Exhibit 10.3.43
ENERGY SERVICES AGREEMENT
BETWEEN
IMPERIAL IRRIGATION DISTRICT
AND
ORMESA, LLC
1 PARTIES
1.1 This Energy Services Agreement is entered into this 11th day of
February, 2003, between Irrigation District ("IID"), an irrigation
district organized under the Water Code of the State of California,
and ORMESA, LLC ("ORMESA"), a Delaware limited liability company.
1.2 IID and ORMESA are sometimes referred to in This Agreement
individually as "Party" and collectively as "Parties".
2 RECITALS
2.1 On March 8, 1999, IID and East Mesa Geothermal, LLC, ("EMG") entered
into an Interim Distribution Service Agreement ("Interim Agreement")
whereby EMG selected to self serve the electrical load of certain
geothermal electric generating facilities located east of the City of
Holtville, (as more particularly described herein) rather than
purchasing such service from IID, as it had previously done. In place
at that time were plant connection and transmission service agreements
for IID to wheel the gross output of these facilities to various
parties.
2.2 On April 15, 2002, the previous owners of EMG transferred their
interest in the above-described geothermal facilities to subsidiaries
of Ormat Nevada Inc. which renamed EMG to ORMESA, and, as a result,
ORMESA succeeded to East Mesa's rights, duties and obligations arising
under the Interim Agreement, as well as the plant connection and
transmission service agreements.
2.3 IID and ORMESA now desire to replace the Interim Agreement with this
Energy Service Agreement in order to redefine their relationship from
and after The Effective Date (defined in Section 4.1, below), relating
to the availability of certain IID facilities, and the furnishing of
IID services to ORMESA's facilities. Further, IID and ORMESA desire to
resolve certain disputes which arose between IID and EMG ("The
Disputes"), regarding performance of and payment for activities of
IID, in the one hand, and ORMESA and EMG, on the other, during the
term of the Interim Agreement and to establish and define the terms of
the settlement of The Disputes.
2.4 To facilitate monitoring the activities of The Parties at the
Facilities, contemplated in This Agreement, as well as the services
provided pursuant to the plant connection and transmission service
agreements, The Parties have agreed that a new, simplified metering
scheme, as described in Exhibit A which will be installed at IID's
Highline Substation. This equipment will become the master meter for
the subject facilities.
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2.5 Nothing in This Agreement affects the rights and obligations of IID
and ORMESA created by the existing plant connection and transmission
service agreements.
2.6 The Interim Distribution Service Agreement is hereby extended to
December 31, 2002. Thereafter, except as otherwise herein provided,
this Energy Services Agreement shall become effective.
3 DEFINITIONS
The words and terms used in This Agreement, when initially capitalized,
whether in singular or plural, shall have the meanings specified:
3.1 "Activities" All activities of The Parties at The Facilities,
conducted pursuant to the terms of This Agreement or the Interim
Agreement.
3.2 "This Agreement" This Energy Service Agreement and all Exhibits
attached hereto.
3.3 "Authorized Representative" The representative of a Party designated
in accordance with Section 12.
3.4 "Capital Addition Costs" The cost of capital additions to, and
replacements for components of the Distribution Facilities, at the
actual cost incurred by IID, plus 10% to allow IID to provide services
to the Facilities, as (i) required pursuant to generally accepted
engineering and operating practices in the electric utility industry,
(ii) used solely to provide services to the Facilities, and (iii)
provided or contracted for pursuant to IID's standard practices;
3.5 "Compromise Payment" Seven Hundred Twenty Four Thousand Dollars
($724,000), an amount established after negotiations between the
Parties which, when paid to IID as herein required, shall resolve all
issues relating to the Special Charge, Distribution Facilities Charge,
Operation and Maintenance Charges (with the exception of the O & M
Charges of Section 5.1.3.1, below), Standby Service and Ancillary
Charges, and represent payment in full of all disputed and undisputed
balances due IID, for these services relating to the Interim
Agreement, projected through December 31, 2002, and the Consumed
Energy Charges, through August 31, 2002.
3.6 "Connection and Transmission Service Agreements" Agreements, titled,
respectively, "Plant Connection Agreement" and "Transmission Service
Agreement," (hereafter, respectively, "TSA" and "PCA") between IID and
ORMESA to provide infrastructure to support IID's wheeling the gross
output of The Facilities to Southern California Edison, as further
described in Exhibit B to This Agreement.
3.7 "Consumed Energy Charge" A charge, billed to and paid by ORMESA to
IID, in accordance with IID's A-2 tariff rate, as specified in the
PCA, for electricity provided by IID and consumed at the Facilities.
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3.8 "Distribution Facilities" Existing IID substations (identified by IID
as ▇▇▇▇ ▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇ 2, and East Mesa 3), distribution circuits,
vaults, switches, breakers, fuses, relays, and other equipment owned
by IID to exclusively serve the Loads.
