s/ Charles B. Clark, Jr

 

This Third Amended and Restated Confirmation Letter (“Third Amended and Restated Confirmation” or “Confirmation”), dated December 7, 2007 (the “Effective Date”), shall, from and after the Start Date (defined below), amend and restate in its entirety the Transaction agreed to on April 22, 2002 and effective May 1, 2002 (the “Original Calpine 2 Confirmation”), as amended by the Amendment dated October 23, 2003 (the "2003 Amendment") and the Letter Amendment dated October 29, 2003 (the "2003 Letter Amendment") as amended by the Modification Letter dated March 30, 2005 (the "2005 Modification Letter") and as conditionally amended and restated pursuant to the Second Amended and Restated Confirmation Letter dated as of April 6, 2005 (the “2005 Contingent Settlement Agreement”) (the Original Calpine 2 Confirmation, as amended by the 2003 Amendment, the 2003 Letter Amendment, the 2005 Modification Letter and the 2005 Contingent Settlement Agreement, is referred to as the “Original Transaction”), between Calpine Energy Services, L.P. ("Party A" or “Seller”) and State of California Department of Water Resources with respect to its responsibilities pursuant to California Water Code Section 80000 et seq. regarding the Department of Water Resources Electric Power Fund separate and apart from its powers and responsibilities with respect to the State Water Resources Development System ("Party B" or “Buyer”) regarding the purchase and sale of the Product under the terms and conditions as set forth herein below. This Third Amended and Restated Confirmation Letter is entered into by Party A and Party B pursuant to and in accordance with the Master Power Purchase and Sale Agreement between Party A and Party B, as modified by that certain Amended and Restated Cover Sheet between Party A and Party B dated April 22, 2002 (the “Cover Sheet”; such Master Power Purchase and Sale Agreement as modified by the Cover Sheet being referred to as the "Master Agreement"), and constitutes part of and is subject to the terms and provisions of such Master Agreement. Terms used but not defined herein shall have the meanings ascribed to them in the Master Agreement.  In the event of any inconsistency between any of the terms herein and in the Master Agreement, the terms of this Confirmation shall control. This Confirmation and the Master Agreement are referred to collectively as the “Agreement”.

 

NOW THEREFORE, the Parties agree as follows:

 

Start Date:  00:00:01 PPT January 1, 2008.

 

Seller:  Calpine Energy Services, L.P. (Party A)

 

Buyer:  State of California Department of Water Resources (Party B)

 

Product:

 

[]           Into _________________, Seller’s Daily Choice

 

[]           Firm (LD)

 

[]           Firm (No Force Majeure)

 

[]           System Firm

 

(Specify System:

)

 

[]           Unit Firm

 

(Specify Unit(s):

)

 

T           Other:

 

(A)  All rights to Energy production capacity (“Capacity”) of the Facility and all Energy produced by the Facility as measured at the Delivery Point and dispatched by Buyer or the CAISO as provided herein, subject to the requirements and limitations on dispatch set forth below.  As set forth below all Capacity and Energy shall be made available exclusively to Buyer, and Seller shall have no rights to market or sell Energy or Capacity from the Facility to any person other than Buyer.

 

(B)  The amount of Capacity and Energy available for dispatch shall be reduced to the extent (i) any portion of the Facility is not available due to full or partial Forced Outage, (ii) any portion of the Facility is not available due to Force Majeure, (iii) all or any part of the Capacity of the Facility or the production of Energy from all or any part of such Capacity is prevented or limited by Buyer’s failure to perform its obligations hereunder, including any failure to dispatch Energy or deliver gas in accordance with the provisions of this Confirmation, (iv) the delivery of Energy from the Facility is prevented or limited by the failure of electric transmission at and from the Delivery Point or the physical curtailment of transmission at the Delivery Point by the CAISO or the transmission owner or by the failure of gas transportation before and to the Gas Delivery Point, (v) the performance of all or any part of the Facility is limited due to physical variations or deviations in the operating levels of the Units which are caused by ambient conditions, quality of gas delivered to the Facility, or the rate of gas delivery to the Facility, or (vi) all or any part of the Capacity of the Facility or the production of Energy from all or any part of such Capacity is limited or unavailable as the result of a Planned Outage to the extent permitted herein; provided, however, that such events were not within the reasonable control of, or the result of the negligence of Seller and which, by the exercise of due diligence, Seller is unable to overcome or avoid or cause to be avoided; provided further, that Buyer’s sole remedies for failure to deliver Energy scheduled by Buyer hereunder shall be the Availability Adjustment Payment provided in Special Condition (4), cover damages as provided in Special Condition 6 and termination payment for default provided in Special Condition 10.  (The circumstances described in clauses (ii) through (v) above are referred to herein as “Excused Outages”.) Subject to the prior execution of a confidentiality agreement in the form attached hereto as Exhibit F, Seller shall provide Buyer with access to all its relevant records, data, employees and contractors as reasonably necessary to verify to Buyer's reasonable satisfaction the occurrence of any of the above events.

 

(C)  Buyer shall have the exclusive right to all capacity attributes associated with the operation and ownership of the Facility, including, without limitation, the ability to schedule and dispatch the Capacity of the Facility (i) in the Ancillary Services markets, (ii) to supply reliability must run capacity, and (iii) to supply RA Capacity or similar capacity attributes, given the limitations provided in clause (B) above and otherwise set forth herein (collectively, the “Capacity Attributes”).  Capacity Attributes shall be subject to the Facility’s actual physical limitations.  Seller represents that neither the Facility nor

 

the individual Units provide “black start” capability, but that the Facility and Units are capable of providing all other Ancillary Services (except that “regulation” service will not be available until February 1, 2008), reliability must run service and RA Capacity, as such products are defined in the CAISO Tariff as of the Effective Date.  The Parties shall (1) cooperate with the CAISO to qualify the Facility to provide Ancillary Services in the CAISO markets or to the CAISO directly; (2) follow the reporting requirements that the California Public Utilities Commission (“CPUC”) has established and may establish in the future with respect to RA Capacity as required for Resource Adequacy Requirement eligibility, and to comply with the Resource Adequacy requirements in Section 40 of the CAISO Tariff; and (3) cooperate with the CAISO regarding the provision of reliability must run service to CAISO from the Facility, including the negotiation, execution and filing of the CAISO pro forma reliability must run agreement.  Except as expressly set forth in the next paragraph, nothing in this Agreement shall require Seller to modify the Facility in any manner in order to provide Ancillary Services that it is not capable of providing from the Facility on the Effective Date, but Seller shall not be relieved of its obligation hereunder to provide Energy, Capacity, RA Capacity or reliability must run service, as such products are defined in the CAISO Tariff as in effect on the Effective Date, solely because a modification to the Facility would be required to do so.

