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Item 7 - Resolution Authorizing Purchase Electricity ~~5-t1"\ b.;W 16/".1 'l~ TO: """ooW, M'"" ,00 M'O"".~ COO",, - FROM: James L. Bowersox, City Man INITIATED BY: James R. Williams, Director of Public Services rf DATE: June 16, 1998 SUBJECT: Resolution Authorizina the City Manaaer to Execute Aoreements. Permittina the City of Powav to Purchase ElectriCi~ from Commonwealth Enerov COrDoration and New Energy Ventures ABSTRACT AB1890 created the framework for establishing a competitive electrical energy market, thereby reducing prices and improving benefits for the electrical energy customer. To take advantage of this special energy reduction opportunity, staff recommends that the City of Poway enter into two separate joint powers agreements-one with SANDAG and the other with the Association of Califomia Water Agencies (ACWA). Consistent with these programs and other CPUC rate reductions, the City of Poway stands to save an estimated 3.1 % [$30,738] from SDG&E electricity rates in 1998-99, when compared to SDG&E electricity rates offered between April 1997 and March 1998. Using the same base period, the City of Poway stands to save an estimated 5.3% [$50,738] in 1999-2000. ENVIRONMENTAL REVIEW - This item is not subject to CEQA review. FISCAL IMPACT In fiscal year 1998-99, entering into these agreements for the purchase of electrical energy, after expenses, should result in a combined estimated reduction in energy costs of $30,738. During the second year participation will increase annual energy savings to an estimated $50,738. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE None RECOMMENDATION It is recommended that the City Council approve the attached resolution authorizing the City Manager to execute agreements that will permit the City to purchase electricity from New Energy Ventures through ACWA and Commonwealth Energy Corporation through SANDAG, each beginning July 1, 1998. ACTION - 1/38 7.1 JUM 1 6 1998 ITEM , ,.---'-.---------- - AGENDA REPOF.. , CITY OF POWAY TO: Honorable Mayor and Members of the City Council FROM: James L. Bowersox, City Man~ INITIATED BY: James R. Williams, Director of Public Services ~ Doug Hilliker, Water Utilities Manager Norm Ginsburg, Interim Sr. Management Analyst DATE: June 16, 1998 SUBJECT: RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AGREEMENTS, PERMITTING THE CITY OF POWAY TO PURCHASE ELECTRICITY FROM COMMONWEALTH ENERGY CORPORATION AND NEW ENERGY VENTURES BEGINNING JULY 1,1998 BACKGROUND Governor Wilson signed AB1890 into law on September 23, 1996. This state legislation created the framework for establishing a competitive electrical energy market, thereby reducing prices and improving benefits for the electrical energy customer. The key elements of AB1890 include (1) the creation of Independent Systems Operators to manage the electrical transmission system, (2) the "unbundling" of the costs associated with electricity power (e.g., generation source, transmission lines, distribution, etc.). and (3) a price cap set on current electrical rates. Public Services Department staff has been actively monitoring California's move toward deregulation and participated in an Energy Deregulation Committee of the San Diego County Water Authority and the SANDAG Ad Hoc Committee on Energy Deregulation. These committees met frequently to discuss energy deregulation activities and review potential energy saving options available to municipal jurisdictions. At one such meeting held on March 22, 1998, representatives from the Association of Califomia Water Agencies (ACWA), New Energy Ventures (NEV). SANDAG, and SDG&E presented information on the status of deregulation and the potential pooled energy purchase options. Independent operators have also contacted City staff in attempts to gain our energy needs business. Among the many options known to staff, two programs have emerged which would permit Poway to pool its energy demands with other government agencies and through the vastly increased demand of the "power pool," purchase electricity at lower rates than otherwise would be available ACTION: I )J 2/38 ITEM 7.1 . JUN 1 6 1998 - Purchase of Electrical Power Aoreements June 16, 1998 Page 2 to us. ACWA has formed a joint power's agency (ACWA-USA) to provide power and possibly other energy related services to member agencies through NEV. In addition, SANDAG has created a pooled energy purchase program for govemmental jurisdictions through Commonwealth Energy Corporation. NEV promises to reduce annual electric rates by a minimum 5% below SDG&E's normal rates whereas Commonwealth promises to reduce annual electric rates from 1.5% - 3.5%. NEV purchases are targeted to high demand service points therefore, participation is limited to those service points that demand >50kW per hour for a significant portion of the fiscal year. There are six such City of Poway meter locations. Eleven additional Poway meters record demands greater than 50KW but these service points have wide fluctuations in power needs so NEV will not accept them into their 5% plus a savings program. Commonwealth will serve these locations as well as the remaining Poway electrical accounts using under 50kW per hour throughout the year. Both companies guarantee these saving throughout the 1998-99 fiscal year. If they fail to meet their pricing objectives, the City can return to SDG&E at its current electric rates without any penalty. Both companies also offer renewal options for future years if we are satisfied with their service and pricing structure. FINDINGS The Association of Califomia Water Agencies authorized the formation of a joint power's agreement to member water agencies and the SANDAG Board of Directors authorized the formation of a San Diego Regional Power Pool through a joint power's agreement among San Diego County municipalities. The principal purpose of these joint power's agreements is to obtain the best guaranteed electricity rates by aggregating the electricity needs of multiple agencies into a large pool of power users thereby increasing the negotiating position of all participants. An added advantage of aggregating power needs is to minimize the changes in power needs between peak and off-peak periods. For example, agencies such as the City of Poway offset much of its high-use period demands (normally during the day when air conditioning systems are running) with off-peak use increases such as for street lighting. Annually, City of poway facilities and services use approximately 11,186,000 kWhrs of electricity at a cost of approximately $1,217,500. Working with our SDG&E accounts executive, ACWA and SANDAG representatives, City of Poway staff has analyzed our energy use history for the period April 1997 to March 1998. During this period, seventeen electricity accounts demanded 50kW per hour or above. Combined, these metered locations consumed 5, 114,384kW of energy at a cost of $550,138. Most of these energy uses are associated with running electrical power equipment in the City's water and wastewater systems, e.g. water pumping stations, filtration plant operating equipment, and sewage lift stations. The City Hall complex, Fire Station #1 and the Performing Arts Center are also high energy use facilities. Yet another 185 metered service points demand less than 50kW and use approximately 4,975,179 kWhrs of electricity each year; among these meters are those at 43 traffic signals. City-owned street lights are not metered but use approximately 750,000 kWhrs each year at a cost of approximately $107,600. SDG&E-owned street lights (we are still awaiting a decision from the Califomia Public Utilities Commission to allow the transfer of ownership for these lights to Poway) use another 347,000 kWhrs at a cost of just under $50,000. The City of poway pays SDG&E for this street light energy use indirectly through rates that also include maintenance. 3/38 ITEII 7.1 JUtl 1 6 1998 -.--.---.-. ____m Purchase of Electrical Power Agreements June 16, 1998 Page 3 Under deregulation restrictions, SDG&E, as a public utility, will be required to sell any power that it generates to the Power Exchange) and then purchase back all electricity that it sells from the Power Exchange and melded rates that fluctuate every few minutes according to supply and demand economics. SDG&E is not in a position to enter into discounted arrangements with certain of its customers. This, among other reasons, has prompted SDG&E to sell off much of its electricity generating capacity to become primarily a transmission, distribution and administration company. SDG&E has embraced the deregulation efforts and has been restructuring itself during the last several months so as not to be significantly impacted when customers such as Poway aggregate their needs and seek contracts at discounted prices from other energy service providers. The independent operators who have approached City staff have been anxious to sign us on as one of their customers, but they have been ill-prepared to contract for firm prices or to guarantee reliable electricity delivery. Staff determined that with such a complex system, to participate with multiple agencies through qualified experts in the energy field, the City's interests would be better served. Conclusions from the various analyses suggest that participation in these joint powers agreements will provide reliable energy and cost reductions in the City's 1998-99 Operating Budget. Moreover, the City will have opportunities to join with the region's other municipal jurisdictions and water agencies to immediate benefits arising from electricity energy deregulation in Califomia beyond the initial ten percent reduction given to all Class A electrical accounts in the City of Poway. To participate in these opportunities, the City must enter into a formal Agreement