HomeMy WebLinkAboutReso 93-017 - Approve COR entering into the South of Tesla agreement by & among the transmission agency of Northern Calif & Its members RESOLUTION NO. q,3 -/ 7
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
APPROVING THE CITY OF REDDING ENTERING INTO THE SOUTH
OF TESLA AGREEMENT BY AND AMONG THE TRANSMISSION AGENCY
OF NORTHERN CALIFORNIA AND ITS MEMBERS; AND AUTHORIZING
THE MAYOR TO SIGN.
WHEREAS, the attached South of Tesla (SOT) Agreement has
been developed to accomplish the linkage between the Transmission
Agency of Northern California (TANG) and its members for the SOT
transmission service provided to TANC by Pacific Gas and Electric
(PGandE) ; and
WHEREAS, the SOT transmission service as provided for in
said Agreement is critical for Redding to complete a transmission
path from the California-Oregon Transmission Project (COTP) to
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Southern California, and to Redding' s ownership interest in the
San Juan Power Plant located in northwestern New Mexico; and
WHEREAS, such service would be utilized to deliver San Juan
power from southern California to the COTP for Redding, and to
provide Redding access to other wholesale power markets in the
south;
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of
the City of Redding as follows:
1. That it is in the best interests of the City of Redding
to enter into the South of Tesla Agreement between the
Transmission Agency of Northern California and its Members, a s
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true copy of which is attached hereto and incorporated herein by
reference.
2. That the Mayor of the City of Redding is hereby
authorized and directed to sign said Agreement on behalf of the
City of Redding; and the City Clerk is hereby authorized and
directed to attest the signature of the Mayor and to impress the
official seal of the City of Redding thereto.
I HEREBY CERTIFY that the foregoing Resolution was
introduced and read at a regular meeting of the City Council of
the City of Redding on the 19th day of January , 1993, and was
duly adopted at said meeting by the following vote:
AYES• COUNCIL MEMBERS• Anderson, Arness, Dahl, Kehoe & Moss
NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: None
ABSTAIN: COUNCIL MEMBERS: None
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CHARLIE MOSS, Mayor
City of Redding
A ST:
CONNIE STROHMAYER, ity Clerk
O PROVED:
RAAPALL A. HAYS, dty Attorney
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7 SOUTH OF TESLA AGREEMENT
8 BETWEEN
9 THE TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
10 AND ITS MEMBERS
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APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 SOUTH OF TESLA AGREEMENT
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2 BETWEEN
3 THE TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
4 AND ITS MEMBERS
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6 TABLE OF CONTENTS
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8 SECTION PAGE
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1 9
10 Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
11 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
12 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
13 2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
,�_.. 14 3 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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15 4 Reallocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
16 5 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
E 17 6 Reinforcement Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18 7 Authority of The TANC Treasurer and TANC Controller . . . . . . . 13
19 8 Use of the Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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20 9 Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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21 10 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
22 11 Effective Date and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
23 12 Billing and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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25 14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
26 15 Liability of TANC Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
27 16 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 18
28 17 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
APPROVED BY TAMC COMMISSION-DECEMBER 16,1992
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1 18 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2 19 Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3 20 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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4 21 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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5 22 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6 23 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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8 Principles for Tesla-Midway Transmission Service . . . . . . . . . APPENDIX A
9 Permanent Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX B-1
10 Long-Term Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX B-2
11 Addresses of the Parties for Billing . . . . . . . . . . . . . . . . . . . . . APPENDIX C-1
12 Addresses of the Parties for Notices . . . . . . . . . . . . . . . . . . . . APPENDIX C-2
13 Pricing for SOT Transmission Service . . . . . . . . . . . . . . . . . . . APPENDIX D
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:L 14 Initial Reinforcements Letter Agreement . . . . . . . . . . . . . . . . . APPENDIX E
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u APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 PREAMBLE
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2 This Agreement is made and entered into as of , 1992, by and among the
3 Transmission Agency of Northern California, hereinafter referred to as "IANC'; and the Cities
4 of Alameda, Healdsburg, Lodi, Lompoc, Redding, Roseville, Santa Clara, and Ukiah; the
5 Sacramento Municipal Utility District; the Modesto Irrigation District, the Turlock Irrigation
6 District; and the Plumas-Sierra Rural Electric Cooperative.
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8 RECITALS
9 WHEREAS:
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10 A. On December 10, 1984, TANC was duly established as a joint powers agency,
'i 11 pursuant to Section 6500 et seq. of the California Government Code, by an
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12 agreement among the Members entitled "Joint Powers Agreement, Transmission
13 Agency of Northern California" Uoint Powers Agreement or JPA); and
14 B. TANC executed the December 19, 1984, "Memorandum of Understanding,
15 California-Oregon Transmission Project" (MOU), among certain California entities
16 and the Western Area Power Administration (Western), which sets forth principles
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17 for the development of the California-Oregon Transmission Project (COTP) and
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18 provides for certain transmission rights between Tesla and Midway Substations;and
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19 C. TANC and the Pacific Gas and Electric Company (PG&E) entered into the Principles
1 20 for Tesla-Midway Transmission Service(Principles)dated August 25,1989,(attached
21 as Appendix A), which provide for transmission service that was described in
t� 22 Section 2.3 of the MOU; and
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23 D. TANC, in good faith, undertook negotiations with PG&E to develop a "definitive
24 agreement" for Tesla-Midway Transmission Service in accordance with the
25 Principles; and
26 E. TANG, after negotiating with PG&E for over two years, was not successful in
27 obtaining a reasonable, definitive successor agreement and, therefore, filed a
28 Complaint and Motion for Summary Disposition with the Federal Energy Regulatory
1 APPROVED BY IANC COMMISSION-DECEMBER 16,1992
1 Commission (FERC) (FERC Docket No. EL91-8-000) seeking relief which would
_ 2 enable TANC to utilize the transmission service provided for in the Principles; and
3 F. On June 12, 1991, FERC issued an Order in Docket No. EL91-8-000 which,inter alia,
4 required PG&E to file the Principles with the FERC and rejected an alternative
5 transmission rate schedule previously filed by PG&E for Tesla-Midway Transmission
6 Service. On June 27, 1991, PG&E filed the Principles with FERC and TANC
7 requested the FERC to order the immediate commencement of Tesla-Midway
8 Transmission Service thereunder. On August 26, 1991, the FERC ordered PG&E to
9 file,within thirty(30)days,a transmission rate schedule which is consistent with the
10 Principles, accompanied by appropriate cost support; and
11 G. On October 9, 1991, PG&E filed a "Replacement transmission rate schedule" which
12 is purported by PG&E to be consistent with FERC's August 26, 1991 order; and
13 H. On November 6, 1991, TANC filed a motion to reform on summary disposition
14 PG&E's Replacement transmission rate schedule so that the Replacement
15 transmission rate schedule will be consistent with the Principles and the FERC's
16 August 26, 1991 Order; and
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17 I. On December 30, 1991,TANC paid PG&E $5,000,000 as its contribution to the costs
18 of the Initial Reinforcements. The payment was made pursuant to a letter
19 agreement, dated December 30, 1991, between TANC and PG&E (attached as
20 Appendix E); and
21 J. On February 26, 1992, FERC issued an Order which, inter alia, required Tesla-
22 Midway Transmission Service to commence on March 1,1992 pursuant to the terms
23 and conditions of the Principles as an interim rate schedule.
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24 K. The purpose of this Agreement is to set forth the arrangements under which TANC
25 will render Tesla-Midway Transmission Service to its Members.
26 NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth in this
{ 27 Agreement, TANC and the Members agree as follows:
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2 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 1. DEFINITIONS
2 Whenever used in this Agreement, the following terms, when initially capitalized, shall
3 have the following meanings. The singular of any definition shall include the plural and
r� 4 the plural shall include the singular.
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5 1.1 Agreement
6 This South of Tesla Agreement (SOTA), as amended and supplemented from time
'f 7 to time in accordance with the terms hereof.
8 1.2 Allocation
-� 9 All or part of a SOT Member's portion of the 300 MW of firm bidirectional Tesla-
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! 10 Midway Transmission Service(measured at Midway Substation)that TANC obtains
` 11 from PG&E. The permanent Allocations, as shown in Appendix B-1, and the long-
12 term Allocations, as shown in Appendix B-2, are expressed as a percentage of
13 TANC's Tesla-Midway Transmission Service or expressed in megawatts,depending
14 upon the context of use.
'� 15 1.3 Cash Call
16 A request for funds from one or more of the SOT Members by the TANC Treasurer
17 for services provided under this Agreement.
` 18 1.4 Cost Sharing Percentage
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u19 A percentage which is utilized by the TANC Treasurer to compute each Member's
j 20 obligation to pay for its share of the SOT Service Charge. Each SOT Member's Cost
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( 21 Sharing Percentage shall be equal to its Allocation expressed as a percentage and as
22 set forth in Appendix B-2.
23 1.5 COTP
;( 24 California-Oregon Transmission Project.
25 1.6 Curtailment
26 A temporary reduction in Tesla-Midway Transmission Service.
27 1.7 FERC
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28 The Federal Energy Regulatory Commission, or its regulatory successor.
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3 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 1.8 Initial Reinforcements
IIS; 2 Those reinforcements to PG&E's transmission system that are specified in Section
3 4.1 of the Principles and as described in Appendix E of this Agreement.
i 4 1.9 Interest Charize
5 That charge against unpaid amounts due and owing,assessed at an annual interest
6 rate compounded monthly equal to the lesser of the following amounts: two percent
7 (2%) plus the applicable first-of-the-month reference rate of the Bank of America
8 N.T. & S.A.,San Francisco, California, or its successor, corresponding to the period
9 during which the payment is overdue; or the maximum interest rate permitted by
10 law.
11 1.10 PA3
12 TANC Project Agreement No. 3 for the COTP.
13 1.11 Principles
14 The Principles for Tesla-Midway Transmission Service executed on August 29, 1989,
15 by and between TANC and PG&E (attached as Appendix A).
16 1.12 Reallocation, Permanent Reallocation, Long-Term Reallocation, Short-Term
} 17 Reallocation
18 A voluntary transfer of all or a part of a SOT Member's Allocation hereunder. Such
'j 19 transfer can be in one of the following forms:
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20 a) Permanent Reallocation - Any permanent transfer of a SOT Member's
i 21 Allocation. Appendix B-1 shall be revised from time to time to reflect any
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f 22 changes occasioned by such Permanent Reallocations.
23 b) Long-Term Reallocation-Any temporary transfer which is longer than six
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24 (6) months in duration. Appendix B-2 shall be revised from time to time to
' 25 reflect any changes occasioned by Long-Term Reallocations or Permanent
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26 Reallocations.
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27 c) Short-Term Reallocation-Any temporary transfer which is six (6) months
28 or less in duration.
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4 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
1 When such a Reallocation occurs,the result shall be the new Allocation for that time
^_ 2 period.
` 3 1.13 SOT
4 South of Tesla.
, . 5 1.14 South of Tesla Reinforcements (SOTR)
'f 6 Those reinforcements to PG&E's transmission system that are described in Section
7 4.2 of the Principles.
8 - 1.15 SOT Member
!, 9 A TANC Member or a former TANC Member which has withdrawn from TANC
i' 10 pursuant to Section 9 of this Agreement which elects to participate in this
11 Agreement pursuant to Section 3 of this Agreement.
12 1.16 SOT Service Charge
! 13 The charge, as determined by the TANC Commission pursuant to the voting
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14 provisions of Section 5, that shall be applied to the bills rendered by TANC to its
15 SOT Members. The charge shall be based upon the rate determined pursuant to
16 Appendix D and applied in accordance with Section 12 of this Agreement.
17 1.17 SOT Short-Term Reallocation Rate
18 The rate, as determined pursuant to Appendix D, which shall be used as the
19 maximum rate for Short-Term Reallocations.
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20 1.18 TANC Commission
k 21 The governing body of TANC as described in the Joint Powers Agreement.
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22 1.19 TANC Member
23 Any of the Members of TANC including: Cities of Alameda, Biggs, Gridley,
24 Healdsburg, Lodi, Lompoc, Palo Alto, Redding, Roseville, Santa Clara, and Ukiah;
25 the Sacramento Municipal Utility District; the Modesto Irrigation District; the
26 Turlock Irrigation District; or the Plumas-Sierra Rural Electric Cooperative, which,
27 at any given point in time, is a party to the Joint Powers Agreement.
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5 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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4.. 1 1.20 TANC Treasurer and TANC Controller
'f 2 The persons appointed by the Commission to serve respectively as TANC Treasurer,
3 and TANC Controller, as provided in the Joint Powers Agreement.
