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EXHIBIT 10.19
ENERGY MANAGEMENT SERVICES
AGREEMENT
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between
Southern California Water Company
and
Enova Energy, Inc.
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ENERGY MANAGEMENT SERVICES AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA WATER COMPANY
AND
ENOVA ENERGY, INC.
Table of Contents
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Section Page
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1. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Effective Date, Term and Cancellation of the Agreement . . . . . 1
4. Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Billing and Payment . . . . . . . . . . . . . . . . . . . . . . 4
7. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 4
8. Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. No Third Party Rights . . . . . . . . . . . . . . . . . . . . . 6
10. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
12. Uncontrollable Forces . . . . . . . . . . . . . . . . . . . . . 7
13. Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
14. Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . 8
15. Representatives and Notices . . . . . . . . . . . . . . . . . . 8
16. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 9
17. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
18. Proprietary Information and Ownership Rights . . . . . . . . . . 9
19. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
20. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 10
21. Signature Clause . . . . . . . . . . . . . . . . . . . . . . . . 11
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ENERGY MANAGEMENT SERVICES AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA WATER COMPANY
AND
ENOVA ENERGY, INC.
1. PARTIES
This Energy Management Services Agreement (Agreement) is made between
Southern California Water Company (SCWC), a California corporation and
Enova Energy, Inc. (Enova), a California corporation, hereinafter sometimes
referred to individually as "Party" and collectively as "Parties."
2. AGREEMENT
The Parties agree as follows.
3. EFFECTIVE DATE, TERM AND CANCELLATION OF THE AGREEMENT
3.1 Effective Date: This Agreement is effective as of the date
when signed by the duly authorized representatives of both
SCWC and Enova.
3.2 Termination: Either Party may terminate this Agreement by
providing the other Party with six months (6) advance written
notice of such termination provided that such notice shall not
be given prior to December 31, 1996.
3.3 Cancellation:
3.3.1 SCWC's Rights: If Enova fails to perform any of its
material obligations or covenants in the manner
required under this Agreement, SCWC may terminate
this Agreement by giving Enova a thirty (30) day
notice (cure period) of its intention to terminate
the Agreement, specifying the default and the manner
of cure SCWC contends is required under the
Agreement. The termination notice shall be effective
to terminate this Agreement unless Enova has cured
the default within the cure period. If the default
is cured within the cure period, then SCWC shall
acknowledge the cure in writing.
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3.3.2 Enova's Rights: Enova shall have the option to
terminate this Agreement effective upon thirty (30)
days' written notice to SCWC if (i) federal, state or
local statutes, regulations or other laws are
modified or interpreted in such a manner, or (ii)
SCWC enters into any energy supply agreement, which
is not an Enova Recommendation, so as to:
3.3.2.1 prohibit Enova from providing any of the
energy management services covered by this
Agreement;
3.3.2.2 adversely affect Enova's ability to perform
services in accordance with this Agreement;
or
3.3.2.3 adversely affect Enova's ability to achieve
cost savings for SCWC under this Agreement.
4. SERVICES
4.1 Resource Planning and Risk Management Services: Enova shall
provide integrated resource planning and risk management
services to SCWC. These services shall include the annual
development of a 5 year resource plan. Such resource plan
shall address:
4.1.1 energy cost and reliability;
4.1.2 the risks associated with i) long-term contracts and
potential stranded investment and ii) short-term
contracts and potential price volatility; and
4.1.3 the use of risk management products to minimize the
risks identified pursuant to Section 4.1.2.
4.2 Energy Management Services: Enova shall be the exclusive
provider of the following energy management services for SCWC:
4.2.1 For capacity, energy and transmission service
transactions of one (1) month or less in duration,
Enova shall:
4.2.1.1 perform the scheduling, dispatching and
accounting of SCWC's firm and non-firm energy
and transmission service purchases, sales
and exchanges. Enova shall act in the name
of SCWC as an independent contractor
utilizing SCWC's enabling contracts that
provide for the purchase, sale, and/or
exchange of capacity, energy, and
transmission service that now or in the
future may exist between SCWC and others for
the term hereof. Additionally, in order for
Enova to perform the accounting, SCWC shall
promptly provide Enova copies of all invoices
for such energy costs.