 

In the event that subsequent to the Effective Date, the Facility requires a capital improvement or other capital expenditure in order (i) to provide Ancillary Services requested by Buyer which the Unit is not capable of providing as of the Effective Date, (ii) to provide a resource adequacy product different from the RA Capacity product defined in the CAISO Tariff as in effect on the Effective Date, or (iii) to provide any reliability must run service different from the reliability must run service defined in the CAISO Tariff as in effect on the Effective Date, Seller shall provide notice thereof to Buyer. Such notice shall include both a description of and a fixed cost for such the capital improvements or other capital expenditures (which fixed cost may contain an allowance for contingencies and for overhead and construction supervision incurred by the Seller, but may not otherwise contain a profit component).

 

Upon receipt of such notice, Buyer shall have the right to direct the Seller to make, and Seller agrees to make, such capital improvements if (i) Buyer agrees to reimburse the Seller for Buyer’s pro rata share of such capital improvements upon completion thereof and (ii) the cost of capital improvements does not, together with the cost of any capital improvements requested by Buyer under Special Condition 8, exceed five million dollars ($5,000,000), or, if the combined cost of such improvements and the improvements requested by Buyer under Special Condition 8 does exceed five million dollars ($5,000,000), Buyer agrees to reimburse Seller for all costs in excess of five million dollars ($5,000,000) in the aggregate.  Buyer shall reimburse Seller for Buyer’s share of the cost of such capital improvements promptly upon completion thereof.  The Parties’ respective pro rata shares shall be based on the useful life of such capital improvements and shall be agreed upon by the Parties prior to the commencement of any work on, such improvements.

 

If Seller would be unable to provide such Capacity Attributes without such capital improvements or other capital expenditures, and if neither Buyer nor Seller is obligated or elects to make such capital improvements or other capital expenditures, then such

 

event shall be treated as an event of Force Majeure, but only to the extent Seller’s is unable to provide such Capacity Attributes as a result of the failure to make such capital improvements or other capital expenditures.

 

Any payments received by the Seller from any third party associated with the commitment or sale of any of the Facility’s Capacity Attributes shall be paid to Buyer promptly upon receipt thereof; provided, however, that Buyer shall be solely and exclusively responsible for complying with the obligations of such commitments or sales, including the cost of supplying the gas to the Facility to generate the Energy required thereunder.

 

[]           Transmission Contingency (If not marked, no transmission contingency):  N/A

 

 

(Specify:

)

 

Contract Quantity:  180 MW until adjusted pursuant to Special Condition (3)

 

Delivery Point:

 

(i)	Prior to implementation of MRTU:  The single CAISO Meter at the Facility 115 kV switchyard connected to the CAISO control grid.

 

(ii)	Upon implementation of MRTU:  The P-Node associated with the single CAISO Meter at the Facility 115 kV switchyard connected to the CAISO control grid.

 

Gas Delivery Point: The PG&E revenue gas meter located at the Facility.

 

Contract Price:

 

(I)	Capacity Payment:  Buyer shall pay to Seller in arrears a monthly Capacity Payment equal to the product of the (i) Contract Quantity times (ii) $2.00 kW-month.

 

(II)	Variable Operations and Maintenance Charge (VOM):  Buyer shall pay to Seller $4.00 per MWh escalating at 4% per annum commencing upon the first anniversary of the Start Date for each MWh of Energy produced by the Units pursuant to a dispatch by Buyer and delivered by Seller to Buyer.

 

 

Special Conditions:

 

(1)	Dispatch, Scheduling and Fuel Management.

 

 

(a)           Buyer shall have the full and exclusive right (except to the extent otherwise directed or dispatched by the CAISO) to dispatch the delivery of Energy and schedule the provision of Ancillary Services that the Facility is capable of providing from the Available Capacity of the Facility 24 hours per day, 365 days per year during the Delivery Period; provided that if Buyer from time to time wants to make a dispatch during Extended Dispatch Hours, Buyer shall (i) provide notice to Seller at least eight (8) hours before the first Extended Dispatch Hour that Buyer wants to have the Facility available for dispatch, which notice shall also specify all Extended Dispatch Hours during the next twenty-four (24) hours or longer period that Buyer wants the Facility available for dispatch, and (ii) pay Seller for all such Extended Dispatch Hours so specified in such notice at the rate of $320 for the first four (4) hours, or any portion thereof, and $80 per hour for each hour after the first four hours, in order to compensate Seller for its incremental staffing costs to accommodate such availability and dispatch.  Any such notice covering a period of twenty-four (24) hours or less may not be modified or revoked once given.  Any such notice covering a period in excess of twenty-four (24) hours may be modified or revoked on twenty-four (24) hours notice.  These rates will increase at 4% per annum beginning on the first anniversary of the Start Date and on each such anniversary thereafter.  Buyer’s dispatch of the Facility is also subject to the following:

 

(i)      Buyer shall notify Seller by email the quantity of MWhs to be generated and the duration of any dispatch in accordance with the communications protocol substantially in the form attached hereto as Exhibit A, which shall be completed by the Parties prior to the Start Date.

 

(ii)      It shall be in Seller’s sole discretion which Unit(s) shall be operated to comply with Buyer’s dispatch instructions.

 

(iii)     Buyer’s dispatch of the Facility shall be limited to four (4) Starts per available Unit per calendar day and to no more than 700 starts per Unit per Contract Year.

 

(iv)     Buyer’s dispatch of the Facility shall be limited in a manner to permit a period of ‘downtime’ (i.e. between the time the breaker is open to the time the breaker is closed) of no less than thirty (30) minutes after a Unit stop (i.e. after the breaker is opened).

 

(v)      Buyer’s dispatch of the Facility shall be limited such that the minimum run time for each Unit that has been dispatched is no less than one hour.

 

(vi)     Buyer’s dispatch of the Facility shall be limited such that the minimum loading for any Unit shall be no less than 20 MW and the maximum dispatch shall not exceed the Available Capacity.

 

(vii)  Buyer’s dispatch of the Facility shall comply with the operating limitations described on Exhibit B, as such exhibit may be amended as provided in Special Condition 1(m) below.

 

(viii)  Buyer agrees to dispatch the Facility in accordance with all applicable Laws and any operation instructions imposed by the CAISO, WECC or NERC associated with a System Emergency.

 

 

 

(ix)     Buyer may not dispatch the Facility in excess of the Available Capacity and may not dispatch any Unit that is unavailable due to a Planned Outage scheduled in accordance with Special Condition 2(d).

 

(x)     Buyer shall cooperate with Seller during any period of testing under this Confirmation.  Buyer shall take the Energy and supply the fuel during testing and receive all revenue from the sale of Energy during testing.

