EXHIBIT 10(1)
POWER PURCHASE AND SALE AGREEMENT
BETWEEN
AVISTA CORPORATION
AND
POTLATCH CORPORATION
INDEX TO SECTIONS
Section Page
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1. Definitions ................................................................................ 2
2. Representations............................................................................. 6
3. Term of Agreement .......................................................................... 7
4. Power Purchases (Power Deliveries to Avista) ............................................... 9
5. Power Sales (Power Deliveries to Potlatch).................................................. 12
6. Operation of Facility....................................................................... 13
7. Scheduling.................................................................................. 15
8. Billing and Payments........................................................................ 15
9. Metering.................................................................................... 18
10. Termination of Agreement.................................................................... 18
11. Forced Outage and Force Majeure............................................................. 19
12. Indemnity................................................................................... 20
13. Limitation of Liability .................................................................... 22
14. Insurance................................................................................... 23
15 Assignment ................................................................................. 25
16. No Unspecified Third Party Beneficiaries.................................................... 25
17. No Transmission Rights...................................................................... 25
18. Benefits for Renewable Fuels................................................................ 25
19. Default..................................................................................... 26
20. Release by Avista .......................................................................... 27
21. Release by Potlatch......................................................................... 27
22. Governmental Authority ..................................................................... 28
23. Several Obligations......................................................................... 28
24. Implementation ............................................................................. 28
25. Non-Waiver ................................................................................. 28
26. Entire Agreement and Amendment ............................................................. 29
27. Venue, Attorneys Fees and Choice of Law..................................................... 29
28. Compliance with Laws ....................................................................... 29
29. Confidentiality............................................................................. 30
30. Notices..................................................................................... 32
31. Settlement of Litigation.................................................................... 33
32. Exhibits.................................................................................... 33
This Power Purchase and Sale Agreement ("Agreement") is entered into as
of this 22nd day of July, 2003, by and between POTLATCH CORPORATION
("Potlatch"), a corporation organized and existing under the laws of the State
of Delaware, and AVISTA CORPORATION ("Avista") of Spokane, Washington, a
corporation organized and existing under the laws of the State of Washington,
hereinafter sometimes referred to collectively as "Parties" and individually as
"Party."
W I T N E S S E T H:
WHEREAS, Potlatch owns and operates pulp, paperboard, tissue and wood
products manufacturing plants in Nez Perce County, Idaho, herein collectively
referred to as the "Lewiston Plant;"
WHEREAS, Avista is presently supplying electric power to Potlatch at
the Lewiston Plant;
WHEREAS, Potlatch owns and operates four thermal electric generating
units located at the Lewiston Plant;
WHEREAS, there is pending before the United States District Court for
the District of Idaho, Case No. CV02-543-C-EJL, a complaint by Potlatch against
Avista;
WHEREAS, there is pending before the Idaho Public Utilities Commission,
Case No. AVU-E-02-08, a complaint by Potlatch against Avista;
WHEREAS, the Parties desire to settle all litigation pending between
them, pursuant to the terms of this Agreement;
WHEREAS, Potlatch desires to sell, and Avista desires to purchase, the
Net Facility Power pursuant to the terms of this Agreement; and
WHEREAS, the Parties intend that, except for self generation by
Potlatch to serve its own Load, Avista shall be the sole purchaser of Net
Facility Power and the sole supplier for Potlatch Load.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows:
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1. DEFINITIONS. In addition to words defined elsewhere in this Agreement
as signified by initial capitalization, whenever used in this Agreement,
exhibits and attachments hereto, the terms below shall have the following
meanings:
(a) "BANKRUPT" With respect to either Party, when such Party (i) files a
petition or otherwise commences, authorizes or acquiesces in the commencement of
a proceeding or cause of action under any bankruptcy, insolvency, reorganization
or similar law, or has any such petition filed or commenced against it and such
petition is not dismissed within sixty (60) days after it is filed, (ii) makes
an assignment or any general arrangement for the benefit of creditors, (iii)
otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a
liquidator, administrator, receiver, trustee, conservator or similar official
appointed with respect to it or any substantial portion of its property or
assets, or (v) is generally unable to pay its debts as they fall due.
(b) "BASE GENERATION AMOUNT(S)" That amount of Net Facility Power,
expressed in megawatt-hours, less any Incremental Generation Amount, for each
hour and delivered by Potlatch to Avista. The maximum Base Generation Amount for
any July 1st through June 30th period (any such period referred to as the
"Operating Year") shall be 543,120 megawatt-hours during a normal year or
544,608 megawatt-hours during a leap year.
(c) "BASE PERIOD DEMAND" The average kVa supplied during the 30-minute
period of maximum electricity use during the portion of the billing period up to
and including the point where the maximum Base Generation Amount is reached.
Demand shall be calculated using a rolling 30-minute demand interval with
5-minute sub-intervals.
(d) "BILLING PERIOD" That period which begins at 0000 hours on the first
day of any month during the term of the Agreement and ends at 2400 hours on the
last day of such month.
(e) "EFFECTIVE DATE" The date this Agreement becomes effective pursuant to
Section 3(a) of this Agreement.
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(f) "EXCESS GENERATION AMOUNT(S)" That amount of Net Facility Power,
expressed in megawatt-hours, generated by the Facility, less any Incremental
Generation Amount, for each hour that is in excess of the maximum Base
Generation Amount of 543,120 megawatt-hours for any Operating Year during a
normal year or 544,608 megawatt-hours during a leap year.
(g) "EXCESS PERIOD DEMAND" The average kVa supplied during the 30-minute
period of maximum electricity use during the portion of the billing period after
the point where the maximum Base Generation Amount is reached. Demand shall be
calculated using a rolling 30-minute demand interval with 5-minute
sub-intervals.
(h) "FACILITY" The electric generating facilities, including all equipment
and structures necessary to generate and supply power, more particularly
described at Exhibit C (Description of the Facility).
(i) "FACILITY SERVICE POWER" Electric power used by the Facility during its
operation for station service, including, but not necessarily limited to
pumping, generator excitation and cooling, as further defined in Exhibit A.
(j) "FORCED OUTAGE" Any outage that either fully or partially curtails the
electrical output of the Facility caused by mechanical or electrical equipment
failure, plant related structural failure, or unscheduled maintenance required
to be performed to prevent equipment failure.
(k) "GOOD INDUSTRY PRACTICE(S)" Good industry practice as defined in the
Interconnection Agreement, which definition is adopted by reference for purposes
of this Agreement as though set forth in full herein.
(l) "GOVERNMENTAL AUTHORITY" Any federal, state or local government,
political subdivision thereof or other governmental, regulatory,
quasi-governmental, judicial, public or statutory instrumentality, authority,
body, agency, department, bureau, or entity or any arbitrator with authority to
bind a Party at law.
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(m) "GOVERNMENTAL RULE(S)" Any law, rule, regulation, ordinance, order,
code, permit, judgment, or similar form of decision of any Governmental
Authority having the effect of law or regulation.
(n) "HEAVY LOAD HOURS" ("HLH") The hours ending 0700 through 2200 Pacific
Prevailing Time, Monday through Saturday inclusive, excluding NERC holidays.
(o) "INCREMENTAL GENERATION AMOUNT(S)" The amount of Net Facility Power
expressed in megawatt-hours for each hour that is in excess of the Nominal
Generation Amount.
(p) "INDEX" The daily price expressed in dollars per megawatt-hour for firm
energy as published by Dow ▇▇▇▇▇ for the Mid-Columbia point of delivery for the
applicable Heavy Load Hours or Light Load Hours. If prices for any hour are not
published for the Mid-Columbia point of delivery, Avista may extrapolate such
prices using reasonable commercial judgment; provided that Avista shall notify
Potlatch in writing of any such extrapolation and the basis thereof. In the
absence of this index, a comparable publication of firm energy prices at
Mid-Columbia shall be used as mutually agreed to by the Parties.
(q) "INTERCONNECTION AGREEMENT" The Generation Interconnection Agreement
between Potlatch and Avista.
(r) "LIGHT LOAD HOURS" ("LLH") All hours other than Heavy Load Hours.
(s) "LOAD" The hourly energy, expressed in megawatt-hours, consumed at
Potlatch's Lewiston Plant excluding Facility Service Power and Losses.
(t) "LOSSES" Electric power used by the Facility during its operation to
transform or transmit electric power to Points of Delivery. Losses shall be
deemed to be 200 kW.