3.9 "Distribution Facilities Charge" The balance of the charge set forth
in the Interim Agreement, in the amount of One Million Nine Hundred
and Fifty Four Thousand Seven Hundred and Ninety Two Dollars
($1,954,792), payable in thirty (30) monthly installments of Sixty
Five Thousand One Hundred and Sixty Dollars ($65,160), commencing on
The Effective Date.
3.10 "Facilities" The geothermal facilities known as ORMESA I (including IE
and IH), ORMESA II, GEM 2, and GEM 3 located in the Holtviile area of
Imperial County, California.
3.11 "New Metering Installation" Any new metering equipment which may be
required as a result of the circumstances described in Section 2.4,
above, approved by the Parties, the cost of which shall be borne by
ORMESA.
3.12 "Operation and Maintenance Charges" Charges for operation and
maintenance costs incurred by IID prior to The Effective Date,
calculated as an allocation to the direct labor and non-labor costs
using standard factors determined reasonably by IID, which standard
factors are applied generally for other IID activities and purposes.
Overhead costs shall include, but not be limited to, costs such as
employee benefits, general and administrative costs, engineering
overhead, and purchasing and warehousing costs.
3.13 "Parasitic Load" The electric demand required to be served at the
Facilities.
3.14 "Release" The document entitled "Mutual Release," attached hereto as
Exhibit C.
3.15 "Uncontrollable Force" Any cause beyond the control of a Party
including, but not restricted to, failure of or threat of failure of a
Party's facilities which have been constructed, operated, and
maintained in accordance with generally - accepted engineering and
operating practices in the electric utility industry; flood, drought,
earthquake, tornado, storm, fire, pestilence, lightning, and other
natural catastrophes; epidemic, war, riot, civil disturbance or
disobedience, strike, labor dispute, labor or material shortage,
sabotage, government priorities, and restraint by court order or
public authority (whether valid or invalid); and inability of a Party
to obtain or keep the necessary authorizations or approvals from any
governmental agency or authority, which inability such Party could not
reasonably have been expected to avoid and which by exercise of due
diligence it has been unable to overcome.
3.16 "Willful Action" Action which is knowingly or intentionally taken or
not taken with conscious indifference to the consequences thereof or
with intent that injury or damage would result or would probably
result there from; which has been determined by final arbitration
award or final judgment or judicial decree to be a material default
under This Agreement and which occurs or continues beyond the time
specified in such arbitration award or judgment or judicial decree for
curing
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such default or, if no time to cure is specified therein, occurs or
continues thereafter beyond a reasonable time to cure such default; or
which is knowingly or intentionally taken or not taken with the
knowledge that does not include any act or failure to act which is
merely involuntary, accidental, or negligent.
The words and terms used in This Agreement, when initially capitalized,
whether in singular or plural, that are not defined in This Agreement shall
have the meanings specified in the Interim Agreement.
4 EFFECTIVE DATE, TERM OF AGREEMENT
4.1 Effective Date The Effective Date of This Agreement ("The Effective
Date") shall be January 1, 2003, unless ORMESA's compliance with the
preconditions described in Sections 5.1.1, 5.1.2 and 13.1
("Preconditions") is excused by either the following circumstances:
4.1.1 ORMESA is delayed in performing the Preconditions by the
occurrence of an Uncontrollable Force; provided, however, that
such excused delay shall not exceed fifteen (15) days after such
occurrence, at which time ORMESA, within five (5) days, shall
nonetheless perform said Preconditions; or
4.1.2 The Parties have mutually agreed to extend the time for
compliance.
4.2 Termination of Interim Agreement On The Effective Date, the Interim
Agreement shall terminate and be of no further force and effect. On
The Effective Date, IID will notify ORMESA in writing its confirmation
that This Agreement is in effect and the Interim Agreement has been
terminated.
4.3 Effect of Failure to Meet Deadlines Unless their performance has been
excused, or, if excused, they have not been performed by the extended
deadlines as described in Section 4.1 above, then This Agreement shall
be of no force and effect, and, notwithstanding any provisions in This
Agreement to the contrary, all Activities shall be governed by the
terms and conditions of the Interim Agreement. In that event, the
Interim Agreement shall remain in effect, without the necessity of
further extensions, so long as IID provides the services to The
Facilities.
4.4 Term. The initial term of This Agreement shall commence on The
Effective Date and terminate fifteen (15) calendar years thereafter.
This Agreement may be extended by mutual agreement of the Parties.
5 OBLIGATIONS AND ENTITLEMENTS OF THE PARTIES
5.1 Terms Relating to Payment
5.1.1 ORMESA will make the Compromise Payment to IID, within five (5)
business days following execution of This Agreement. Upon
receipt of the Compromise Payment, IID will cancel and return to
ORMESA the FPL Bond identified as a $500,000 Bond No. 23-46-15
posted by GEM
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Resources LLC on July 24, 2000. Thereafter, ORMESA will provide
security for performance of This Agreement in accordance with
IID's established policies relating to new commercial accounts.