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4.2.1.2 submit energy schedules to Southern
California Edison (SCE) pursuant to the terms
of the SCE control area import agreement.
4.2.2 For capacity, energy and transmission service
transactions of greater than one (1) month in
duration, Enova shall:
4.2.2.1 assess available energy markets, through
formal request for proposals (RFP) and
informal routine telephone contacts, to
identify feasible and economically beneficial
resource transactions;
4.2.2.2 analyze market trends, economic conditions,
legislation and regulatory actions affecting
the availability, cost and utilization of
bulk-power; and
4.2.2.3 develop, negotiate and administer contracts
for the procurement and/or sale of purchased
power or transmission services (each such
transaction must be agreed to in writing by
SCWC before being acquired for SCWC by
Enova).
5. Compensation
5.1 Monthly Service Fee: In recognition of the services provided
in Section 4 above, SCWC shall pay to Enova a monthly service
fee as specified below:
5.1.1 A fixed monthly service fee of $6,000.
5.1.2 A variable monthly service fee equal to $1.70/MWh
for all energy purchased by Enova on behalf of SCWC.
5.1.3 Beginning January, 1997, the fixed monthly service
fee shall be adjusted annually, effective January 1
of each calendar year thereafter, by multiplying the
previous year's ("Base Year") fixed monthly service
fee by a factor equal to the quotient of (i) the
average of the 12 month series of the CPI for Los
Angeles, Anaheim and Riverside ("CPI") or, if this
CPI is no longer available, the U.S. City Average
CPI, divided by (ii) the average of the 12 month CPI
series, or successor thereto, ending October 31 of
the fiscal year immediately prior to the Base Year.
5.2 Communication Equipment and Monthly Costs: SCWC shall be
responsible for the cost of establishing and maintaining
communications necessary to conduct energy management services
pursuant to Section 4.2 hereof. Such costs shall include one-
time hardware, software development if required, and monthly
communications facility costs. Such costs shall be discussed
and agreed to by the Parties before they are incurred.
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6. Billing and Payment
6.1 General Billing: Commencing with the month immediately
following the month in which services have commenced pursuant
to Section 3.1, Enova shall by the seventh day of each month
provide SCWC a written statement of services rendered. Each
service shall be itemized and subject to the following billing
provisions.
6.1.1 Billing: Enova shall provide by the seventh (7th )
day of each month a ▇▇▇▇ to SCWC itemizing all
services for which there are charges that month.
6.1.2 Payment: Each month, by the twentieth (20th ) day,
SCWC shall pay to Enova the amount billed for that
month.
6.2 Energy Management Services: The monthly amount, pursuant to
Section 5.1 above, shall be noted on each monthly ▇▇▇▇.
6.3 Communication Costs: Communication costs for equipment,
software and monthly services, pursuant to Section 5.2, shall
be itemized in the monthly statement submitted by Enova to
SCWC.
6.4 Late Payments: If either Party fails to make payment when the
same is due, interest thereon shall accrue and be payable at
the rate of one percent (1%) compounded per month or the
maximum legal rate, whichever is less, prorated by days until
payment is received. Interest shall be computed on the basis
of a thirty (30) day month and applied to the actual number of
days from the due date until payment is made.
6.5 Billing Disputes: In the event either Party (the "Disputing
Party") should in good faih dispute any portion of the
amount shown on any statement, the Disputing Party shall pay
all of that statement, including the disputed amount. Any
amount which is disputed by the Disputing Party in good faith
and which is thereafter determined not to be owing by the
Disputing Party, shall be refunded by the non-Disputing
Party, together with interest on such amount as provided in
Section 6.4, within twenty (20) days of final resolution of
such dispute by written agreement of the Parties or final
decision of the Arbiters if the disputes are submitted to
arbitration as provided in Section 16 hereof.