(u) "NET FACILITY POWER" Electric power generated by the Facility and
measured at the point of generation less Facility Service Power and less
electric power used to compensate for Losses.
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If any adjustment to the meter readings is required hereunder to determine the
Net Facility Power actually delivered to the Points of Delivery, the electric
power which the Parties agree is used by the Facility in its operation and
losses to the Points of Delivery is set forth in Exhibit A.
(v) "NOMINAL GENERATION AMOUNT(S)" A calculation to be performed daily and
shall be the same for each hour of that day, but only used when the Parties
execute a Power Purchase of Incremental Generation Amounts, to be determined as
follows: The amount of electric power generated by the Facility, expressed in
megawatts per hour, determined by averaging the hourly Net Facility Power
generation amounts less any Power Purchases of Incremental Generation Amounts
for each hour for the immediate past period counting backwards beginning two (2)
days prior to the current day and consisting of thirty (30) days, not
necessarily contiguous, in which the average Net Facility Power was greater than
720 megawatt-hours for each of these days (30 aMW). The Nominal Generation
Amount shall be not less than fifty-five (55) megawatts per hour. The Nominal
Generation Amount shall be calculated as of the date of any transaction for a
Power Purchase of Incremental Generation Amounts and shall be the same amount
for each hour during the term of such transaction. If the Power Purchase
transaction for an Incremental Generation Amount is a prescheduled transaction,
then the Nominal Generation Amount calculation will serve to set the Base
Generation Amount or Excess Generation Amount for the duration of the
Incremental Generation Transaction Period, and any Net Facility Power above that
amount shall be deemed the Incremental Generation Amount. The "Incremental
Generation Transaction Period" shall be all hours of each of the days specified
for delivery of Incremental Generation Amounts that are part of a single
prescheduled transaction which is also the first such transaction executed by
the Parties for Incremental Generation Amount deliveries during those same days.
The Incremental Generation Amount shall be set equal to zero for the purpose of
calculating Base Generation Amounts (as defined in Subsection 1(b)), Excess
Generation Amounts (as defined in Subsection 1(f)), and Nominal Generation
Amounts during those hours in which no Incremental Generation Amount is
purchased by Avista, in accordance with Section 4.
(w) "PACIFIC PREVAILING TIME" The Pacific Time, either standard time or
daylight savings time, whichever is in effect at the relevant time.
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(x) "POINTS OF DELIVERY" The locations where the Facility is electrically
interconnected with Avista's electrical system
(y) "POWER PURCHASE(S)" Power transactions in which Avista purchases from
Potlatch electric power generated by the Facility.
(z) "POWER SALE(S)" Power transactions in which Potlatch purchases electric
power from Avista.
(aa) "TRUE-UP PROCESS" That process described in Section 3(f) for settling
obligations incurred under this Agreement in the event of termination.
(bb) "WEEK" The period of time beginning at 0000 hours on any Sunday during
the term of this Agreement and ending at 2400 hours on the immediately
subsequent Saturday.
2. REPRESENTATIONS.
(a) Potlatch represents that it is the sole owner of the Facility, that all
licenses or permits required for the operation thereof have been or will be
obtained in the name of, or assigned to Potlatch, prior to the Effective Date
and that the undersigned is authorized to execute this Agreement in Potlatch's
behalf. Potlatch also represents that each generating unit described at Exhibit
C (Description of the Facility) is a qualifying facility ("Qualifying Facility")
pursuant to law and the rules of the Federal Energy Regulatory Commission.
(b) Each Party represents and warrants to the other:
(1) subject to the provisions of Subsections 3(b) and 3(c), it has
all authorizations from Governmental Authority necessary for it to legally
perform its obligations under this Agreement or will obtain such authorizations
in a timely manner prior to the time at which any performance by it requiring
such authorizations becomes due;
(2) the execution, delivery and performance of this Agreement are
within its statutory and corporate powers, have been duly authorized by all
necessary action and do not violate any of
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the terms or conditions in its governing documents, any material contract to
which it is a party or by which it or any of its properties may be affected or
bound, or any Governmental Rule applicable to it;
(3) this Agreement constitutes a legal, valid and binding
obligation of the Party enforceable against it in accordance with its terms, and
the Party has all rights such that it can and shall perform its obligations to
the other Party in conformance with the terms and conditions of this Agreement,
subject to bankruptcy, insolvency, reorganization and other laws affecting
creditor's rights generally and general principles of equity;
(4) no Bankruptcy is pending against it, being contemplated by it,
or to its knowledge threatened against it; and
(5) subject to the provisions of Subsections 3(b) and 3(c) there
are no suits, proceedings, judgments, rulings or orders by or before any
Governmental Authority that could reasonably be expected to have a material
adverse effect on its ability to perform this Agreement.
3. TERM OF AGREEMENT.
(a) Subject to the provisions of this Section 3, this Agreement shall be
effective at 0000 hours on July 1, 2003. Power Purchases and Sales pursuant to
this Agreement shall be deemed to have commenced upon the Effective Date.
(b) Potlatch and Avista shall jointly petition the Idaho Public Utility
Commission ("IPUC") for an order approving this Agreement. This Agreement is
conditioned upon approval by the IPUC of the following provisions:
(1) approval of the Agreement as a settlement of all known
existing disputes between the Parties, without precedential value and without
prejudice to the Parties' positions on similar issues in the future;
(2) direct assignment of all Power Purchase costs paid by Avista
to Potlatch under this Agreement to Avista's Idaho operations; and
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(3) deferral and recovery of 100% of all Power Purchase costs paid
by Avista to Potlatch under this Agreement to Avista's Idaho Power Cost
Adjustment ("PCA") or otherwise recovered by Avista through base rates.
In the event that the IPUC does not approve the Agreement or approves
it upon conditions that are unacceptable to Avista or Potlatch in their sole
discretion, the Agreement shall terminate upon the date of such order, subject
to the True-Up Process described below.
After IPUC initial approval of this Agreement, should the IPUC revise
regulatory treatment of the Agreement in a manner unacceptable to Avista or
Potlatch in their sole discretion, the Agreement shall terminate upon the date
of such order, without being subject to the True-Up Process described below.
(c) This Agreement is conditioned upon the execution and filing with the
Federal Energy Regulatory Commission ("FERC") of the Interconnection
Agreement between Avista and Potlatch within sixty (60) days of the Effective
Date of this Agreement. In the event that FERC does not approve the
Interconnection Agreement or approves it upon conditions that are unacceptable
to Avista or Potlatch in their sole discretion, this Agreement shall terminate
upon the date of such order, subject to the True-Up Process described below.
(d) In the event that any third person requests rehearing of an order of
the IPUC that approves the Agreement or appeals an order of the IPUC that
approves this Agreement to a court of competent jurisdiction, the Agreement
shall terminate upon the date of an order on rehearing or order on appeal that
disapproves the Agreement or approves it upon conditions that are unacceptable
to Avista or Potlatch in their sole discretion, subject to the True-Up Process
described below.
(e) In the event this Agreement is not finally approved by December 31,
2003, neither Party shall have any further obligations hereunder, and this
Agreement shall terminate, subject to the True-Up Process described below.
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(f) TRUE-UP PROCESS: In the event that this Agreement is terminated
pursuant to Subsections 3(b) through 3(e) except as otherwise provided, the
Parties agree to refund amounts paid and received hereunder that exceed amounts
that would have been paid and received had this Agreement not taken effect from
the Effective Date to the date of termination ("Interim Period"). Such refund
amounts shall be calculated as the difference between the amounts paid and
received hereunder and the amounts that would have been paid and received if
Potlatch had utilized its Facility to generate electricity for its own Load at
the Lewiston Plant during the Interim Period and purchased its remaining
electricity requirements at Schedule 25 rates. If the amount of electricity
generated by the Facility exceeds the Load at the Lewiston Plant during the
Interim Period, Avista shall be deemed to have purchased the amount in excess
of the Load, and such purchase shall be priced at the energy rates contained
in Schedule 25, calculated for each month of the Interim Period. Incremental
Generation Amounts and prices paid therefor during the Interim Period shall
not be subject to this True-Up Process.
(g) This Agreement shall terminate at 2400 hours on June 30, 2013.
4. POWER PURCHASES (POWER DELIVERIES TO AVISTA).
(a) Potlatch shall sell and deliver and Avista shall purchase and accept
delivery of Net Facility Power in accordance with the terms and conditions of
this Agreement. Such purchase by Avista shall satisfy Avista's obligation to
purchase power from the Facility pursuant to the Public Utility Regulatory
Policies Act for the term of this Agreement. All prices for Power Purchases
described in this Section 4 are all inclusive, and Avista shall not impose any
charges or set-offs for transmission, losses, ancillary services or other
similar costs.