 

(b)           Prior to implementation of MRTU by CAISO, Seller shall be the Scheduling Coordinator for the Facility.  As Scheduling Coordinator, Seller shall schedule Energy deliveries to Buyer or Buyer’s Scheduling Coordinator, through an Inter-SC Trade, equal to the Energy properly dispatched by Buyer hereunder.  CAISO charges and revenues for the provision of imbalance energy by or to CAISO, together with any revenues with respect to the provision of Ancillary Services or Capacity Attributes, shall be passed through from Seller to Buyer; provided that, Seller shall be responsible for any penalties imposed by the CAISO under the CAISO Tariff as the result of Seller’s breach of its obligations under this Agreement or its obligations as Scheduling Coordinator for the Facility under the CAISO Tariff.

 

(c)           Upon implementation of MRTU by the CAISO, Buyer shall have the option to elect to be the Scheduling Coordinator for the Facility upon sixty (60) days advance written notice to Seller.  When acting as Scheduling Coordinator, (i) Buyer shall be solely responsible for complying with the obligations applicable to Scheduling Coordinators under the CAISO Tariff, including timely submission of schedules; (ii) Buyer shall be responsible for all CAISO charges and shall receive all CAISO revenues; provided, however, that Seller shall be responsible for and shall reimburse Buyer for penalties imposed by the CAISO under the CAISO Tariff as the result of Seller’s breach of its obligations under this Agreement or to comply with the requirements applicable to generators under the CAISO Tariff, to the extent such failure is not the result of any failure by Buyer to comply either with its obligations hereunder (e.g. to deliver gas), or its obligations as Scheduling Coordinator under the CAISO Tariff; (iii) Buyer shall promptly notify the CAISO of any Facility outage with respect to which Seller has provided notice to Buyer and shall promptly adjust the CAISO schedule for the Facility in accordance with the intra-day scheduling requirements of the CAISO Tariff upon notice from Seller of a Facility outage pursuant to Special Condition (2); (iv) Buyer shall reimburse Seller for any penalties, fines, fees or other charges assessed upon Seller by the CAISO caused by Buyer’s failure to comply with its obligations under this Agreement or as the Scheduling Coordinator for the Facility, including the failure by Buyer to dispatch the Units as required by the CAISO during a System Emergency; provided however such reimbursement by Buyer shall not be required to the extent Buyer’s failure to comply with its obligations under this Agreement or as the Scheduling Coordinator for the Facility is the result of Seller’s breach of its obligations under this Agreement or to comply with the requirements applicable to generators under the CAISO Tariff, including without limitation the requirement to provide timely notice of the Available Capacity of the Facility pursuant to Special Condition 2(b).  Subject to the prior execution of a confidentiality agreement in the form attached hereto as Exhibit F, Seller and Buyer shall each provide the other with access to all its respective relevant records, data, employees

 

 

 

and contractors reasonably necessary to verify to each Party's reasonable satisfaction the occurrence of any of the above events.

 

(d)           During the period after the implementation of MRTU by the CAISO, in the event Buyer has not elected hereunder to be the Scheduling Coordinator for the Facility, Seller shall be the Scheduling Coordinator for the Facility.  The Parties agree that, while Seller is the Scheduling Coordinator, Energy shall be scheduled in the Day Ahead or Real Time Markets as requested by Buyer consistent with the requirements and limitations of this Agreement as an Inter-SC Trade at the P node for the Facility, and the Buyer shall direct the Seller (as the Scheduling Coordinator of the Facility) to self-schedule or submit a production bid curve consistent with the requirements and limitations of this Agreement into the CAISO market. Such Inter-SC Trades shall be used to balance out the CAISO payments to Seller for the injection of the scheduled energy on to the CAISO grid and the CAISO charge to Buyer or Buyer’s agent for the withdrawal of the scheduled energy from the CAISO grid.  If Seller’s injection of energy from the Facility on to the CAISO grid is greater than the amount of energy settled through such Inter-SC Trade as provided in this Special Condition 1(d), Seller shall pay over to Buyer that portion of the payment from the CAISO to Seller for the injection of such energy on to the CAISO grid attributable to the excess energy actually injected on to the CAISO grid .  If Seller’s injection of energy from the Facility on to the CAISO grid is less than the amount of energy settled through such Inter-SC Trade as provided in this Special Condition 1(d), Buyer shall pay to Seller an amount equal to the amount paid to Buyer (or Buyer’s agent) by the CAISO for the excess of the amount of energy settled through such Inter-SC Trade over the amount of energy actually injected on to the CAISO grid.  Otherwise, Buyer shall be responsible for all CAISO charges except for any penalties imposed by the CAISO under the CAISO Tariff as the result of Seller’s breach of its obligations under this Agreement or its obligations as Scheduling Coordinator for the Facility under the CAISO Tariff.  The parties further agree (i) to schedule Ancillary Services by entering Inter-SC Trades at the P node for the Facility in the Day Ahead or Real Time Markets as requested by the Buyer consistent with the requirements and limitations of and obligations of the Parties under this Agreement and (ii) to cooperate in scheduling Inter-SC Trades to account for the IFM Load Uplift Obligations of buyer or Buyer's agent as a result of Seller's submission (as Scheduling Coordinator) of self-schedules at the direction of Buyer or Buyer's agent consistent with the requirements and limitations of and obligations of the Parties under this Agreement.

 

(e)           Within ninety (90) days after the Effective Date, Buyer and Seller shall jointly review the roles and responsibilities of a Generator Operator (GOP) and a Generator Owner (GO) of the Facility under the applicable rules and regulations of WECC and NERC and shall agree on an initial allocation of such roles and responsibilities between them consistent with the requirements of this Agreement, which shall then be attached to this Confirmation as Exhibit E. Buyer and Seller acknowledge that the rules and regulations of WECC and NERC with respect to these roles and responsibilities and with respect to plant reliability in general may change over time and agree to cooperate both in complying with the WECC and NERC requirements in accordance with such initial allocation and in revising such allocation from time to time as necessary to comply, in a manner consistent with this Agreement, with changes in such rules and regulations or in their implementation.  The Party responsible for complying with a particular role or

 

 

 

responsibility (the “Responsible Party”) shall pay or reimburse, as applicable, the other Party (the “Other Party”) for any penalties, fines, fees or other charges assessed upon the Other Party by the WECC or NERC associated with the Responsible Party’s failure to comply with such role or responsibility, provided that the Other Party shall cooperate with the Responsible Party in complying with such role or responsibility, including providing such information, giving such notices and taking such actions as the Other Party is uniquely in a position to do.  Subject to the prior execution of a confidentiality agreement in the form attached hereto as Exhibit F, Seller and Buyer shall each provide the other with access to all its respective relevant records, data, employees and contractors as reasonably necessary to verify to each Party's reasonable satisfaction the occurrence of any of the above events.

 

(f)           Buyer shall be Fuel Manager for the Facility.