with the ACWA USA and SANDAG as well as enter into one year contracts with NEV and Commonwealth . [A copy of the resolution authorizing their execution and each Memorandum is attached. [Attachments A, B, and C] By working within a joint power's framework, the City will position itself to take advantage of additional increased benefits as the new deregulated electricity market develops and matures. There will be some expenses associated with this deregulation direction but they would be incurred regardless of who provides electricity supply to Poway. These expenses will be approximately $1,000 to purchase and install a direct read time of use electric meter for each 50kWand above meter (seventeen meters). Through Commonwealth (SANDAG) an option to lease the meters is offered but we would ultimately have to purchase them anyway so staff proposes to make the investment immediately. There will be a one time joining fee of $3,000 payable to ACWA to make us eligible to participate in the New Energy Ventures contract. All of our smaller category "A" accounts will automatically realize a 10% savings from SDG&E which was mandated by the CPUC. Through Commonwealth we can obtain an additional estimated 2.5% savings on these accounts. Similarly, 2.5% savings will be realized on all remaining accounts below 50kW. Finally, depending on the specific meter, savings of 2.5% through Commonwealth, or 5% through NEV, will be realized on accounts above 50kW. Consistent with these programs and other CPUC rate reductions, the City of Poway stands to save an estimated 3.1 % [$30,738] from SDG&E electricity rates in 1998- 99, when compared to SDG&E electricity rates offered between April 1997 and March 1998. Using the same base period, the City of Poway stands to save an estimated 5.3% [$50,738] in 1999- 2000. (Attachment D summarizes the anticipated savings in fiscal 1998-99 and 1999-2000.) 4/38 JUlll 6 1998 ITEM "1.11 Purchase of Electrical Power Agreements June 16, 1998 Page 4 ENVIRONMENTAL REVIEW This action is not subject to CECA review. FISCAL IMPACT In fiscal year 1998-99, entering into these agreements for the purchase of electrical energy, after expenses, should result in a combined estimated reduction in energy costs of $30,738. During the second year participation will increase annual energy savings to an estimated $50,738. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE None. RECOMMENDATION It is recommended that the City Council approve the attached resolution authorizing the City Manager to execute agreements, permitting the City of Poway to purchase electricity from Commonwealth Energy Corporation and New Energy Ventures beginning July 1, 1998. Attachments: A. Resolution authorizing the execution of agreements B. Memorandum of Agreement - ACWA, including an agreement with New Energy Ventures [On file in the Public Services Department] C. Memorandum of Agreement - SANDAG, including an agreement with Commonwealth Energy Corporation [On file in the Public Services Department] D. Summary of Projected Electrical Energy Savings in Fiscal 1998-99 C:\DIRSDA T AIWPFILESICQUNCIL 1ST AFF.RPT\ 1998\ELEC616.400 5/38 Jutl 1 6 1998 ITEII "1.1.\ RESOLUTION NO. 98 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA AUTHORIZING THE EXECUTION OF MEMORANDUMS OF AGREEMENT WITH ASSOCIATION OF CALIFORNIA WATER AGENCIES (NEW ENERGY VENTURES) AND SAN DIEGO AREA GOVERNMENTS (COMMONWEALTH ENERGY CORPORATION) FOR JOINT POWERS PARTICIPATION IN DISCOUNTED ELECTRIC POWER CONSORTIA WHEREAS, Association of California Water Agencies (ACWA) and San Diego Area Government (SANDAG), based on the recommendations of each respective agency's study committee dealing with California Electricity Utility Restructuring (AB1890), have authorized the formation of joint powers' agreements to implement the purchase of discounted electric power and related services on behalf of interested municipal agencies; and WHEREAS, ACWA has selected New Energy Ventures and SANDAG has selected Commonwealth Energy Corporation though a competitive bidding process; and WHEREAS, ACWA has negotiated a master contract with New Energy Ventures and SANDAG has negotiated a master contract with Commonwealth Energy Corporation, both contracts will provide guaranteed savings on the monthly City of Poway's electricity bills; and WHEREAS, the City of Poway understands that there are no costs and no risks involved in participating in these respective joint powers. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: Section 1: The City Council authorizes the execution of these respective Memorandums of Agreement with ACWA and SANDAG to implement the purchase of discounted electric power and related services; and Section 2: The City Council authorizes the execution of contracts with New Energy Ventures and Commonwealth Energy Corporation for guaranteed savings on the City of Poway electricity bills; and Section 3: The City Council authorizes the City Manager to sign the necessary Memorandums of Agreement and Contract documents on behalf of the City Council. ATTACHMENT A ITEM -1.1 I' JUlIl 6 1998 6/38 Resolution 98 - Page 2 PASSED, ADOPTED, and APPROVED by the City Council of the City of Poway at a regular meeting thereof this 16th day of June, 1998. Don Higginson, Mayor ATTEST: Lori Anne Peoples, Assistant City Clerk STATE OF CALIFORNIA ) )SS COUNTY OF SAN DIEGO) I, Lori Anne Peoples, Assistant City Clerk of the City of Poway do hereby certify, under penalty of pe~ury, that the foregoing Resolution No. 98- , was duly adopted by the City Council at a meeting of said City Council held on the 16th day of June 1998, and that it was so adopted by the following vote: AYES: NOES; ABSTAIN: ABSENT: Lori Anne Peoples, As 'stant City Clerk JU~ll 6 1998 ITEM -'.1 7/38 ____...______.__.._________________________.____n___..___________ JOINT POWERS AGREEMENT. OF THE ASSOCIATION OF CALIFORNIA WATER AGENCIES UTILITY SERVICE AGENCY This Agreement which is entered into by and between the Parties signatory here to is made with reference to the following: RECITALS A. The Parties are each public agencies or mutual water companies authorized to acquire, construct, maintain and/or operate facilities for the development and/or use of water resources, including facilities to store, treat, and deliver water for municipal, industrial, agricultural, domestic and other purposes. B. The Parties are each authorized to purchase Utility Services in connection with the operation of facilities for the development, use and delivery of water. C. One or more of the Parties are also authorized to acquire, construct, own, operate, control or use works for supplying their own facilities or others with Utility Services. D. The Parties are each members of the Association of Califomia Water Agencies and share the common purpose of securing and providing Utilities Services at reasonable cost in the public interest. 2 jpaI2.97.doc 12JSI97 ATTACHMENTB JUN 1 6 1998 ITEM 7.1'e 8138 - E. The Parties desire to create a jOint powers agency to exercise those powers held in common to provide for the development or purchase of Utility Services for their mutual benefit. NOW THEREFORE, the Parties for and in consideration of the premises, and the mutual terms, conditions, promises and covenants contained in this Agreement, do hereby agree as follows: ARTICLE 1. DEFINITIONS. The following terms capitalized in the text shall have the meaning specified in this Article unless the context otherwise requires. 1.1. AGENCY. Agency shall mean the Association of Califomia Water Agencies-Utility Service Agency, a joint powers agency created by the Parties pursuant to this Agreement. 1.2. AGREEMENT. This joint powers agreement as it now exists or as it may from time to time be amended. 1.3. ASSOCIATION. The Association of Califomia Water Agencies, a Califomia non-profit corporation. 1.4 CUSTOMERS OR CONSTITUENTS. Customers or constituents shall mean those persons, corporations, partnerships or other entities that receive services from a Party or own property within the boundaries of that Party. 1.5. COMMISSION. The goveming body of the Agency. 3 jpaI2.97.doc IV"" 9/38 JUN 1 6 1998 ITEU 7.111 1.6. LAW or THE LAW. The Joint Exercise of Powers Act, being Articles 1 and 2 of Chapter 5 of Division 7 of Title I of the Govemment Code of the State of Califomia commencing with Section 6500, and all laws which amend or supplement it. 1.7. PARTY. Any full or affiliate member of the Association that can legally enter into this Agreement and that does so by signing it. 1.8. PROJECT SERVICE AGREEMENT OR PSA. An agreement between the Agency and any of the Parties relating to a Utility Service or Utility Services which those Parties use or are authorized to provide. 1.9. UTILITY SERVICE OR UTILITY SERVICES. One or more of the following utility services: water, electrical, power, heat, gas, transportation, telephone, television, or other utility or communications services. 1.10. WORKING CAPITAL ACCOUNT. The special fund maintained for general overhead and reconnaissance or other limited initial studies of the Agency. ARTICLE 2. PURPOSE AND POWERS. 2.1. Creation: There is hereby created, pursuant to the Law, a public entity to be known as the "Association of Califomia Water Agencies-Utility Service Agency" . 2.2. Term: This Agreement shall be effective from the date on which the Executive Director of the Association certifies that it has been executed by Parties that have collectively deposited a minimum of $100,000 in the Working Capital Account and shall remain in effect until terminated as hereinafter provided. 