(b) Avista shall pay $42.92 per megawatt-hour for the Base Generation
Amount generated by the Facility each hour and delivered by Potlatch to Avista.
(c) Avista shall pay eighty-five percent (85%) of the applicable (HLH or
LLH) Index price per megawatt-hour, up to a maximum price paid to Potlatch of
$55 per megawatt-hour, for
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Excess Generation Amounts generated by the Facility each hour and delivered by
Potlatch to Avista. Potlatch may choose to not schedule and deliver Excess
Generation Amounts to Avista and instead supply electric power to the Load
during any Week; provided, however, Potlatch shall notify Avista of its election
in accordance with Subsection 7(a) and such election shall be binding for the
Week. In the event Potlatch does not notify Avista of its election in accordance
with Subsection 7(a), Potlatch shall be deemed to have elected to supply the
power to its Load for the Week. Avista shall not pay Potlatch for such Excess
Generation that is not scheduled and delivered to Avista.
(d) The maximum Excess Generation Amount that Avista shall purchase for any
Operating Year shall be 43,800 megawatt-hours. Excess Generation Amounts in
excess of the maximum Excess Generation Amount shall be deemed used to serve
Potlatch Load.
(e) Avista shall pay for Incremental Generation Amounts as set forth
herein. Avista shall make price offers for Incremental Generation Amounts to
Potlatch, either upon its own initiative or upon Potlatch's request, subject to
Subsection 4(f) below. Prices offered by Avista shall include all Avista costs,
including but not limited to, unit contingency, transmission, losses, ancillary
services and other costs, but excluding third party transmission costs. Potlatch
may request a price offer from Avista on a prescheduled basis for Incremental
Generation Amounts consistent with Section 7. Unless the Parties otherwise
agree, Avista, using reasonable commercial efforts, shall provide a price offer
which shall be eighty-five percent (85%) of a unit contingent sale price that
Avista is able to execute with a third party for the Incremental Generation
Amount that Potlatch will make available to Avista on a prescheduled basis. If
Avista is unable, after using reasonable commercial efforts to execute a unit
contingent sale, or is unwilling, using reasonable commercial judgement to
execute a unit contingent sale, then Avista shall not be obligated to offer a
prescheduled price to Potlatch. Any Avista purchases of firm, rather than unit
contingent, Incremental Generation Amounts shall be subject to separate
negotiation and mutual agreement at the time of such purchases.
If the Parties are unable to mutually agree upon a prescheduled price
for Incremental Generation Amounts and Potlatch desires to sell Incremental
Generation Amounts to Avista, Potlatch may request a real-time price offer for
the hour from Avista consistent with Section 7.
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Subject to Subsection 4(f) below, if the Parties are unable to mutually agree on
a real-time price for such hour, then Potlatch may elect, consistent with
Section 7, to receive a price based on eighty percent (80%) of the weighted
average price of Avista's real-time hourly sales and purchases for the hour in
which the Parties agree that Avista will purchase Incremental Generation
Amounts. If Avista has no real-time hourly purchases or sales for the hour in
which Potlatch elects to sell Incremental Generation Amounts to Avista, then
eighty percent (80%) of the hourly real-time market price internally recorded by
Avista based on information which Avista generally discovers through its
participation in the market shall be used as the price for the Incremental
Generation Amount for such hour.
(f) Avista shall use the same degree of care and effort to purchase and, if
necessary, to resell Incremental Generation Amounts as it uses in selling
electric power from Avista owned generating resources. Notwithstanding anything
in this Agreement, Avista reserves the right to refuse to purchase Incremental
Generation Amounts due to commercially reasonable internal policy limitations
prohibiting purchases for resale or Governmental Rules prohibiting purchases for
resale. Avista shall make reasonable efforts to notify Potlatch in advance of
such internal policy limitations or Governmental Rules.
(g) With regard to a prescheduled purchase of an Incremental Generation
Amount, at the time of execution of the transaction, Avista shall provide
Potlatch with a facsimile copy of the transaction confirmation that shall
include the mutually agreed upon price and estimated Incremental Generation
Amount as provided by Potlatch. With regard to a real-time purchase of an
Incremental Generation Amount, at the time of execution of the transaction,
Avista shall provide Potlatch with a voice confirmation of either the price or
Potlatch's election to take the calculated price, in accordance with Subsection
4(e). Potlatch shall provide a voice confirmation of the estimated Incremental
Generation Amount. Potlatch may call Avista's real-time scheduler in the hour
following the hour of delivery of the Incremental Generation Amount and Avista
shall provide the real-time market price internally recorded in accordance with
Subsection 4(e) for Potlatch's information purposes only.
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(h) MULTIPLE INCREMENTAL GENERATION AMOUNT TRANSACTIONS WITHIN A SINGLE
HOUR: Should the Parties enter into more than one transaction for delivery in
any hour of Incremental Generation Amounts, then the actual Incremental
Generation Amounts produced by Potlatch's Facility will be first committed to
the transaction entered into on the earliest date and time and the remaining
actual Incremental Generation Amounts will be committed to the remaining
transactions in the order in which the Parties entered into those transactions.
5. POWER SALES (POWER DELIVERIES TO POTLATCH).
(a) Avista shall sell and deliver and Potlatch shall purchase and accept
delivery of electric power and energy required for Potlatch's Load at the
Lewiston Plant for the duration of the Agreement in accordance with the terms
and conditions of this Agreement, Avista's Rules and Regulations in effect with
the IPUC, applicable tariff schedules and orders of the IPUC in effect at the
time electric power is delivered hereunder, as they may be changed from time to
time, and any other requirements imposed by law, provided:
(1) Avista shall not be obligated to provide to Potlatch Facility
Service Power or Losses; and
(2) Any demand charge assessed to Potlatch for periods in which
Power Purchases are made shall be based on either:
(i) The coincident hourly sum of (1) Net Facility Power
produced by the Facility (expressed in kilowatts) and (2) electric power
(expressed in kilowatts) that flows from Avista's electric system to the
Potlatch Load added vectorily to only the reactive power ("kVARs") that flows
from Avista's electric system to the Potlatch Load during periods when Avista
purchases from Potlatch either Base Generation Amounts or Excess Generation
Amounts, or;
(ii) The coincident hourly sum of (1) Incremental
Generation Amounts produced by the Facility (expressed in kilowatts) and (2)
electric power (expressed in kilowatts) that flows from Avista's electric system
to the Potlatch Load added vectorily to only the reactive power ("kVARs") that
flows from Avista's electric system to the Potlatch Load during periods when
Potlatch elects to use Excess Generation Amounts to serve its Load.
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Reactive power produced by the Facility as described in either of the
cases under Subsection 5(a)(2)(i) or 5(a)(2)(ii) above shall not be included in
the demand calculation.
(3) Any demand charge assessed to Potlatch for periods in
which no Power Purchases are made shall be based only on kilowatts that flow
from Avista's electric system to the Potlatch Load added vectorily to only the
reactive power that flows from Avista's electric system to the Potlatch Load.
(b) Avista shall ▇▇▇▇ for all electric power delivered by Avista for
Potlatch's Load at the rates set forth in Avista's Extra Large General Service
Schedule 25, including all adjustments thereto, unless and until such time as
the IPUC issues an order authorizing Avista to ▇▇▇▇ at a different rate. Nothing
shall prejudice any Party's right to propose, or the Commission to order, in
future proceedings that Potlatch's service should be priced at rates other than
Schedule 25 rates. This Agreement shall not be construed as restricting the
right of either Party to petition the IPUC to establish, disestablish, amend or
alter Avista's Rules and Regulations in effect with the IPUC, applicable tariff
schedules and orders of the IPUC, including but not limited to Schedule 25.
6. OPERATION OF FACILITY.
(a) Potlatch shall construct, operate and maintain the Facility and
associated electrical equipment in compliance with Qualifying Facility status
and in accordance with applicable laws and regulations and in accordance with
Good Industry Practice. Potlatch shall construct, operate and maintain the
Facility and other equipment associated with the Lewiston Plant at its own risk
and expense. Avista shall construct, operate and maintain its interconnection
facilities, that portion of its system that is interconnected to the Facility,
and all equipment needed to receive and transmit electric power in accordance
with applicable laws and regulations and in accordance with the Interconnection
Agreement and Good Industry Practice.