 

(g)           Buyer shall be responsible for the nomination and delivery of the fuel to the Gas Delivery Point and for all local distribution charges, including any surcharges, provided under the PG&E gas tariff and rules.

 

(h)           Seller shall be responsible for any gas imbalances resulting from Seller’s unexcused failure to deliver Energy dispatched by Buyer for the minimum period of time necessary to adjust CAISO schedules and gas nominations on an intra-day basis, or from Seller’s failure to timely notify Buyer of a Forced Outage, a Planned Outage or a Facility outage due to Force Majeure.  Buyer shall be responsible for any gas imbalance caused by a Facility outage from any other cause, including any failure by Seller to deliver Energy due to a failure by Buyer to comply with its obligations hereunder as Fuel Manager.

 

(i)           Buyer shall be responsible for compliance with the PG&E tariff and rules, including compliance with any instructions regarding Emergency Flow Order (EFO) or Operational Flow Order (OFO) conditions.

 

(j)           Buyer shall be responsible for the quality of the fuel delivered to the Facility, including compliance of such fuel with the PG&E gas tariff and rules concerning gas quality and the Btu content of the fuel delivered to the Gas Delivery Point.

 

(k)           Buyer shall be responsible for any penalties, fines, fees or other charges assessed upon Seller by PG&E associated with Buyer’s, or its agent’s, failure to comply with the obligations of a Fuel Manager under PG&E’s tariff and rules, including the obligations under Special Conditions 1(g) through 1(j).   Subject to the prior execution of a confidentiality agreement in the form attached hereto as Exhibit F, Seller shall provide Buyer with access to all its relevant records, data, employees and contractors as reasonably necessary to verify to Buyer's reasonable satisfaction the occurrence of any of the above events.

 

(l)           Buyer may designate one or more persons to act as its agent under this Special Condition (1) in performing its functions and obligations as Scheduling Coordinator or Fuel Manager.  Buyer shall provide Seller with written notice designating its agent(s), including all necessary and customary contact information.  Nothing in this paragraph (e) shall relieve Buyer of its obligations as Scheduling Coordinator or Fuel Manager.

 

 

 

(m)           Within ninety (90) days after Effective Date, Buyer and Seller shall jointly review the limitations on the operation of the Facility due to the conditions and requirements of applicable Permits, the physical limitations of the Facility equipment and Good Utility Practices and shall amend Exhibit B to the extent they agree is appropriate and consistent with this Agreement to reflect such operating limitations.

 

(2)	Seller’s Performance Rights and Obligations.

 

(a)           Seller agrees to operate and maintain the Facility in accordance with Good Utility Practices, including, without limitation, complying with applicable Law, the requirements of applicable Permits and Seller’s Interconnection Obligations including maintaining the capability of the Facility to provide Energy, Capacity, RA Capacity or reliability must run service, as such products are defined in the CAISO Tariff as in effect on the Effective Date.

 

(b)           Unless Seller notifies Buyer otherwise, the Available Capacity of the Facility shall be equal to the Contract Quantity.  Seller shall notify Buyer promptly, and in all events within 30 minutes, after Seller becomes aware that the Available Capacity of all the Units is less than the Contract Quantity.  Seller shall also notify Buyer promptly, and in all events within 30 minutes, after Seller becomes aware of any other changes in the Available Capacity.  Any notice of the Available Capacity of the Units shall continue in effect unless and until changed by a subsequent notice by Seller of the Available Capacity.  All notices under this Special Condition (2) shall be provided in accordance with the communications protocol to be agreed by the Parties as provided in Special Condition 1(a)(i).

 

(c)           Seller shall be allowed sixty (60) Unit-Days of Planned Outage in aggregate for all of the Units per Contract Year.  As used herein, a “Unit-Day” means one day for one Unit, to be applied to the Units in Seller’s sole discretion.  By way of example only, 60 Unit-Days could mean 60 days of Planned Outage for one Unit, or 15 days of Planned Outage each for four Units, or other combinations totaling 60 Unit-Days.  Any increment of a Day shall count as a “Unit-Day”.  Seller shall notify Buyer of its proposed schedule of Planned Outages that constitute “planned outages” under the NERC Generating Unit Availability Data System (GADS) reporting guidelines for the Units for each Contract Year on or before thirty (30) days preceding such Contract Year.  If Seller wants to conduct any such Planned Outage at a different time than shown on such schedule, Seller and Buyer shall cooperate and agree on a mutually and reasonably acceptable time to reschedule such Planned Outage.  If Buyer wants Seller to conduct any such Planned Outage at a different time than shown on such schedule, Seller and Buyer shall cooperate and agree on a mutually and reasonably acceptable time to reschedule such Planned Outage, but Buyer shall reimburse Seller for all incremental costs incurred by Seller in rescheduling such Planned Outage.  Seller shall also be entitled to schedule Planned Outages that constitute “maintenance outages” under the NERC Generating Unit Availability Data System (GADS) reporting guidelines during the Contract Year on ten (10) days prior notice to Buyer, but if Buyer reasonably requests that such Planned Outage be conducted at a different time, Seller and Buyer shall cooperate and agree on a mutually and reasonably acceptable time to schedule such Planned Outage.  Each Party shall make all reasonable efforts, consistent with Good Utility Practices, to accommodate the other Party’s schedule requests with respect to Planned Outages and shall agree to any

 

 

 

schedule changes if (i) directed by the CAISO or (ii) if necessary to avoid a Unit being or becoming unavailable as a result of maintenance that cannot, consistent with Good Utility Practices, be delayed until the next scheduled Planned Outage, including any subsequent maintenance that may be necessary to follow-up on a temporary remedy made in response to a Forced Outage.  Notwithstanding anything to the contrary herein, a Planned Outage may not immediately follow a Forced Outage unless either the Planned Outage was scheduled prior to the occurrence of the Forced Outage or Seller has remedied the Forced Outage prior to the commencement of the Planned Outage.  Notwithstanding the foregoing, Seller shall not conduct Planned Outages during the months of January, June through September, and December.

(d)           Metering will conform to CAISO standards or the equivalent. Seller will provide such CAISO metering settlement data to Buyer as Seller and Buyer (or Buyer’s agent designated pursuant to Special Condition 1(l)) may agree in the communications protocol to be agreed by the Parties as provided in Special Condition 1(a)(i).

 

(e)           Seller shall notify Buyer within 30 minutes after the occurrence of any outage and shall thereafter provide Buyer daily verbal or written updates of the status of such outage.  Within five (5) Business Days after the occurrence of such outage, Seller shall (i) investigate the cause of such outage diligently and in good faith, (ii) notify Buyer of the course and results of such investigation, (iii) notify Buyer of the cause of such outage and expected duration of such outage, and (iv) subject to the prior execution of a confidentiality agreement in the form attached as Exhibit F, provide Buyer any information reasonably necessary to verify to Buyer's reasonable satisfaction the cause of the outage.