Such security shall not exceed more than 3 months' billing under
This Agreement, and shall be in a form of a corporate guarantee
of Ormat Funding Corp. (which owns 100% of Ormesa LLC) and reduce
every year until elimination at the end of year 3.
5.1.2 ORMESA will pay for the cost of the new metering scheme and
capital improvement charges thereof (if any) prior to The
Effective Date of This Agreement, if the cost has already been
determined, unless the time for such payments has been mutually
extended by the Parties.
5.1.3 ORMESA will pay for the following services provided prior to The
Effective Date, as billed, after completion of the services,
within thirty (30) business days of receipt of IID's Invoice:
5.1.3.1 Any O and M Charges attributable to O and M services
provided prior to The Effective Date, including, but not
limited to the charge for insulation cleaning Five
Thousand Eighty Three Dollars and Fifty One Cents
($5,083.51), performed on October 22, 2002; and
5.1.3.2 Charges incurred for energy provided by IID and consumed
in The Facilities; and
5.1.4 After The Effective Date, IID will provide and ORMESA will pay:
5.1.4.1 The Consumed Energy Charge;
5.1.4.2 The remaining balance of the Facilities Distribution
Charge;
5.1.4.3 All charges described in the TSA and PCA, provided,
however, that until June 1, 2003, in lieu of payment for
IID's services relating to frequency/regulation,
reactives/voltage support, reserves and imbalance
support, ORMESA will pay the sum of ten thousand dollars
($10,000) per month; thereafter; ORMESA will pay for
actual consumption or allocation of costs for these
services, as provided in the TSA or PCA, as applicable
to all FACA participants.
5.1.4.4 Capital Improvement Charges; and
5.2 Special Charge Termination On The Effective Date, the Special Charge,
Operation & Maintenance Charge and Ancillary Charge, as described in
the Interim Agreement will terminate.
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6 OPERATING TERMS
6.1 Compliance with Interruptions Should there be an interruption as
described in Section 6.3, ORMESA, immediately after being orally
notified by IID, shall comply with directions given by IID's
schedulers, dispatchers, or troubleshooters.
6.2 Power Quality The quality of the power delivered from the Facilities
to the Loads, including but not limited to voltage, stability, and
phase imbalance, shall be the sole responsibility of ORMESA.
6.3 Interruptions IID reserve the right to interrupt the distribution
service provided hereunder if any of the conditions described in
Sections 6.4 or 6.5 exists on the Distribution Facilities utilized to
provide said service. The existence of the described conditions shall
be as determined by IID in its sole judgment; provided that such
determination shall be consistent with prudent operating procedures
and with generally accepted engineering and operating practices in the
electric utility industry. Should there be an interruption, as
described, in Sections 6.4 or 6.5, IID shall employ reasonable efforts
to expeditiously eliminate the cause and minimize the duration of such
interruption.
6.4 Danger to Life or Property IID may interrupt the distribution service
provided hereunder as necessary to avoid or alleviate danger to life
or property. The operation of automated equipment designed to protect
Distribution Facilities from damage may interrupt without warning the
services provided hereunder.
6.5 Work IID may interrupt the services provided hereunder to the extent
necessary to construct, install, maintain, repair, replace, remove,
inspect, or investigate any part of the Distribution Facilities
utilized to provide such service. IID shall coordinate with ORMESA
such interruption to the extent practicable, and IID shall notify
ORMESA of such interruption as far in advance as practicable, but in
no event less than forty-eight (48) hours in advance of such
interruption.
6.6 Compliance With Applicable Operating Standards At all times during
the term, The Parties will abide by and comply with operating policies
and procedures, established from time to time by the Western
Electrical Coordinating Council ("WECC"), and, without limitation,
good utility business practices.
7 TERMS REGARDING BILLING & PAYMENT
7.1 Billing Procedure IID shall render monthly bills to ORMESA for the
services provided to Ormesa as described in Section 5.1.4. Bills shall
be due and payable not later than twenty-five (25) calendar days after
the date of issuance.
All payments by ORMESA shall be sent to:
Imperial Irrigation District
c/o Manager, Finance and Accounting
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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All ▇▇▇▇▇▇▇▇ by IID shall be sent to:
ORMESA, LLC
▇/▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
7.2 Change of Billing Addresses At any time, a Party's Authorized
Representative may change the address to which payments or ▇▇▇▇▇▇▇▇
shall be sent by giving written notice to the other Party's Authorized
Representative.
7.3 Interest on Unpaid Bills Bills which are not paid in full by the due
date shall thereafter bear interest at the rate of one and one-half
percent (1 1/2%) per month or the maximum legal rate of interest,
whichever is less, compounded monthly on the unpaid amount. Interest
shall be prorated by days from the due date to the date payment is
received by IID.