(b) Interconnection of electrical systems under this Agreement shall be
governed by the Interconnection Agreement. Nothing herein is intended to amend
or alter the Interconnection Agreement as it may be amended or superceded. In
the event that the Interconnection Agreement
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is superceded or amended as a consequence of a lawful order of the Federal
Energy Regulatory Commission, or other agency or court having jurisdiction
thereof, the Parties agree to negotiate in good faith such amendments to this
Agreement as are necessary to preserve the intent of this Agreement. Subject to
Governmental Rules, in the event of a conflict between the terms of this
Agreement and the Interconnection Agreement, the terms of this Agreement shall
take precedence.
(c) Exhibit B (Communications), attached hereto, shall govern
communications between Potlatch and Avista for purposes of this Agreement.
(d) Potlatch shall provide Avista as much notice as is reasonably
practicable under the circumstances in the event of any planned increase to or
reduction in its Load of more than 10,000 kilowatts. Potlatch shall also provide
as much notice as is reasonably practicable under the circumstances of any
planned outages of the Facility and any planned increase or reduction of
generation from the Facility of more than 10,000 kilowatts. The notices shall
specify the amount and the expected duration of such outages, increases and
reductions.
(e) Potlatch shall use its best efforts to maintain its Load on Avista's
electric system (at the Points of Delivery) at a power factor of 95% or
higher throughout the term of this Agreement. Avista shall not be liable for any
loss or damage incurred by Potlatch resulting solely from Potlatch's failure to
maintain a power factor of 95% or higher.
(f) The Parties acknowledge that Avista's electric power system and
delivery facilities, under certain circumstances, may constrain power deliveries
to Potlatch's Lewiston Plant. Potlatch shall notify Avista of any intention to
increase its energy and demand requirements at the Lewiston Plant beyond the
capacity of Avista's facilities. The Parties shall negotiate in good faith the
terms and conditions of a mutually acceptable separate agreement to install
additional facilities required to accommodate additional energy and demand
requirements, subject to approval by the IPUC and consistent with FERC rules and
regulations.
(g) Potlatch agrees to adhere to IEEE 519 guidelines for power quality.
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7. SCHEDULING.
(a) GENERAL SCHEDULING: Potlatch shall submit to Avista pre-schedulers its
estimated hourly schedules for Base Generation Amounts, Excess Generation
Amounts, and Load for each Week, and shall make commercially reasonable efforts
to deliver electric power as scheduled. Potlatch shall also indicate, pursuant
to Subsection 4(c), whether it will sell Excess Generation Amounts to Avista or
elects to instead supply Excess Generation Amounts to its Load for the Week.
Potlatch shall insure that such submission is received by Avista no later than
1700 hours Pacific Prevailing Time of the second-to-the-last business day
observed by both Parties of the Week preceding the Week to be pre-scheduled by
facsimile or other similar written form. Potlatch shall also call Avista's
real-time scheduler as soon as practical if there are material changes to
expected generation amounts or Load.
(b) DAY-AHEAD INCREMENTAL GENERATION AMOUNT SCHEDULING ESTIMATES: Potlatch
shall submit to Avista's pre-schedulers its best estimates of hourly Incremental
Generation Amounts by 0600 hours Pacific Prevailing Time on the business day
observed by both Parties immediately preceding the day or days on which electric
power is to be delivered, unless otherwise mutually agreed by the Parties.
(c) REAL-TIME INCREMENTAL GENERATION AMOUNT SCHEDULES: Potlatch shall
contact Avista real-time schedulers no earlier than two hours and not later than
one hour prior to the hour in which power is to be delivered to communicate its
best estimate of hourly Incremental Generation Amounts and any material change
in expected electric power deliveries or changes in Load.
8. BILLING AND PAYMENTS.
(a) So long as there are Power Sales made and/or payments due hereunder,
Avista shall prepare monthly an itemized billing of the payment due, including
the amounts of Power Purchases, Power Sales, the appropriate rates, and any
adjustments to the payment consistent
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with the provisions herein. Payments for amounts billed shall be received by the
Party to be paid on the due date, which shall be either the 20th day of the
month following the Billing Period or ten (10) days after receipt of the ▇▇▇▇,
whichever is later ("Due Date"). Payment shall be made at the location
designated by the Party to which payment is due. If the Due Date falls on a
non-business day of either Party, then the payment shall be due on the next
following business day.
(b) Subject to Subsection (c) below, any payments by Avista to Potlatch or
by Potlatch to Avista, if not paid in full within the limitations set forth in
Subsection (a), shall be late. In addition to the other remedies for such an
Event of Default pursuant to this Agreement, the late-paying Party shall be
assessed a charge for late payment equal to the lesser of one percent (1%) per
whole or partial month, or the maximum rate allowed by the laws of the State of
Idaho per whole or partial month multiplied by the overdue amount. Each Party
shall have the right to offset any amounts due it against any present payments
owed to the other Party.
(c) If a Party in good faith disputes a ▇▇▇▇ prepared by the other Party,
the disputing Party may pay or withhold the amount in dispute. If a disputing
Party elects to pay or withhold the amount in dispute, it shall provide a
written notice to the other Party at the same time that payment would be
normally due, which notice shall specifically set forth the basis of the
dispute. The Parties agree as soon as practicable to negotiate the dispute and
failing negotiation, to otherwise resolve the dispute in the most expeditious
manner practicable. If the disputing Party elects to withhold the disputed
amount, and if the billing dispute is resolved in favor of the Party that
prepared the ▇▇▇▇, the disputing Party shall pay to the billing Party the amount
withheld with interest accrued at the rate set forth in Subsection (b) above,
multiplied by the withheld amount, prorated by months and partial months from
the original date that the amount should have been paid to the actual date of
payment. If the disputing Party elects to pay the disputed amount, and the
billing dispute is resolved in favor of the disputing Party, the Party that
prepared the ▇▇▇▇ shall refund the disputed amount to the disputing Party, with
interest accrued at the rate set forth in Subsection (b) above multiplied by the
disputed amount, prorated by months and partial months from the date that the
amount was paid to the date of refund.
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(d) Potlatch may verify information used in preparing invoices by examining
Avista documents in its Spokane office for a period up to ninety (90) days after
the billing date. All information, records and reports related to Power
Purchases or Power Sales under the terms of this Agreement, and the calculation
of prices therefor, will be open to inspection by Potlatch upon reasonable
notice and provided that Potlatch shall keep all such information confidential
and use it only for purposes of this Agreement, and further provided that in any
enforcement proceedings, Potlatch shall avail itself of procedures to protect
the confidentiality of such information under the applicable Governmental Rules.
(e) Avista shall prorate amounts billed to Potlatch for demand and other
charges, in accordance with the provisions of this Section, during the initial
month of Power Purchases and Power Sales under this Agreement if such purchases
and sales commence on any day other than the first day of the month, and during
any Billing Period in which Potlatch elects to use Excess Generation Amounts to
serve the Load as permitted in Section 4(c). The Power Sales demand quantities,
expressed in kilovolt-amperes ("kVa") shall be prorated for the purposes of
calculating the demand charge for the applicable Billing Periods. For the
applicable Billing Periods, the prorated demand quantity components shall be
calculated as follows: (1) Base Period Demand, expressed in kVa, during that
portion of the Billing Period in which Avista made Power Purchases of Base
Generation Amounts from Potlatch multiplied by the number of days (rounded to
the nearest whole day) in the Billing Period in which Avista made Power
Purchases of Base Generation Amounts from Potlatch and then divided by the total
number of days in the Billing Period; (2) Excess Period Demand, expressed in
kVa, during that portion of the billing period in which Avista made no Power
Purchases other than Incremental Generation Amounts from Potlatch multiplied by
the number of days (rounded to the nearest whole day) in the Billing Period in
which Avista made no Power Purchases other than Incremental Generation Amounts
from Potlatch and then divided by the total number of days in the Billing
Period; (3) Excess Period Demand, expressed in kVa, during that portion of the
Billing Period in which Avista purchased Excess Generation Amounts from Potlatch
multiplied by the number of days (rounded to the nearest whole day) in the
Billing Period in which Avista made Power Purchases of Excess Generation Amounts
from Potlatch and then divided by the total number of days in the Billing
Period. Prorated total demand quantity, expressed in kVa, is calculated from the
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arithmetic sum of (1), (2) and (3) above. The resultant total demand quantity
shall be used for calculation of the demand charge.