 

(3)	Capacity Adjustment Payment:

 

(a)           During the period beginning March 1 and ending May 31 in each Contract Year, unless otherwise agreed, Seller will conduct a performance test of the Facility (“Annual Performance Test”) in accordance with the Test Procedures attached hereto as Exhibit D; provided, however, that if the capacity of the Facility or any Unit has been reduced as a result of a Forced Outage, or Force Majeure and the effect of such Forced Outage, or Force Majeure cannot be eliminated or remedied in time to conduct the Annual Performance Test within the time period above, the time for conducting the Annual Performance Test shall be extended as necessary to eliminate or remedy the effect of such Forced Outage, or Force Majeure and to permit the Annual Performance Test to be conducted with all Units fully operational.

 

(b)           If the Contract Quantity as determined by the Annual Performance Test is equal to or greater than 95% of the Target Capacity, no Capacity Penalty will be payable hereunder until the next Annual Performance Test.  If the Contract Quantity as determined by the Annual Performance Test is less than 95% of the Target Capacity, Seller will pay Buyer a monthly Capacity Adjustment Payment (prorated for partial months) equal to $13,111 times the difference between the 95% of Target Capacity and the Contract Quantity as determined by the Annual Performance Test.  Seller shall continue to pay any applicable monthly Capacity Adjustment Payment until the Contract Quantity is re-determined pursuant to the next Annual Performance Test or an Additional Performance Test pursuant to Special Condition 3(c) below.

 

 

 

(c)           If the Contract Quantity as determined by the Annual Performance Test is less than 95% of the Target Capacity, Seller may request up to two additional performance tests in any Contract Year (an “Additional Performance Test”), to be conducted in the same manner as the Annual Performance Test.  If the Contract Quantity as determined by the Additional Performance Test is equal to or greater than 95% of the Target Capacity, no further Capacity Penalty will be payable hereunder until the next Annual Performance Test.  If the Contract Quantity as determined by the Additional Performance Test is less than 95% of the Target Capacity, Seller will continue to pay Buyer a monthly Capacity Adjustment Payment (prorated for partial months) equal to $13,111 times the difference between the 95% of Target Capacity and the Contract Quantity as determined by the Additional Performance Test.  Seller shall continue to pay any applicable monthly Capacity Adjustment Payment until the Contract Quantity is re-determined pursuant to the next Annual Performance Test or an Additional Performance Test pursuant to this Special Condition 3(c).

 

(d)           The “Target Capacity” of the Facility is equal to 180 MW less 0.25 MW per Unit for each 5,000 hours of operation per Unit, without proration (i.e. the reduction in the Target Capacity will only be applied for a full 5,000 hours of operation or integral multiples thereof).

 

(4)	Availability Adjustment Payment:

 

(a)           Within ten (10) days of the end of each calendar month, an Availability Factor (AF) shall be determined as follows:

 

AF = TME/MME

 

Target AF = 0.97 for the calendar months of June through September and 0.94 for each other calendar month.

 

	TME  (Total  Monthly  Energy)  =  Σ  TDE  for  all  Normal  Dispatch  Hours  and  each Extended Dispatch Hour for which Buyer has given notice of requested availability pursuant to Special Condition 1(a) in the calendar month
	MME (Maximum Monthly Energy) = the sum, over each Normal Dispatch Hour and each Extended Dispatch Hour for which Buyer has given notice of requested availability pursuant to Special Condition 1(a) in the calendar month, of the following sum each such hour: (i) Contract Quantity, less (ii) the quantity of Contract Quantity that is unavailable due to an Excused Outage (provided that such quantity shall not include any quantity of Contract Quantity included in item (ii) of TDE), less (iii) the quantity of the Contract Quantity that is unavailable due to a Planned Outage scheduled pursuant to Special Condition (2).
	TDE (Total Delivered Energy) = the sum of (i) Energy delivered from the Facility by Seller in accordance with this Confirmation, plus (ii)

 

 

 

uninstructed imbalance energy delivered by the CAISO (a) due to physical variations in the operating level of the Facility excused hereunder, and (b) for the minimum period of time necessary under the CAISO Tariff to adjust schedules or output in the event of an outage of the Facility, plus (iii)  the amount of Energy that could have been produced from the Available Capacity but which was not scheduled by Buyer; provided, that no energy excluded from the MME shall be included in the TDE.

 

 

(b)           If in any calendar month, the AF is less than the Target AF applicable to such calendar month, Seller shall pay to Buyer an Availability Adjustment Payment equal to the product of (i) the difference of the Target AF for the calendar month less the AF for such calendar month times (ii) 100 times (iii) $30,000.

 

(5)	Heat Rate Adjustment Payment:

 

(a)           As part of the Annual Performance Test conducted pursuant to Special Condition 3(a), Seller shall also conduct a test of the heat rate of the Facility, in accordance with the Test Procedures attached hereto as Exhibit D.

 

(b)           If the Facility Heat Rate as determined by the Annual Performance Test is equal to or less than the Target Heat Rate, no Heat Rate Adjustment Payment will be payable hereunder until the next Annual Performance Test.  If the Facility Heat Rate as determined by the Annual Performance Test is greater than the Target Heat Rate, then, beginning 30 days after the Annual Performance Test, Seller will pay Buyer a daily Heat Rate Adjustment Payment equal to the product of (i) the excess of the Facility Heat Rate over the Target Heat Rate, times (ii) the Gas Index for such day, times (iii) the amount of Energy delivered to Buyer hereunder for such day.  Seller shall pay such amount for every day from the time the Heat Rate Adjustment Payment commences until the Facility Heat Rate is re-determined to be less than or equal to the Target Heat Rate pursuant to the next Annual Performance Test or an Additional Performance Test.  The Heat Rate Adjustment Payment shall be payable monthly in arrears.

 

(c)           If the Facility Heat Rate as determined by the Annual Performance Test is greater than the Target Heat Rate, Seller may request up to two Additional Performance Tests in any Contract Year for purposes of re-determining the Facility Heat Rate.  If the Facility Heat Rate as determined by the Additional Performance Test is less than or equal to the Target Heat Rate, no further Heat Rate Adjustment Payment will be payable hereunder until the next Annual Performance Test.  If the Facility Heat Rate as determined by the Additional Performance Test is greater than the Target Heat Rate, Seller will continue to pay Buyer the Heat Rate Adjustment Payment determined in the same manner as in Special Condition 5(b) above but on the basis of the Facility Heat Rate as determined by the Additional Performance Test.  Seller shall continue to pay such amount until the Facility Heat Rate is re-determined pursuant to the next Annual Performance Test or another Additional Performance Test.