4 1.21 Tesla-Midway Transmission Service (TMTS)
5 Three hundred (300) megawatts of firm bidirectional transmission service provided
�._ 6 by PG&E to TANC, which is allocable by TANC to its SOT Members, pursuant to
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7 the Principles or a FERC accepted transmission rate schedule (TRS).
' 8 1.22 Tesla-Midway Transmission Service Agreement (TMTS Agreement)
i. 9 An agreement that may be made between TANC and PG&E, including the
10 Principles or a FERC accepted TRS, which provides for certain transmission and
11 other services over PG&E's facilities.
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12 1.23 Tesla-Midway Transmission Service Charge (TMTS Charge)
13 Those charges that are made from time to time by PG&E to TANC pursuant to the
14 TMTS Agreement, including but not limited to, monthly transmission service
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15 charges, mitigation charges, and special facilities charges related to TANC's share
16 of the Initial Reinforcements.
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18 2. AUTHORIZATION
19 TANC is hereby authorized and directed to act on behalf of the SOT Members in any
20 activities necessary to fulfill its obligations or enforce its rights related to the Principles, a
it 21 successor TMTS Agreement, subject to procedures for SOT Member approval and
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22 authorization established by the TANC Commission pursuant to this Agreement and the
23 terms and conditions of the Joint Powers Agreement.
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25 3. PARTICIPATION
26 3.1 Subject to Sections 3.2 and 3.3 below, each SOT Member, by executing this
27 Agreement, hereby elects to receive an Allocation of TANC's TMTS. Such election,
'! 28 and payment of its share of the SOT Service Charges, permits a SOT Member to
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6APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 receive an Allocation in accordance with Appendices B-1 and B-2, as those
2 Allocations may be revised pursuant to this Agreement. Further,such election shall
3 obligate the SOT Member to all terms and conditions provided for by this
4 Agreement _... _.
5 3.2 While Section 3.1 above permits SOT Members to participate in this Agreement,the
6 SOT Members recognize that the services and obligations under this Agreement are
7 contingent upon the TANC Commission's acceptance of TMTS provided by PG&E.
8 3.3 In the event that fewer than all of the SOT Members elect to accept an Allocation
9 from TANC once the TANC Commission accepts the TMTS Agreement, Appendix
10 B-1 shall, within thirty (30) days of the date that the TMTS Agreement is approved
11 by the TANC Commission, be revised to reflect the participation by those SOT
12 Members electing to take service. Such revision shall be determined in accordance
13 with the procedures as established in Section 4.3 of this Agreement.
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15 4. REALLOCATIONS
16 TMTS may be reallocated among SOT Members consistent with the Principles or the TMTS
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17 Agreement. Such Reallocations shall be permitted, provided that the resulting total
18 Allocations equal 300 MW in each direction. Procedures for Reallocation shall be as
19 follows:
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20 4.1 Short-Term Reallocations - A Short-Term Reallocation, to be in effect for no longer
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21 than six (6) months, may be made pursuant to an agreement reached among the
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. 22 SOT Members participating in the Short-Term Reallocation. Such Short-Term
23 Reallocation shall be made provided that such a reallocation is offered to one or
24 more SOT Members and such offer is at a price in accordance with Section 4.4.1
Si 25 below. Such Short-Term Reallocations shall not relieve any SOT Member of its
26 responsibilities for payments or any other related obligations to TANG.
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27 4.2 Long-Term Reallocations-A Long-Term Reallocation,which shall be effective upon
28 the first day of a future month and continue in effect for more than six (6) months,
7 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 may be made by the TANC Commission. Such a Long-Term Reallocation shall be
2 made pursuant to a resolution approving a revised Appendix B-2 by the TANC
3 Commission, provided that such a Lon Term Reallocation is offered in the
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4 following manner:
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5 4.2.1 A SOT Member may make a written request to the TANC Commission to
- 6 offer a Long-Term Reallocation. The other SOT Members shall be notified
7 immediately of such a written request. All SOT Members shall have a pro-
8 rata right to the available Allocation in accordance with the Permanent
9 Allocations as shown in Appendix B-1. The pro rata right, in percent, of
10 each SOT Member, other than the SOT Member making the offer, shall be
{ 11 equal to:
12 Pro rata right,in percent= SOT Member's PA.,in MW x 100%
!: (Sum of all PA.,in MW)-(Amt of PA.of the SOT Member making the offer,in MW)
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Where P.A.equals the Permanent Allocations,as shown in Appendix B-1,at the time the offer is made.
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r. Within forty-five (45) days of the date of that written request, all SOT
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Members must notify the TANC Commission of their desired amount of
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such available Allocation.
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4.2.2 To the extent that there remains a residual amount of the available
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Allocation after following the procedures set forth in Section 4.2.1 above,
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the remainder of the available Allocation may be offered, in accordance
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with the TMTS Agreement, to third parties and any such Allocation shall
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be made available at negotiated terms and conditions.
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u 4.2.3 Such Long-Term Reallocations shall not relieve any SOT Member of its
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ultimate responsibilities for payments or any other related obligations to
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TANC.
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=i 4.3 Permanent Reallocations - A Permanent Reallocation shall be made by the TANC
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Commission pursuant to the following procedures:
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8 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 4.3.1 A SOT Member may make a written request to the TANC Commission to
2 offer a Permanent Reallocation. The other SOT Members shall be notified
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3 immediately of such a request. All SOT Members shall have a pro rata
;I 4 right to the available allocation in accordance with the Permanent
5 Allocations as shown in Appendix B-1. The pro rata right, in percent, of
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6 each SOT Member, other than the SOT Member making the offer, shall be
7 equal to: -
i_. 8 Pro rata right,in percent= SOT Member's PA.,in MW X 100%
(Sum of all P.A.,in MW)-(Amt of PA.of the SOT Member making the offer,in MW)
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,i Where P.A.equals the Permanent Allocations,as shown in Appendix B-1,at the time the offer is made.
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4.3.2 To the extent that there remains a residual amount of the available
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Allocation after following the procedures set forth in Section 4.3.1 above,
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the remainder of the available Allocation may be offered, in accordance
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with the TMTS Agreement, to third parties and any such Allocation shall
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be made available at negotiated terms and conditions.
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4.3.3 Such Permanent Reallocations to a SOT Member shall relieve the SOT
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'I Member of its obligations under this Agreement to TANC with respect to
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that Permanent Reallocation. Any SOT Member receiving such Permanent
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Reallocation shall assume all rights and obligations under this Agreement
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r with respect to that Permanent Reallocation. Any third party to which a
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it Permanent Reallocation is made shall have only the right to receive and use
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the portion of TMTS represented by that Permanent Reallocation. All
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obligations under this Agreement with respect to a Permanent Reallocation
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to a third party shall remain with the reallocating SOT Member.
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4.3.4 The TANC Commission shall revise Appendices B-1 and B-2 to reflect the
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Permanent Reallocation, with all third parties receiving Permanent
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f Reallocations shown as footnotes in Appendices B-1 and B-2.
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;l 4.4 Charges for Reallocations - Charges for Reallocations of SOT Members' Allocations
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shall be as follows:
9 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 4.4.1 Short-Term Reallocations shall be charged an amount that is equal to the
2 price agreed to by the SOT Member providing the Short-Term Reallocation
3 and the SOT Member(s) receiving the Short-Term Reallocation, provided
4 that the price shall not exceed,but may be less than, 100 percent of the SOT
5 Short-Term Reallocation Rate pursuant to Appendix D. Such Short-Term
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6 Reallocations shall be billed by the SOT Member(s) providing the
7 Reallocations to the SOT Member(s) receiving those Reallocations.
-:f 8 4.4.2 Long-Term Reallocations and Permanent Reallocations shall be charged an
'r 9 amount, as described in Section 12.1, which reflects their pro-rata share of
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10 the SOT Service Charge through a modification to Appendix B-1 or B-2,as
11 appropriate,that reflects such Reallocations. Such Long-Term Reallocations
12 and Permanent Reallocations shall be billed by TANC to its SOT Members
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13 pursuant to Section 12 of this Agreement.
14 4.5 For purposes of this Agreement, the SOT Members hereby covenant and agree that
15 any Reallocation to third parties under this Agreement will not, in any way,
16 adversely affect the exclusion of the interest on any of the TANC indebtedness from
17 gross income for federal income tax purposes under Section 103 of the Internal
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18 Revenue Code of 1986, as amended, and the applicable regulations thereunder (or
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!� 19 any successors to such statute and regulations), including without limitation, by
I 20 reason of classification of such TANC indebtedness as a "private activity bond"
21 within the meaning of said Code.
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23 5. VOTING
24 Actions, approvals or authorizations required under this Agreement shall be given or
25 withheld by the TANC Commission using the general voting procedures described in the
26 Joint Powers Agreement, subject to the following provision:
l 27 5.1 The TANC Commission shall exercise all the powers of TANC and shall require (1)
28 for a quorum, the presence of TANC Commissioners who together represent a
10 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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1 majority of the Permanent Allocations, as shown in Appendix B-1, represented by
2 the TANC Commissioners of SOT Members not in default under this Agreement at
3 the time of the vote and (2) for any action requiring a vote of the TANC
4 Commission, votes totalling not less than sixty-five (65) percent of the Permanent
5 Allocations represented by the TANC Commissioners of SOT Members not in
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6 default under this Agreement at the time of the vote and no fewer than four of the
7 SOT Members voting affirmatively.
9 6. REINFORCEMENT COSTS
10 6.1 Initial Reinforcements Cost Sharinz-TANC's share of the capital cost for the Initial
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11 Reinforcements has been provided for under the provisions of a letter agreement,
12 dated December 30,1991,between TANC and PG&E (attached as Appendix E). The
13 SOT Members shall reimburse TANC for those costs in the form of a monthly
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14 payment as shown in Appendix D. To the extent that this Agreement terminates
,r
i.
15 prior to the completion of the repayment by the SOT Members for those costs, the
16 TANC Treasurer may be authorized by the TANC Commission to bill the SOT
I
17 Members for the remaining costs in a manner to be determined by the TANC
J
18 Commission.
19 6.2 SOTR (Los Banos-Gates) - In accordance with the voting provisions of Section 5 of
` 20 this Agreement, TANC may elect in the future to participate in the SOTR. If such
21 election is made, the following provisions shall apply:
22 6.2.1 TANC's participation in the SOTR shall be offered to TANC Members as
23 follows:
24 (a) For the first three hundred megawatts (300 mw) of TANC's
°1 25 participation, each SOT Member not then in default shall be
26 entitled to take up to at least an amount equal to its Permanent
27 Allocation expressed in megawatts as set forth in Appendix B-1,
,ai 28 which is in effect as of the date of TANC's election to participate
li
11 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
in any subsequent South of Tesla transmission service provided by
2 TANC to its SOT Members as a result of TANC's contribution to
3 the SOTR.
i 4 (b) For amounts of TANC's participation above the first three
5 hundred megawatts specified in part (a) above, TANC shall offer
` 6 such remainder to all TANC Members, including those not
!- 7 currently SOT Members, on a pro-rata basis based on the
8 participation percentages shown in column B of Appendix C of the
9 TANC agreement entitled, "Transmission Agency of Northern
i. 10 California Project Agreement No. 3 for the California-Oregon
11 Transmission Project."
�i
' 12 (c) To the extent there remains any additional TANC's
'•i
13 participation that has not been allocated after completion of the
14 process described in subsection (b) above, such remainder will be
f
15 offered to any other TANC Member(s) and third parties.
r
j 16 6.2.2 Those SOT Members who elect to take such service as a result of the SOTR
ti
17 shall establish procedures for the administration and obligations of such
•r.
18 service.
19 6.2.3 Any SOT Member which elects not to take such service as a result of the
20 SOTR shall continue to receive an equivalent amount of service from TANC
i' 21 for a period no longer than three (3) years from the date of the written
;!.
22 notification of TANC's election to participate in the SOTR. Such non-
23 electing SOT Member shall be financially obligated for its share of the costs,
is
24 excluding any costs related to the SOTR, that TANC incurs as a result of
f' 25 continuing to provide this service during that period. In addition, at the
26 end of such service,the non-electing SOT Member shall be billed,as a one-
27 lump-sum charge, for the remainder of its pro-rata share of the costs
.,, 27 P g
28 for the Initial Reinforcements.
12 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
Y'
n
I..
1 6.2.4 No such election is required at the date of the execution of this Agreement;
Er.
2 therefore, this Agreement does not obligate either TANC, the SOT
3 Members, or any other TANC Members to participate in the SOTR.
4
5 7. AUTHORITY OF THE TANC TREASURER AND TANC CONTROLLER
6 At the direction of the TANC Commission, the following authorities are granted:
7 7.1 The TANC Treasurer and the TANC Controller are hereby authorized to render
Y
8 monthly bills,in accordance with Section 12 of this Agreement and Appendix D, to
9 the SOT Members for the SOT Service Charge and for any replacement power
10 provided by PG&E to the SOT Members.