8 EXHIBITS MADE PART OF THIS AGREEMENT
8.1 Exhibits Incorporated The Exhibits attached to This Agreement are by
reference incorporated herein and made a part thereof, and remain in
full force and effect in accordance with their respective provisions
until superseded by a subsequent exhibit.
8.2 Subsequent Exhibits Any subsequent exhibit shall be executed by the
signatories.
8.3 Subsequent Exhibits Requirements Each superseding exhibit must
contain the date it becomes effective and must be attached to This
Agreement, and when so attached, is incorporated herein and becomes a
part thereof.
9 BILLING DISPUTES; BILLING DISPUTE RESOLUTION
9.1 Claims Re Incorrect ▇▇▇▇▇▇▇▇ If ORMESA makes a claim that IID has
issued an incorrect billing, while full and timely payment of the ▇▇▇▇
or bills is not excused, and ORMESA shall pay the entire amount(s)
billed by the due date, the basis for such claim shall be presented to
the Authorized Representatives.
9.2 Authorized Representative Agreement Within fifteen (15) days pursuant
to ORMESA's claim, If the Authorized Representatives agree that there
was no incorrect billing, the Parties shall accept the matter as
resolved. If, however, an incorrect billing has occurred and the
Authorized Representatives agree that there was an incorrect billing,
the billing shall be forthwith corrected and any amounts owed relating
thereto shall be refunded to ORMESA plus interest, as in Section 9.4.
9.3 Effect of Failure to Agree If the Authorized Representatives within
thirty (30) calendar days after receipt of an incorrect billing claim,
the Authorized Representatives cannot agree on the issue, a dispute
shall be declared.
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9.4 Dispute Resolution In the event a billing dispute is declared, the
Parties shall endeavor to agree on a process to resolve the dispute.
If no such dispute resolution process is established by the Parties
within thirty (30) calendar days after a dispute is declared, the
dispute shall be resolved by binding arbitration in accordance with
the rules of the American Arbitration Association. If a determination
is made that an incorrect billing has been issued, and an overpayment
has occurred, the amount of the overpayment shall be paid to ORMESA by
IID. Overpayments shall bear interest at the rate of seven percent
(7%) per annum. Interest shall be prorated, by days from the date of
payment by ORMESA to the date the refund is mailed by IID to ORMESA.
10 LIABILITY AND INDEMNITY
10.1 Indemnity for Agreement Activities A given Party, its directors,
officers, agents, and employees shall not be liable to the other
Party, its directors, officers, agents, and employees, for claims or
losses (including consequential losses) resulting from the given
Party's Agreement Activities, except for those claims or losses
(including consequential losses) attributable to the Willful Action of
the given Party, its directors, officers, agents, or employees. The
other Party expressly releases the given Party, its directors,
officers, agents, and employees, from any liabilities, claims, or
losses (including consequential losses) resulting from the given
Party's Agreement Activities, except for those liabilities, claims, or
losses (including consequential losses) which result from the Willful
Action of the given Party, its directors, officers, agents, or
employees.
10.2 Indemnity for Third Party Claims Each Party shall indemnify and hold
the other Party, its directors, officers, agents, and employees
harmless against all liabilities to any person or entity not a Party
to This Agreement, which liabilities arise as a result of the subject
matter of This Agreement and which result from the sole negligence or
Willful Action of the indemnifying Party, its directors, officers,
agents, or employees, which liabilities involve death, bodily injury,
or property damage, and whether such liabilities are direct, indirect,
or consequential. The indemnity obligation described in this Section
10.2 shall include a Party's liabilities to third parties, as set
forth herein, as well as its reasonable costs, expenses, and
attorneys' fees incurred in negotiating, settling, or defending
against such liabilities.
11 AUTHORIZED REPRESENTATIVES
11.1 Initial Designation At the time This Agreement is executed, each Party
shall designate by written notice to the other Party, an Authorized
Representative who is authorized to act on its behalf in the
implementation of This Agreement.
11.1.1 IID's Authorized Representative:
Name:
--------------------------------
Tel:
--------------------------------
Fax:
--------------------------------
E-mail:
--------------------------------
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11.1.2 ORMESA's Authorized Representative:
Name: Ran Raviv
Tel: (▇▇▇)▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
11.2 Change In Designation Either Party may change at any time the
designation of its Authorized Representative by written notice to the
other Party.
11.3 No Authority to Amend Agreement The Authorized Representatives shall
not have the authority to amend This Agreement.