4 jpa 12-97.doc 12Im7 10/38 JUN 1 6 1998 ITeM 7.1 " 2.3. Puroose: The purpose of this Agreement is to provide for the joint exercise, through the Agency, of powers COmmon to the Parties to study, acquire, construct, own, operate, control, maintain, use, or replace works for supplying their own facilities and their customers or constituents with Utility Services as provided for in Project Service Agreements executed by Parties having the common power to provide for the Utility Services specified in each respective Project Service Agreement and to enter into agreements and to do all acts related and incidental thereto in order to provide Utility Services required by the Parties. 2.4. Powers. The Agency shall have the power to exercise any power common to all the Parties as authorized by the Law and to exercise any power common to those Parties that enter into a Project Service Agreement to provide the means, manner and methods of providing for a Utility Service. These powers shall be exercised subject to such restrictions upon the manner of exercising such powers as are imposed on the Modesto Irrigation Distrid as specified in the Irrigation District Law (Water Code Sections 20500, at seq.) The Agency is authorized, in its own name, to do all acts necessary or convenient for the exercise of such powers for such purposes that the Parties could do separately, and all other acts authorized by the Law, including but not limited to any or all of the following: 2.4.1 To make and enter into contracts; 2.4.2 To employ agents, consultants, attomeys and employees; 1 Government Code Section 6509 states that the powers of the Agency shall be 'subject to the restrictions upon the manner of exercising the power of one of the contracting parties, which oartv shall be desionated bv the aoreement." (Emphasis added.) 5 jpaI2-97.doc 1= 11/38 JUN 1 6 1998 ITEM 7.1' ~ ------ - ---..-- , 2.4.3 To acquire personal property, and any interest therein by purchase, gift, lease, option, grant, bequest, devise or otherwise, and to hold and dispose of such property; 2.4.4 To sue and be sued in its own name; 2.4.5 To be an applicant, make applications for, and receive grants from govemmental and private entities and to participate in State bond issues; 2.4.6 To prepare project reports and applications, to qualify for grants, and to enter into grant contracts and to do all other things necessary to comply with State and Federal laws and regulations with respect to grants; 2.4.7 To borrow or receive advances of funds from Parties or from other sources as may be permitted by law; 2.4.8 To execute leases and installment sale or installment purchase contracts; and 2.4.9 To exercise all powers necessary and proper to carry out the terms and provisions of this Agreement or otherwise authorized by law; In addition to the above listed powers, the Agency is authorized to exercise the following powers to the extent permitted in a Project Service Agreement, for the benefit of the Parties to such Project Service Agreement: 2.4.10 To acquire real as well as personal property, and all and any interest therein, by purchase, gift, lease, grant, bequest, devise, eminent domain or otherwise, and to hold and dispose of such property; 2.4.11 To incur debts, liabilities and obligations; 2.4.12 To issue bonds, notes, warrants, and other evidences of indebtedness to finance costs and expenses to carry out the powers exercised for the Parties to a Project Service Agreement; and 2.4.13 To set service charges and fees for any Utility Service. 6 jpll12.97.doc 121S/97 12/38 JUN 1 6 1998 ITEM 7.1 ,~ - ARTICLE 3. COMMISSION ORGANIZATION AND POWERS 3.1. Govemino Bodv. The Goveming Body of the Agency shall be a Commission consisting of one Commissioner appointed by each Party. Each Party may also appoint one or more altemates to act in the absence of a Commissioner. Each Commissioner or altemate shall serve at the pleasure of the Party who appointed such Commissioner or altemate. The role of an altemate Commissioner shall be to assume the duties of the Commissioner for whom he or she is the altemate in case of the absence or unavailability of such Commissioner. 3.2. Commissioners' Comoensation and Exoenses. Commissioner's and altemate's compensation, if any, and expenses shall be bome by the Party appointing such Commissioner. 3.3. Meetinos. The Commission shall hold at least one regular meeting each year, and, by resolution, may provide for the holding of regular meetings at more frequent intervals. The date upon which, and the hour and place at which each such regular meeting shall be held, shall be fixed by resolution of the Commission. Special meetings of the Commission may be called in accordance with the provisions of Section 54956 of the Califomia Govemment Code. All meetings of the Commission shall be called, held, noticed and conducted subject to the provisions of the Ralph M. Brown Act (Califomia Gov. Code SS 54950, at seq.) 7 jpaIZ.97.cIoc 12JS/97 13/38 JUN 1 6 1998 ITEM 7.11 -------._-, -----" --,._--,----~ 3.4. Quorum. A quorum of the Commission for the transaction of business shall consist of 50 Commissioners, except less than a quorum may adjoum from time to time. 3.5 Votino. The Commission shall take no action on a general matter without the affirmative vote of a simple majority of the Commissioners voting; provided, however, that if a Project Service Agreement so provides, any action of the Commission involving such PSA that does not affect the rights and obligations of any Party that is not a participant in such PSA shall be taken only by a majority vote of the Commissioners representing the Parties participating in such PSA, whose votes shall be weighted as provided for in such PSA. 3.6. Bvlaws. The Commission shall establish bylaws and rules of procedure not inconsistent with this Agreement. 3.7. Princioal Office. The principal office of the Agency shall be the principal office of the Association. 3.8. Aoreement with Association. The Agency shall contract with the Association for the provision of all staff and administrative services required by the Agency and such contract shall be on terms mutually acceptable to the Commission and the Association. 3.9. Powers of the Commission. The Commission shall have the following powers and functions: 8 jpaI2-97.doc 12/5191 14/38 JUN 1 6 1998 ITEM 7.1 '4 - (a) The Commission shall elect from its voting members a President, a Vice President and three other members of the Executive Committee as provided for in Section 4.1 and in the Bylaws. (b) The Commission may review all acts of the Executive Committee, and shall have the power to modify and/or reverse any decision or action of the Executive Committee upon a majority vote of the Commissioners present and voting at any duly constituted Commission meeting. (c) The Commission shall review, modify if necessary, and approve the annual operating budget of the Agency, prepared by the Executive Committee pursuant to Section 4.4. (d) The Commission shall receive and review periodic accountings of all funds of the Agency. (e) The Commission shall have the power to conduct on behalf of the Agency all business of the Agency, including that assigned to the Executive Committee, which the Agency may conduct under the provisions hereof and pursuant to law. (I) The Commission shall have the power to approve or disapprove each proposed Project Service Agreement submitted to it by the Executive Committee pursuant to Section 7.2(a). (g) The Commission shall have such other powers and functions as are provided for in this Agreement or in the Bylaws. ARTICLE 4. EXECUTIVE COMMITTEE 9 jpa 12-97.doc 121SJ97 15/38 JUtll 6 1998 ITEM 7.1 --- ~ ~---~--_. 4.1. Membershio. There shall be an Executive Committee of the Agen9Y which shall consist of 7 members. The members of the Executive Committee shall be the President of the Commission, the Vice President of the Commission, three other members elected by the Commission from its voting members as provided for in the Bylaws, and two members appointed by the Board of Directors of the Association. 4.2. MeetinQs of the Executive Committee. The meetings of the Executive Committee shall be held and conducted as provided for in the Bylaws. The President of the Agency, or the Vice President in his or her absence, shall serve as the Chairman of the Executive Committee. The Executive Committee shall make periodic reports to the Commission advising the Commission of its decisions and activities and shall fumish to the Commissioners copies of all minutes of Executive Committee meetings. All meetings of the Executive Committee shall be called, held, noticed and conducted subject to the provisions of the Ralph M. Brown Act (Govemment Code 99 54950, et seq.). 4.3. Vacancies. Vacancies on the Executive Committee shall be filled as provided in the Bylaws. 4.4. Powers of the Executive Committee. The Executive Committee shall have the following powers: (a) The Executive Committee shall cause to be prepared an operating budget for the Agency for each fiscal year, subject to review, modification and approval by the Commission. (b) The Executive Committee shall appoint the Treasurer/Controller and Secretary of the Agency. 10 jpaI2-97.doc 1215197 JUtll 6 1998 ITEM 7.1 16/38 (c) The Executive Committee shall exercise {1eneral supervisory and policy control over the Administrator. (d) The Executive Committee may establish additional committees and subcommittees as it deems necessary to best serve the interest of the Agency. (e) The Executive Committee shall have such other powers and functions as are provided for pursuant to this Agreement or by the Commission. ARTICLE 5. OFFICERS 5.1. Officers. The officers of the Agency shall be a President, a Vice President, an Administrator, a Secretary, and a Treasurer/Controller. 