11 7.2 The TANC Treasurer is hereby authorized to make payments for TMTS Charges
12 pursuant to the TMTS Agreement provided that such invoices are approved for
13 payment pursuant to the procedures or policies adopted by the TANC Commission
14 including any expedited payment procedures for payment of invoices.
15 7.3 The TANC Controller is hereby authorized to adjust previous bills rendered to SOT
16 Members when necessary to reflect changes in cost components of the SOT Service
17 Charge.
18 7.4 The TANC Treasurer and TANC Controller may be authorized to perform additional
19 duties, as appropriate, to carry out the responsibilities of TANC under this
r 20 Agreement.
'1
21
22 8. USE OF THE ALLOCATIONS
'j 23 8.1 Member Power Scheduling Rights - During any scheduling period, each SOT
24 Member or its designated agent shall have the right to schedule power transactions
j 25 up to its Long-Term Allocation as shown in Appendix B-2, adjusted for any Short-
26 Term Reallocation, and subject to any Curtailment.
a
27 8.2 SOT Transmission Service Use Information Coordination-Each SOT Member or its
`{ 28 designated agent shall provide the TANC Commission with information required
i
13 APPROVED BY TAMC COMMISSION-DECEMBER 16,1992
1 to meet TANC's obligations under the TMTS Agreement. The TANC Commission
2 shall submit such information to PG&E in accordance with the TMTS�} Agreement..
3 8.3 Curtailment - Curtailments, if any, of TMTS in either direction will be shared on a
jj 4 pro-rata basis among the SOT Members, consistent with the TMTS Agreement.
-i 5 8.4 Curtailment Procedures-Other specific procedures which implement the provisions
6 of this Section 8 shall be determined by the TANC Commission.
7
8 9. WITHDRAWAL
.s
,F
9 9.1 Withdrawal from TANC - TANC and the SOT Members hereby agree that the 300
10 MW of firm bidirectional TMTS is provided to TANC. If a SOT Member should
J 11 withdraw from TANC, TANC shall cease to allocate TMTS to a withdrawing SOT
12 Member, unless notified otherwise pursuant to Section 9.3 below.
13 9.2 The SOT Member withdrawing under Section 9.1 shall remain financially obligated
r
14 to TANC for all costs associated with that SOT Member's Allocation until such time
15 as another SOT Member(s) agrees to assume such financial responsibility.
16 9.3 A withdrawing SOT Member may,upon advance notice to the TANC Commission,
;I 17 request to continue to receive an Allocation of TMTS after having withdrawn from
18 TANC. Such continued receipt of service will continue to be subject to the terms
19 and conditions of this Agreement.
fl
:f 20
f 21 10. DEFAULT
22 10.1 Upon the failure of any SOT Member to meet its obligations hereunder,TANC shall
r�
23 give written notice of the failure to such SOT Member or former SOT Member and,
+I
24 if such failure has not been cured within forty-five (45) days after the date of such
,f
25 notice,it shall constitute a default at the expiration of that forty-five (45)day period.
26
27 10.2 If such default is not cured at that time, the SOT Member shall be considered to
'! 28 have permanently waived any and all rights to receive an Allocation of TANC's
14 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
1 TMTS. All SOT Members recognize and agree that no SOT Member has any
2 ownership rights to TMTS. To the extent that a SOT Member, which has defaulted,
3 has any remaining financial obligations to TANC for costs, including the TMTS
4 Charge, such obligations remain with that SOT Member unless the obligations are
5 satisfied by other SOT Member(s).
6 10.3 In the event that a SOT Member's default remains uncured, each SOT Member
7 severally agrees that the Allocation of each non-defaulting SOT Member shall be
8 increased by the product of the ratio of the non-defaulting SOT Member's Allocation
9 to the sum of all non-defaulting SOT Members' Allocations, expressed as a
10 percentage, times the Allocation of the defaulting SOT Member. Such an increase,
11 which is limited to a cumulative maximum of twenty-five percent (25%) above the
12 Permanent Allocations shown in Appendix B-1 as of the effective date of this
13 Agreement, shall not require the consent of the non-defaulting SOT Member(s). To
i
14 the extent that the Allocation of the defaulting SOT Member is greater than the
i
15 increase in the non-defaulting SOT Members' Allocations provided for in the
i
? 16 preceding sentence, any residual Allocation shall be offered in accordance with the
1 17 Reallocation provisions in Sections 4.2 and 4.3.
I
18 10.4 Upon a default,in addition to the rights and remedies available to TANC pursuant
19 to Section 10.3,TANC may protect and enforce its rights hereunder by suit or suits
20 in equity or at law, whether for the specific performance of any covenant herein or
i
21 for damages or in aid of the execution of any power granted herein or any other
a
l� 22 remedy available under any provision of applicable law.
1 23 10.5 The term "SOT Member", when used in this Section 10, shall include a former SOT
24 Member that has withdrawn pursuant to Section 9.
25
<i
`i
26 11. EFFECTIVE DATE AND TERM
r
27 11.1 This Agreement shall become effective sixty (60) days after the date on which the
28 TANC Commission adopts a resolution authorizing execution of the Agreement on
;f
t
15 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
°I
.j
1
1 behalf of TANC provided that SOT Members with Permanent Allocations totaling
F 2 at least 95 percent of TANC's TMTS have executed the Agreement on or before that
r�
3 date.
_- 4 _11.2 If the SOT Members that have executed the Agreement total more than 95 percent
5 of the Permanent Allocations,but less than 100 percent,each of those SOT Members
6 severally agrees that the Permanent Allocation of each executing SOT Member shall
7 be automatically increased, on a pro-rata basis as shown in Appendix B-1, until all
8 of TANC's Permanent Allocations of TMTS have been completed,provided that the
9 SOT Members may otherwise agree to different increases so long as the total SOT
.i
10 Members' Permanent Allocations equal 100 percent.
11 11.3 This Agreement shall remain in full force and effect as long as (A) the Joint Powers
12 Agreement,and(13)a TMTS Agreement remain effective,provided however that this
13 Agreement will no longer be in effect upon the date it is superseded by a successor
14 agreement.
15 11.4 A successor agreement, as referenced in Section 11.3 above, shall contain the
16 principles of Section 6.2 of this Agreement.
` 17
18 12. BILLING AND PAYMENT
19 12.1 Determination of Bills-Bills rendered by the TANC Treasurer to the SOT Members
20 shall reflect the basic cost sharing responsibility which is calculated by multiplying
'! 21 the SOT Long-Term Allocation (as shown in Appendix B-2, expressed as a
22 percentage) by the SOT Service Charge. In addition, any SOT Member which
23 receives replacement power from PG&E pursuant to the TMTS Agreement shall
7
24 have the cost associated with its usage of replacement power reflected in its bill.
25 12.2 Monthly bills shall be rendered by the TANC Treasurer to SOT Members in a timely
{� 26 manner. Such bills shall be sent by either United States mail first class, postage
y; 27 prepaid or its equivalent, or by facsimile to the billing address specified in
JI 28
16 APPROVED BY TAMC COMMISSION-DECEMBER 16,1992
r
r
1 Appendix C-1. The designation of any person specified in Appendix C-1 may be
2 changed at any time by advance notice given to the TANC Treasurer.
3 12.3 Billings for amounts payable shall be due on the twenty-fifth (25th)day after receipt
4 of the bill. If the due date falls on a non-business day of either party, then the
5 payment shall be due on the next following business day without interest.
6 12.4 Amounts of monthly billings not paid on or before the due date shall be payable
7 with an Interest Charge calculated from the due date to the date of payment.
8 12.5 In case any portion of any monthly bill is in dispute, the entire bill shall be paid
9 when due and the dispute referred to the TANC Commission for resolution. If the
10 TANC Commission determines that an overpayment was made, the overpayment
11 shall be refunded. If the refund exceeds five hundred dollars ($500.00) and is more
12 than one (1) month past due, it shall be paid with interest at a rate based on the
13 Interest Charge less two (2) percentage points.
i
4 14
fi 15 13. INSURANCE
i.
16 TANC shall maintain, or cause to be maintained in force,insurance as may be determined
t 17 prudent in the judgment of the TANC Commission to effect the purposes of this
G
{ 18 Agreement.
19
20 14. INDEMNIFICATION
a
r 21 TANC shall indemnify, defend, and hold harmless each SOT Member, and its governing
4
22 board members,officers,employees,consultants,and agents,from any liability for personal
23 injury, death, or property damage arising out of the negligent or willful misconduct of
i� 24 TANG pursuant to this Agreement,or the TMTS Agreement. TANC shall not be obligated
25 to indemnify,and shall not be liable to,any SOT Member for economic loss arising out of
;i
26 any act or omission on the part of TANC while carrying out its obligations under this
,I
27 Agreement.
`i 28
�i
ji 17 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
;I
:i
!. 1 15. LIABILITY OF TANC OFFICERS
_ 2 15.1 Release - Each SOT Member agrees that TANC's Commissioners, officers, and
3 employees shall not be liable to the SOT Members for direct, indirect or
4 consequential loss or damage suffered by the SOT Members as a result of: (i) the
5 performance or nonperformance by TANC under the TMTS Agreement or (ii) the
6 performance or nonperformance of TANC under this Agreement. Each SOT
7 Member releases TANC's Commissioners,officers,employees,the Treasurer and the
41
8 Controller from any claim or liability (whether based on negligence or otherwise)
9 as a result of any actions or inactions of TANC under this Agreement or the
i
10 performance or non-performance by TANC under the TMTS Agreement.
I 11 15.2 No Modification- The provisions of this Section 15 shall not be construed so as to
12 relieve TANC of any obligations under the TMTS Agreement and the provisions of
I
13 this Section 15 shall not be construed to modify or amend Paragraph 2 of the Joint
F
14 Powers Agreement.
' 15
16 16. NOTICE
1 17 16.1 Manner of Notice - Any notice or demand by a SOT Member to TANC under this
18 Agreement shall be deemed properly given if deposited in the United States mail
l 19 first class postage prepaid or its equivalent, or sent via facsimile or other electronic
,r 20 media and confirmed by telephone or in writing within twenty-four (24) hours,
;i
21 addressed to TANC at its operational office;any notice or demand by TANC to any
22 SOT Member under this Agreement shall be deemed properly given if deposited in
;i
+ 23 the United States mail first class postage prepaid or its equivalent, or sent via
! 24 facsimile or other electronic media and confirmed by telephone or in writing within
j 25 twenty-four(24)hours,addressed to the addressee as shown in Appendix C-2. The
�i
26 designations of the name and address to which any such notice or demand is
27 directed may be changed at any time and from time to time by any party giving
�i
28 notice as above provided in this Section.
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it
' 18 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
1 16.2 Time Computation- In computing any period of time from such notice, other than
2 for billing as specified in Section 12,such period shall commence on the date mailed
3 or, if sent via facsimile or other electronic media, on the date sent.
it.
4
I 5 17. APPLICABLE LAW
6 This Agreement is made under and shall be governed by the laws of the State of California.
;i 7 _
E 8 18. SEVERABILITY
'I
9 If any section,paragraph,clause,or provision of this Agreement,or any part thereof,shall
'r 10 be finally adjudicated by a court of competent jurisdiction to be invalid, the remainder of
11 this Agreement shall remain in full force and effect as though such section, paragraph,
12 clause,or provisions or any part thereof so adjudicated to be invalid had not been included
13 herein and the parties shall renegotiate the terms and conditions of this Agreement so as
14 to carry out the intent of the invalid provision.
'� 15
a
16 19. APPENDICES
E
17 This Agreement includes Appendices A, B-1, B-2, C-1, C-2, D, and E attached hereto and
t
I 18 are incorporated herein by this reference. Appendices B-1, B-2, C-1, C-2, and D may be
k19 amended, modified, or otherwise changed or rescinded by the TANC Commission in
20 accordance with the voting provisions of Section 5 without effect on the remainder of this
{ 21 Agreement.
i' 22
23 20. WAIVER
'( 24 Any waiver at any time by any party of its rights with respect to a default under this
25 Agreement,or with respect to any other matters arising in connection with this Agreement,
a
26 shall not be deemed a waiver with respect to any subsequent default or other matter.
27
28
.�I
1
19 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
3
f
t
♦t_
. 1 21. CAPTIONS
2 Except as used for definitions,all indexes,titles,subject headings,section titles and similar
F
3 items are provided for the purpose of reference and convenience and are not intended to
- 4 be inclusive, definitive, or to affect the meaning or scope of this Agreement.
�'t 5
6 22. COUNTERPARTS
7 This Agreement may be executed in several counterparts, each of which shall be deemed
j 8 to be an original and all of which, when taken together, shall constitute a single
a 9 Agreement.