 

(d)           The “Target Heat Rate” is equal to 10,500 Btu/kWh plus 30 Btu/kWh for each 5,000 hours of operation per Unit without proration (i.e. the increase in the Target Heat

 

 

 

Rate will only be applied for a full 5,000 hours of operation or integral multiples thereof).  The “Gas Index” is equal to the “PG&E Citygate” midpoint price as reported in Gas Daily for the applicable day.

 

(6)         Cover Damages.  Except as otherwise excused herein, in addition to any Availability Adjustment Payment under Special Condition (4), Article IV of the Master Agreement shall apply to the failure of Seller to deliver or Buyer to receive Energy scheduled by Buyer accordance with this Agreement except that Seller shall not be liable for damages under Article IV of the Master Agreement to the extent that Seller has notified Buyer that the Capacity of or Energy available for dispatch from the Facility has been reduced due to a Forced Outage, an Excused Outage or a Planned Outage (provided notice shall not be required with respect to Excused Outages described in clauses (iii), (iv) or (v) of paragraph (B) in the description of Product).  For purposes of Article IV of the Master Agreement, the “Contract Price” shall be equal to (A) the product of (i) 10,500 Btu/kWh times (ii) the sum of (1) Gas Index plus (2) the local distribution charges, including any surcharges, for gas deliveries on PG&E’s system, plus (B) the applicable VOM.

 

(7)         Special Maintenance Payment.  If, as a result of dispatches by Buyer hereunder, any Unit is operated more than 4,000 hours during the Delivery Period and all Units have on a combined basis been operated for more than 16,000 hours, Buyer shall make a special maintenance payment to Seller of $1,000,000 per Unit for each 4,000 hours (or integral multiple thereof) that such Unit is operated during the Delivery Period.

 

(8)         Governmental Charges.  In addition to the obligations under Article 9 of the Master Agreement, and notwithstanding anything in this Agreement to the contrary, Buyer shall reimburse Seller for all newly imposed taxes, charges or fees assessed or levied by any governmental authority in respect of any Greenhouse Gases emitted by or attributed to the Facility, within forty-five (45) days of Buyer’s receipt from Seller of documentation establishing (i) that Seller is actually liable for the tax, charge, fee or cost in respect of Greenhouse Gases emitted by or attributed to the operation of the Facility during the Delivery Period; (ii) that, as of the date of execution of this Agreement, the legislation or regulation imposing the tax, charge, fee or cost was not effective or scheduled to become effective; (iii) the amount of the tax, charge, fee or cost; (iv) that the tax, charge, fee or cost was imposed on Seller by a governmental authority that has valid jurisdiction over Seller or the Facility; (v) that Seller has paid the tax, charge, fee or cost for which Seller seeks reimbursement from Buyer, and (vi) that Seller took all reasonable steps to mitigate the amount of such tax, charge, fee or cost; provided, however, that Buyer shall not be obligated to reimburse any fines or penalties incurred as a result of Seller’s failure to comply with applicable law or Permits.

 

For purposes of the foregoing, except as provided in this paragraph, reasonable steps shall not be deemed to require Seller to modify or make capital improvements to the Facility, or to continue to operate the Facility if modifications, capital improvements or other capital expenditures would be required to do so in compliance with applicable law or Permit conditions related to Greenhouse Gases, regardless of whether or not such modifications, capital improvements or other capital expenditures would reduce or eliminate taxes, charges or fees otherwise payable by Buyer or are required in order for the Facility to continue to operate at any level.  If modifications or capital improvements to the Facility or other capital expenditures would be required in order to operate the

 

 

 

Facility in compliance with applicable law or Permit conditions related to Greenhouse Gases, Seller shall provide notice thereof to Buyer. Such notice shall include both a description of and a fixed cost for such the capital improvements or other capital expenditures (which fixed cost may contain an allowance for contingencies and for overhead and construction supervision incurred by the Seller, but may not otherwise contain a profit component).

 

Upon receipt of such notice, Buyer shall have the right to direct the Seller to make, and Seller agrees to make, such capital improvements if (i) Buyer agrees to reimburse the Seller for Buyer’s pro rata share of such capital improvements upon completion thereof and (ii) the cost of capital improvements does not, together with the cost of any capital improvements requested by Buyer under paragraph (C) of the description of Product, exceed five million dollars ($5,000,000), or, if the combined cost of such improvements and the improvements requested by Buyer under paragraph (C) of the description of Product does exceed five million dollars ($5,000,000), Buyer agrees to reimburse Seller for all costs in excess of five million dollars ($5,000,000) in the aggregate.  Buyer shall reimburse Seller for Buyer’s share of the cost of such capital improvements promptly upon completion thereof.  The Parties’ respective pro rata shares shall be based on the useful life of such capital improvements and shall be agreed upon by the Parties prior to the commencement of any work on, such improvements.

 

If the operating level of the Facility would be reduced or the Facility would not be able to continue to operate without such modifications, capital improvements or other capital expenditures, and if neither Buyer nor Seller is obligated or elects to make such modifications, capital improvements or other capital expenditures, then such event shall be treated as an event of Force Majeure, but only to the extent of such reduction in operating level or ability to operate.

 

“Greenhouse Gases” means emissions into the atmosphere of (i) carbon dioxide (CO₂), nitrous oxide (N₂O) and methane (CH₄), which are produced as the result of combustion or transport of fossil fuels, (ii) hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF₆) generated as a result of the operation of the Facility, and (iii) other greenhouse gases (GHGs) that have been determined by the United Nations Intergovernmental Panel on Climate Change to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere.  Greenhouse Gases may be defined or expressed in terms of a ton of CO₂-equivalent in order to allow comparison between the different effects of gases on the environment.  Gases or emissions that are regulated due to impacts other than global warming (e.g. toxicity or creation of smog) shall not, to the extent of such other regulation, be considered “Greenhouse Gases” for the purposes of this Confirmation, but shall be considered “Greenhouse Gases” to the extent they are regulated due to impacts on global warming.

(9)	Events of Default.  In addition to the Events of Default specified in Section 5.1 of the Master Agreement, the following shall constitute Events of Default by Seller:

(a)

The Availability Factor calculated pursuant to Special Condition (4) is less than 0.70 for six (6) consecutive months.

 

 

 

(b)

The Contract Quantity as shown by any Annual Performance Test is less than 150 MW unless a Contract Quantity of 150 MW or more is subsequently demonstrated by an Additional Performance Test within six (6) months after such Annual Performance Test; provided, however, if Seller is prevented or delayed in conducting such Additional Performance Test by Force Majeure, such six (6) month period shall be extended by the period of such delay.

(10)	Payment on Termination; Limitation of Liability.