7. FURTHER ASSURANCES
7.1 Purchasing Practices: Each Party shall use its best
commercially reasonable efforts to take, or cause to be taken,
any action to do, or cause to be done, all things necessary,
proper or advisable under applicable laws to consummate and
make effective the transactions and activities contemplated by
this Agreement, including, but not
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limited to, amendment of SCWC's current purchasing practices
and procedures to allow Enova to perform services pursuant to
this Agreement.
7.2 Allocation of Non-Firm Resources: Enova represents and SCWC
acknowledges that Enova shall provide similar services
contemplated by this Agreement for others, in addition to
SCWC. To avoid the appearance and the possibility of a
conflict of interest with SCWC or a claim that Enova may not
be acting in SCWC's best interests to reduce purchased power
costs, Enova shall allocate non-firm energy and non-firm
transmission, and other electric services, pro rata among
Enova's customers, including SCWC, on the basis of each
customer's megawatt-hour and, as appropriate megawatt
requirement during any hour of service; provided, however,
that SCWC's firm power and firm transmission resources shall
not be so allocated. SCWC acknowledges and agrees that the
allocation method described herein adequately addresses any
potential conflict with SCWC's interest which is served by
Enova and waives any and all claims it may have against Enova
arising from such allocation method.
7.3 Control and Payment of Subordinates: SCWC retains Enova on an
independent contractor basis and not as an employee. The
personnel performing the services contemplated by this
Agreement on behalf of SCWC shall at all times be under
Enova's exclusive direction and control and are not employees
of SCWC. Enova shall pay all wages, salaries, and other
amounts due such personnel in, connection with their
performance of services under this Agreement and as required by
law. Enova shall be responsible for all reports and
obligations regarding such personnel including, but not
limited to: social security taxes, income tax withholding,
unemployment insurance, and workers compensation insurance.
8. AUDITS
8.1 Right to Audit: Upon prior notice, either Party shall have the
right to designate its own employee representative(s) or its
contracted representative(s) with a certified public
accounting firm who shall have the right to examine those
accounts, books, records, or supporting documentation to
verify the accuracy of any statement, charge, computation or
demand made under or pursuant to this Agreement and related
capacity, energy, transmission or other electric services
agreements. Any such audit(s) shall be at the auditing
Party's expense and undertaken at reasonable times and in
conformance with generally accepted auditing standards. The
other Party agrees to fully cooperate with any such audit(s).
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8.2 Audit Period: The right to audit shall extend during the
length of this Agreement and for a period of not more than one
(1) year following the month in which services were performed.
The Parties shall retain all necessary records and
documentation for the entire length of this audit period.
8.3 Remedy of Errors: In the event any exceptions are found during
an audit, the Party finding the exceptions shall promptly
notify the other Party of such exception in writing. The
Parties shall attempt to resolve all audit exceptions as soon
as possible thereafter. To the extent that resolution of an
audit exception involves a monetary payment from one Party to
the other, the Party making payment shall do so within sixty
(60) days of the audit exception resolution. The payment
amount shall include interest calculated at the rate of one
percent (1 %) compounded per month or the maximum legal rate,
whichever is less, of the unpaid balance prorated by days from
the date of resolution until payment is received. Interest
shall be computed on the basis of a thirty (30) day month and
applied to the actual number of days from the due date until
payment is made.
9. NO THIRD PARTY RIGHTS
Except as otherwise specifically provided in this Agreement, the
Parties do not intend to create rights in, or to grant remedies to,
any third party as a beneficiary of this Agreement or of any duty,
covenant, obligation or undertaking established herein.
10. WAIVERS
Any waiver at any time by either Party of its rights with respect to a
default under this Agreement, or with respect to any other matter
arising in connection with this Agreement, shall not be deemed a
waiver with respect to any subsequent default or other matter arising
in connection therewith or otherwise. Any delay, short of the
statutory period of limitation in asserting or enforcing any right,
shall not be deemed a waiver of such right.