1
I
10
11 23. SIGNATURES
'I
j 12 TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
j 13 By:
I
14 Date:
� 15
;4
-� 16 CITY OF ALAMEDA
.j 17 By:
18 Date:
19
�j 20 CITY OF HEALDSBURG
21 By.
22
Date:
23
24 CITY OF LODI
25 By:
26 Date:
27
28
I
20 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
;i
1 CITY OF LOMPOC
2 By:
3 Date:
4
5 MODESTO IRRIGATION DISTRICT
6 By:
` 7 Date:
9 PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE
10 By:
11 Date:
12
13 CITY OF REDDING
i
L
14 By:
i
15 Date:
r
16
17 CITY OF ROSEVILLE
18 By:
'I 19 Date:
20
21 SACRAMENTO MUNICIPAL UTILITY DISTRICT
f 22 By:
23 Date:
;I
24
25 CITY OF SANTA CLARA
`` 26 By:
hl
27 Date:
28
xl 21 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
i
1,.. 1 TURLOCK IRRIGATION DISTRICT
t�
2 By
3 Date:
j:
. 4
5 CITY OF UKIAH
I
6 By:
7 Date:
8
9
10
11
i
12
13
i
14
i
15
j 16
'i 17
.j 18
i
19
20
21
22
a;
23
24
i 25
26
.t 27
'1 28
1
22 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
is 1 APPENDDC A
--- 2 PRINCIPLES FOR TESLA-MIDWAY TRANSMISSION SERVICE
:. 3
4
6
7
i.
8
9
;i 10
{ 11
I
12
13
j 14
15
16
;i 17
18
19
20
'.I 21
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22
;{ 23
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' 24
R
y'- 25 .. -
'4
I 26
l.
{ 27
i
28
,i
APPROVED BY TANC COMMISSION-DECEMBER 16,1992
i,
I�
I
1
2 PRINCIPLES FOR TESLA-MIDWAY TRANSMISSION SERVICE
3
4 Whereas, certain California utilities and agencies signed the
5 Memorandum of Understanding - California-Oregon Transmission
6 Project dated December 19, 1984 ("MOU") which relates to the
7 development of a new 500 kV AC transmission facility ("COTP")
8 between the California-Oregon border and the Tesla Substation;
9
10 Whereas, sections 2.2 and 2.3 of the MOU contemplate that Pacific
11 Gas and Electric Company ("PG&E") will provide firm bidirectional
12 transmission service between Tesla and Midway Substations under
13 reasonable rates, terms and conditions up to specified amounts
14 to: the Cities of Anaheim, Azusa, Banning, Colton, Riverside,
15 and Vernon ("Southern Citiest') , San Diego Gas & Electric Company
16 ("SDG&E") , Southern California Edison Company ("Edison") and the
17 Transmission Agency of Northern California ("TAMC") (collectively
18 "MOU Participants") ;
i
19
20 Whereas, certain MOU Participants and certain other Designated
21 Participants have executed the "Revised Principles$', and TAMC and
22 PG&E have determined that the Revised Principles as modified for
23 TAMC pursuant to the terms and conditions herein will form the
24 basis for negotiating a definitive transmission service agreement
25 under the terms and conditions contemplated by the MOU;
26
27 Nov, therefore, these principles are agreed to as of
28 1989 by and between PG&E and TAMC. j
-1-
;I
I
i! 1 1.0 DEFINITIONS
'I 2
3 1.1 CPPA Board of Control - The Board of Control
4 established under the July 20, 1964 #'California Power
5 Pool Agreement#' among PG&E, Edison, and SDG&E.
6
7 1.2 COTP Terminus - The southernmost point of change in
8 ownership of facilities between. PG&E and the COTP
9 Participants, or as otherwise agreed by the parties.
10
11 1.3 CPUC - The Public Utilities Commission of the State of
12 California or its regulatory successor.
' 13
i
14 1.4 Designated Participants - The parties receiving
15 transmission 'service in accordance with the Revised
16 Principles or like agreements, including TAMC . under
I
17 these principles.
,i 18
19 1.5 Entitlements - The firm and non-firm transmission
20 service to be provided to each Designated
21 Participant. For TAMC, three hundred (300) megawatts
22 of firm, bidirectional transmission service provided by
23 PG&E according to the terms and conditions of these
24 principles unless increased in accordance with Section
25 5.3.
26
i
27 1.6 FERC - The Federal Energy Regulatory Commission or its
28 regulatory successor.
-2-
II
1 1.7 Initial Reinforcements - Those transmission system
2 reinforcements, other than South of Tesla
3. Reinforcements, installed by PG&E according to the
4 terms and conditions of Sections 4.1 and 5.2 to
5 increase the Transmission Capability over PG&E's system
6 between Tesla Substation/COTP Terminus and Midway
7 Substation to meet the transmission requirements of the
8 Designated Participants.
9
10 1.8 Mitigation Measures - Changes by PG&E in its operations
11 in order to avoid or -eliminate transmission service
12 curtailments even though these changes may be
13 uneconomic to PG&E, provided that PG&E in its sole
14 judgment determines that it can reasonably do so and is
15 fully compensated for such actions as provided herein.
16 Such actions shall include but not be limited to
17 curtailment of third party loads if appropriate,
18 uneconomic dispatch of hydro and pumped
19 storage/generation resources, operation of higher cost
20 generation and purchase of power from others. Such
21 actions shall not include any change in the operation
22 of Diablo Canyon Nuclear Power Plant.
23
24 1.9 Pre-specified Mitigation - Mitigation Measures
25 consisting of switching PG&E's AC Intertie schedules to
26 PG&E's DC Intertie schedules when DC line capacity is
27 available and increasing or decreasing Morro Bay
II 28
-3-
® i
1 generation to the extent available, for which PG&E is
2 compensated as provided in Section 5.4.
3
4 1.10 Priority Commitments - PG&E's obligations to meet load
5 and load growth of its customers in northern
6 California, and to transmit electricity, by reason of
7 its status as a public utility and its existing
8 contracts, including but not limited to, its
9 interconnection contracts with utilities in northern
10 California and the California Power Pool Agreement,
11 the Pacific Intertie Agreement and the PG&E-DWR
12 Comprehensive Agreement, and excluding transmission
13 service provided by PG&E to Third Parties, and to
14 Designated Participants under these principles, Revised
15 Principles, and like agreements.
16
17 1.11 Prudent Utility Practice - Those practices, methods,
18 and equipment, including provisions for contingencies
19 and reserves, as modified from time to time, that are
20 commonly used to operate electric power facilities (a)
21 reliably and safely to serve a utility's customers
22 dependably and economically, with due regard for the
23 state of the art in the electric power industry, (b) by
24 utilities which have at least 200 XW of peak load, own
25 or operate at least 100 MW of generation and are
26 members of the WSCC, and which are located either in
27 the retail service areas of PG&E and TAMC Members or in
28 the State of California, whichever represents the
I -4-
1 better application of the considerations in subsection
2 (a) above. The practices, methods, and equipment
3 examined under this definition are not limited to those
4 of PG&E.
5
6 1.12 Revised Principles - The #'Revised Principles for
7 Tesla-Midway Transmission Service,1t executed by PG&E
8 and certain MOU Participants or incorporated as part of
9 agreements with other parties for such service, as they
10 may be modified.
11
12 1.13 South of Tesla Reinforcements - A new Los Banos-Gates
13 line and directly associated facilities, unless PG&E,
14 in accordance with Prudent Utility Practice, identifies
.15 another set of reinforcements which are as cost
16 effective, comparable in scope with, and serve the same
17 purpose as the Los Banos-Gates line and directly
18 associated facilities, which may be installed by PG&E
19 in accordance with Section 4.2 to increase Transmission
20 Capability to meet the transmission requirements of the
21 Designated Participants and PG&E as set forth under the
22 terms and conditions of the Revised Principles, these
23 principles, and like agreements.
24
25 1.14 TAMC Member - Any of the Cities of Alameda, Biggs,
26 Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Redding,
27 Roseville, Santa Clara, and Ukiah; the Sacramento
28 Municipal Utility District; the Modesto Irrigation
-5-
1 District; the Turlock Irrigation District; or the
2 Plumas-Sierra Rural Electric Cooperative, Inc. ;
3 provided that such entity has not relinquished or
4 assigned its rights and interests in TANC's entitlement
5 in the COTP or, if the COTP is not constructed, has not
6 relinquished or assigned its rights and interests in
7 TANC's Entitlement under these principles or the
8 definitive successor transmission service agreement.
9
10 1.15 Third Party - An entity, to the extent that it is
11 neither receiving services as a Designated Participant
12 nor served under Priority Commitments or PG&E's
13 entitlements referred to in Section 3.2. Nothing in
14 these principles shall create any expectation or
15 obligation of PG&E to provide any service to a Third
16 Party.
17
18 1.16 Transmission Capability - The transfer ability,
19 expressed in megawatts, of PG&E's transmission
20 facilities to transmit electric energy between Midway
21 Substation and Tesla Substation/COTP Terminus, which is '.
22 determined by PG&E in its sole judgment, consistent'
23 with Prudent Utility Practice, to be the maximum powers
24 transfer ability of the transmission facilities under
25 operating conditions existing at the time of
26 determination.
27
28
-6-
I
1 2.0 GENERAL TERMS
2
3 2.1 Effective Date of Principles - These principles shall
4 become effective upon execution by PG&E and TAMC and
5 shall remain in effect until a definitive successor
6 transmission service agreement is executed by PG&E and
i
7 TAMC. PG&E and TAMC shall use best efforts to complete
8
a definitive successor transmission service agreement
;I
9 by September 1, 1989. PG&E shall use good faith
10 efforts to file such agreement with FERC within sixty
11 days after execution. TAMC and PG&E agree that such
"I 12 definitive successor transmission service agreement
13 shall reflect and implement Section 2.3 of the MOU
14 fully, provided that any rights and obligations of the
15 parties under Section 2.3 of the MOU shall not be
16 satisfied fully until the South of Tesla Reinforcements
i
17 are completed or such definitive successor transmission
18 service agreement terminates in accordance with Section
19 8 of these principles.
20
21 2.2 Provision of Service - Beginning January 1, 1990, PG&E
22 shall provide firm bidirectional transmission service
23 in the amount of TANC's Entitlement between Midway
24 Substation and points of receipt and delivery set forth
25 in section 2.4 pursuant to the definitive successor
26 transmission service agreement embodying the terms and
27 conditions of these principles, subject to the
28 conditions in section 2.6.
-7-
i •
1 2.3 Effect on Other Agreements - PG&E and TAMC agree that
2 the present interconnection agreements and future
I
3 similar agreements between PG&E and TAMC Members and
4 between PG&E and the Northern California Power Agency
5 will be amended or will provide for receipt and
6 delivery of power transmitted hereunder at the backbone
7 level at no additional cost to TAMC Members consistent
8 with Section 5.1.
+i 9
10 2.4 Points of Receipt and Delivery - The points of receipt
j 11 and delivery by PG&E shall be:
12
i
13 2.4.1 Midway Substation to each TAMC Member, to
14 provide a complete transmission path from
15 Midway Substation over system interconnect and
16 backbone subfunction transmission facilities
17 of PG&E's electric system; provided that for a
18 given TAMC Member, transmission service
19 between PG&E's backbone facilities and that
20 TAMC Member shall be pursuant to an amendment
21 to the existing agreement between PG&E and
22 that TAMC Member, if necessary, or a new
23 agreement if that IANC Member does not have an
24 existing agreement with PG&E. For purposes of
25 Tesla-Midway transmission service for TANG and
26 TAMC Members related to Sections 2.2 and 2.3
27 of the MOU, prior to January 1, 1999, or such
28 earlier date as may be applicable in
-8-
i
• I
1 accordance with Section 5.61 if PG&E changes
2 the definition of backbone facilities, PG&E
3 will only charge TAMC whatever its charges
4 would have been with the definition of
5 backbone facilities in use as of January 1,
6 1989. PG&E also agrees that any changes in
7 its current definition of backbone facilities
8 prior to January 1, 1999, or such earlier date
i
9 as may be applicable in accordance with
10 Section 5.6, will not be used to require any
11
TANC Member to obtain transmission service
12 between PG&E's backbone facilities and that
13 TAMC Member which it would not have had to
14 obtain without the change in definition of
15 backbone facilities.
