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Power Purchase Agreements

Power Purchase Agreements. Alex Sifford Ecos Consulting Portland, Oregon www.ecosconsulting.com. Nomenclature. Power PURCHASE = utility view Power SALES = developer view Since good marketing looks for customer perspective, Purchase it is. Power Characteristics.

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Power Purchase Agreements

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  1. Power Purchase Agreements Alex Sifford Ecos Consulting Portland, Oregon www.ecosconsulting.com

  2. Nomenclature • Power PURCHASE = utility view • Power SALES = developer view • Since good marketing looks for customer perspective, Purchase it is

  3. Power Characteristics • Typically unable to store so physical delivery critical: where and when • Utilities have differing requirements e.g., Supplemental or Full Requirements • Baseload or Block Power = more commodity-like • Variable or Peak Power = has most value if able to follow load

  4. BPA firm power rate schedules: Preference Firm (PF) $29.60/MWh Industrial Firm Power (IP-02) Residential Load (RL-02) • New Resource Firm Power (NR-02) $50.40/MWh Northwest Power Rates

  5. Value to the Purchaser • Cost compared to other new resources • Risk factored into cost e.g., levelized costs provide rate stability. • <Natural gas price forecasts are where today?> • Credit stability of the Seller = rate stability • Baseload allows utility to back off other resources

  6. Example Short-Term PPA • One Page Term Sheet Bid • 1 – 3 Years • HLH period or Baseload • Point of Delivery into BPA system • Price in $/MWh • Can be a starting point in L-T negotiations

  7. 24 Sections 55 Pages Comprehensive Current Compare to Lender requirements DEFINITIONS TERM; FACILITY DEVELOPMENT REPRESENTATIONS AND WARRANTIES DELIVERIES OF ENERGY AND GREEN TAGS PURCHASE PRICE; COSTS Example Long-Term PPA

  8. OPERATION AND CONTROL QUALIFYING FACILITY STATUS SECURITY METERING BILLINGS, COMPUTATIONS AND PAYMENTS DEFAULTS AND REMEDIES INDEMNIFICATION AND LIABILITY INSURANCE FORCE MAJEURE SEVERAL OBLIGATIONS Example Long-Term PPA (cont’d.)

  9. CHOICE OF LAW PARTIAL INVALIDITY WAIVER GOVERNMENTAL JURISDICTION AND AUTHORIZATIONS SUCCESSORS AND ASSIGNSENTIRE AGREEMENT NOTICES CONFIDENTIALITY DISAGREEMENTS ------------- Example Long-Term PPA (cont’d.)

  10. BPA 2004 Transmission & Ancillary Services • Generation Interconnection requirements • TBL interconnects new generating facilities to its transmission system. The process allows interconnection on a first-come, first-serve basis by signing up into the TBL queue.

  11. BPA 2004 Transmission & Ancillary Services • NT-04 Network Integration Rates • Base Rate $1.028 $/kW-mo • Load Shaping $0.425 $/kW-mo • Transmission customers purchasing Open Access Transmission Tariff service are required to purchase from TBL the Ancillary Services of: 1) Scheduling, System Control and Dispatch, and 2) Reactive Supply and Voltage Control from Generation Sources.

  12. BPA 2004 Transmission & Ancillary Services • Point to Point Service • TBL provides firm and non-firm transmission from point(s) of receipt to point(s) of delivery under a tariff.

  13. Definitions – whose practices Term – option to extend Project Configuration – share of output Purchase of Energy Net of parasitics – self supply Net of transmission to Pt. Of Delivery Wheeling - Line losses factored in Power Purchase Agreement Issues & Examples

  14. Power Purchase Agreement Important Issues • Credit Support – Parent or other backup • Environmental Attributes (Green Tags) • Milestones – environmental, transmission • Seller Obligations – Leases, O&M • Buyer Obligations – Able to take & pay

  15. Transmission Issues – Queue, Ancillary Services, Firm Products Project O & M – Standards Security – Credit changes Defaults & Remedies – How to cure, rights v. obligations (see lenders) Power Purchase Agreement Important Issues

  16. Power Purchase Agreement Important Issues • Termination – terms, of convenience • Dispute Resolution – meet, arbitrate, court • Assignment – Control over to whom • Confidentiality - $, promotion • Force Majeure – both plant & transmission

  17. Thank you Thanks to George Darr, retired BPA, and Joe Taffe, Power Manager, Clatskanie PUD for their help.

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