5.2. President and Vice President. The Commission shall elect a President and Vice President of the Agency from its members for two year terms. In the event the President or the Vice President so elected ceases to be a member of the Commission, the resulting vacancy in the office of President or Vice President shall be filled at the next regular meeting of the Commission held after such vacancy occurs. In the absence or inability of the President to act, the Vice President shall act as President. The President, or in his or her absence the Vice President, shall preside at and conduct all meetings of the Commission and of the Executive Committee. 5.3. Administrator. The Executive Director of the Association or his or her designee shall be ex-officio the Administrator of the Agency and shall have the general administrative responsibility for the activities of the Agency pursuant to the contract between the Agency and the Association provided for in Section 3.8. 11 jpaI2-97.doc: 12IS197 17/38 JUtll 6 1998 ITEM 7.1 -_._----~-- -~-------- . 5.4. Secretary. The Secretary shall be app.ointed by the Executive Committee and shall be responsible for all minutes, notices and records of the Commission and the Executive Committee and shall perform such other duties as may be assigned by the Executive Committee. 5.5. Treasurer/Controller. The Treasurer/Controller shall be appointed by the Executive Committee and shall be the chief financial officer of the Agency, shall have the powers, duties and responsibilities specified in the Law and shall draw checks to pay demands against the Agency which have been approved by the Agency. The Treasurer/Controller shall file an official bond with the Secretary of the Agency in the amount fixed by the Executive Committee. ARTICLE 6. FINANCIAL PROVISIONS. 6.1. Fiscal Year. The fiscal year of the Agency shall be the same as the fiscal year of the Association. 6.2. Deoositarv. The Treasurer/Controller shall be the depositary and have custody of all money of the Agency from whatever source and shall perform the duties specified in Govemment Code Section 6506.5. All funds of the Agency shall be strictly and separately accounted for, and regular reports shall be rendered to the Parties, the Executive Committee and to the Commission of all receipts and disbursements at least quarterly during the fiscal year. The books and records of the Agency shall be open to inspection by any Party or Commissioner at all reasonable times. The Treasurer/Controller shall either make or contract with a certified public accountant or 12 jpaI2-97.doc: 1'1IS/97 Jmll 6 1998 iTEM 7.1 18138 - public accountant to make an annual audit of the accounts and records of the Agency, which shall be conducted, at a minimum, in accordance with the requirements of the State Controller under Section 26909 of the Califomia Govemment Code, and shall conform to generally accepted auditing standards. 6.3. Prooertv Bonds. The Executive Committee shall from time to time designate the officers and persons, in addition to the Treasurer/Controller, who shall have charge of, handle, or have access to any property of the Agency. Each such officer and person, including the Treasurer/Controller, shall file a bond in an amount designated by the Executive Committee. When fixing the amount of such bonds, the Executive Committee shall be deemed to be acting for and on behalf of the Parties who appointed them in compliance with Govemment Code Section 6505.1. 6.4. Budoet. As soon as practicable after the effective date of this - Agreement, and thereafter at least 30 days prior to the commencement of each fiscal year the Administrator shall present a proposed budget to the Executive Committee for the forthcoming fiscal year, and prior to the commencement of the fiscal year, the Executive Committee shall present a budget to the Commission for the Commission's adoption. 6.5. Contributions to Workino Caoital Account. The Working Capital Account shall initially be a minimum of $100,000 which is to be used for the purpose of funding general overhead and administrative expenses for the ongoing operations of the Agency and for initial reconnaissance level studies of any Utility Service the Commission may determine to undertake. Parties who join the Agency within one hundred twenty 13 jpaI2.91.doc 121S197 19/38 JUtl1 6 1998 ITEM 7. 1, ~ - -----_._-----~._- ----..--'- (120) days of the effective date of this Agreement shall contribute $2,500 to the Working Capital Account upon signing this Agreement. Parties who join the Agency thereafter shall contribute to the Working Capital Account an amount to be determined by the Commission. The Commission may assess additional contributions to the Working Capital Account which shall be assessed equally among the Parties; provided, however, that any Party that does not desire to contribute any such assessment to the Working Capital Account may withdraw as a member of this Agency. Any Party that does not pay any such assessment within sixty (60) days after receipt of a statement from the Agency shall be deemed to have withdrawn as a Party and ceased to be a Party to this Agreement. 6.6 Other Contributions. Contributions or advances of other funds and of personnel, equipment or property may be made to the Agency by any Party for any purposes of this Agreement, with the consent of the Executive Committee. Any such advances may be made subject to repayment, and in such case shall be repaid in the manner agreed upon by the Party making the advance and the Agency. 6.7 Retum of Contributions and Revenue. In accordance with Govemment Code Section 6512.1, repayment or retum to the Parties of all or any part of any contributions made by the Parties and any revenues received by the Agency may be directed by the Commission at such time and upon such terms as the Commission may decide. The Commission shall hold title to all funds, and property acquired by it during the term of this Agreement. 14 jpaI2.97.doc 12I5J97 20/38 JUN 1 6 1998 ITEM 7.tH -- ARTICLE 7. UTILITY SERVICES. 7.1. Reconnaissance Studies. The Executive Committee may institute studies of any Utility Service which may be of interest to the Parties. During the preparation of the budget, the Executive Committee shall identify any Utility Service warranting an investigation during the current and succeeding fiscal years. Funds for any reconnaissance level study may be budgeted by the Commission and authorized for expenditure from the Working Capital Account of the Agency, or by contributions or advances which one or more Parties may make to the Agency. 7.2. Proiect Service Aoreements. (a) Upon a determination by the Executive Committee that a Utility Service warrants pursuit for further study and development beyond the initial phase of a reconnaissance study, the Executive Committee shall cause to be prepared and submitted to the Commission a proposed Project Service Agreement. If the Commission approves the proposed Project Service Agreement (PSA), it shall be submitted to the Parties. Each Party whose contribution to the Working Capital Account is current and who has the power to acquire or provide the Utility Service specified in the proposed PSA shall be entitled to participate in that Utility Service and to execute the proposed PSA. No Party shall be obligated to participate in any Utility Service or in any PSA, nor shall any Party be obligated to withdraw from this Agreement for failure to participate in any such Utility Service or in any PSA. The contribution requirements, benefit shares and voting rights of the Parties electing to participate in a PSA shall be determined by the Parties to the PSA and set forth in the PSA. In order to participate in a Utility Service a Party shall 15 jpaI2-97.doc 12JSm 21/38 JUN 1 6 1998 ITEM 7.1 ' -----~--~------- - .___U"M" approve the PSA pertaining to that Utility Service by a resolution duly authorized and adopted by its Board of Directors. Any amendments to PSAs must be approved by the Executive Committee in order to be effective. (b) A PSA may provide that Parties to the PSA may make the Utility Services fumished by the PSA available to their customers and constituents and associate members of the Association to the extent permitted by law, provided that such customers and constituents and Association members agree to pay to the Agency those charges established by the Executive Committee for such service. One half of any payments received by the Agency for such charges from customers and constituents who are not members of the Association and one-half of any royalties or other payments received by the Agency resulting from Utility Services provided to such customers and constituents shall be paid by the Agency upon receipt to the Association as an additional payment under the contract with the Association provided for in Section 3.8. The furnishing of Utility Services by a Party to a customer or constituent or associate member of the Association shall not confer any membership or voting rights upon that customer, constituent or Association member. (c) The Parties to a PSA shall indemnify, defend and hold harmless the Association and the Parties that do not participate in such agreement from liability of any kind resulting from or in any way related to the financing, contribution or acquisition of any Utility Service provided by such agreement. A PSA shall provide for such rates, charges, fees and payments as shall be agreed upon by the Parties thereto, and they shall be at 16 jpaI2-91.doc 121S197 22/38 Jutll 6 1998 ITEM 7.1 - least sufficient to pay and discharge all obligations of the Agency that are or will be increased in connection with any Utility Service provided by such agreement. ARTICLE 8. RELATIONSHIP OF THE AGENCY AND ITS MEMBER ENTITIES. 8.1. Separate Entitv. The Agency shall be a public entity separate frorn the Parties to this Agreement. Unless, and to the extent, otherwise agreed herein, the debts, liabilities and obligations of the Agency shall not be the debts, liabilities or obligations of the Parties. All property, equipment, supplies, funds and records of the Agency shall be owned by the Agency, except as otherwise provided in this Agreement. 