16
17 2.4.2 Each TAMC Member to Midway Substation, to
18 provide a complete transmission path from each
19 IANC Member's electric system over system
20 interconnect and backbone subfunction
21 transmission facilities of PG&Els electric
22 system; provided that for a given TAMC Member,
23 transmission service between that TAMC Member
24 and PG&E's backbone facilities shall be
25 pursuant to an amendment to the existing
26 agreement between PG&E and that TAMC Member,
27 if necessary, or a new agreement if that TAMC
28 Member does not have an existing agreement
-9-
I '
it
I
1 with PG&E. For purposes of Tesla-Midway
j 2 transmission service for TAMC and TAMC Members
3 related to Sections 2.2 and 2.3 of the MOU,
4 prior to January 1, 1999, or such earlier date
I�
i
5 as may be applicable in accordance with
6 Section 5.61 if PG&E changes the definition of
7 backbone facilities, PG&E will only charge
8 TANC whatever its charges would have been with
9 the definition of backbone facilities in use
10 as of January 1, 1989. PG&E also agrees that
I
11 any changes in its current definition of
12 backbone facilities prior to January 1, 1999,
13 or such earlier date as may be applicable in
14 accordance with Section 5.6, will not be used
15 to require any. TANC Member to obtain
16 transmission service between PG&E's backbone
i7 facilities and that TAMC Member which it would
18 not have had to obtain without the change in
19 definition of backbone facilities.
20
21 2.4.3 Midway Substation to the COTP Terminus/Tesla
22 Substation, only for delivery onto the COTP.
23 It is TANCIs intent to transmit power
i
24 delivered onto the COTP to various points,
25 including, but not limited to Tracy
26 Substation, Olinda Substation, and Malin
27 Substation utilizing TANCIs COTP capacity.
28 Since TkNCIs rights to use its COTP
-10-
i
1 entitlement, like the rights of all COTP;
2 Participants, will be defined in the COTPI
3 Participation Agreement and perhaps other)
4 project agreements, these principles do not
5 address the issue of rights to use the COTP.
6
7 2.4.4 COTP Terminus/Tesla Substation to Midway
8 Substation only for receipt from the COTP. Itll
9 is TANC#s intent to transmit power received
10 from various points on the COTP including, but
11 not limited to Malin Substation, Olinda
12 Substation, and Tracy Substation to Midway
13 Substation utilizing TANC's COTP capacity.
14 Since TANC's rights to use its COTP
15 entitlement, like the rights of all COTP
16 Participants, will be defined in the COTP
17 Participation Agreement and perhaps other
i8 project agreements, these principles do not
19 address the issue of rights to use the COTP.
20
21 2.5 TAMC Members, acting through TAMC, and PG&E agree to
22 use best efforts to amend or enter into the agreements
23 described in Sections 2.3, 2.4.1 and 2.4.2 by September
24 1, 1989, and not to condition such amendments or
25 agreements on the inclusion of any other terms and
26 conditions which are unrelated to or inconsistent with
27 these principles.
28
-11-
I
i
1 2.6 Regulatory Approvals - Implementation of these
2 principles and the definitive successor transmission
3 service agreement is subject to and conditioned upon
i�
4 PG&E obtaining in a form and manner satisfactory to it,
5 which determination shall be made in good faith and
6 shall not be arbitrary or capricious, all governmental
7 approvals, including rate filings, permits and
8 certificates required to carry out these principles and
9 such transmission service agreement. These
g principles
10 and the definitive successor transmission service
11 agreement will be reexamined and reconsidered by PG&E
12 and TAMC to the extent either is found by any court or
13 regulatory agency or body having competent
14 jurisdiction, to be unlawful, unjust, unreasonable,
15 imprudent or otherwise not in the public interest.
16 Nothing in this Section 2.6 shall be construed to
17 conflict with the time period specified in Section 6.3
18 during which transmission service hereunder is deemed
19 firm following PG&E's inability to install South of
20 Tesla Reinforcements.
21
22 2.7 These principles represent a compromise between PG&E
23 and IANC concerning the meaning and implementation of
24 Section 2.3 of the MOU. The parties agree that these
25 principles establish no precedent with regard to any
26 other entity or agreement, or to the meaning and
27 implementation of Section 2.3 of the MOU if the
28
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1 definitive successor transmission service agreement
2 does not become effective.
3
I� 4 3.0 CONTINUITY OF SERVICE
I
5
i�
6 3.1 General - PG&E shall maintain continuity of
7 transmission service for TAMC subject to PG&E's use of
8 Transmission Capability between Midway Substation and
9 the points of receipt and delivery set forth in Section
10 2.4 and transfer capability between PG&E and Edison's
11 system (including PG&Els share of the Midway-Vincent #3
12 line) for its Priority Commitments, provided that PG&E
�I
13 may as it determines necessary in its sole judgment
14 curtail service to TAMC pursuant to this Section 3 to
15 maintain continuity of service to loads, system
16 reliability and stability and to avoid or remedy
17 conditions which may jeopardize its electric system or
18 service thereon, or as is otherwise required for
19 maintenance or Prudent Utility Practice. Any
20 curtailment pursuant to this Section 3.1 shall be made
21 in accordance with the priorities set forth in Section
22 3.21 except as modified below. It is recognized that
23 under system jeopardy conditions PG&E's priority will
24 be to maintain the integrity of its electric system and
'Il
25 there may be instances where it is not possible to
26 curtail strictly in accordance with the priorities set
27 forth in Section 3.2. In such cases, PG&E's system
28
-13-
I operators shall use good faith efforts to curtail
2 consistent with the priorities set forth in Section,
3 3.2. j
4
5 3.1.1 In conjunction with maintaining continuity of
6 service, PG&E shall coordinate with TAMC its
7 schedules for planned outages which would'
i
8 affect service to TAMC.
9
10 3.1.2 Prior to .completion of the South of Tesla
I
11 Reinforcements, PG&E shall implement Pre-
12 specified Mitigation to the extent available
13 up to a total of 200 MW south-to-north and 700
14 MW north-to-south for TAMC and other
i
15 Designated Participants under the terms and
16 conditions of these principles. Subsequent to
17 the completion of the South of Tesla
18 Reinforcements, the charges in Section 5.4
19 shall cease, and service to TAMC shall not be
20 curtailed if curtailments can be mitigated or
21 eliminated by PG&E implementing Mitigation
22 Measures for which PG&E shall bear the costs.
23
24 3.2 Curtailment Priorities - In the event that
25 transmission line loading, based on daily preschedules,
26 hourly schedules, or real time determination by PG&E
27 dispatchers, is in excess of the amount of Transmission '
28 Capability, such excess loading may be curtailed by ',
-14-
I PG&E under the terms and conditions of these principles
2 for TAMC and like agreements for Designated
3 Participants and Third Parties in the following
4 sequence:
5
6 3.2.1 Non-firm and interruptible transmission
7 service commitments except as otherwise
8 specified below.
9
10 3.2.2 Any firm transmission service for or on behalf
i
11 of Third Parties who have not contributed to
12 the Initial Reinforcements or the South of
13 Tesla Reinforcements.
14
15 3.2.3 Any use by PG&E in excess of PG&Efs Soo Mw of
16 reserved Transmission Capability and Priority
17 Commitments which also exceeds the amount of
18 additional Transmission Capability PG&E has
19 obtained through its contribution to the South
i 20 of Tesla Reinforcements in accordance with
21 Section 5.3.
22
23 3.2.4 Non-firm Entitlements of the Designated
24 Participants and any interruptible
25 transmission service for or on behalf of Third
26 Parties who have contributed to the Initial
27 Reinforcements.
28
„ -15-
1 3.2.5 Any use by PG&E of its 500 MA of reserved
2 Transmission Capability, the firm Entitlements
3 of the Designated Participants, and any firm
4 transmission service for or on behalf of Third
5 Parties when such entities (i) have
6 contributed to the Initial Reinforcements,
7 (ii) have not contributed to South of Tesla
8 Reinforcements and (iii) do not request
9 Mitigation Measures.
10
11 3.2.6 The firm Entitlements of Designated
12 Participants and any firm transmission service
13 for or on behalf of Third Parties when such
14 entities (i) have contributed to Initial
15 Reinforcements, (ii) have not contributed to
16 the South of Tesla Reinforcements and (iii) do
17 request Mitigation Measures or have agreed to
18 Pre-specified Mitigation according to Sections
19 3.1.2 and 5.4; and, prior to completion of the
20 South of Tesla Reinforcements, any use by PG&E
21 of its 500 MA of reserved Transmission
22 Capability for which it implements Mitigation
23 Measures.
24
25 3.2.7 Transmission service for Designated
26 Participants and Third Parties who have
27 contributed to South of Tesla Reinforcements,
28 any use by PG&E in excess of its 500 MW of
-16-
1
i
I reserved Transmission Capability for which it
2 has contributed to South of Tesla
3 Reinforcements, and any use by PG&E of its Soo
4 MW of reserved Transmission Capability.
5
.i
6 3.2.8 Priority Commitments
7
8 Curtailments in accordance with any of the foregoing
9 categories shall be pro-rata among all entities in that
i
10 category based on Entitlements, contract rights of
11 Third Parties, and the uses reserved to PG&E in this
12 Section 3.2.
13
14 3.3 PG&E shall give TAMC reasonable advance notice prior to
15 curtailing transmission service pursuant to Section 3.1
16 or 3.2. Provisions for determination of transmission
i
17 line loading in excess of Transmission Capability shall
18 be included in the definitive successor transmission
19 service agreement.
20
21 4.0 REINFORCEMENTS
22
23 4.1 Initial Reinforcements - PG&E shall promptly complete
24 its study and propose a plan of service pursuant to the
25 terms and conditions of these principles for Initial
26 Reinforcements to its transmission system between Tesla
27 and Midway Substations. PG&E will meet with TAMC and
28 the other Designated Participants in order to discuss
I�
-17-
1 any comments they may have on the proposed plan of
2 service and thereafter, giving due consideration to
3 their comments, adopt a plan of service and install
4 reinforcements necessary to implement it. TAMC shall
5 accept its share of the cost responsibility for these
6 Initial Reinforcements in accordance with Section 5.2.
7
8 4.2 South of Tesla Reinforcements - PG&E and TAMC recognize
' 9 that reinforcements to PG&Efs system may be required
I
10 to maintain the adequacy of PG&E's transmission service
11 for TAMC and other Designated Participants. When PG&E
12 determines that South of Tesla Reinforcements are
13 necessary, PG&E shall give notice to the Designated
14 Participants at least six years in advance of the time
15 when such reinforcements are to be completed. Once
16 such determination is made, PG&E shall study and
17 propose a plan of service for the South of Tesla
18 Reinforcements. PG&E shall meet with the Designated
19 Participants in order to discuss any comments they may
20 have on the proposed plan of service and thereafter,
21 giving due consideration to their comments, adopt a
22 plan of service and install facilities and equipment
23 necessary to implement it. TANG shall accept its share
24 of the cost responsibility for South of Tesla
25 Reinforcements in accordance with Section 5.3, unless
26 (i) it elects not to contribute its share of the costs
27 in accordance with Section 8.2.1 or (ii) the definitive
28 successor transmission service agreement terminates in
' -18-
i
1 accordance with Section 8.2.2, 8.2.3 or 8.2.4 before
i
2 TAMC has made its election in accordance with Section
3 8.2.1 or contributed to the South of Tesla
4 Reinforcements. TAMC shall not be required to
5 contribute to the cost of the South of Tesla
6 Reinforcements prior to the time that the CPPA Board of
i
7 Control, as presently constituted, determines by
8 affirmative vote of at least PG&E and Edison that such
9 reinforcements are necessary. In the event that PG&E
i
10 has already initiated the South of Tesla Reinforcements
11 when such determination is made by the CPPA Board of
12 Control, the timing of TANC1s cost contribution shall
13 be the same as if PG&E had initiated such
14 reinforcements after such determination was made by the
15 CPPA Board of Control.
16
17 4.3 Beneficial Use - To the extent TAMC can demonstrate
18 that PG&E or a Third Party is making beneficial use of
19 the additional Transmission Capability created by the
'I 20 Initial Reinforcements, or that a Third Party is making
21 beneficial use of the Transmission Capability created
22 by the South of Tesla Reinforcements, and has not
23 contributed to the cost of such reinforcements, PG&E
24 or, if after PG&E's use of best efforts that Third
25 Party agrees, that Third Party shall contribute a just
26 and reasonable share of the costs of such
27 reinforcements. To the extent TAMC can demonstrate
28 that PG&E is making beneficial use of the additional
-19-
I
I�
,j 1 Transmission Capability created by the South of Tesla
2 Reinforcements beyond the 300 MW or more of additional
3 Transmission Capability PG&E has paid for pursuant to
4 Section 5.3, PG&E shall contribute a just and
5 reasonable share of the cost of the South of Tesla
6 Reinforcements in addition to the contribution already
7 made pursuant to Section 5.3. If agreement on such
8 cost sharing cannot be reached, then the matter shall
9 be submitted to arbitration. Beneficial use shall not
10 include PG&E's use for its 500 MW of reserved
'i
11 Transmission Capability or for Priority Commitments.
12
13 4.4 Ownership - PG&E shall own, operate and maintain all
:I 14 reinforcements to its electric system in connection
15 with these principles.