(f) Adjustments shall be made in ▇▇▇▇▇▇▇▇ for errors in a meter reading or
in a billing discovered within thirty-six (36) months of the error.
9. METERING.
(a) Metering shall be governed by the provisions of Exhibit A.
(b) Avista shall be responsible for any meter readings required by this
Agreement.
10. TERMINATION OF AGREEMENT.
Subject to the Force Majeure provision of this Agreement, the Agreement may be
terminated at Avista's sole option, if any of the following conditions occur.
(a) Potlatch abandons the Facility or otherwise renders the Facility
incapable of generating electric power; or
(b) There have been no electric power deliveries to Avista from the
Facility for a period of twelve (12) consecutive months; or
(c) The electric power deliveries from the Facility to Avista fail to
exceed 175,200 megawatt-hours during any rolling period of twenty-four (24)
consecutive months, which rolling period commences any time after the first
twelve (12) consecutive months following the Effective Date.
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11. FORCED OUTAGE AND FORCE MAJEURE.
(a) Neither Party shall be liable to the other Party for, or be considered
to be in breach of or default under this Agreement, on account of any delay in
performance due to any of the following events, which event or circumstance was
not anticipated as of the Effective Date ("Force Majeure"):
(1) Any cause or condition beyond such Party's reasonable control
that such Party is unable to overcome by the exercise of reasonable diligence,
including but not limited to: fire, flood, earthquake, volcanic activity, wind,
drought and other acts of the elements; court order and act of civil, military
or governmental authority; strike, lockout and other labor dispute; riot,
insurrection, terrorism, sabotage or war; Governmental Rules; Forced Outage;
breakdown of or damage to facilities or equipment; electrical disturbance
originating in or transmitted through such Party's electric system or any
electric system with which such Party's system is interconnected; any
interruption of transmission service required for the performance of this
Agreement that is excused by reason of force majeure or uncontrollable forces
under a Party's contract with a transmission service provider; and, any act or
omission of any person or entity other than such Party, and Party's contractors
or suppliers of any tier or anyone acting on behalf of such Party; or
(2) Any action taken by such Party which is, in the sole judgment
of such Party, necessary or prudent to protect the operation, performance,
integrity, reliability or stability of such Party's electric system or any
electric system with which such Party's electric system is interconnected,
whether such actions occur automatically or manually.
(b) In the event of any Force Majeure occurrence, the time for performance
thereby delayed shall be extended by a period of time reasonably necessary to
compensate for such delay. Nothing contained in this paragraph shall require any
Party to settle any strike, lockout or other labor dispute. In the event of a
Force Majeure occurrence, which will affect performance under this Agreement,
the nonperforming Party shall provide the other Party written notice as soon as
practicable after the occurrence of the Force Majeure event. Such notice shall
include the particulars of the occurrence, assurances that suspension of
performance is of no greater scope and of no longer duration than is required by
the Force Majeure and that best efforts are being
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used to remedy its inability to perform. The nonperforming Party shall remedy
the Force Majeure occurrence with all reasonable dispatch. The performing Party
shall not be required to perform or resume performance of its obligations to the
nonperforming Party corresponding to the obligations of the performing Party
excused by the Force Majeure occurrence.
(c) Force Majeure does not include changes in the ownership, occupancy, or
operation of the Facility or Avista if such changes occur because of normal
business occurrences which include but are not limited to: changes in business
economic cycles; recessions; bankruptcies; tax law changes; sales of businesses;
closure of businesses; changes in production levels; and, changes in system
operations.
(d) Force Majeure does not excuse any Party from making payments of money
due under this Agreement for power purchased prior to the Force Majeure event.
12. INDEMNITY.
(a) POTLATCH'S DUTY TO INDEMNIFY. Potlatch shall indemnify, hold harmless
and defend Avista, and its officers, directors, employees, affiliates, managers,
members, trustees, shareholders, agents, contractors, subcontractors,
affiliates' employees, invitees and successors, from and against any and all
third party claims, demands, suits, obligations, payments, liabilities, costs,
losses, judgments, damages and expenses (including the reasonable costs and
expenses of any and all actions, suits, proceedings, assessments, judgments,
settlements, and compromises relating thereto, reasonable attorneys' and expert
fees and reasonable disbursements in connection therewith) for damage to
property, injury to any person or entity, or death of any individual, including
Avista's employees and affiliates' employees, Potlatch's employees, or any other
third parties, to the extent caused wholly or in part by any act or omission,
negligent or otherwise, by Potlatch or its officers, directors, employees,
agents, contractors, subcontractors and invitees arising out of or connected
with Potlatch's performance or breach of this Agreement, or the exercise by
Potlatch of its rights hereunder; provided, however, that the provisions of this
Section shall not apply if any such injury, death or damage is held to have been
caused by the sole
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negligence or intentional wrongdoing of Avista, its agents or employees. The
foregoing indemnification obligation shall not be limited in any way by workers'
compensation laws or by any limitation on the amount or type of damages,
compensation or benefits payable by Potlatch under applicable workers'
compensation laws.
(b) AVISTA'S DUTY TO INDEMNIFY. Avista shall indemnify, hold harmless and
defend Potlatch, and its officers, directors, employees, affiliates, managers,
members, trustees, shareholders, agents, contractors, subcontractors, invitees
and successors, from and against any and all third party claims, demands, suits,
obligations, payments, liabilities, costs, losses, judgments, damages and
expenses (including the reasonable costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements, and compromises
relating thereto, reasonable attorneys' and expert fees and reasonable
disbursements in connection therewith) for damage to property, injury to any
entity or person, or death of any individual, including Potlatch's employees and
affiliates' employees, Avista's employees, or any other third parties, to the
extent caused wholly or in part by any act or omission, negligent or otherwise,
by Avista or its officers, directors, employees, agents, contractors,
subcontractors and invitees arising out of or connected with Avista's
performance or breach of this Agreement, or the exercise by Avista of its rights
hereunder; provided, however, that the provisions of this Section shall not
apply if any such injury, death or damage is held to have been caused by the
sole negligence or intentional wrongdoing of Potlatch, its agents or employees.
The foregoing indemnification obligation shall not be limited in any way by
workers' compensation laws or by any limitation on the amount or type of
damages, compensation or benefits payable by Avista under applicable workers'
compensation laws.
(c) NOTICE. A Party seeking indemnification under this Agreement ("First
Party") shall give the other Party ("Second Party") notice of the claim or
action giving rise to a right of indemnification as soon as practicable, but in
any event on or before the thirtieth (30th) day after the First Party's actual
knowledge of such claim or action. The notice shall describe the claim or action
in reasonable detail, and shall indicate the amount (estimated if necessary) of
the claim or action. Any failure of the First Party to provide the notice
required by this Section shall not affect the First Party's rights to
indemnification except to the extent the Second Party is actually
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and materially prejudiced as a result of such failure. Neither Party may settle
or compromise any claim for which indemnification is sought under this Agreement
without the prior consent of the other Party; provided, however, said consent
shall not be unreasonably withheld or delayed. Each Party's indemnification
obligation shall survive expiration, cancellation or early termination of this
Agreement.
(d) ACKNOWLEDGMENT TO NEGOTIATION. POTLATCH AND AVISTA SPECIFICALLY WARRANT
THAT THE TERMS AND CONDITIONS OF THE FOREGOING INDEMNITY PROVISIONS ARE THE
SUBJECT OF MUTUAL NEGOTIATION BY THE PARTIES, AND ARE SPECIFICALLY AND EXPRESSLY
AGREED TO IN CONSIDERATION OF THE MUTUAL BENEFITS DERIVED UNDER THE TERMS OF THE
AGREEMENT.
13. LIMITATION OF LIABILITY.
(a) LIMITATION OF LIABILITY. With respect to claims by and between the
Parties under this Agreement, the measure of damages at law or in equity in any
action or proceeding shall be limited to direct actual damages only. Such direct
actual damages shall be the sole and exclusive remedy and all other remedies or
damages at law or in equity are waived and neither Party shall be liable in
statute, contract, in tort (including negligence), strict liability, warranty or
under any other legal theory or otherwise to the other Party, its agents,
representatives, and/or assigns, for any special, incidental, punitive,
exemplary or consequential loss or damage whatsoever, including, but not limited
to, loss of profits or revenue for work not performed, for loss of use of or
under-utilization of the other Party's facilities, loss of use of revenues,
attorneys' fees, litigation costs, or loss of anticipated profits, resulting
from either Party's performance or non-performance of an obligation imposed on
it by this Agreement, without regard to the cause or causes related thereto,
including the negligence of any Party. The Parties expressly acknowledge and
agree that this limitation shall not apply to any claims for indemnification
under Section 12 of this Agreement. The provisions of this Section shall survive
the termination or expiration of this Agreement.