8.2. Additional Parties. Additional Parties who are members of the Association may join in this Agreement after its effective date and become mernbers of the Agency if accepted and approved by a majority of the Executive Cornmittee members. The Executive Committee may prescribe terms and conditions for the joinder of such Parties. Such Parties shall evidence their joining of the Agency by signing this Agreement and contributing to the Working Capital Account the amount set by the Commission. 8.3. Termination of a Party's Participation in the Aoencv bv the Party. Any Party may withdraw from this Agreement by giving six months written notice of its election to do so, which notice shall be given to the Executive Committee and to each of the Commissioners; provided, that such withdrawal does not in any way impair any contracts, resolutions, indentures or other obligations of the Agency then in effect. No refund or repayment of any portion of the Working Capital Account or any other funds 17 jpaI2-97.doc 1215197 23/38 JUlll 6 1998 ITEM 7.1 ---- ------------ . ---------------~-_._~._----- . contributed by the Party, unless otherwise provided for in a PSA, shall be made to the Party ceasing to be a Party to this Agreement. 8.4. Termination of a Party's Participation bv the Commission. The Commission may terminate any Party's participation in the Agency, provided that such Party is not then a participant in any Project Service Agreement, by a two-thirds vote of the Commissioners present and voting at any duly constituted Commission meeting. 8.5. Disposition of Property Upon Termination. Upon termination of this Agreement, any surplus money on hand shall be retumed to the Parties in proportion to their contributions made. The Executive Committee shall first offer any property, works, rights and interests of the Agency for sale to the Parties. If no such sale to the Parties is consummated, the Executive Committee shall offer the property, works, rights and interests of the Agency for sale to any govemmental agency, private party or persons for good and adequate consideration. The net proceeds from any sale shall be distributed among the Parties in proportion to their contributions made. If no such sale is consummated, then all property, works, rights and interest of the Agency shall be given to the Association. ARTICLE 9. MISCELLANEOUS PROVISIONS. 9.1. Breach.' If default shall be made by any Party in any covenant contained in this Agreement, such default shall not excuse any of the other Parties from fulfilling their obligations under this Agreement, and the Parties shall continue to be liable for the payment of all contributions and the performance of all obligations contained in 18 jpaIZ-91.doc 1215/97 JUll 1 6 1998 . . EM ., ,1 24/38 this Agreement and in any PSA executed by such parties. The Parties hereby declare that this Agreement is entered into for the benefit of the Parties and the Agency, and the Parties hereby grant to the Agency the right to enforce by whatever lawful means the Agency deems appropriate all the obligations of each Party hereunder. Each and all of the remedies given to the Agency by this Agreement, by the Law, by any PSA, or by any law now or hereafter enacted are cumulative, and the exercise of any right or remedy shall not impair the right of the Agency to any or all other remedies. 9.2. Severabilitv. Should any part, term or provision of this Agreement be decided by a court of competent jurisdiction to be illegal or in conflict with any Federal law or any law of the State of Califomia, or otherwise be rendered unenforceable or ineffectual, the validity of the remaining parts, terms or provisions hereof shall not be affected thereby. 9.3. Successors and Assionment. This Agreement shall be binding upon and shall inure to the benefit of the successors of each of the Parties. The Agreement rnay not be assigned without the advance written consent of all of the Parties. A PSA shall set forth the conditions under which a Party may assign any right or obligation thereunder. 9.4. Amendment of this Aoreement. This Agreement may be amended by a two-thirds vote of the Commissioners voting thereon at a duly constituted meeting of the Commissioners; provided, that no such amendment shall cause the Agency to violate any condition or restriction or any contract of the Agency or frustrate the operation of any PSA. 19 jpa 12-97.doc 1215/97 25/38 JUN 1 6 1998 ITEM 7.1 .,~--~- "-~ 9.5. Notices. Any notice authorized or required to be given pursuant to this Agreement shall be in writing and shall be deemed to have been given when mailed, postage prepaid, or delivered during working hours to the addresses of the Party as such addresses are communicated to the Agency from time to time. 9.6. Withdrawal by Operation of Law. Should the participation of any Party to this Agreement be decided by the courts to be illegal or in excess of that Party's authority or in conflict with any law; the validity of the Agreement as to the remaining Parties shall not be affected thereby, and each Party hereby agrees that it would have entered into this Agreement upon the same terms as provided herein if that withdrawing party had not been a participant in this Agreement. 9.7. Multiple Orioinals. This Agreement may be executed in counterparts, each of which shall be deemed an original. 9.8. Limitations on Liabilitv. The Agency shall be authorized to defend, indemnify and hold harmless any Commissioner, altemate Commissioner, Executive Committee member or officer or employee for actions taken or not taken within the scope of the authority given or granted by the Agency and may purchase insurance as the Executive Committee may deem appropriate, if any. The Agency shall defend, indemnify and hold harmless the Association, each Party, and their respective officers, agents and employees from and against any claim or suit arising out of any act or omission of the Agency, its Commission, the Executive Committee or its officers, agents and employees in connection with this Agreement, a Utility Service or a Project Service Agreement. The Parties, as between themselves, in contemplation of Section 895.2 of the Govemment 20 jpaI2-97.doc I2ISI97 26/38 JUtll 6 1998 ITEM 7.1 -- - Code, and pursuant to the authority contained in Sections 895.4 and 895.6 of that Code, each assume the full liability imposed upon the Party, or any of its officers, agents or employees by law for injury caused by any negligent or wrongfUl act or omission occurring during the performance of this Agreement to the same extent that such liability would be imposed in the absence of Section 895.2 of that Code. To achieve such purpose, each Party shall indemnify and hold harmless the other Parties for any loss, costs or expenses that may be imposed on such other Parties solely by virtue of Section 895.2. The provisions of Section 2778 of the Civil Code are made a part of this Agreement as though fully set forth in this Agreement. IN WITNESS WHEREOF, the Parties executed this Agreement on the dates shown below. OFFICIAL NAME OF PARTY Date: By: Title of Officer: ATTEST: Secretary of the Party APPROVED AS TO FORM: (Not Required by ACWA-USA) Counsel of the Party 21 jpaI2-97.doc 1215/97 Jutll 6 1998 ITEM 7.1 1 27/38 ---" ~._-- --- . 5/8/98 , COMMONWEALTH ENERGY POWER SERVICES AGREEMENT This Agreement rAgteement'j is entered into by and between Commonwealth Energy COIpOration ("COMMONWEALTH'), a California COJpOration, and San Diego Regional Power Pool participant ("PARTICIPANT; effective the date written below and based upon the following recitals, covenants and conditions: WHEREAS, PARTICIPANT controls the electricity purchases for the meter or meters listed on Schedule A contained herein or separately attached hereto (individually, a "Meter' and, collectively, the 'Meters'); WHEREAS, COMMONWEALTH is in the business of providing low cost electricity and related services and is registered by the California Public Utilities Commission as an Electric Service Provider (ESP #1092) and with the Federal Energy Regulatory Commission as a Power Marketer. WHEREAS, COMMONWEALTH has been selected through a competitive bidding process and has entered into an Agreement with the San Diego Association of Governments (the .SANDAG Agreementj, the administrator of the San Diego Regional Power Pool, and has furnished a petiormance bond to SANDAG for use by the San Diego Regional Power Pool to pay the costs of conducting another Power Procurement Process if COMMONWEALTH were to default under the SANDAG Agreement or this Agreement; WHEREAS, COMMONWEALTH hereby offers to PARTICIPANT electric power purchasing services under California's competitive power supply program created by AB 1890 and known as the Direct Access program ("Direct Access'), at a discount to the rates offered by CUSTOMER'S Utility Distribution Company ('UDC"); WHEREAS, PARTICIPANT wishes to participate in COMMONWEALTH'S power purchasing program; NOW THEREFORE, in consideration of the covenants, recitals and conditions contained herein and for other good and valuable consideration, receipt of which is hereby acknowledged, COMMONWEALTH and PARTICIPANT hereby enter into this Agreement DEFINITIONS All capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in Schedule B attached hereto, AGREEMENT 1, COMMONWEALTH SERVICES: COMMONWEALTH shall procure electric power to serve the full requirements of the meter loads specified by PARTICIPANT and listed in Schedule A, and shall perform, manage or acquire all functions necessary, including scheduling through a CAlSO-<:ertified Scheduling Coordinator, to effect delivery of such power to PARTICIPANT through the California Direct Access system. PARTICIPANT shail have the right to include any meters (existing or new) into this Agreement at