16
17 4.5 Diligence - After the South of Tesla Reinforcements are
18 determined by the CPPA Board of Control to be necessary
19 in accordance with Section 4.2, PG&E shall use due
20 diligence to install such reinforcements. In the event
21 that PG&E is unable to obtain any approvals required
22 for PG&E to install the South of Tesla Reinforcements,
23 PG&E shall make such proposals as are, in its judgment,
24 reasonable alternatives to installing such
25 reinforcements itself, including giving due
26 consideration to permitting TAMC to install such
I
27 reinforcements.
28
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i
1 4.6 TAMC Alternative Project - In the event that TAMC
2 terminates the successor definitive transmission
3 service agreement pursuant to Section 8.2.1 because
4 TAMC elects to construct facilities in lieu of
5 contributing to the cost of . South of Tesla
6 Reinforcements, TAMC shall offer PG&E the opportunity
7 for joint ownership of a substantial portion of the
8 amount of transmission capability. from such facilities
9 in excess of TANC's needs provided that (i) regulatory
10 or other approvals required for PGW s participation in
11 TANC's facilities do not result in a delay in
,j 12 construction unsatisfactory to TANG, (ii) such
13 participation by PG&E does not impair TANC's ability to
14 finance such facilities or increase TANCIs financing
15 costs, and (iii) such opportunity does not preclude
16 TANG from giving other utilities and agencies the opp-
17 ortunity to participate in ownership of such
18 facilities. In the event that PG&E receives permission
19 from the CPUC to participate once construction of such
20 facilities has begun, TAMC shall afford PG&E the
21 opportunity to participate to the extent that there is
22 remaining capacity in excess of TANCIs and other
23 Participants' needs, provided that such participation
24 by PG&E does not adversely impact TANC's existing,
25 pending, or future financing for such facilities.
26
27 4.7 Refund of Contribution to Reinforcements - In the event
28
-21-
�I
1 that the successor definitive transmission service
2 agreement terminates pursuant to Section 8 after TAMC
3 has contributed to the cost of the South of Tesla
4 Reinforcements, PG&E shall refund to TANC its
5 contribution as follows:
6
7 4.7.1 TAMC shall receive no refund until ten
8 years after the commercial operation date of
9 the South of Tesla Reinforcements, except to
10 the extent that TAMC demonstrates beneficial
I
11 use of the South of Tesla Reinforcements by
12 PG&E or a Third Party in accordance with
13 Section 4.3.
14
15 4.7.2 After the first ten years of commercial
ii 16 operation, or to the extent the demonstration
17 is made in accordance with Sections 4.3 and
18 4.7.11 PG&E shall pay TAMC that portion of
19 TANC's contribution toward the cost of South
20 of Tesla Reinforcements equal to the book
21 value of TANCfs contribution, not including
22 any adjustment for applicable taxes,
23 depreciated using a useful life of thirty
24 years.
25
26 5.0 RATES AND CHARGES
27
28 5.1 Transmission Service Charge - For transmission service
-22-
1 pursuant to Section 2.2, TAMC shall pay PG&EIB current
1
!� 2 rates on file with the FERC. The combined rates
3 (system interconnect and backbone) for each of the
4 years 1990 and 1991 shall be $0.74 per kA-month applied
5 to TANC's Entitlement. Except as provided in Section
6 5.1.1, rates for subsequent periods shall be as
7 mutually agreed or as may be unilaterally filed by PG&E
III 8 with the FERC under Section 205 of the Federal Power
9 Act. TAMC shall have the right to intervene, protest
10 or otherwise oppose any such unilateral filing. In
11 addition, after 1991 IANC retains all rights it may
12 have under Section 206 of the Federal Power Act. Firm
13 transmission service will be billed on a contract
14 demand, take-or-pay basis for TANC's Entitlement. The
15 parties acknowledge that PG&E and individual TAMC
16 Members have or may have separate agreements which
17 provide for area, backbone, and system interconnect
18 transmission charges. PG&E agrees to provide
19 bidirectional transmission service between Midway
20 Substation and the points of receipt and delivery as
21 set forth in Section 2.4 for the charges under these
22 principles and not to impose additional backbone or
23 - system interconnect charges in connection with service
24 under these principles and under such separate
25 agreements. Charges for area transmission service,
26 where applicable, will be provided in accordance with
27 such separate agreements between PG&E and TAMC Members.
'i
j 28
;i -23-
1 5.1.1 Except as provided in Section 5.6, the rates
2 applicable from January 1, 1992 through
3 December 31, 1998 shall be PG&E's backbone and
4 system interconnect charges reflecting
5 system-average cost based functionalized
6 rates, changed based only on changes in PG&E's
7 costs.
8
9 5.2 Initial Reinforcement Charge - TANC shall pay, as
10 further defined in the definitive successor
11 transmission service agreement, its proportionate share
12 of the costs of the Initial Reinforcements, adjusted
13 for applicable taxes, and associated annual ownership
14 charges. Such costs shall include the study costs, not
15 to exceed $2.6 million, associated with such
16 reinforcements and the Los Banos-Gates Project. Such
17 costs for Initial Reinforcements are estimated to be
18 approximately $7.21 million before taxes. This
19 estimate is based on transmission studies and subject
20 to revision following completion of such
21 reinforcements. Such total costs shall be shared
22 proportionately among the Designated Participants and
23 Third Parties based on total subscriptions for such
24
25
26 1 This estimate is subject to modification for,
among other things, the installation of additional
27 shunt capacitors at Tesla substation to the extent
these costs are not covered under separate projects.
28
-24-
I service. Designated Participants and Third Parties who
2 contribute to the cost of the Initial Reinforcements
3 shall receive appropriate reimbursement subsequent to
4 similar contributions made at a later date by other
5 Designated Participants or Third Parties. The annual
6 ownership charge for the Initial Reinforcements is
7 estimated to be $386,400 in 1990 allocated
'i 8 proportionately to all contributing Designated
9 Participants and Third Parties.
10
11 5.3 South of Tesla Reinforcement Charge - The parties
12 anticipate that the South of Tesla Reinforcements will
.i 13 increase the Transmission Capability by approximately
I
14 1100 to 1200 MW. Subject to Section 8, TAMC, PG&E and,
15 subject to separate agreement with PG&E, Edison, each
,I
16 agree to pay for a share of the cost of the South of
17 Tesla Reinforcements, adjusted as to TAMC and Edison
1 18 for applicable taxes, and associated annual ownership
19 charges, as follows: TAMC - 300 MW, PG&E - 300 MW,
20 Edison - 281 NW. Such shares shall be divided by the
21 total shares allocated to TAMC, PG&E, Edison, other
22 Designated Participants and Third Parties (e.g. , for
23 TAMC, 300/total allocation) , whether or not the total
24 shares allocated to TAMC, PG&E, Edison, other
25 Designated Participants and Third Parties exceed the
J
26 increased Transmission Capability resulting from the
27 South of Tesla Reinforcements. To the extent that any
28 portion of the cost of such reinforcements is not
-25-
I allocated to other Designated Participants or Third
2 Parties in accordance with Section 5.3.3, TAMC, PG&E
3 and Edison shall each pay its proportionate share of
4 such amount and receive a corresponding increase in
5 Entitlement or transmission use. TAMC, PG&E, and
6 Edison also shall each pay its proportionate share of
7 PG&E's associated annual ownership charges for the
8 South of Tesla. Reinforcements. PG&E shall amend the
9 October 12, 1987 Revised Principles with Edison to
10 reflect the provisions of this Section 5.3.
11
12 5.3.1 In the event that Edison is relieved of its
13 obligation to contribute to the cost of the
14 South of Tesla Reinforcements pursuant to
i
,I 15 separate agreement with PG&E, PG&E and TAMC
16 shall remain obligated to pay for 300 MW
17 shares each; however, PG&E shall not be
18 obligated to install the South of Tesla
19 Reinforcements until and unless Edisonfs
20 previous share of such reinforcements is
21 assumed by PG&E, TAMC, other Designated
22 Participants or Third Parties.
23
24 5.3.2 In the event that PG&Efs participation in the
25 COTP terminates, PG&E shall be relieved of its
26 obligation to contribute to the cost of the
27 South of Tesla Reinforcements. In such event,
28 TAMC and, subject to separate agreement with
,i
-26-
i
1 PG&E, Edison, shall remain obligated to pay
2 for 300 MA and 281 MA shares, respectively;
3 however, PG&E shall not be obligated to
4 install the South of Tesla Reinforcements
5 until and unless PG&E's previous share of the
6 cost of such reinforcements is assumed by
7 Edison, TAMC, other Designated Participants or
8 Third Parties.
9
10 5.3.3 Unless ordered otherwise by a court or
11 regulatory agency of competent jurisdiction,
12 PG&E agrees to condition any agreements for
13 new firm transmission service longer than 10
14 years, including contract renewals, between
15 Tesla Substation/COTP Terminus and Midway
16 Substation to Designated Participants or Third
17 Parties on agreement to pay a corresponding
18 share of the costs of the Initial
19 Reinforcements and the South of Tesla
20 Reinforcements. Firm transmission service
21 provided by PG&E to Third Parties for 10 years
22 or less between Tesla Substation/COTP Terminus
23 and Midway Substation may be subject to
24 payment of an appropriate share of the costs
25 of such reinforcements in accordance with
26 Section 4.3. Transmission service provided by
27 PG&E which does not include a requirement to
28 pay for Initial Reinforcements and South of
-27-
1 Tesla Reinforcements shall not be considered
2 by the CPPA Board of Control in determining
3 the need for the South of Tesla
4 Reinforcements. PG&E and TAMC also agree to
5 use their best efforts to obtain agreement by
6 Designated Participants and Third Parties to
7 whom PG&E has already committed, after
8 execution of the MOU, to provide firm
9 Tesla-Midway transmission service to pay a
10 corresponding share of the costs of the
11 Initial Reinforcements and, for service beyond
12 1999, the South of Tesla Reinforcements.
13
14 5.4 Pre-Specified Mitigation Charge - In accordance with
i
15 Section 3.1.2', TAMC shall pay PG&E as full compensation
16 for Pre-specified Mitigation as follows:
17
18 5.4.1 January 1, 1990 through December 31, 1993
19 $0.10/kW-month;
20
21 5.4.2 January 1, 1994 through December 31, 1998 -
22 $0.20/kW-month;
23
24 5.4.3 January 1, 1999 through December 31, 2004
25 $0.30/kW-month.
26
27
28
-28-
,i
i
i
1 Except as provided in Section 5.6, the foregoing rates
2 shall be applied to TANCIs Entitlement and shall not be
3 subject to change before January 1, 2005.
4
5 5.5 Losses - PG&E shall be compensated for transmission
6 losses by an appropriate reduction to TANCIs power
u
7 deliveries based on functionalized system-average loss
8 factors or as otherwise mutually. agreed. The parties
9 acknowledge that PG&E and individual TAMC Members have
a
10 or may have separate agreements which provide for area,
11 backbone, and system interconnect transmission losses.
12 PG&E agrees to provide bidirectional transmission
i
13 service between Midway Substation and the points of
14 receipt and delivery as set forth in Section 2.4 with
15 losses as set forth in these principles and not to
16 impose additional backbone or system interconnect
17 losses in connection with service under these
18 principles under such separate agreements. Losses for
'I
19 area transmission service, where applicable, will be
20 assessed in accordance with such separate agreements
21 between PG&E and TAMC Members. The loss factors for
22 the system interconnect and backbone subfunctions are
23 currently 0.999534 and 0.981547, respectively. The
24 combined loss factor is 0.9810896 (e.g. , deliveries
25 over the system interconnect and backbone are reduced
26 to an amount equal to the amount of power scheduled at
.i
27 the contract point of origin within PG&E's system
28 multiplied by 0.9810896) . PG&E may revise these loss
-29-
•
1 factors from time to time as appropriate,ro riate
, and shall
2 submit an analysis to IANC supporting those revisions.
3 If the parties agree on those revisions, they shall
4 sign a separate letter agreement accepting those
5 revisions which shall become effective immediately
6 thereafter. If the parties cannot agree, PG&E shall
7 have the right to file a revision with the FERC and
8 such revision shall become effective on the date it is
9 accepted for filing by FERC.
10
11 5.6 Early Termination of Rates - In the event that the
12 COTP is terminated or there is not substantial progress
13 towards its completion by January 1, 1995, or PG&Efs or
14 TANC's participation in the COTP terminates, Sections
15 5.1.1 and 5.4.3 shall no longer be in effect. ._
16
17 6.0 FIRMNESS OF TRANSMISSION SERVICE PRIOR TO SOUTH OF TESLA
18 REINFORCEMENTS
19
20 6.1 General - Transmission service provided hereunder shall
21 be deemed firm by PG&E and, subject to separate
22 agreement with TAMC, by Edison, for purposes of imports
23 to or exports from their respective control areas.