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(b) LIMITATION OF LIABILITY FOR WIS PARTIES. Notwithstanding the provisions
of Subsection (a) above, if both Avista and Potlatch are parties to the Western
Interconnected Systems Limitation of Liability ("WIS") Agreement, then the WIS
Agreement shall control their liabilities with respect to damages to the
Facility, the interconnection facilities, or Avista's electric system.
14. INSURANCE.
(a) GENERAL LIABILITY. The Parties agree to maintain, at their own cost and
expense, general liability, workers' compensation, and other forms of insurance
relating to their operations for the life of this Agreement in the manner, and
amounts, at a minimum, as set forth below.
(1) Workers' compensation insurance in accordance with all
applicable state and federal law, including Employer's Liability Insurance in
the amount of $1,000,000 per occurrence;
(2) Commercial General Liability Insurance, including Contractual
Liability Coverage for liabilities assumed under this Agreement, and Personal
Injury Coverage in the minimum amount of $5,000,000 per occurrence for bodily
injury and property damage. Potlatch's policy shall include Avista as an
additional insured.
(3) Where a Party has more than $100 million in assets it may, at
its option, self-insure all or part of the insurance required in this Section
14; provided, however, the self-insuring Party agrees that all other provisions
of this Section 14, including, but not limited to, waiver of subrogation, waiver
of rights of recourse, and additional insured status, which provide or are
intended to provide protection for the other Party and its affiliated and
associated companies under this Agreement, shall remain enforceable. A Party's
election to self-insure shall not impair, limit, or in any manner result in a
reduction of rights and/or benefits otherwise available to the other Party and
its affiliated and associated companies through formal insurance policies and
endorsements as specified in the above parts of this Section 14. The
self-insuring Party agrees that all amounts of self-insurance, retentions and/or
deductibles are the responsibility of and shall be borne by the self-insuring
Party.
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(b) CERTIFICATES. Within fifteen (15) days of the Effective Date, and each
anniversary of the Effective Date, during the term of this Agreement, (including
any extensions), each Party shall provide to the other Party, properly executed
and current certificates of insurance with respect to all insurance policies
required to be maintained by such Party under this Agreement. Certificates of
insurance shall provide the following information:
(1) Name of insurance company, policy number and expiration date;
(2) The coverage required and the limits on each, including the
amount of deductibles or self-insured retentions, which shall be for the account
of the Party maintaining such policy;
(3) A statement indicating that the other Party shall receive at
least thirty (30) days prior written notice of cancellation or expiration of a
policy, or reduction of liability limits with respect to a policy; and
(4) A statement identifying and indicating that additional
insureds have been named as required by this Agreement.
(c) POLICY REQUEST. At a Party's request, in addition to the foregoing
certifications, the other Party shall deliver to the first Party a copy of
applicable sections of each insurance policy.
(d) INSPECTION. Each Party shall have the right to inspect the original
policies of insurance applicable to this Agreement at the other Party's place of
business during regular business hours.
(e) "CLAIMS MADE" INSURANCE. If any insurance is written on a "claims made"
basis, the respective Party shall maintain the coverage for a minimum of seven
years after the termination of this Agreement.
(f) WAIVER OF SUBROGATION. To the extent permitted by the insurer and
commercially reasonable, each Party shall obtain waivers of subrogation in favor
of the other Party from any insurer providing coverage that is required to be
maintained under this Section 14. A Party shall not be required to obtain a
waiver of subrogation if the other Party is not able to obtain a waiver of
subrogation from its insurance carrier.
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15. ASSIGNMENT.
Neither Party shall voluntarily assign its rights or delegate its
duties under this Agreement, or any part of such rights or duties without the
written consent of the other Party. Such consent shall not unreasonably be
withheld. Further, no assignment by either Party shall relieve or release it to
the extent of any of its obligations hereunder. Subject to the foregoing
restrictions on assignments, this Agreement shall be fully binding upon, inure
to the benefit of and be enforceable by the Parties and their respective
successors, heirs and assigns.
16. NO UNSPECIFIED THIRD PARTY BENEFICIARIES.
Except as specifically provided in this Agreement, there are no third
party beneficiaries of this Agreement. Nothing contained in this Agreement is
intended to confer any right or interest on anyone other than the Parties, and
their respective successors, heirs and assigns permitted under Section 15.
17. NO TRANSMISSION RIGHTS.
Nothing in this Agreement shall be construed as granting Potlatch any
right of access, or any other rights, to Avista's transmission system.
18. BENEFITS FOR RENEWABLE FUELS.
Nothing in this Agreement shall affect Potlatch's rights to benefits
attributable to Potlatch's use of renewable fuels for generation. The Parties
further agree to negotiate in good faith should it be necessary at a later date,
to develop a separate agreement in order to provide Potlatch with those
benefits.
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19. DEFAULT.
(a) An "Event of Default" shall mean, with respect to a Party (a
"Defaulting Party"), the occurrence of any of the following:
(1) the failure to make, when due, any payment required pursuant
to this Agreement if such failure is not remedied within three (3) business
days after delivery of written notice;
(2) any representation or warranty made by such Party herein is
false or misleading in any material respects when made or when deemed made or
repeated;
(3) the failure to perform any material covenant or obligation
set forth in this Agreement (except to the extent constituting a separate Event
of Default) if such failure is not remedied within thirty (30) business days
after delivery of written notice;
(4) such Party becomes Bankrupt; or
(5) such Party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all of its assets to, another entity
and, at the time of such consolidation, amalgamation, merger or transfer, the
resulting, surviving or transferee entity fails to assume all the obligations
of such Party under this Agreement to which it or its predecessor was a party
by operation of law or pursuant to an agreement reasonably satisfactory to the
other Party.
(b) In the Event of Default, the following shall apply:
(1) The non-defaulting Party shall give written notice to the
Defaulting Party of the Event of Default in accordance with this Agreement.
(2) Except for an Event of Default that arises from failure to
make money payments or from a Party becoming bankrupt, if, after 30 days
following receipt of such notice, the Defaulting Party has not taken the steps
necessary to cure the event of default, the non-defaulting Party may, at its
option, terminate this Agreement; provided, however, that except for the failure
to pay sums which are due and payable, if the defaulting Party, within such
30-day period, commences and thereafter proceeds with all due diligence to cure
such default, such 30-day period shall be extended up to six (6) months after
written notice to the defaulting Party, as may be necessary to cure the event of
default with all due diligence. For an Event of Default that arises from the
failure to make money payments, the non-defaulting Party may, at its option,
terminate this Agreement if the Defaulting Party shall have failed to cure the
failure to pay within
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three (3) business days following receipt of notice of such failure. For an
Event of Default that arises from a Party becoming bankrupt, the non-defaulting
Party may, at its option, immediately terminate this Agreement upon notice to
the Defaulting Party.
(3) Upon the Event of Default and an expiration of any period to
cure granted herein, the non-defaulting Party may, but has no obligation, to
terminate this Agreement effective upon notice to the Defaulting Party and may
exercise all other rights and remedies available to the non-defaulting Party
under applicable law. Whether or not the non-defaulting Party elects to
terminate this Agreement, it may, in addition to other remedies provided for
herein, pursue such remedies as are available at law or in equity including
suspension of its performance so long as the Event of Default is continuing and
has not been cured.
(c) Any right or remedy afforded to either Party under any provision of
this Agreement on account of the breach or default by the other Party is in
addition to, and not in lieu of, all other rights or remedies afforded to
such Party under any other provisions of this Agreement, by law or otherwise
on account of the breach or default.
20. RELEASE BY AVISTA.
Avista releases Potlatch from any and all claims, losses, harm,
liabilities, damages, costs and expenses to the extent resulting from any
disconnection, interruption, suspension or curtailment by Potlatch pursuant to
terms of this Agreement.
21. RELEASE BY POTLATCH.
Potlatch releases Avista from any and all claims, losses, harm,
liabilities, damages, costs and expenses to the extent resulting from any
disconnection, interruption, suspension or curtailment by Avista pursuant to
terms of this Agreement.
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22. GOVERNMENTAL AUTHORITY.