any time during the term of the Agreement upon thirty (3O) days written notice to COMMONWEALTH. COMMONWEATH shall be PARTICIPANTS' exclusive electrical supply purchasing agent for the loads specified in Schedule A during the term of this Agreement, with the exclusive right to pursue, evaluate and negotiate any and all electric supply procurement opportunities for the purpose of reducing PARTlCIPANrS electric supply procurement costs. PARTICIPANT shall keep COMMONWEALTH apprised of other energy cost reduction options it may pursue and shall forward to COMMONWEAL TH any proposals from any other sources that may lead to a reduction in PARTlCIPANrS electricity unit costs for electric supply procurement 2, PRICING: 2.1 Guaranteed Savinas: COMMONWEALTH shall provide electrical energy to PARTICIPANT at a rate such that PARTICIPANT is guaranteed a minimum savings of ("Guaranteed Savings"): , Three and onE~-half percent (3.5%) discount below the otherwise applicable total bill from the PARTlCIPANrS UDC provided the San Diego Regional Power Pool has an Aggregated Monthly Load Factor greater than or equal to .60, ATTACHMENT C ITEM 7.1 4 28/38 Jutll 6 1998 ,- 518/98 . Two and one-haJf percent (2,5%) discount below the otherwise applicable total bill from the PARTICIPANTS UDC provided the San Diego Regional Power Pool has an Aggregated Monthly Load Factor greater than or equal to ,55 but less than ,60, . Two peroent (2%) discount below the otherwise applicable total bill from the PARTICIPANTS UDC provided the San Diego Regional Power Pool has an Aggregated Monthly Load Factor greater than or equal to ,50 but less than ,55, . One and one-half percent (1.5%) discount below the othllfWise applicable total bill from the PARTICIPANTS UDC provided the San Diego Regional Power Pool has an Aggregated Monthly Load Factor less than ,50. 2.2 Incremental Savinas: In addition, COMMONWEALTH will share with PARTICIPANT any realized cost saving beyond the applicable Guaranteed Savings ('Incremental Savings') according to the following schedule: seventy five percent (75%) of Incremental Savings to PARTICIPANT and twenty fIVe percent (25%) of Incremental Savings to COMMONWEALTH. Incremental Savings is defined as the difference between (1) the amount PARTICIPANT would have paid for electrical energy during the billing period under PX pricing as a buncled utility customer under its Applicable Tariff and (2) COMMONWEALTH's Cost of Power, less the Guaranteed Savings, provided that the Incremental Savings cannot be negative. COMMONWEALTH's Cost of Power is defined as its purchased generation costs plus any out-of-pocket costs for functions required to utilize the ISO controlled grid for energy delivered to PARTICIPANT, provided that the cost for such functions shall not exceed what PARTICIPANTS cost would have been with bundled utility service. 2.3 Enemv Charae Calculation: COMMONWEALTH'S bill amount for the energy and services provided to PARTICIPANT by COMMONWEALTH shall be equal to COMMONWEALTH's actual Cost of Power for the electrical energy delivered to PARTICIPANT, plus 25% of any Incremental Savings, provided that in no event will COMMONWEAL TH's bill amount to PARTICIPANT exceed an amount which ensures that PARTICIPANT realizes the Guaranteed Savings, There shall be no additional charges to PARTICIPANT related to COMMONWEALTH'S provision of electrical energy service beyond those described above and in section 4 of this Agreement. The above pricing includes the provision of all services or functions which are, or may be required, to be performed, managed, or acquired by COMMONWEALTH including without limitation billing, Meter Data Management Agent (MDMA) functions, and all schedule coordination services, to effect delivery of power to PARTICIPANT whether or not they are specifically enumerated in this Agreement. 3, SCHEDULE COORDINATION SERVICES: Schedule coordination services required to effect delivery of power to PARTICIPANT shall be performed by COMMONWEALTH or by contractors approved by the Califomia Public Utilities Commission and the Independent System Operator and under contract to COMMONWEALTH. 4, METERING: If required, COMMONWEALTH shall provide, install, own and maintain at a cost of $22 per month per meter Direct Access Meters to PARTICIPANT. COMMONWEALTH shall own, insure, WBrTant, and provide meter support services including corrective maintenance services for all meters installed under this Agreement at no additional cost to the $22 per month metering charge. If required, additional communications equipment (extension of phone/modem line beyond 10 feet from meter installation location) shall be the responsibility of the PARTICIPANT. Upon the expiration or sooner termination of this Agreement, PARTICIPANT may purchase meter{s) at a fair market value or COMMONWEALTH will remove the meter at no additional cost at PARTICIPANTS option. COMMONWEALTH shall allow PARTICIPANT to own, install, and maintain its own Direct Access Meter at PARTICIPANTS option without PARTICIPANT incurring the $22 per month per meter charge, PARTICIPANT grants COMMONWEALTH, its contractors and agents the right to enter its premises to install, repair, maintain, and remove meters provided by COMMONWEALTH. 5. BILUNG: PARTICIPANT elects to receive a consolidated invoice submitted by the UDC for UDC charges and COMMONWEALTH'S charges, COMMONWEAL TH shall take the necessary steps to fulfil the ESP obligations set forth under the UDC's direct access rules, with no charge to PARTICIPANT, to ensure that PARTICIPANT is billed through the Consolidated UDC Billing option for the energy services to be provided by COMMONWEALTH according to the 29/38 JUfll 6 1998 ITEM 7,1 --.,,-----" ~--_.,------------_.__.- 518198 pricing terms specified in this Agreement All meter reading and data processing functions are included as a part of this billing saMce obligation. 6. ENERGY CONSUMPTION INFORMATION: PARTICIPANT shall designate COMMONWEALTH to PARTICIPANrS current electricity supplier(s) as an authorized recipient of PARTlCIPANrS current and historical electricity cost and usage data. PARTICIPANT shall provide facility descriptions, operating information and such other infonnation available to PARTICIPANT as COMMONWEALTH may reasonably require in the perfonnance of its seMces under this Agreement and that PARTICIPANT is comfortable providing; provided that such requests shall be reviewed and approved by SANDAG prior to COMMONWEALTH making the request to PARTICIPANT. Except as specifically authorized by PARTICIPANT to disclose such infonnation and except for use by SANDAG for the purpose of verifying the calculation of its Aggregation Fee, COMMONWEAL TH shall maintain in accordance with CPUC rules and decisions any and all such infonnation provided by PARTlCIPANrS current electricity supplier(s) as confidential. COMMONWEAL TH shall provide semi-annual consolidated summary reports to each PARTICIPANT reganing PARTlCIPANrS historical monthly energy usage and savings achieved compared to PX costs for each meter, At no additional cost, PARTICIPANTS with installed Direct Access Meters will be able to view and electronically download historical energy use data through a secure intemet server on a daily basis or more frequently, ff required, 7, QUALITY: COMMONWEALTH shall procure and provide finn electric power supplies to meet the full energy requirements of PARTlCIPANrS loads specified in Schedule A 8, EFFECTIVE DATE: This Agreement shall commence on July 1,1998, 9, TERM OF AGREEMENT: This Agreement shall commence on the effective date for a tenn of one (1) year from the date PARTICIPANT begins receipt of service from COMMONWEALTH, or until June 30, 1999, whichever occurs firs~ with PARTICIPANT having the option to renew at the existing tenns of this Agreement for up to four (4) additional one year periods beginning on July 1 of every year. PARTICIPANT may exercise its option to renew by giving written notice thereof to COMMONWEAlTH at least thirty (30) days prior to expiration of the then current tenn. 10. LOW PRICE GUARANTEE: If, after at least six (6) months from the execution of this Agreement, The San Diego Regional Power Pool receives a verifiable written offer by an Established Supplier to supply The San Diego Regional Power Pool's electricity at a rate which The San Diego Regional Power Pool believes is below the COMMONWEALTH delivered rate, then COMMONWEALTH shall have thirty (30) days from notice of the offer to elect to supply PARTICIPANT The San Diego Regional Power Pool the electricity and equivalent seMce, if any, as described in the offer on tenns equivalent to the offer, If after thirty (30) days' notice of the offer, COMMONWEALTH has not elected in writing to supply The San Diego Regional Power Pool the electricity and services under terms equivalent to the offer and The San Diego Regional Power Pool accepts the offer, then the PARTICIPANT will terminate this Agreement without penalty or liability. 11, COMMUNICATIONS: All communications shall be in writing and sent or delivered to the address set forth opposite the Party's signature hereto or such other address as may be designated by written notice, and shall be deemed given when received. 12. AUDIT AND INSPECTION OF RECORDS: COMMONWEALTH shall maintain complete and accurate records with respect to the Guaranteed Savings, Incremental Savings, and Cost of Power calculations under Section 2 under this Agreement All such records shall be maintained on a generally accepted accounting basis and shall be clearly identified. COMMONWEALTH shall provide reasonable access to the representatives of PARTICIPANT, or their appointees, to such books and records. PARTICIPANT reserves the right to examine and audit such books and records and to make transcripts or copies of them as necessary, COMMONWEALTH shall allow inspection of all work data, documents, proceedings, and activities related to this Agreement for a period of three (3) years from the date of final payment under this Agreement In addition to the above accounting records, COMMONWEALTH shall maintain records to show actual costs for its Cost of Power, . 