24
25 6.2 Replacement Power - Replacement power pursuant to these
26 principles is provided as an accommodation and in order
27 to reach agreement on the package of terms and
28 conditions for Tesla-Midway transmission service in
-30-
I these principles. In accordance with Section 2.7, by
2 agreeing to these principles the parties do not intend
3 that anything in
y g these principles requires, or may be
4 used as a basis for requiring, that any replacement
5 power or similar service be made available or supplied
6 (1) to any TAMC Member other than under the definitive
7 successor transmission service agreement, or (2) to any
'I
8 other entity. The parties acknowledge that PG&E is
9 able to provide replacement power under the terms in
10 these principles only because: (1) this service is
�I
'i 11 expected to be needed only occasionally in off-peak
12 periods and infrequently, if at' all, in on-peak periods
13 based on TANCIs anticipated use of south-to-north
14 transmission service; (2) this service will be provided
15 only to TANC Members and only in accordance with the
16 conditions and limitations of these principles; (3)
.i
17 this service is to be provided in connection with
18 curtailment of Tesla-Midway transmission service and
! 19 not for unavailability of any power resource or other
20 transmission service; and (4) PG&E will not be required
21 to add or purchase power to its system, or reduce the
22 integrity and reliability of service to Priority
23 Commitments in order to supply replacement power to
24 TAMC.
25
26 South-to-north transmission service shall be deemed
27 firm by PG&E for all purposes under the various
28 interconnection, integration, and sales and service
-31-
:j 1 agreements between TAMC Members and PG&E; however,
2 before the South of Tesla Reinforcements are installed,
3 to the extent that Pre-specified Mitigation for
4 south-to-north service is insufficient and TANC's
5 Entitlement is curtailed in accordance with Section 3.1
6 or 3.2, PG&E shall provide replacement power, to the
7 extent available and up to the amount of TANC's
8 Entitlement, if requested by a TAMC Member.
i
9 Replacement power under this Section 6.2 shall not be
i
10 provided by PG&E to the extent that curtailments are
11 required and implemented by PG&E during on-peak periods
12 as a result of: (1) emergency conditions, including
13 Tesla-Midway transmission facility outages and partial
14 outages; or (2) actions taken by PG&E during system
i
15 jeopardy pursuant to Section 3.1. On-peak periods
16 shall be designated by PG&E, consistent with general
17 industry definitions and the load characteristics of
18 PG&E's electric system, and shall include 50% of the
19 hours in a week. Initially, on-peak periods shall be
i
20 Monday-Friday 7 a.m. to 10 p.m. , Saturdays 1 p.m. to 10
'
.m. subject to change with adequate� 21 P . subj7 g notice given to
22 TAMC.
23
24 The price formula used in any given month through
25 December 31, 2004 shall be the quantity of replacement
26 power provided in kWh in a given month times 10,500
27 Btu/kWh times PG&E's monthly average fuel cost
i 28 (weighted average of oil and gas) for electric
-32-
1 generation at PG&E's conventional steam plants. PG&E1s
2 average fuel cost for electric generation is currently
3 defined as the sum of:
4 (i) The annual average G-IIEG transportation rate
5 calculated based on the currently effective
6 G-IIEG gas transportation tariff or its
7 successor. (The annual average G-IIEG
8 transportation rate is the current
9 CPUC-adopted annual revenues for utility
10 generation divided by the current CPUC-adopted
11 annual utility electric generation volumes) ;
12 and
'i 13 (ii) The core and/or non-core gas procurement rates
14 (G-PC and/or G-PN, or their successor rates,
15 as applicable based on the gas procurement for
16 the month concerned) , except when PG&E uses
17 oil rather than gas for some or all of its
18 power plants. In the latter case, PG&E may
19 use its weighted average price of oil and gas
20 instead of the applicable gas procurement
21 rate.
22 After December 31, 2004, replacement power shall be
23 priced as agreed by PG&E and TAMC or as filed with the
24 FERC by PG&E pursuant to Section 205 of the Federal
25 Power Act.
26
27 6.3 Term of Firmness - For purposes of Sections 6.1 and
i
28
-33-
1 6.2, transmission service hereunder shall be deemed
2 firm prior to the completion date of the South of Tesla
3 Reinforcements; if, however, after the South of Tesla
4 Reinforcements are determined by the CPPA Board of
5 Control to be necessary in accordance with Section 4.2,
6 PG&E is unable to install such reinforcements after
7 exercising due diligence in accordance with section
8 4.50 transmission service hereunder shall be deemed
9 firm only until the later of (i) January 1, 2004 or
10 (ii) 8 years following the date the CPPA Board of
11 Control makes such determination.
12
13 6.4 Limited Effect on Nature of Power Resources - Nothing
14 in these principles shall be construed to define or
15 determine that any power resource is firm except to the
16 extent that firm transmission is an element of such
17 definition or determination.
18
19 7.0 UNCONTROLLABLE FORCES
20
21 The obligations of any party under these Principles and successor
22 agreements thereto, except for payment obligations, shall be
23 subject to uncontrollable forces. Further, such obligations
24 shall be subject to PG&E's discretion in allocating time and
25 materials during periods of shortage in order to avoid jeopardy
26 to its retail customers.
27
28
-34-
1 8.0 TERM OF SUCCESSOR DEFINITIVE TRANSMISSION SERVICE AGREEMENT
2
3 8.1 General - The successor definitive transmission service
4 agreement shall become effective when permitted to do
5 so by FERC and shall remain in effect for the longer of
6 (i) the term of the COTP Participation Agreement or
7 (ii) the date specified in Section 8.2.31 unless
8 terminated in accordance with Section 8.2.
9
10 8.2 Early Termination - The successor definitive
11 transmission service agreement shall terminate upon the
12 earliest of the following events or dates:
13
14 8.2.1 The later of (i) the completion of the South
15 of Tesla Reinforcements or (ii) three years
16 after the CPPA Board of Control makes the
17 determination that such reinforcements are
18 necessary in accordance with Section 4.2;
19 provided that South of Tesla Reinforcements
20 are determined to be necessary by the CPPA
21 Board of Control pursuant to Section 4.2 and
22 TAMC gives written notice to PG&E within
23 ninety (90) days of such determination that it
24 elects not to contribute to the cost thereof
25 in accordance with Section 5.3.
26
27 8.2.2 The termination date specified in a written
28
-35-
1 notice given by TAMC to PG&E at least sixty
2 (60) days in advance of termination, following
3 a change by PG&E, accepted or approved by
4 FERC, in its methodology for computing or
5 developing transmission service charges, rates
6 or prices under Section 5.1 if such change in
7 methodology is reasonably estimated to
8 increase charges, rates or prices for
9 transmission service under Section 5.1 by 35
10 percent over four years or less from the date
11 such changed methodology becomes effective.
12 If TAMC has contributed to the cost of South
13 of Tesla Reinforcements in accordance with
14 Section 5.3, TAMC shall have the option to
15 continue service until the date on which TAMC
16 receives a refund in accordance with Section
17 4.7, or any shorter period when the
18 termination date specified in written notice
19 given by TAMC to PG&E is at least 180 days
20 after such notice is given, in which case PG&E
21 agrees not to increase the transmission
22 service charges, rates or prices under Section
23 5.1 by more than 35 percent in any four year
24 period prior to the expiration of the ten year
25 period described in Section 4.7; provided,
26 however, for purposes of Section 4.71 TANC
27 shall be entitled to receive its refund at the
• 28
-36-
1 same time as it would have if TAMC had not
i
2 elected to continue service.
3
4 8.2.3 The later of (i) January 1, 2010 or (ii) 10
5 years after completion of the South of Tesla
6 Reinforcements if TAMC contributes to the cost
7 of such reinforcements in accordance with
8 Section 5.3; provided . that the COTP is
9 terminated or is not in commercial operation
10 by January 1, 2000, or PG&E's or TANCIs
11 participation in the COTP terminates. PG&E
12 shall not unreasonably withhold its consent to
13 extend for up to one year the above January 1,
14 2000 trigger date if substantial progress
15 toward completion of the COTP has been madel,
16 and is then underway.
17
18 8.2.4 The termination date specified in a written
19 notice given by TAMC to PG&E at least ninety
20 (90) days in advance of termination; provided
21 that PG&E does not initiate installation of
22 the South of Tesla Reinforcements within two
23 years of the determination by the CPPA Board
24 of Control that such reinforcements are
25 necessary in accordance with Section 4.2,
26 because (i) either PG&E or Edison has been
27 relieved of its obligation to contribute to
28 the cost of such reinforcements pursuant to
-37-
1
I Section 5.3.1 or Section 5.3.2 and (ii) PG&EIs
2 or Edison's previous share of the cost of such
3 reinforcements is not assumed by PG&E, Edison,
4 Designated Participants or Third Parties.
5
i
6 9.o SIGNATURES
7
8 The signatories to these principles represent that they have been
9 appropriately authorized to enter into this agreement on behalf
10 of the party for whom they sign.
12
13 Pacific Gas and Electric Company
14
15 By:
16 Vice Pr side t
17 Power Planning and Contracts
18
19
20
21 Transmission Agency of Northern California
22
23 By: .
24 Ch irman
25
26
27
28
-38-
Attachment A
PLAN OF SERVICE
SOUTH OF TESLA INITIAL REINFORCEMENTS PROTECT
The project has three construction components, as follows:
(1) Upgrade Existing Series Capacitors At Los Banos Substation
Upgrading the existing series capacitors at Los Banos Substation, in the Los
Banos-Midway #1 and #2 500 kV lines from 1,600 amp to 1,800 amp. This
upgrade includes:
a) Installing capacitor units at Los Banos Substation.
b) Rebalancing capacitor groups and strings.
c) Installing bracing for the capacitor bank platform.
(2) 230 kV Station and Line Work
Establish two separate 230 kV circuits between Gates and Panoche Substations.
This upgrade includes:
a) Connecting to 230 kV the section of the Gates-Panoche 230 kV DCTL
currently used for the Gates-Coalinga No. 2 70 W line.
b) Installing new 230 kV circuit breakers at.Gates and Panoche
Substations.
' c) Reconductoring the 230 kV bus at Panoche Substation.
d) Relocating the Panoche-Kearney 230 kV line termination.
(3) 70 kV Line Work
Replace the 70 kV line currently using the Gates-Panoche 230 kV DCTL. This
includes:
a) Acquire right-of-way for construction of the line.
b) Construct 11 miles of 70 kV line section to make available the
section of the Gates-Panoche 230 kV DCTL being operated at 70 kV.
i
1 APPENDDC B-1
2 PERMANENT ALLOCATIONS
3
,- 4 _ _ (A) (B)
5
Expressed Expressed
6 in in
Percentages Megawatts
4 7 -_
8 City of Alameda 2.104 6.31
9 City of Healdsburg 0.236 0.71
10 City of Lodi 2.069 6.21
' City of Lompoc 0.266 0.80
11
Modesto Irrigation District 34.000 102.00
F 12
Plumas-Sierra Rural Electric 0.235 0.70
} 13 Cooperative
City of Redding 10.333 31.00
i` 14
City of Roseville 1.786 5.36
15 Sacramento Municipal Utility District 15.333 46.00
16 City of Santa Clara 27.000 81.00
17 Turlock Irrigation District 6.334 19.00
City of Ukiah 0.304 0.91
18 TOTAL 100.000 300.00
19
,f
,�(.. 20
a.
:G
s
21
,w
22
23
;f
24
l� 25 .
26
27
28
1992
APPROVED BY IANC COMMISSION-DECEMBER 16
B1 .
1 APPENDIX B-2
2 LONG-TERM ALLOCATIONS'
3
4
5
(A) (B)
6
'! 7 Expressed Expressed .
in in
g Percentages Megawatts
9 City of Alameda 5.000 15.00
10 City of Healdsburg 0.236 0.71
11 City of Lodi 5.788 17.37
12 City of Lompoc 0.266 0.80
Modesto Irrigation District 34.000 102.00
13 Plumas-Sierra Rural Electric 0.235 0.70
14 Cooperative
City of Redding 0.000 0.00
15
City of Roseville 5.504 16.51
16 Sacramento Municipal Utility District 15.333 46.00
17 City of Santa Clara 27.000 81.00
18 Turlock Irrigation District 6.334 19.00
'i City of Ukiah 0.304 0.91
19 TOTAL 100.000 300.00
20
,i 21
i. 22
23
24
;r 25
f'
26
27
28 ' This Appendix represents a summary of the impacts of Long-Term Reallocations upon
Permanent Allocations for the period beginning March 1, 1992 and ending December 31, 1993.