(a)

With respect to this Confirmation, the Master Agreement (including Sections 5.2 and 5.3) is hereby amended to provide that in the event Buyer terminates this Transaction as the result of an Event of Default where Seller is the Defaulting Party, the Termination Payment shall, notwithstanding anything to the contrary contained in the Master Agreement, be equal to the net present value (using a discount rate equal to the “Present Value Rate” set forth in Section 5.3 of the Master Agreement) as of the date of termination of the product of (i) the Target AF, times (ii) 100, times (iii) $26,400 for each month remaining in the Delivery Period.  Except for reasonable attorneys’ fees incurred in enforcing this Agreement and interest due and owing on unpaid amounts that are past due, such Termination Payment shall be the only amount payable by Seller as the result of the termination of this transaction by Buyer due to an Event of Default by Seller.

 

(b)

Notwithstanding anything herein or in the Master Agreement to the contrary, the total payments by Seller under Special Conditions 3, 4 and 10(a) shall not exceed the Termination Payment that would be payable under Special Condition 10(a) if this Transaction were to be terminated as the result of an Event of Default where Seller is the Defaulting Party on the Start Date, i.e. if such Termination Payment were to be determined for the entire Delivery Period, plus any interest due and owing thereon, reasonable attorneys’ fees incurred in enforcing this Agreement and the pro rata portion of the cost of capital improvements paid for by Buyer pursuant to paragraph (C) of the description of Product and/or Special Condition 8, as applicable, based on the amount by which the portion of the Delivery Period during which such improvements were to be used was shortened due to early termination of this Confirmation.

 

(11)	Notice of Events Beyond Seller’s Control; Termination.

(a)

Seller shall notify Buyer within 30 minutes after the occurrence of an outage due to Force Majeure and shall thereafter provide Buyer daily verbal or written updates of the status of such outage.  Within five (5) Business Days after the occurrence of such outage, Seller shall (i) investigate the cause of such outage diligently and in good faith, (ii) notify Buyer of the course and results of such investigation, (iii) notify Buyer of the cause of such outage and expected duration of such outage, and (iv) subject to the prior execution of a confidentiality agreement in the form attached as Exhibit F, provide Buyer any information reasonably necessary to verify to Buyer's reasonable satisfaction the cause of the outage.  Seller shall provide Buyer with daily updates including all information

 

 

 

listed in (i) through (iv) above.  Promptly, but in any event within ten (10) Business Days, after notice is given pursuant to the preceding sentence, the Parties shall meet to discuss the basis and terms upon which the arrangements set out in this Agreement shall be continued, taking into account the effects of such event or circumstance.

(b)

In the event Seller claims that some or all of the Capacity of or Energy available for dispatch from the Facility is not available due to Force Majeure for a cumulative total of three hundred sixty-five (365) days, Buyer shall have the right, at its election, to terminate this Confirmation on ten (10) Business Days notice to Seller with no further liability for either Party following such termination, except for a true up for amounts accrued hereunder prior to the date of termination, including amounts due for Product supplied to Buyer hereunder, the pro rata portion of the cost of capital improvements paid for by Buyer pursuant to paragraph (C) of the description of Product and/or Special Condition 8, as applicable, based on the amount by which the Delivery Period during which such improvements were to be used was shortened due to early termination of this Confirmation and other payments and charges accrued by either Party prior to such termination, all of which shall be settled and paid within five (5) Business Days after the date of termination.  Within ten (10) Business Days after such termination, Buyer shall return the letter of credit described in Special Condition 14 to Seller.

(12)

Insurance.  Seller shall at its sole expense purchase from and maintain in a company or companies lawfully authorized to conduct business in the jurisdiction where the Facility is located having an A rating in Best’s Key Rating Guide the insurance described below.  Buyer shall be named as an additional insured to the extent of the indemnity obligations assumed hereunder by Seller under all coverages required under this Agreement except All Risk Property Insurance and Workers Compensation.  Seller shall provide Buyer certificates of insurance and blanket endorsements (if applicable) for each policy described below within ten (10) Business Days of Buyer’s request therefor.  The certificates must state that coverage will not be cancellable except after thirty (30) days prior written notice (ten (10) days in the event of non-payment of premiums) has been given to Buyer.  All policies of insurance required below shall include a waiver by the insurer of any rights of subrogation against the Buyer.

All Risk Property Insurance – Seller will procure and maintain all risk property insurance including coverage for physical damage, boiler and machinery and extra expense during the operation of the Facility, and business income.  Coverage valuation shall be the actual repair or replacement costs but no greater than the full replacement cost of the Facility.  Coverage will also apply during inland transit.  Such coverage shall allow for reasonable deductibles and sublimits for specific perils as consistent with Prudent Industry Practice.

Commercial General Liability – Seller will carry commercial general liability coverage with limits of $1 million per occurrence, $2 million in aggregate.  The insurance will

 

 

 

cover claims brought against Seller for third party bodily injury (including death), personal injury and property damage.  The coverage will include provisions for broad form property damage, explosion, collapse and underground hazard coverage (XCU), cross liability, severability of interest, broad form contractual liability, and completed operations.

Excess Liability/Umbrella Coverage – Seller will carry excess liability/umbrella coverage insurance of $9 million per occurrence so that the total coverage for Commercial General Liability and Excess Liability/Umbrella Coverage shall be at least $5 million per occurrence, however, such $10 million total coverage may be made up of any combination of Commercial General Liability and Excess Liability/Umbrella Coverage at Seller’s sole discretion.

Workers Compensation – Seller will carry workers compensation insurance covering statutory workers compensation obligations as required by state law.  The coverage will also include $1 million in Employers Liability coverage insuring Claims brought by employees brought outside the California workers’ compensation statute.  Seller will also require workers compensation coverage of any contractors employed for maintenance of the facility.

(13)

Certain Representations and Defaults.  Notwithstanding anything in this Confirmation or the Master Agreement to the contrary, the Chapter 11 Proceeding shall not constitute an Event of Default by Seller or Seller’s Guarantor under Section 5.1 of the Master Agreement, and Seller’s representations under Sections 10.2(v) and 10.2(vi) are deemed to contain an exception for the Chapter 11 Proceeding.

 

(14)

Performance Assurance.  In order to provide security for the payment of amounts that may be payable by Seller to Buyer hereunder, Seller will deliver to Buyer (a) a letter of credit in the face amount of Twenty Million Dollars ($20,000,000) in the form of Exhibit C attached hereto within three (3) Business Days after the Effective Date, and (b) such written assurances as Buyer may reasonably request that the Guarantee Agreement given by Calpine Corporation to the Buyer dated as of August 31, 2005, pursuant to paragraph (t) of the “Other Changes” section of the Cover Sheet, secures, and shall continue to secure following the “effective date” of Calpine Corporation’s Chapter 11 Plan of Reorganization, the prompt and complete payment when due, by acceleration or otherwise, of all amounts payable by Seller under this Confirmation.