13, INDEMNIFICATION: At no time shall PARTICIPANT, including its officers, agents and employees, parent or Slilsidiary company be liable or forced to pay penalties, fees, fines or any other sanction levied against COMMONWEALTH by the 30/38 Jutl 1 6 1998 ilt::M 7,1 - 5/8/98 Independent System Operator, the California Public Utilities Commission, the Federal Energy Regulatory Commission or any other entity as a result of any default on the part of COMMONWEALTH in regards to performance of duties required by this Agreement Should, for ar\y reason, PARTICIPANT be direcUy assessed any fine, fee or penalty by any entity because of COMMONWEALTH'S activities regarding this Agreement, COMMONWEALTH will be fully responsible for paymentlhereof, COMMONWEALTH will defend, indemnify, and hold PARTICIPANT harmless from losses, claims or costs of any kind caused or alleged to have been caused by COMMONWEALTH'S negligence, actions or inactions, 14, INSURANCE: COMMONWEALTH shall maintain comprehensive general liability insurance in minimum limits of $1 million/occurrence and $3 million aggregate and shall maintain wor1<ers' compensation insurance as required by California law, COMMONWEALTH will provide proof of insurance to PARTICIPANT upon signature and request 15. ASSIGNMENT: Neither COMMONWEALTH nor PARTICIPANT may assign this Agreement without the prior written consent of the other. If written consent to assignment is not given within 15 days after a written request therefor, which consent will not be unreasonably withheld, then the party proposing the assignment may terminate this Agreement without penalty or liability upon 30 days written notice, provided that COMMONWEALTH may not terminate for failure of PARTICIPANT to consent to COMMONWEALTH'S proposed assignment unless its proposed assignee is an Established Supplier, An Established Supplier is defined as an entity possessing all of (1) all requisite certifications, permits and authorities to perform COMMONWEAL TH'S obligations under this Agreement, (2) a demonstrated track record in the provision of electric power indicative of an ability to fully perform COMMONWEALTH'S obligations under this Agreement, and (3) a net worth at least the equivalent of that of COMMONWEALTH'S as of the date of this Agreement 16, FORCE MAJEURE: "Force Majeure' shall be defined as an event that is not within the reasonable control of the Party claiming suspension rthe Claiming Party"), and that by the exercise of due dligence, the Claiming Party is unable to overcome in a commercially reasonable manner or obtain or cause to be obtained a commercially reasonable substitute performance therefor, and such event shall not be deemed to be a default under this Agreement Force Majeure includes, but is not limited to: acts of God; fire; war, flood; earthquake; civil disturbance, sabotage; failure of facilities or breakage of machinery or equipment of parties other than the Claiming party; supply curtailment due to UDC equipment failure; declaration of emergency by the ISOIPX; regulatory or legislative action, or action or restraint by court order or governmental authority (so long as the Claiming Party has not applied for or assisted in the application for, and has opposed where and to the extent reasonable, such governmental action), Specifically excluded from Force Majeure events is economic hardship due to mar1<et conditions, whatever their cause. If either party shall be unable to cany out any obligation under this Agreement (other than the obligation to make payments) due to Force Majeure, this Agreement shall remain in effect but such obligation shall be suspended for the period necessary as a result of the Force Majeure, provided that (I) the Claiming Party gives the other Party prompt written notice describing the particulars of the Force Majeure, including but not limited to the nature and date of the occurrence and the expected duration of the disability; (ii) the suspension of performance is of no greater scope and of no longer duration than is required by the Force Majeure; and Qii) the Claiming Party uses commercially reasonable efforts to remedy its inability to perform. 17, DEFAULT: Failure by COMMONWEALTH, any affiliate, parent company, partner or principal of COMMONWEALTH, in the performance of any obligation under this Agreement constitutes default of this Agreement In the event of such default, in addition to any other reme<ies it may have available by law, PARTICIPANT may terminate this Agreement at its option by written notice to COMMONWEALTH. PARTICIPANT shall attempt to provide 30 days notice in the event of such termination, but may provide less notice as it determines is reasonable under the circumstances, 18, ENTIRE AGREEMENT: This Agreement, including any Exhibit or Schedule hereto, embodies the entire Agreement and understanding, and supersedes all prior Agreements and understandings between the parties with respect to the subject mailer hereof. This Agreement may not be amended except by writing executed and delivered by the parties hereto, 31/38 JUN 1 6 1998 ITEM 7.1 ---~-----_.- ~-----_.~-------_.- 5/8/98 19. LAWS, VENUE, AND ATTORNEY'S FEES: This Agreement shall be intEllplllted in accordance with the laws of the Slate of Calnomia. If any action is brought to interpret or enforce any tfl/lll of this Agreement, the action shall be brought in a slate or federal court situated in the County of San Diego, Slate of California. In the event of any such litigation be\W99n the parties, the prevailing party shall be entiUed to recover all reasonable costs incurred, including reasonable allomeys' fees, as detennined by the court. COMMONWEALTH ENERGY CORPORATION SAN DIEGO REGIONAL POWER POOL PARTICIPANT Signature Signature Name Name TiUe Tme Date Date Address Address Agency 32138 JUtl 1 6 1998 ITEM 7.1 -. 5/8/98 Schedule A Electric Meters to Participate in San Diego Regional Power Pool 33/38 JUlll 6 1998 ITEM 7.1 - ~~------ -.------- 5/8/98 Schedule B Definitions Aggregated Monthly Load Factor: Represents the Load Factor calculated for the period of a month for an aggregated group, Aggregated Monthly Load Factor is calculated by summing the total kWh for all participants of an aggregation, dividing that total by the number of hours in the month, and then dividing that number by the coincident peak kW for all participants of the aggregation for the same month. For every meter that is eligible to use load profiling, COMMONWEALTH shall apply Califomia Public Utility Commission (CPUC) approved load profiles provided by Sen Diago Gas and Electric (SDG&E) to the PARTlCIPANrS actual monthly kWh usage for that meter as recorded by SDG&E to calculate that meter's demand for every hour of the period, The calculated hou~y demand for each meter will then be used in conjunction with actual hourly interval metered data to calculate the aggregated group's coincident peak kW, For each meter not eligible to use load profiling, COMMONWEALTH shall use actual recorded kWh usage for the month and actual recorded kW for each hour in the month in its calculated of the aggregated group's coincident peak demand, A mete(s eligibility (less than 50 kW) to use load profiling is defined by the CPUC in D. 97-10.Q86. The approved load profiles may be found on the Intemet at hltp://162,15,5.2Iwk-group/daildail. Applicable Tariff: The current or subsequent public rate or tariff schedule detailing utility rates, rules and tenns of service that are filed with and approved by a regulatory agency and for which the customer is qualified to obtain service. California Independent System Operator (CAlSO): The entity responsible for the operation and control of the statewide transmission grid pursuant to AS 1890, California Public Utilities Commission (CPUC): The regulatory agency established to regulate privately owned utilities and to ensure adequate service to the public at rates which are just and reasonable both to customers and shareholders of the utilities. Cost of Power: As defined in Section 2.2 of this Agreement Direct Access (PA): A service election which allows customers to purchase competitive energy services from non-utility entities ragistered with the State of Califomia known as ESPs, Direct Access Meters: An interval meter that complies with CPUC meter design specifications and is required by certain customers to participate in Direct Access. This meter must meet CPUC meter design specification at the time of meter installation. An interval meter is defined as a meter capable of reading and storing electric consumption data at specified time intervals of no greater than one hour as required for Direct Access settlement and data required to bill applicable UDC tariffs, Electric Service Provider (ESP): An entity which provides electric service to a retail or end-use customer, but which does not fall within the definition of an electrical corporation under Public Utilities Code Section 218, Established Supplier: As defined in Section 15 of this Agreement Federal Energy Regulatory Commission: The federal regulatory agency responsible for regulating the activities of key portions of the nation's natural gas utilities, electric utilities, natural gas pipeline transportation utilities, and hydroelectric power producers. Guaranteed Savings: As defined in Section 2.1 of this Agreement Incremental Savings: As defined in Section 2,2 of this Agreement Kilowatt (kW): Often referred to as electric demand, kW is the amount of energy drawn by a customer at a specific time. Kilowatt-hour (kWh): Electric energy expressed in