12 SETTLEMENT OF PRIOR DISPUTES
12.1 Agreement As Settlement Document
12.1.1 On The Effective Date, all disputes between IID and ORMESA
relating to the Facilities, arising from obligations between or
among IID and ORMESA), shall be deemed settled and resolved. To
reflect such settlement, IID and ORMESA shall execute a mutual
release, in the form attached hereto and marked Exhibit C. This
mutual release, when executed by The Parties, will settle and
resolve all such disputes, including, but not limited to those
which may have arisen prior to the April 15, 2002 transaction
between the owners of EMG (now ORMESA) regarding The
Facilities, as described in the foregoing Recitals. ORMESA
represents and warrants that it has full authority to settle
and resolve such disputes by executing This Agreement and the
attached mutual release.
13 GENERAL PROVISIONS
13.1 Prior Communications Superseded This Agreement contains the entire
agreement and understanding between the Parties as to the subject
matter of This Agreement and supersedes all prior agreements,
commitments, representations, and discussions between the Parties as
to said subject matter.
13.2 No Dedication of Facilities
13.2.1 Performance of a given Party pursuant to This Agreement,
including but not limited to undertakings by a Party to the
other Party under any provision of This Agreement, shall not
constitute the dedication of the Party's facilities or any
portion thereof to the public or to the other Party.
13.2.2 It is understood and agreed that any undertaking by a Party
under any provision of This Agreement shall cease upon the
termination of This Agreement, unless such obligations survive
This Agreement's term.
13.3 Written Waiver Required Remedies of a given Party upon the other
Party's default or other failure to perform any obligation set forth
in This Agreement shall not be waived, nor shall a given Party's
failure to require strict performance of any of the provisions of This
Agreement or to exercise any of its rights hereunder constitute a
waiver of such provisions or rights, unless an express written waiver
from the given Party shall have been given to the other Party.
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13.4 No Partnership or Joint Venture Created The Parties do not intend to
create or establish, nor shall This Agreement or any performance or
undertaking by a Party or the Parties pursuant to This Agreement be
deemed to create or establish, a partnership, joint venture, or other
similar relationship between them.
13.5 No Third Party Rights The Parties do not intend to create rights in
or to grant remedies to any third party as a beneficiary of This
Agreement.
13.6 Performance Excused by Occurrence of Uncontrollable Force
13.6.1 Neither Party shall be considered to be in default in the
performance of any of its obligations under This Agreement when a
failure of performance is due to an Uncontrollable Force.
13.6.2 A Party rendered unable to fulfill any of its obligations under
This Agreement by reason of an Uncontrollable Force shall give prompt
telephonic notice followed by written notice of such condition to the
other Party and shall exercise due diligence to remove such condition
with all reasonable dispatch.
13.7 Strike or Labor Dispute If a Party's performance is affected by a
strike or labor dispute, nothing contained herein shall be construed
to require the Party to settle any such strike or labor dispute.
13.8 Assignments Any assignment by ORMESA of its interest in This
Agreement which is made without the written consent of IID, which such
consent shall not be unreasonably withheld, shall not relieve ORMESA
of its liability for performance of any of its duties and obligations
hereunder, and in the event of any such assignment ORMESA shall
continue to remain liable for payment of any and all money due IID
hereunder and for the performance and observance of all other
covenants, duties, and obligations to be performed and observed
hereunder by ORMESA to the same extent as though no assignment has
been made; provided, however, that ORMESA will have the right to
assign This Agreement for security purposes, to a bank or other entity
which provides financing or refinancing for construction, repair,
maintenance and operation of The Facilities or any portion thereof or
to an affiliate that has ownership or operational interests in The
Facilities and IID shall promptly consent to such assignment in
writing. IID shall approve an assignment to a lender or affiliate, so
long as any such assignee(s) agrees, in writing, to be bound by the
terms and conditions of This Agreement, and such agreement is
furnished to IID in advance of the assignment. In the case of a
lender, IID, in its sole discretion, may waive the application of some
or all of the duties and obligations of This Agreement, so long as the
lender agrees that, in the event of foreclosure, the successor shall
be bound by the terms hereof to the same extent as ORMESA. For
purposes of this Section 13.8, the term "affiliate" refers to an
entity which is directly or indirectly owned or controlled by an
entity which owns or controls fifty percent (50%) or more of the
equity interest in ORMESA.
13.9 Agreement Binding on Successors All of the provisions of This
Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, permitted assignees, and
legal representatives.
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13.10 Governing Law and Venue
13.10.1 Laws governing any court proceedings or actions commenced in
connection with interpretation or enforcement of This
Agreement shall be the laws of the State of California.
13.10.2 Venue for any court proceedings or action commenced in
connection with the interpretation or enforcement of This
Agreement shall be in Imperial County, California.
13.11 Severability If any provision of This Agreement is determined to be
void for any reasons, then the remaining provisions of This Agreement
must be severed there from and remain in full force and effect. The
remaining provisions shall be interpreted and enforced so as to give
full meaning to such provisions without reference to those provisions
determined to be void.
13.12 Modifications No modifications, changes, or amendments of This
Agreement shall be effective unless made in writing and signed by the
authorized signatories to This Agreement.
