchase and Energy Storage
Agreement, hereinafter called Agreement, and shall remain in effect until superseded by
another Exhibit D; provided this Exhibit D or any superseding Exhibit D shall terminate
concurrently with the termination of the Agreement.
2. The Discharge Energy Delivery Charge will include the following charges as applicable to
Participant:
a) Scheduling and Trading. If not charged under a separate agreement with AEPCO, a
monthly cost to reflect the scheduling and trading services calculated on the total MWh
of Discharge Energy multiplied by the AEPCO scheduling and trading rate, currently
$0.47 per MWh, subject to change year to year.
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EXHIBIT E – FORM OF LETTER OF CREDIT
[Bank Letterhead]
Arizona Electric Power Cooperative, Inc.
P.O. Box 670
1000 S. Highway 80
Benson, Arizona 85602
Irrevocable Letter of Credit No. [ ___________ ]
Issuance Date: [ ]
Amount: $[____]
Expiration Date: [ ]
We hereby issue in your favor this irrevocable Letter of Credit No. ________ (this “Letter of
Credit”) in the aggregate stated amount of [$_____] for the account of [Name of Participant] (the
“Company”) in relation to that certain Pinal Power Purchase and Energy Storage Agreement, dated
as of ____________ to which Company and Arizona Electric Power Cooperative, Inc (“AEPCO”)
are party (as may have been amended, modified or supplemented from time to time to time, the
“Agreement”).
This Letter of Credit is effective immediately and expires at our close of business on the expiration
date shown above. Notwithstanding the foregoing, this Letter of Credit will automatically
terminate upon its surrender to us for cancellation.
Funds under this Letter of Credit are available against your sight draft and demand made on us
from time to time, such demand to be made by your submission of your statement, purportedly
signed by your authorized officer as follows, with appropriate insertions: “___________ has failed
to [describe default] its obligations under the Pinal Power Purchase and Energy Storage
Agreement, dated as of _______________, to which Company is a party and under which the
undersigned is AEPCO, and as a result the undersigned is claiming the sum of $_______ under
[Bank Name] letter of credit number ____.”
Any such presentation shall be made at our [Bank Address]. If we receive your demand certificate
on or prior to the expiration or termination of this Letter of Credit, then we will honor your demand
in accordance with your payment instructions, provided, that such documents are presented in
strict compliance with the terms and conditions of this Letter of Credit.
To the extent not contrary to the express provisions hereof, this Letter of Credit shall be governed
by the Uniform Customs and Practice for Documentary Credit (2007 Revision), International
Chamber of Commerce Publication No. 600 (the “UCP”). As to matters not addressed by the UCP,
this Letter of Credit shall be governed by and construed in accordance with the laws of the State
of New York, without reference to the conflict of law provisions thereof that would direct the
application of the laws of another jurisdiction.
Communications with respect to this Letter of Credit shall be in writing and shall be addressed to
us at [Bank Address], specifically referring to this Letter of Credit Number _____________.
37
This Letter of Credit sets forth in full our undertaking. Except as stated herein, payment of demands
made under this Letter of Credit is not subject to any condition or qualification. Our obligations
hereunder are primary obligations that shall not be affected by the performance or nonperformance
by any party to the Agreement of any obligations under the Agreement or under any agreement
between such a party and any other person. Our obligations and liabilities hereunder shall not in
any way be affected, modified, amended, reduced, impaired, amplified or limited by any
amendment, renewal, extension, modification, compromise, release, discharge or reference of,
under, to or in connection with the Agreement or any other document or agreement (except only
the certificate referred to herein). Reference herein to the Agreement shall not be deemed to
incorporate the same herein by reference.
Very truly yours, [Bank Name]
______________________________________
Authorized Signatory
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EXHIBIT F – PARTICIPANT’S AGENT
1. This Exhibit is only applicable if the Participant designates, in writing, a Participant’s Agent to
act on the Participant’s behalf within a defined scope of authority.
2. Participant represents and warrants to AEPCO that:
a) Pursuant to the terms and conditions of that certain Resource Management Services agreement
(Contract No. 97-DSR-10820) between Participant and Western Area Power Administration
("WAPA") (the "RMS Agreement"), Participant has designated WAPA ("Agent" or
“Participant’s Agent”) as its Agent to act for and bind the Participant in connection with the
scheduling of Transactions entered into by Participant with AEPCO under this Agreement.
Additionally, Agent shall have the authority to perform any and all duties incident to or
necessary for the scheduling of electricity hereunder.
b) The RMS Agreement has been duly authorized and executed, is in full force and effect, and
constitutes the legal, valid and binding obligation of Participant.
c) Participant will be fully bound to perform the obligations incurred, on its behalf by the Agent,
under this Agreement.
d) Participant shall indemnify AEPCO, its affiliates and its respective officers, directors,
employees and agents and hold them harmless from and against all losses, costs, liabilities,
damages and expenses (including, without limitation, costs of suit and reasonable attorney's
fees) which arise out of this Agreement, and which may be incurred by AEPCO as a result of
Agent's acting as Participant 's Agent as provided herein.
e) Participant may terminate the original Agent's authority and designate a new Agent from time
to time by giving written notice of same to AEPCO at least thirty (30) days prior to the effective
date of such new designation, and in that event the original Agent's authority to act as Agent
for Participant shall cease with respect to documents executed after the effective date set forth
in such notice and the newly designated agent shall be substituted therefor, provided, however,
that the designation of a new Agent shall not impair or affect scheduling instructions by the
original Agent prior to the effective date of the designation of the new Agent. Participant agrees
that AEPCO may rely upon documents, including online scheduling entries in OASIS or other
such systems executed by a representative of the Agent, without AEPCO inquiring as to the
authority of any such representative.
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EXHIBIT G – SUBSCRIPTION SHARES
AEPCO Class A Member Participant’s in the Project to include but limited to GCEC, SSVEC,
Trico, and MEC will execute amendments to their wholesale power agreements to reflect that their
collective participation in the Project shall require that each of them will be obligated to increase
their respective purchases of the Product sold to Participant by an amount necessary to ensure that,
in the event of a Class A Member Participant default, the entire amount of Class A Member
Participant’s Subscription Share remains committed by the remaining Class A Member
Participants for the Term of this Agreement.