 

(15)

General.  With respect to this Confirmation, the last sentence appearing in Section 5.2 of the Master Agreement shall not apply.  For purposes of clarity, Party A and Party B further agree that the occurrence of a Regulatory Event may not provide a basis for an Event of Default under Section 5.1 of the Master Agreement.  In addition to Buyer’s other rights to assign or novate this Agreement under the Master Agreement, Buyer shall have the right to assign the Option to Pacific Gas and Electric Company (“PG&E”) and its rights under this Agreement upon exercise of the Option if (i) such assignment is made prior to July 1, 2009, and (ii) PG&E has a long term senior unsecured debt rating of at least BBB from Standard & Poor’s and Baa2 from Moody’s Investor Services at the time of such assignment.  PG&E shall have the right to exercise the Option in accordance with its terms if (1) it has a long term senior unsecured debt rating of at least BBB from

 

 

 

 

Standard & Poor’s and Baa2 from Moody’s Investor Services at the time of such exercise and (2) it agrees to assume all of Buyer’s obligations under this Agreement when it exercises the Option (with appropriate modifications as necessary to reflect the change in status of the parties to this Agreement).  If Buyer assigns the Option to PG&E and PG&E exercises the Option in compliance with the foregoing requirements, Seller agrees to enter into a new agreement with PG&E on the same terms and conditions as this Agreement with respect to the period after the exercise of the Option, but, except as specifically provided in the preceding sentence, Seller shall have no obligation to modify any right or obligation under this Agreement in connection with any such assignment of the Option to or the exercise of the Option by PG&E.

 

(16)	Definitions.  When used in this Confirmation, the following terms shall have the following defined meanings:

 

“Ancillary Services” has the meaning defined in the CAISO Tariff.

 

“Available Capacity” means the Contract Quantity less any portion of the Contract Quantity that is not available as the result of any of the matters described in clauses (i) through (vi) of paragraph (B) of the description of Product.

 

“CAISO” means the California Independent System Operator Corporation or any successor entity performing similar functions.

 

“CAISO Tariff” means the CAISO FERC Electric Tariff, First Replacement Volume No. 1, as it may be amended, supplemented or replaced (in whole or in part) from time to time.

 

“Chapter 11 Proceeding” means the jointly administered bankruptcy cases under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C., of Calpine Corporation and its affiliated debtors, Case No. 05-60200(BRL) 11 in the United States Bankruptcy Court, Southern District of New York.

 

“Contract Year” means each calendar year during the Delivery Period commencing upon 00:00:01 PPT on January 1 and ending upon 24:00:00 PPT December 31.

 

“CPUC” means the California Public Utilities Commission or a successor governmental agency performing the same or similar functions.

 

“Dispatch Hours” means the Normal Dispatch Hours and the Extended Dispatch Hours.

“Extended Dispatch Hours” means all hours other than Normal Dispatch Hours.

“Facility” means the Los Esteros Critical Energy Facility located at 800 Thomas Foon Chew Way, San Jose, CA 95134 and consisting of four Units.

 

“Fuel Manager” means the person responsible for the procurement, nomination, balancing of natural gas delivered to the Facility.

“Forced Outage” means a force outage or force derating as defined in the NERC Generating Unit Availability Data System (GADS) reporting guidelines of a Unit (but only, in the case of a partial forced outage or partial force derating, to the extent thereof) that is not the result of an Excused Outage or a Force Majeure.

 

 

“Gas Index” has the meaning defined in Special Condition 5(d).

“Good Utility Practices” has the meaning defined in the CAISO Tariff.

 

“IFM Load Uplift Obligations” has the meaning defined in the CAISO Tariff.

“Interconnection Obligations” means Seller’s obligations set forth in the Generator Interconnection Agreement, dated as of April 19, 2002, between Los Esteros Critical Energy Facility LLC and PG&E, the Generator Special Facilities Agreement, dated as of April 19, 2002, between Los Esteros Critical Energy Facility LLC and PG&E, the Participating Generator Agreement, dated as of November 22, 2002, between Los Esteros Critical Energy Facility LLC and the CAISO, and the Natural Gas Service Agreement, dated as of December 11, 2002, between Los Esteros Critical Energy Facility LLC and PG&E.

“Inter-SC Trade” has the meaning defined in the CAISO Tariff.

“MRTU” means the Market Redesign and Technology Upgrade to be implemented by CAISO on or about April 1, 2008 which includes a transmission congestion management system that uses locational marginal pricing to assign prices to energy at Nodes on the transmission system.

“Node” has the meaning defined in the CAISO Tariff.

“Normal Dispatch Hours” means collectively, the hours ending (HE) 0700 through HE 2200 Monday through Friday (other than NERC holidays) and HE 1100 through HE 2200 Saturday, Sunday and NERC holidays.

“Permits” means the permits and other governmental approvals necessary to operate the Facility.

“Planned Outage” means a “planned outage” or a “maintenance outage” as defined in the NERC Generating Unit Availability Data System (GADS) reporting guidelines.

“PPT” means the then prevailing time in the Pacific Time Zone.

“RA Capacity” means the maximum megawatt amount that the CAISO recognizes from a Unit that qualifies for Buyer’s Resource Adequacy Requirements and is associated with the Unit’s Capacity Attributes.

“Resource Adequacy” means the procurement obligation of load serving entities, including Buyer, as such obligations are described in CPUC Decisions D.04-10-035 and D. 05-10-042 and subsequent CPUC decisions addressing Resource Adequacy issues, as those obligations may be altered from time to time in the CPUC Resource Adequacy Rulemakings (R.) 04-04-003 and (R.) 05-12-013 or by any successor proceeding, and all

 

 

other Resource Adequacy obligations established by any other entity, including the CAISO.

“Resource Adequacy Requirements” means Buyer’s Resource Adequacy or successor program requirements, as the CPUC, the CAISO or other regional entity may prescribe.

“Start” shall mean each instance where (i) a Unit start sequence was initiated to meet a dispatch or schedule; and (ii) the Unit reached the required dispatch or schedule level within 30 minutes (or 10 minutes in the case of an emergency after instruction by the Department).

“Unit” means each combustion turbine and related physical assets that comprise a single electric generating unit with a capacity of approximately 45 MW constituting part of the Facility.

 

Calpine Energy Services, L.P.					State of California Department of Water Resources separate and apart from its powers and responsibilities with respect to the State Water Resources Development System
By:	/s/ Jeffrey P. Kinneman          12/7/07				By:	/s/ Timothy J. Haines          12/7/07
Name:			Jeffrey P. Kinneman		Name:			Timothy J. Haines
Title:		Vice President			Title:		Deputy Director

 

 

 

a.	Seller shall notify Buyer and Buyer’s Agent by phone or email within 30 minutes of any Forced Outage. Seller shall also allow access by Buyer and Buyer’s Agent to the CAISO SLIC files for the Facility to verify information on Facility outages

 

 

 

 

EXHIBIT A - ATTACHMENT 1