13.13 Notices Any notice, demand, or request provided for in This
Agreement or served, given, or made in connection with it shall be in
writing and shall be deemed properly served, given, or made if
delivered in person or sent by United States mail, postage prepaid,
or by facsimile, to the persons specified below unless otherwise
provided for in This Agreement:
Imperial Irrigation District
c/o General Manager
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ORMESA, LLC
▇/▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Either Party may at any time, by notice to the other Party, change the
designation or address of the person so specified as the one to
receive notices pursuant to This Agreement.
13.14 Headings and Labels The headings and labels contained in This
Agreement are for the convenience of the reader and are not intended
to be used in the interpretation of This Agreement.
13.15 Interpretation In case of a conflict between the procedures or
standards performed by IID relative to WECC, the provisions of This
Agreement shall govern. In the event an ambiguity or question of
intent or interpretation arises, This Agreement shall be construed as
if drafted jointly by the Parties and no
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presumption or burden of proof shall arise favoring or disfavoring
any Party by virtue of authorship of any of the provisions of This
Agreement.
13.16 Further Assurances The Parties agree to execute such documents that
may be reasonably necessary and required to carry out the intent of
this Agreement.
14 AUTHORITY TO EXECUTE
14.1 Representations
14.1.1 Each Party represents and warrants that it has the authority to
enter into and bind itself to all applicable parts and provisions of
This Agreement.
14.1.2 The signatory has been duly authorized to execute and deliver
This Agreement on behalf of the Party for which the signatory signed.
14.1.3 ORMESA specifically represents and warrants that it has the
authority to enter into This Agreement in connection with the
Holtville Plants and the Loads.
15 EXECUTION
IN WITNESS WHEREOF, the Parties have caused this Energy Services Agreement
to be executed on this ___ day of February, 2003.
IMPERIAL IRRIGATION DISTRICT ORMESA, LLC
By ORMAT FUNDING CORP.
Sole Member of ORMESA, LLC
By By
--------------------------------- ---------------------------------
Name Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Title: President, Board of Directors Title: Controller
Date: Date:
-------------------------------- ------------------------------
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EXHIBIT A
SIMPLIFIED METERING SCHEME
November_, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Ormesa, LLC - Plant Engineer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇:
The following is a basic description of the proposed simplified metering scheme
to interface Imperial Irrigation District and Ormesa, LLC (OG) Facilities. This
scheme will be created to simplify export metering and to capture and register
electrical services provided to OG as described in the "Energy Services
Agreement" (ESA) due to be effective January 1, 2003.
OG plans to self serve its station service load. OG will also generate to
fulfill any export or line loss schedule obligations per the ESA. As indicated
in the attached Simplified Metering Scheme, East Highline's "Master Meter" (M-1)
referenced to the 92 KV HL4-Line will be utilized to meter the net export from
0G. The existing OG-2 meter (M-2) will continue to meter the net generation from
the Ormesa Geothermal-2 facility. The net generation from OG-1 can be determined
from the difference of the meters i.e. OG-1=(M-1)-(M-2).
Further, IID will provide standby service (all components) up to 2 MW at the A2
Rate. Any additional requirements by OG will be charged at the penalty rate of
$18/KW-MO. Associated energy will be charged at the thermal heat rate of 14,000
MMBTU/KWH multiplied by the Southern California Border Gas price as published in
▇▇▇▇▇'▇ "Gas Daily," on a two day lag for the month during which energy was
provided.
Below is a description and components breakdown of these two schedules. Please
note that an official "Penalty Rate" does not exist. My intentions here are to
demonstrate how electric service component's costs from the A2 rate will change
if OG exceeds 2 MW. Also, for each component I have included in brackets and in
red, a description of the algorithm(s) used to appropriately capture usage.
These algorithms will be created on a display of our Advanced Control's Energy
Management System. Inputs to EMS to be provided by Supervisory Control and Data
Acquisition (SCADA).
Please confirm that this is generally agreeable to Ormesa, LLC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Supt., Energy Mgmt.
Imperial Irrigation District
Enc.
Simplified Metering Scheme
[Graphic: Simplified Metering Scheme to Interface Imperial
Irrigation District and Ormesa Facilities]
EXHIBIT B
EXISTING PLANT CONNECTION AND TRANSMISSION SERVICE AGREEMENTS
A. Background: On December 16, 2002 ORMESA further reorganized the Ormesa
Projects' holding structure in order to make them more efficient and streamline
the relationship with IID. All of the properties of Ormesa Geothermal, a
California General Partnership, Ormesa Geothermal II, a California General
Partnership and Gem Resources, LLC a Delaware corporation - which are entities
wholly owned by Ormesa LLC were merged into and are now held by ORMESA,
directly. For convenience we have attached the previous ownership structure
(Annex B.1) and the effect of the merger (Annex B.2).