11. ASSIGNMENT
No transfer or assignment of all or any part of this Agreement or any
rights, benefits or duties under it by any Party shall be effective
without the prior written consent of the other Party which consent shall
not be unreasonably withheld; provided, that this Section shall not
apply to interests which arise by reason of any deeds of trust,
mortgages, indentures or security agreements heretofore granted or
executed by a Party. Any successor to or transferee or assignee of the
rights of a Party, whether by voluntary
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transfer, judicial sale, foreclosure sale, or otherwise, shall be
subject to all terms and conditions of this Agreement to the same
extent as though such successor, transferee or assignee were an
original Party.
12. UNCONTROLLABLE FORCES
Neither Party shall be considered in default in the performance of any
of its obligations under this Agreement (other than obligations of
said Party to make payments hereunder) when a failure of performance
shall be due to uncontrollable forces. A Party rendered unable to
fulfill any of its obligations under this Agreement by reason of an
uncontrollable force shall exercise due diligence to remove such
inability with all reasonable dispatch. Nothing contained herein
shall be construed so as to require a Party to settle any strike or
labor dispute in which it may be involved. For the purposes of this
Agreement, an uncontrollable force shall be any cause beyond the
control of the Party affected, including but not limited to, failure
of or threat of failure of facilities, flood, earthquake, storm, fire,
lightning, epidemic, famine, war, riot, civil disturbance or
disobedience, labor dispute, labor or material shortage, restraint by
court order or public authority, and action or non-action by, or
inability to obtain necessary authorizations or approvals from any
governmental agency or authority which, by exercise of due diligence
and foresight, such Party could not reasonably have been expected to
avoid and which, by exercise of due diligence, it has been unable to
overcome.
13. LIABILITY
13.1 Willful Action: Except for any loss, damage, claim, cost,
charge or expense resulting from willful action, no Party, its
directors, or other governing body, officers, or employees
shall be liable to the other Party for any loss, damage, claim,
cost, charge, or expense of any loss, damage, claim, cost,
charge, or expense of any kind or nature (including direct,
indirect, or consequential loss, damage, claim, cost, charge,
or expense) incurred by the other Party, resulting whether or
not from the negligence of any Party, its directors, or other
governing body, officers, employees, or any other person or
entity whose negligence would be imputed by such Party from the
performance or nonperformance of the obligations of any Party
under this Agreement.
13.2 Release: Except for any loss, damage, claim, cost, charge, or
expense resulting from willful action, each Party releases the
other Party, its directors, or other governing body, officers,
and employees, from any such liability referred to in Section
13.1.
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14. COMPLETE AGREEMENT
This Agreement constitutes the complete and entire agreement between
the Parties. Any previous communications, representations, or
agreement, whether oral or written, with respect to the subject matter
thereof are withdrawn. There are no additions to, or deletions from,
or changes in, any of the provisions hereof, and no understanding,
representations, or agreements concerning any of the same, which are
not expressed herein. The invalidity of any part of this Agreement
shall not affect the validity of the remaining parts of the Agreement.
15. REPRESENTATIVES AND NOTICES
15.1 Representatives: Each Party shall designate an Authorized
Representative and an alternate who shall be authorized to act
on its behalf with respect to matters contained herein which
are the functions and responsibilities of the Authorized
Representatives. Within thirty (30) calendar days after
execution of this Agreement, each Party shall give written
notice to the other Party of its designation, and shall
promptly notify the other Party of any subsequent changes in
such designation. The Authorized Representatives shall have
no authority to modify any of the provisions of this
Agreement.
15.2 Notifications: Any notice, request, demand, or statement shall
be given in writing and delivered by prepaid first class mail,
facsimile, or by hand to a Party at the addresses provided
below or such other addresses as the Parties hereto may
designate in writing from time to time:
TO ENOVA: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX Number: (▇▇▇) ▇▇▇-▇▇▇▇
TO SCWC: ▇▇▇▇ ▇▇▇▇ ▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX Number: (▇▇▇) ▇▇▇-▇▇▇▇
15.3 Timing of Notices: Notices or demands delivered personally or
by facsimile shall be deemed served as of actual receipt.
Mailed notices or demands shall be deemed served seventy-two
(72) hours after deposit in the United States mail.