This Agreement is subject to the Governmental Rules now or hereafter in
effect, of all Governmental Authorities having jurisdiction over the Facility,
this Agreement, the Parties or either of them. All Governmental Rules that are
required to be incorporated in agreements of this character are by this
reference incorporated in this Agreement.
23. SEVERAL OBLIGATIONS.
Except where specifically stated in this Agreement to be otherwise, the
duties, obligations and liabilities of the Parties are intended to be several
not joint or collective. This Agreement shall not be interpreted or construed to
create an association, joint venture or partnership between the Parties or to
impose any partnership obligations or liability upon either Party. Each Party
shall be individually and severally liable for its own obligations under this
Agreement. Further, neither Party shall have any rights, power or authority to
enter into any agreement or undertaking for or on behalf of, to act as or to be
an agent or representative of, or to otherwise bind the other Party.
24. IMPLEMENTATION.
Each Party shall take such action (including, but not limited to, the
execution, acknowledgement and delivery of documents) as may reasonably be
requested by the other Party for the implementation or continuing performance of
this Agreement.
25. NON-WAIVER.
The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be
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construed as a waiver or relinquishment to any extent of such Party's right to
assert or rely upon any such provision or right in that or any other instance;
rather, the same shall be and remain in full force and effect.
26. ENTIRE AGREEMENT AND AMENDMENT.
This Agreement together with its exhibits constitutes the entire
agreement of the Parties hereto and supersedes and replaces any prior agreements
or understandings between said Parties, entered into for the same or similar
purposes, with the exception the Interconnection Agreement. No change, amendment
or modification of any provision of this Agreement shall be valid unless set
forth in a written amendment to this Agreement signed by both Parties.
27. VENUE, ATTORNEYS FEES AND CHOICE OF LAW.
Venue of any action filed to enforce or interpret the provisions of
this Agreement shall be exclusively in the United States District Court for the
District of Idaho or the District Court of the State of Idaho encompassing Nez
Perce County and the Parties irrevocably submit to the jurisdiction of any such
court. In the event of litigation to enforce the provisions of this Agreement,
the prevailing Party shall be entitled to reasonable costs and attorney's fees
in addition to any other relief allowed. Notwithstanding conflict of law rules,
the laws of the State of Idaho shall apply to disputes arising under this
Agreement.
28. COMPLIANCE WITH LAWS.
Both Parties shall comply with all applicable laws and regulations of
Governmental Authorities having jurisdiction over the Facility and the
operations of the Parties.
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29. CONFIDENTIALITY.
(a) DEFINITION. "Confidential Information" shall mean any confidential,
proprietary or trade secret information or a plan, specification, pattern,
procedure, design, device, list concept, policy or compilation relating to the
present or planned business of a Party, which is designated in good faith as
confidential by the Party supplying the information, whether conveyed orally,
electronically, in writing, through inspection or otherwise, except that the
real-time in-plant data, shall be considered Confidential Information without
the need for designation.
(b) GENERAL OBLIGATIONS.
(1) Each Party shall hold in confidence any and all Confidential
Information unless: (i) compelled to disclose such information by Governmental
Rules or as otherwise provided for in this Agreement; or (ii) to meet
obligations imposed by Governmental Authority or by membership in NERC or WECC
(including other transmission providers). Information required to be disclosed
under (i) or (ii) above, does not, by itself, cause any information provided by
Potlatch to Avista to lose its confidentiality. To the extent it is necessary
for either Party to release or disclose such information to a third party in
order to perform that Party's obligations herein, such Party shall advise said
third party of the confidentiality provisions of this Agreement and use its best
efforts to require said third party to agree in writing to comply with such
provisions.
(2) During the term of this Agreement, and for a period of three
(3) years after the expiration or termination of this Agreement, except as
otherwise provided in this Section 29, each Party shall hold in confidence and
shall not disclose to any person Confidential Information.
(3) Each Party shall use at least the same standard of care to
protect Confidential Information it receives as it uses to protect its own
Confidential Information from unauthorized disclosure, publication or
dissemination.
(c) EXCLUDED INFORMATION. Confidential Information shall not include
information that the receiving Party can demonstrate: (i) is generally available
to the public other than as a result of disclosure by the receiving Party; (ii)
was in the lawful possession of the receiving Party on a non-confidential basis
prior to receiving it from the disclosing Party; (iii) was supplied to the
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receiving Party without restriction by a third party, who, to the knowledge of
the receiving party, after due inquiry was under no obligation to the disclosing
party to keep such information confidential; (iv) was independently developed by
the receiving party without reference to Confidential Information of the
disclosing party; (v) is, or becomes, publicly known, through no wrongful act or
omission of the receiving Party or Breach of this Agreement; or (vi) is
required, in accordance with Subsection 29(d) of this Agreement, to be disclosed
by any Governmental Authority or is otherwise required to be disclosed by law or
subpoena, or is necessary in any legal proceeding establishing rights and
obligations under this Agreement. Information designated as Confidential
Information will no longer be deemed confidential if the Party that designated
the information as confidential notifies the other Party that it no longer is
confidential.
(d) SUBPOENA. If a Governmental Authority or entity with the right, power,
and apparent authority to do so requests or requires either Party, by subpoena,
oral deposition, interrogatories, requests for production of documents,
administrative order, or otherwise, to disclose Confidential Information, that
Party shall provide the other Party with prompt notice of such request(s) or
requirement(s) so that the other Party may seek an appropriate protective order
or waive compliance with the terms of this Agreement. The notifying Party shall
have no obligation to oppose or object to any attempt to obtain such production
except to the extent requested to do so by the disclosing Party and at the
disclosing Party's expense. If either Party desires to object or oppose such
production, it must do so at its own expense. The disclosing Party may request a
protective order to prevent any Confidential Information from being made public.
Notwithstanding the absence of a protective order or waiver, the Party may
disclose such Confidential Information which, in the opinion of its counsel, the
Party is legally compelled to disclose. Each Party shall use reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded any
Confidential Information so furnished.
(e) USE IN ARBITRATION. Each Party may utilize information or documentation
furnished by the disclosing Party in any dispute resolution proceeding or in an
administrative agency or court of competent jurisdiction addressing any dispute
arising under this Agreement, subject to a confidentiality agreement with all
participants (including, if applicable, any arbitrator) or a protective order.
-31-
(f) BREACH. The Parties agree that monetary damages by themselves will be
inadequate to compensate a Party for the other Party's Breach of its obligations
under this Section 29. Each Party accordingly agrees that the other Party is
entitled to equitable relief, by way of injunction or otherwise, if it breaches
or threatens to breach its obligations under this Section 29.
30. NOTICES. All written legal notices required by this Agreement shall be
mailed or delivered as follows:
To Avista: Avista Corporation
Attention: Vice President, Energy Resources and
Optimization
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Mailing Address:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
To Potlatch: Vice President, Pulp & Paperboard Division
Potlatch Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Vice President and General Counsel
Potlatch Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Changes in persons or addresses for submittal of written notices by a
Party to this Agreement shall be made in writing to the other Party and
delivered in accordance with this Section 30. Any verbal notice required hereby
which affects the payments to be made hereunder shall be confirmed in writing as
promptly as practicable after the verbal notice is given.
-32-
31. SETTLEMENT OF LITIGATION.
Potlatch shall dismiss with prejudice its complaint in the United
States District Court for the District of Idaho, Case No. CV02-543-C-EJL, and
its complaint before the Idaho Public Utilities Commission, Docket No.
AVU-E-02-08, upon entry of a final order of the IPUC or court of competent
jurisdiction approving the Agreement.
32. EXHIBITS.
This Power Purchase Agreement includes the following exhibits, which
are attached and incorporated by reference herein:
Exhibit A - Metering
Exhibit B - Communications
Exhibit C - Description of the Facility
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the first date
herein-above set forth:
POTLATCH CORPORATION AVISTA CORPORATION
By: __________________________ By:________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇
Title: Plant Manager, Idaho Pulp & Title: Chairman, President and Chief
Paperboard Division Executive Officer
-33-
EXHIBIT A
[METERING SPECIFICATIONS, POINTS AND LOCATIONS GRAPHIC]
[SIMPLIFIED METERING DIAGRAM]
1.0 DEFINITIONS
Whenever used in this Exhibit the following terms shall have the following
meanings:
1.1 "NET FACILITY POWER" (G(n)). Expressed kW.
1.1.1 For the purposes of this Agreement, the Parties have
agreed that Facility Service Power is 125 kW per operating generating unit.