ORMESA, LLC will therefore require a SINGLE Plant Connection Agreement
("PCA") and a single Transmission Services Agreement ("TSA") for EACH of its
Power Purchase Agreements with Southern California Edison, to be achieved by
paragraphs B and C, as follows:
B. Consolidation & Assignment of Agreements: The Parties to This Agreement
hereby agree that the following agreements are assigned and re-designated as
held by Ormesa LLC:
1. PCA for the Ormesa Geothermal Plant between IID and Ormesa Geothermal
dated October 1, 1985.
2. The following two agreements should be consolidated into the PCA of
Ormesa Geothermal:-
i. PCA for the Ormesa IE Geothermal Plan between IID and Geothermal
dated October 21, 1988.
ii. PCA for the Ormesa IH Geothermal Plant between IID and Ormesa
Geothermal dated October 3, 1989.
3. PCA for the Ormesa Geothermal Plant No. 2 between IID and Ormesa
Geothermal II dated May 26, 1987.
4. TSA for the Ormesa I, Ormesa IE and Ormesa IH Geothermal Power Plants
between IID and Ormesa Geothermal dated October 3, 1989.
5. TSA for the Ormesa II Geothermal Power Plant between IID and Ormesa
Geothermal II dated August 25, 1987.
C. Termination of Agreements: The Parties to This Agreement hereby agree
to terminate the following agreements as they are no longer necessary for the
operation of the Projects:
1. PCA for the Geo East Mesa Limited Partnership Unit No. 2 between IID
and Geo East Mesa Limited Partnership dated March 21, 1989.
2. PCA for the Geo East Mesa Limited Partnership Unit No. 3 between IID
and Geo East Mesa Limited Partnership dated March 21, 1989.
In addition, upon consolidation of the PCAs mentioned in 2(i) and 2(ii) above
into Ormesa Geothermal, terminate the following:
1. PCA for the Ormesa IE Geothermal Plan between IID and Geothermal dated
October 21, 1988.
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2. PCA for the Ormesa IH Geothermal Plant between IID and Ormesa
Geothermal dated October 3, 1989.
3. TSA for the Geo East Mesa LP Unit No. 2 Plant between IID and Geo East
Mesa Limited Partnership dated March 21, 1989.
4. TSA for the Geo East Mesa LP Unit No. 3 Plant between IID and Geo East
Mesa Limited Partnership dated March 21, 1989.
D. Notices :
o Any payment related communications should be addressed to:
▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Controller
ORMESA, LLC
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
T (▇▇▇) ▇▇▇-▇▇▇▇
F (▇▇▇) ▇▇▇-▇▇▇▇
E ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
o Any Contract & Legal communications should be addressed to:
Mr. Ran Raviv, Vice President
ORMAT Nevada, Inc.
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
T (▇▇▇) ▇▇▇-▇▇▇▇
F (▇▇▇) ▇▇▇-▇▇▇▇
E ▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
o Any Technical communication should be communicated to:
Mr. ▇▇▇ ▇▇▇▇▇▇▇▇, Plant Manager
ORMESA, LLC
▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
T (▇▇▇) ▇▇▇-▇▇▇▇
F (▇▇▇) ▇▇▇-▇▇▇▇
E ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
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Annex B.1:
[Graphic: Simplified Organization Chart of Ormat Nevada Inc. and
its Subsidiaries and the relationship with Imperial Irrigation District]
2
Annex B.2
[Graphic: Simplified Ownership Structure Between Imperial
Irrigation District and Ormesa LLC]
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EXHIBIT C
FORM OF
MUTUAL RELEASE
This Release, by and between ORMESA, LLC ("ORMESA"), a Delaware limited
liability company and Imperial Irrigation District ("IID"), is being executed
and delivered on February 11th, 2003, (the "Release Date"). ORMESA and IID are
hereinafter collectively referred to as the "Parties" and individually as a
"Party".
BACKGROUND
On March 8, 1999, IID and East Mesa Geothermal, LLC, ("EMG") entered into an
Interim Distribution Service Agreement ("Interim Agreement") whereby EMG elected
to self serve the electrical load of certain geothermal electric generating
facilities located East of the City of Holtville, rather than purchasing such
service from IID, as it had previously done.
On April 15, 2002, the previous owners of EMG transferred their interests in the
above-described geothermal facilities to subsidiaries of Ormat Nevada Inc., who
renamed EMG to ORMESA, and, as a result, ORMESA succeeded to EMG's rights,
duties and obligations arising under the Interim Agreement.
IID and ORMESA desire to resolve certain disputes which arose between them ("The
Disputes"), regarding performance of and payment for activities of IID, on the
one hand, and ORMESA on the other, during the term of the Interim Agreement and
to establish and define the terms of the settlement of The Disputes, pursuant to
the Energy Services Agreement between IID and ORMESA, to which this Release is
attached as Exhibit C.