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16. ARBITRATION
16.1 If any controversy, dispute or claim arises out of this
Agreement which cannot be resolved by the personnel directly
involved, either Party may invoke this dispute resolution
procedure by giving written notice to the other Party. This
process shall be a compromise negotiation. All offers,
promises, conduct and statements, whether oral or written made
pursuant to this negotiation shall be confidential,
inadmissible, and not discoverable for any purpose, including
impeachment, in any subsequent arbitration between the
Parties.
16.2 If any dispute arises, as to any factual matter, the Parities
shall submit the factual dispute to binding arbitration. The
Party wanting to pursue such arbitration shall prepare and
serve on the other Party a detailed explanation of the
dispute, including the issues to be resolved and the requested
relief, to which the other Party shall reply within thirty
(30) days. Within ten (10) days after service of the reply,
each Party shall choose an arbitrator, who together shall
choose a third (neutral) arbitrator, and the three shall
determine the issues. In all other respects, the arbitration
shall be governed by the rules of the American Arbitration
Association. The arbiters shall render a decision in writing
not later than thirty (30) days after the matter has been
submitted to them, and the decision of a majority shall be
binding upon the Parties. The arbiters may, in their
discretion, award arbitration costs and attorneys' fees to
either Party. The Parties intend that this Agreement to
arbitrate be valid, enforceable, and irrevocable.
16.3 The decision of the arbiters shall be binding, final and
unappealable and shall have the effect of a judgment. If the
decision is not complied with by a Party within twenty (20)
days of the time of receipt of a written copy of the award of
the arbiters, the other Party may apply to a court of
competent jurisdiction for entry of a judgment based on such
award, together with the costs, including a reasonable
attorney's fee, incurred in obtaining such judgment.
17. SURVIVAL
Obligations and rights set forth in Sections 5, 6, 8, 10, 11, 12, 13,
16 and 19 hereof pertaining to or affecting each Party's obligation to
make payments hereunder shall survive until fully satisfied.
18. PROPRIETARY INFORMATION AND OWNERSHIP RIGHTS
18.1 Enova agrees to use reasonable steps to keep confidential all
information related to projects, methods of manufacture, trade
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secrets or processes (except such information as may belong in
the public domain), and the business or affairs of SCWC which
may be acquired in the performance of work pursuant to Section
4 hereof, provided all such information requiring confidential
treatment has a legend to that effect on it at the time it is
given to Enova.
18.2 Previously developed reports, computer programs,
recommendations, specifications, drawings, technical data,
sketches and all the information used by Enova in connection
with its performance pursuant to Section 4 hereof shall remain
the exclusive property of Enova. Performance under Section 4
hereof shall not convey to SCWC any right to use (either
temporarily or permanently) such previously developed
materials unless specifically provided in writing as part of
this Agreement.
18.3 The reports, computer programs, recommendations,
specifications, drawings, technical data, sketches and all
other information developed and furnished by Enova in
connection with its performance pursuant to Section 4 hereof
shall remain the exclusive property of Enova, subject to
SCWC's permanent right to use same for its own purposes.
Enova shall have the unrestricted right to use and reproduce
all such information, unless such use would violate Enova's
obligation to SCWC pursuant to Section 18.1 hereof.
19. TAXES
In the event foreign, federal, state or local taxes (other than
corporate taxes) are assessed on any transaction undertaken by Enova
for and on behalf of SCWC which is contemplated by this Agreement,
SCWC shall reimburse Enova for the amount of such tax which shall be
invoiced in a separate statement to SCWC as an additional direct
expense under Section 6 hereof.
20. GOVERNING LAW
This Agreement shall be interpreted, governed by, and construed under
the laws of the state of California or the laws of the United States,
as applicable, as if executed and to be performed wholly in the state
of California.
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21. SIGNATURE CLAUSE
The signatories hereto represent that they have been authorized to
enter into this Agreement on behalf of the Party for whom they sign.
BY /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ DATE 3/26/96
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice-President
Enova Energy, Inc.
BY /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ DATE 3/25/96
--------------------------------- -------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Customer Service
Southern California Water Company
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