Potlatch shall notify Avista when substantial changes are made to the Facility
that affect the amount of Facility Service Power. Within a reasonable time the
Parties shall select a mutually agreed upon third party auditor and shall share
equally the costs of such an audit of Facility Service Power. Unless otherwise
agreed, the value determined by such audit shall become the new amount for
Facility Service Power for the balance of the term of this Agreement.
1.1.2 For the purposes of this Agreement, the Parties have
agreed that Losses are 200 kW.
1.2 "POWER GENERATED" (G(1), G(2), G(3), & G(4)). The electric
power measured at each operating unit expressed in kW.
A-1
1.3 "ENERGY PURCHASED" (E(p)). The amount of energy that Avista
purchases from Potlatch generated by the Facility in kWh in each hour.
1.4 "ENERGY SOLD" (E(s)). The amount of energy that Potlatch
purchases from Avista, in kWh in each hour.
1.5 "UTILITY TIE ACTIVE POWER" (P(ut)). The total active power
delivered to Potlatch, measured at each of the two (2) Pointsof
Delivery expressed in kW.
1.6 "UTILITY TIE REACTIVE POWER" (Q(ut)). The total reactive power
delivered to Potlatch, measured at each of the two (2) Points of
Delivery expressed in kVAR.
1.7 "BASE GENERATION AMOUNT" (G(b)). Expressed in kW.
1.8 "BASE PERIOD DEMAND" (D(kVa-base)). Expressed in kVa.
1.9 "EXCESS GENERATION AMOUNT" (G(e)). Expressed in kW.
1.10 "EXCESS PERIOD DEMAND" (D(kVa-excess)). Expressed in kVa.
1.11 "INCREMENTAL GENERATION AMOUNT" (G(i)). Expressed in kW.
1.12 "NOMINAL GENERATION AMOUNT" (G(nom)). Expressed in kW.
2.0 GENERAL METERING FORMULAS:
2.1 P(ut) = P(ut1) + P(ut2)(kW)
2.2 Q(ut) = Q(ut1) + Q(ut2) (kVAR) Delivered to Potlatch
2.3 G(n) = G(1) + G(2) + G(3) + G(4) - (125kW*(the number of
operating generating units)) - (Losses)
2.4 G(i) = G(n) - G(nom), where G(i) > 0
Otherwise G(i) = 0
A-2
3.0 BASE PERIOD POWER SALES FORMULA (TIME PERIOD IN WHICH BASE
GENERATION AMOUNT HAS NOT BEEN EXCEEDED)
3.1 Energy Sold (E[s]) = (P[ut] + G[n]) * Time (kWh)
3.2 Base Period Demand (kVa)
D[kVa-base] = (square root of)(P[ut]+G[n])(2) + (Q[ut](2)
4.0 EXCESS PERIOD POWER SALES FORMULA (TIME PERIOD AFTER THE BASE
GENERATION AMOUNT IS EXCEEDED) WHEN THE MAXIMUM EXCESS
GENERATION AMOUNT IS EXCEEDED OR WHEN POTLATCH USES EXCESS
GENERATION AMOUNTS TO SERVE LOAD AND AVISTA DOES NOT PURCHASE
INCREMENTAL GENERATION AMOUNTS
4.1 Energy Sold (E(s)) = (P(ut))* Time (kWh)
4.2 Excess Period Demand (kVa)
D[kVa-base] = (square root of)(P[ut](2)+G[n]) + (Q[ut](2)
5.0 EXCESS PERIOD POWER SALES FORMULA (TIME PERIOD AFTER THE BASE
GENERATION AMOUNT IS EXCEEDED) WHEN THE MAXIMUM EXCESS GENERATION
AMOUNT IS EXCEEDED OR WHEN POTLATCH USES EXCESS GENERATION AMOUNTS TO
SERVE LOAD AND AVISTA PURCHASES INCREMENTAL GENERATION AMOUNTS
5.1 Energy Sold (E(s)) = (P(ut)+G(i))* Time (kWh)
5.2 Excess Period Demand (kVa)
D[kVa-base] = (square root of)(P[ut]+G(i)(2) + (Q[ut](2)
6.0 EXCESS PERIOD POWER SALES FORMULA (TIME PERIOD AFTER THE BASE
GENERATION AMOUNT IS EXCEEDED) WHEN AVISTA PURCHASES EXCESS GENERATION
AMOUNTS FROM POTLATCH AND AVISTA DOES NOT PURCHASE INCREMENTAL
GENERATION AMOUNTS
6.1 Energy Sold (E(s)) = (P(ut)+ G(n)* Time (kWh)
A-3
6.2 Excess Period Demand (kVa)
D[kVa-base] = (square root of)(P[ut]+G[n])(2) + (Q[ut](2)
D[kVa-base] = (square root of)(P[ut]+G[n])(2) + (Q[ut](2)
7.0 EXCESS PERIOD POWER SALES FORMULA (TIME PERIOD AFTER THE BASE
GENERATION AMOUNT IS EXCEEDED) WHEN AVISTA PURCHASES EXCESS
GENERATION AMOUNTS FROM POTLATCH AND AVISTA PURCHASES
INCREMENTAL GENERATION AMOUNTS
7.1 Energy Sold (E(s)) = (P(ut)+ G(n))* Time (kWh)
7.2 Excess Period Demand (kVa)
D[kVa-base] = (square root of)(P[ut]+G[n])(2) + (Q[ut](2)
8.0 BASE PERIOD POWER PURCHASE FORMULA
8.1 Base Generation Purchased (G(b)) = G(n) * Time (kWh) where
G(i) = 0 or G(b) = G(nom)* Time (kWh) where G(i) > 0
8.2 Incremental Generation Purchased (G(i)) = G(n) - G(nom) * Time
(kWh) where G(i) > 0 otherwise G(i) = 0
9.0 EXCESS PERIOD POWER PURCHASE FORMULA
9.1 Excess Generation Purchased (G(e)) = G(n)* Time (kWh) where
G(i) = 0 or G(e) = G(nom) where G(i) > 0
or G(e) = 0 where Potlatch uses Excess Generation Amounts to
serve Load
9.2 Incremental Generation Purchased (G(i)) = G(n) - G(nom) * Time
(kWh) where G(i) > 0 otherwise G(i) = 0
A-4
EXHIBIT B
COMMUNICATIONS
1. Verbal Communications
(a) Verbal communications relating to electric power scheduling, generation
or load level changes between Potlatch and Avista shall be between the
following personnel:
(1) Pre-Schedule (5:30 a.m. to approximately 1:30 p.m. on normal
business days):
Avista Pre-Scheduler (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Potlatch Utility Supervisor (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(2) Real-Time Schedule (available 24 hours per day):
Avista Real-Time Scheduler (▇▇▇) ▇▇▇-▇▇▇▇
Potlatch Utility Supervisor (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) During normal business hours, all verbal communications relating to
interruptions and outages:
Avista System Operator (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Potlatch Utility Operator (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(c) Outside of normal business hours (nights, weekends, and holidays), all
verbal communications relating to interruptions and outages shall take
place between the following personnel:
Avista System Operator (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Potlatch Utility Operator (▇▇▇) ▇▇▇-▇▇▇▇
Alternate Phone Number (▇▇▇) ▇▇▇-▇▇▇▇
Either Party may provide written notice to the other Party setting
forth different contact numbers.
B-1
EXHIBIT C
DESCRIPTION OF THE FACILITY
1. Unit Number One Description
(a) The unit number one turbine, General Electric serial number 197741, is
a nine stage, 3600 RPM, 600 PSIG steam turbine.
(b) The unit number one generator, General Electric serial number 316X188,
is nameplate rated at 12,500 kVA.
2. Unit Number Two Description
(a) The unit number two turbine, General Electric serial number 83530, is a
six stage, 3600 RPM, 600 PSIG steam turbine.
(b) The unit number two generator, General Electric serial number 6784689,
is nameplate rated at 11,188 kVA.
3. Unit Number Three Description
(a) The unit number three turbine, General Electric serial number 197836,
is a twelve stage, 3600 RPM, 1250 PSIG steam turbine.
(b) The unit number three generator, General Electric serial number
316X374, is nameplate rated at 41,600 kVA @ 30 PSIG H2.
4. Unit Number Four Description
(a) The unit number four turbine, from ABB order number MB275226, is a 3600
RPM steam turbine.
(b) The unit number four generator, ABB serial number HM300516, is
nameplate rated at 66,916 kVA
C-1