IID and ORMESA represent to each other, their respective officers, directors,
successors and assigns, that their agreement to execute and be bound by the
terms of the Energy Services Agreement and this Mutual Release are based, in
part, on their warranty and representation that each has full authority to
settle The Disputes in accordance with the terms of the Energy Services
Agreement applicable to The Disputes, and that, by executing this Release, the
terms hereof will bind IID and ORMESA.
RELEASE TERMS
In consideration of the mutual benefits that they will receive as a result of
the resolution of their disputes arising under the Interim Agreement and the
terms of this Release, the Parties, intending to be legally bound, hereby agree
as follows:
1. Each Party, on behalf of itself and its affiliates and each of their
respective past, present and future officers, directors, board members,
attorneys, employees, agents, servants, consultants, advisors, shareholders,
successors and assigns (the "Releasing Party"), irrevocably and unconditionally
releases, acquits and forever discharges the other Party and its affiliates and
its past, present and future officers, directors, board members, attorneys,
employees, agents, servants, consultants, advisors, shareholders, successors and
assigns (the "Released Party") from any and all charges, complaints, claims,
actions, suits, demands, liabilities, obligations, promises, agreements,
contracts, damages, costs, debts and expenses
1
(including attorney fees and legal and court costs) whatsoever, whether known or
unknown, suspected or unsuspected, both at law and in equity (individually,
"Claim"; collectively, "Claims") that the Releasing Party now has, has ever had
or may hereafter have against the Released Party arising out of or in connection
with the Interim Agreement or the relationship between the Parties created
thereby. Each Party expressly waives and relinquishes all rights and benefits
that it may have under any state or federal statute, court or administrative
decision, or common law principle that would otherwise limit the effect of this
Release to claims known or suspected prior to the Release Date, and it does so
understanding and acknowledging the significance and consequences of such
specific waiver.
2. Except with respect to the obligations and performance required by the
terms and provisions of this Release, the Parties each acknowledge that they are
aware of the facts, and that it is their intention that execution of this
Release shall be effective as a full and final settlement of, and as a bar to,
each and every Claim. The Parties acknowledge that they are aware that if they
hereafter discover facts different from, or in addition to, the facts which they
now know or believe to be true, it is nevertheless their intention hereby to
settle finally, and fully, each and every Claim. In furtherance of such
intention, the Release herein shall become effective upon the events described
herein, and will remain in effect as releases notwithstanding the discovery of
any such different or additional facts.
The Parties further understand and agree that the Release may extend to
matters which have not yet been discovered, and that such possibility has been
explicitly taken into account in determining the consideration to be given for
this Release and in entering into the Release herein which is intended to
include all Claims, whether known or unknown arising from the Interim Agreement.
The Parties acknowledge that they are familiar with, and expressly waive,
all of the rights and/or privileges provided by California Civil Code section
1542 which states;
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECTUING THE RELEAES,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
The Parties being aware of this Civil Code section 1542 hereby expressly
waive any and all rights that they might have thereunder and statutes of similar
effect throughout the world. The Parties understand and acknowledge the
significance and consequence of the specific waiver of California Civil Code
section 1542 and hereby assume full responsibility for any injuries, damages,
losses or liabilities that they may hereafter discover as possibly resulting
from the release Claims.
3. Each Party hereby irrevocably and unconditionally agrees to refrain,
directly and indirectly, from asserting any claim or demand, or commencing,
instituting or causing to be commenced or instituted, any suit, proceeding,
arbitration or other action of any kind against any person or entity released
pursuant to the releases granted in Section 1 based upon any matter purported to
be released by this Release.
4. Without in any way limiting any of the rights and remedies otherwise
available to the Released Party, the Releasing Party shall indemnify and hold
harmless the Released Party from and against all losses, liabilities, claims,
damages or expenses (including costs of
2
investigation and attorney fees and legal and court costs), whether or not
involving third party claims, arising directly or indirectly from or in
connection with (i) the assertion by or on behalf of the Releasing Party of any
Claim or other matter purported to be released pursuant to this Release and (ii)
the assertion by any third party of any claim or demand against any Released
Party that arises directly or indirectly from, or in connection with, any
assertion by or on behalf of the Releasing Party against such third party of any
matters purported to be released pursuant to this Release.
5. If any court of competent jurisdiction holds any provision of this
Release invalid or unenforceable, the parties to this Release intend for the
other provisions of this Release to remain in full force and effect. Any
provision of this Release held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.
6. This Release may not be modified except by a writing signed by the
persons against whose interest such modification shall operate. This Release
shall be governed by and construed under the laws of the State of California
without regard to principles of conflicts of law.
IN WITNESS WHEREOF, each of the undersigned have executed and delivered this
Release as of February , 2003.
IMPERIAL IRRIGATION DISTRICT ORMESA, LLC
By ORMAT FUNDING CORP.
Sole Member of ORMESA, LLC
By By
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Name Name : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Position Position : Controller
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