kilowatt-hours is measured by multiplying the amount of electric power delivered (measured in watts) by the amount of time over which the energy was consumed (measured in hours). Kilowatts equal one thousand watt-hours. Megawatts equal a million watt-hours or one thousand kilowatt-hours, 34/38 JUlll 6 1998 ITEM "(.1 . - 5/8198 Load Factor: Load Factor indicates to what degree a participant's actual energy consumption (kWh) during a given time period compared to the consumption that would have occurred had consumption been fully sustained at the participant's maximum demand (kW) level, Load Factors are expressed in peroentages, and higher load factors represent a more even distribution of load Load Factor is calculated by dviang the total kWh for a period by the hours in the period, and then civicing that number by the peak kW for the same period. Meler Data Management Agent (MDMA): MDMAs must be approved by the custome(s UDC and is responsible for meter reading, usage calculations and data access. Participant: An agency that executes a Memorandum of Understanding with SANDAG to join the San Diego Regional Power Pool. A Participant may be a subsidiary public agency or non profit organization of the entity executing this Agreement Power Exchange (PX): A Califomia state chartered, non profit organization charged with providing an efficient competitive auction, open on a nondiscriminatory basis to all suppliers, that meets the loads of all exchange customers at efficient prices. The PX is a scheduling cOOldinator and is independent of the CAISO and other market participants. Power Procurement Process: The process which includes identifying qualified Electrical SeMce Providers, developing a Request for Proposals, solicitation of ESP responses, evaluation of such proposals, negotiation of power purohase agreements, and development of final contracts for competitive power purohases. Meler (or Meters): ki. defined in the first Recital of this Agreement San Diego Regional Power Pool: An aggregated group of agencies established to coordinate the purchase of electric energy, transmission, and other services on behalf of the participating agencies. San Diego ki.sociation of Governments (SANDAG): SANDAG is the regional planning agency, as well as a key technical and informational resource, for the area's eighteen incorporated cities and the county government who collectively are the Association of Govemments. Through this voluntary association, local govemments work together to solve current problems and plan for the future. SANDAG is a joint powers agency authorized under California State law. Scheduling Coordinator (SC): An entity certified by the Federal Regulatory Commission through the CAlSO that acts as a go-between with the ISO on behalf of generators, supply aggregators (wholesale marketers), retailers, and customers to schedule the distribution of eJeclJicity. Utility Distribution Companies (UDCs): The entities which will continue to provide regulated services for the distribution of electricity to customers and S9fVe customers who do not choose direct access, 35/38 JUtll 6 1998 ITEM "1.1 _.~.~--_.- -.-.'..---.-.----- ----~----_._------,- 5/8198 MEMORANDUM OF UNDERSTANDING BETWEEN THE SAN DIEGO ASSOCIATION OF GOVERNMENTS (SANDAG) AND THE PUBUC AGENCY PARTICIPANTS IN THE SAN DIEGO REGIONAL POWER POOL PUrDose. The pUJpose of this Memorandum of Understanding (MOU) is to: A. Provide public agencies in the San Diego area an opportunity to save money on electricity costs as a result of indusby restructuring; B, Transfer knowledge to public agencies on efficient and effective methods for achieving cost savings in the restructured electricity mar1<et C. Set forth the basic structure for public agencies to receive electricity cost savings from electric restructuring in Califomia without having to individually bear the total costs of procuremen~ contracting, and administration necessary to achieve the energy saMce cost benefits; D. Position the San Diego Regional Power Pool to make effective and timely decisions and to increase future savings as opportunities arise and the mar1<et matures; and E. Create a structure for the San Diego area public agencies thet will facilitate competitive power suppliers responding to the particular needs of the participating public agencies and their constituents. Upon execution, this MOU between the public agency participant and SANDAG shall remain in effect for the period of time during which the public agency participant is purchasing power from a competitive supplier using a master bilateral contract with a energy selVice provider selected by the San Diego Regional Power Pool. There is no cost to public agencies for entering into this Memorandum of Understanding. There is no legal or financial liability created between SANDAG and public agency participants In the San Diego Regional Power Pool, nor among the power pool participants, as a result of entering Into this Memorandum of Understanding. Definition of Public Aaencies. Public agencies include agencies and their subsidiary non profit corporations. San Dieao Reaional Power Pool. The San Diego Regional Power Pool was created to pursue maximum electricity selVice cost savings, with limited or no financial risk, through the use of a power purchase contract that provides the flexibility for public agencies to take advantage of competition in the restructured electric selVice indUsby, The San Diego Regional Power Pool will operate through a Power Pool Committee created by the SANDAG Board. The Committee's membership will consist of one representative from each public agency that has an effective MOU with SANDAG. The Responsibilities and duties of the Committee will include: A. Review and selection of a competitive energy selVice provider(s) that is viewed as offering cost savings of most interest to the San Diego Regional Power Pool participants; B. Develop a master bilateral contract(s) for the purchase of power and other energy selVices by the participants; C, Administer the Memorandum of Understanding between participating public agencies and SANDAG regarding participation in the power pool and its administration; and D, Provide guidance to SANDAG staff on program administration and other matters necessary for the successful operation of the San Diego Regional Power Pool. The Committee will choose its own operating rules and procedures including voting formula, selection of officers, and subcommittee structure, if necessary. Responsibilities of SANDAG. The responsibilities and duties of SANDAG in the on-going operation and administration of the San Diego Regional Power Pool will include: A. Facilitating creation of the Power Pool Committee and authorizing agreements and other actions necessary for the pool to make decisions on power purchases and related energy selVices; B, Provide staff and administrative support to the Power Pool Committee in managing the electricity selVice provider(s) and in performing other functions necessary for the success of the San Diego Regional Power Pool; C, Receive payments from electricity selVice provider(s) selected by the San Diego Regional Power Pool to fund administration and support activities provided by SANDAG; account for payments received over the costs of administration and support and distribute those payments to benefit the power pool and its members, as determined by the Power Pool Committee; 36/38 JUlll 6 199B ITEM 7.1 . - 518/98 D. Consider Power Pool Committee recommendations, and take appropriate actions, regarcing developments, trends, issues and opportunities for achieving the cont~atad electric energy cos( savings and communicate with the region's governments, businesses and residents on lhasa matters; and E. Consider legislative and regulaloly recomniendations from the Power Pool Committee and communicate with local, state, and federal representatives on lhasa issues. ResDonslbllilles of PartlclDallna Public Aaencies. The responsibilities and duties of participating pItlIic agencies in the 0n- going operation and administration of the San Diego Regional Power Pool will include: A Detennine if it will enter into bilateral contracL negotiated by SANDAG, with the electricity service provider(s), and select meters to be entered in the San Diego Regional Power Pool; B. Participate as a member of the Power Pool Committee, if desired by the pItlIic agency; C. SLWIY the Power Pool Committee and SANDAG with notice of any verifiable written offer received from an established supplier to supply electricity at a rate lower than the rate currenUy being delivered through the Power Pool. D, Through the Power Pool Committee, make recommendations to SANDAG on legislative and regulatory issues, and developments, trends, issues and opportunities for electricity purchases to the region's governments, businesses and residents. SAN DIEGO REGIONAL POWER POOL PARTICIPANT SAN DIEGO ASSOCIATION OF GOVERNMENTS Signature Signature Name Name TiUe TiUe Date Date Address Address Agency 37/38 JUtl 1 6 1998 ITEM 7.1 ----.-------- - ,------ _.~-~- '0"00 ma:>......mor-- CO"litC"')C"')......com,.....,....O)O)CO,....CDCO-.;tN""'" CO _ Q Na:>m,..........m CON,................a:>...,.CO~O......No)...,.O)V~V M ~~C ~~~~~~ ~~~~~~N...,.C"')......C"')............o)COM......~ ~ E ="> 0) N N '1"""............. Ll) C") Ll) N ...... ...... C"') Q - >- ftI ...... N N II) .. 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Ql- ~~~E~~ES ~ o C3 --"''':> EC =0 ~.. ..m:>-", ~~_W~OS >~ Q)T""" mO~T"""Ew~wOQ.O '1n '1J)IJ)m"~" ~~:>()~ >~Ql~:>oo~en~Ql~ 0 ~~~~&~~ S~~~5 ~~c5Q.~~~~ffi~ u ~.~.~.-w- ~-0.2~_'C.2Q)~~~m.2.2~- Cp o~~oom~ ~m~~l'9mO~um=~~~~ S E ~~~~us C~~~Eoo~.~E~m~E~EEgs ~ _ .QlQl=C~ ~ ,~~EQl~EE~QlOEEEE~~ 0 ~ m~~~o::s U~moo.~~.mow.~gomoo~::s oC 0 uooen~z0 ~~~z()~uuuen~:>uuuu>Ul ~ 38/38 M "7 1 ATTACHMENT D JUlll 6 1998 ITE . .