B-2 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
i
f
1 APPENDDC C-1
r 2 ADDRESSES OF THE PARTIES FOR BILLING
3
City of Alameda
4 Bureau of Electricity
P. O. Box H
5 Alameda, CA 94501
FAX #: 510/748-3975
6
City of Healdsburg
7 c/o Northern California Power Agency
180 Cirby Way
8 Roseville, CA 95678
FAX #: 916/783-7693
9
}_ City of Lodi
10 P. O. Box 3006
'I Lodi, CA 95241-1910
11 FAX #: 209/333-6795
12 City of Lompoc
100 Civic Center Plaza
13 Lompoc, CA 93438
FAX #: 805/736-5347
14
Modesto Irrigation District
15 P. O. Box 4060
Modesto, CA 95352
16 FAX #: 209/526-7575
17 City of Redding
Attention: Electric Department
18 760 Parkview Avenue
Redding, CA 96001-3396
V19 FAX #: 916/224-4389
20 City of Roseville
Electric Department
21 2090 Hilltop Circle
Roseville, CA 95678
22 FAX #: 916/784-3797
23 Sacramento Municipal Utility District
Attention: Accounts Payable MS-27
24 P. O. Box 15830
Sacramento, CA 95852-1830
25 FAX #: 916/732-6587
,$ 26
{
;c
27
28
I
y C-la APPROVED BY TANC COMMISSION-DECEMBER 16,1992
it
1 City of Santa Clara
Electric Department
2 Attention: Accounts Clerk
1500 Warburton Avenue
3 Santa Clara, CA 95050
FAX #: 408/241-8291
4
Turlock Irrigation District
F 5 Attention: Power Resources Department
'i P. O. Box 949
6 Turlock, CA 95381
FAX #: 209/632-8181
7
City of Ukiah
8 300 Seminary Avenue
Ukiah, CA 95482 -
9 FAX #: 707/463-6204
10 Plumas-Sierra Rural Electric Cooperative
P. O. Box 2000
11 Highway 70, 3 Miles West of Portola
i( Portola, CA 96122-2000
'+ 12 FAX #: 916/832-5761
13 Transmission Agency of Northern California
P. O. Box 15129
14 Sacramento, CA 95851-0129
FAX # 916/852-1073
` 15
'! 16
17
18
19
20
'i 21
22
i
23
24
25
26
r!;
27
28
C-lb APPROVED BY TANC COMMISSION-DECEMBER 16,1992
I
f
t _
1 APPENDDC C-2
2 ADDRESSES OF THE PARTIES FOR NOTICES
3
General Manager
4 City of Alameda
Bureau of Electricity -
5 P. O. Box H
Alameda, CA 94501
6 FAX #: 510/748-3975
7 General Manager
City of Healdsburg
8 c/o Northern California Power Agency
180 Cirby Way
,r 9 Roseville, CA 95678
' FAX #: 916/783-7693
10
Electric Utility Director
�. 11 City of Lodi
P. O. Box 3006
12 Lodi, CA 95241-1910
FAX #: 209/333-6762
13
Public Works Director
;( 14 City of Lompoc
100 Civic Center Plaza
15 Lompoc, CA 93438
FAX #: 805/736-1261
'} 16
Chief Operations Officer
17 Modesto Irrigation District
P. O. Box 4060
18 Modesto, CA 95352
! FAX #: 209/526-7574
19
i Director, Electric Department
J 20 City of Redding
760 Parkview Avenue
21 Redding, CA 96001-3396
i FAX #: 916/224-4389
I' 22 -
Electric Utility Director
#1 23 City of Roseville
Electric Department
24 2090 Hilltop Circle
Roseville, CA 95678
25 FAX #: 916/784-3737
j 26
27
28
f C-2a APPROVED BY TANC COMMISSION-DECEMBER 16,1992
J
1 Assistant General Manager
Sacramento Municipal Utility District
2 MS-41
P. O. Box 15830
> 3 Sacramento, CA 95852-1830
FAX #: 916/732-6562
I 4
Director of Electric Utility
5 City of Santa Clara
1500 Warburton Avenue
6 Santa Clara, CA 95050
FAX #: 408/241-8291
7
General Manager
8 Turlock Irrigation District .
P. O. Box 949
9 Turlock, CA 95381
FAX #: 209/632-8181
10
City Manager
11 City of Ukiah
300 Seminary Avenue
12 Ukiah, CA 95482
t FAX #: 707/463-6204
13
General Manager
14 Plumas-Sierra Rural Electric Cooperative
? P. O. Box 2000
15 Highway 70, 3 Miles West of Portola
'i Portola, CA 96122-2000
16 FAX #: 916/832-5761
17 Executive Director
Transmission Agency of Northern California
?� 18 P. O. Box 15129
Sacramento, CA 95851-0129
19 FAX #: 916/852-1073
;i 20
21
22
,
,
23
l 24
f+
25
26
27
'i 28
II
C-2b APPROVED BY TANC COMMISSION-DECEMBER 16,1992
.11= -�-�:1R
December 30, 1991
i�
Mr. Joseph B. Marcotte, Chairman
Transmission Agency of Northern California
P.O. Box 15129
Sacramento, CA 95851-0129
Dear Mr. Marcotte:
This letter sets forth the agreement between Pacific Gas and Electric Company
(PG&E) and the Transmission Agency of Northern California (TANC) regarding
the construction by PG&E of the South-of-Tesla Initial Reinforcements and the
contribution by TANC in aid of construction of such Initial Reinforcements as
contemplated by Sections 4.1 and 5.2 of the Principles for Tesla-Midway
Transmission.Service (TANC Principles) entered into between PG&E and
TANC on August 25, 1989. Nothing in this letter agreement shall represent
agreement on any other issues currently the subject of settlement discussions
between the parties in conjunction with FERC proceedings (Docket Nos. EL91-
8-000, ER91-344-000, and ER91-505-000)) regarding South-of-Tesla
transmission service for TANC.
1. Payment: TANC shall pay to PG&E a lump sum of $5,000,000 before
the close of business on December 31, 1991. This amount consists of
$3,906,250 capital contribution to the Initial Reinforcements, and
$1,093,750 (28 percent) for federal tax on Contributions In Aid of
Construction (CIAO). It is intended and agreed that the payment made
by TANC hereunder for its pro-rata share of the Initial Reinforcements
shall constitute payment in full of TANC's obligation in connection with
,I the construction and installation thereof. In the event that PG&E
subsequently constructs the more extensive project referred to as the
South-of-Tesla Reinforcements (SOTR), and TANC elects to contribute
to the cost of the SOTR, none of the costs related to the Initial
Reinforcements shall be included or assessed to TANC as part of its pro-
rata share of the costs of the SOTR unless the Parties agree at the time
to include such costs. If payment of the $5 million is received after
December 31, 1991, a six percent surcharge to account for state taxes
! on CIAC shall be added to the lump sum amount and TANC shall pay
such additional amount. In addition, payment received in 1992 shall
include interest at 10 percent on an annualized basis accruing from
January 1 , 1992 up to and including the date payment is received by
PG&E. TANC will receive no tax depreciation benefits associated with
the Initial Reinforcements that may accrue to PG&E.
Mr. Joseph B. Marcotte, airman .
December 30, 1991
Page 2 of 4
2. Conditional Refund of Payment for Tax on CIAC: Should TANC choose
to challenge the application of the federal or state tax on the CIAC made
by TANC, PG&E agrees to cooperate with TANC in preparing and
supporting such application. TANC shall bear the expenses of any such
filing. If such a ruling is received from the appropriate federal or state
authority, PG&E shall apply to the appropriate authority for a refund. If
PG&E makes such an application, TANC shall reimburse PG&E for a
pro-rata part of the actual administrative and clerical costs incurred.
Should it be determined that PG&E is not required to pay federal or state
tax on the CIAC made by TANC and such tax is not collected or is
refunded, PG&E shall return TANC's pro-rata share of such refund. In
the event that PG&E receives a refund of such tax which includes
interest to PG&E, PG&E shall return TANC's pro-rata share of any
associated interest on such payment to TANC. However, TANC shall
pay PG&E an amount to make it whole (on a net present value, after tax
basis) for any taxes and interest PG&E may incur at a later date, which
are attributable to TANC's contribution. Because this amount will be
difficult to compute, and its determination will be subject to significant
controversy, the parties agree that`-TANC shall pay PG&E the following
sum, such amount being a reasonable approximation of the amount
described in the preceding sentence: the sum of (i) the total amount
includable in PG&E's gross income attributable to TANC's contribution
multiplied by the "gross-up" percentage for contributions-in-aid-of-
construction, as set forth in PG&E's CPUC Electric Tariffs, as applicable
to contributions received on the last day of the taxable year for which
such amount is so includable in PG&E's gross income, plus (ii) interest
'i with respect to the total amount described in (i) computed at the "CPUC"
Rate" from the due date (without extensions) of the federal tax return for
the taxable year in which such amount is includable, until the date TANC
pays to PG&E the total amount described herein. The "CPUC rate" is
interest at the average three-month commercial paper rate as published
in the Federal Reserve Bulletin, or such other rate as the CPUC may
establish from time to time to replace the rate in paragraph 18 of its
conclusions of law in Decision 87-09-026.
3. Refunds for Future Contributions: TANC shall be entitled to
reimbursement from contributions made at a later date by other
participants in the Initial Reinforcements Project. Such contributions
may be made by existing participants who increase their participation, or
new participants, who may make a capital contribution to the cost of the
Initial Reinforcements to obtain service. In calculating the equivalent
contribution for such a reimbursement, neither interest nor the six
percent state tax on CIAC shall be included (if TANC's payment is
received by PG&E on or before December 31 , 1991), but federal tax on
CIAC at 28 percent shall be included unless a determination is made by
the IRS that the CIAC is non-taxable, in which case, the contribution will
include no tax component. Reimbursement to TANC shall be pro-rata,
Mr. Joseph B. Marcotte*airman
December 30, 1991
Page 3 of 4
based on the MW share of each participant, and shall be limited to
contributions actually received by PG&E from new participants or
existing participants who increase their Initial Reinforcements Project
participation. To the extent that a new participant pays for a pro-rata
share of the entire study costs (without a $2.6 million study cost cap), the
portion contributed above the cap (including tax gross-up) will not be
reimbursed to TANC since TANC has not paid such costs. PG&E and
TANC will make good faith efforts to collect a full pro-rata contribution
�
from any new participant or an existing participant which r
. P Y 9 p p requests or
4
obtains firm South-of-Tesla transmission service.
4. No Audit Rights: In return for PG&E's agreeing to accept a lump'sum
from TANC as payment in full for TANC's share of the costs of the Initial
Reinforcements, TANC agrees to waive, for the limited purpose of this
Initial Reinforcements settlement, all claims it may have to an audit, a
final construction accounting, and a review of supporting documents for
a final cost accounting if PG&E undertakes such an accounting for the
Initial Reinforcements -- and PG&E shall have no obligation to provide
such rights to TANC in connection with the Initial Reinforcements.
5. Completion of Construction: PG&E agrees to construct the Initial
Reinforcements, as described in the Project Plan of Service attached
hereto as Appendix A, and to complete and have the same ready for
service within twenty-eight (28) months from date of the full execution of
this letter agreement. PG&E shall be responsible for obtaining all
necessary governmental and regulatory permits and approvals to
construct and operate the Initial Reinforcements. In the event the Initial
Reinforcements are not completed and ready for service within twenty-
eight (28) months after the full execution of this letter agreement, unless
TANC otherwise agrees, PG&E shall refund to TANC its full contribution
made hereunder with interest at 10 percent on an annualized basis
accruing from January 1, 1992; provided that, PG&E has made a good
faith effort to complete the Initial Reinforcements and has failed to do so,
the refund would be pro rata based on actual benefits versus anticipated
benefits. TANC shall not unreasonably withhold its consent to extend for
up to four (4) months the time period for completion of construction
without refund if substantial progress toward completion of the Initial
Reinforcements has been made and is then underway.
6. TANC's Monthly Payment for Special Facilities for the Initial
Reinforcement: TANC's monthly payment for Special Facilities (also
sometimes referred to as Annual Ownership Charge) shall begin on the
first of the month following commercial operation of the Initial
Reinforcements. The amount of this monthly payment shall be as set
forth in the settlement agreement currently being negotiated by the
Parties or the TRS, whichever becomes effective.
Mr. Joseph B. Marcotte,16airman •
December 30, 1991
Page 4 of 4
If you agree with the terms set forth above, please sign both duplicate originals
and return one to me.
Sincerely,
9.
C-- t7-�-- -
PACIFIC AS AND ELECTRIC COMPANY
(4441 Robert J. Haywood
Vice President
Power Planning and Contracts
Date
Accepted:
TRANSMISSION AGENCY OF NORTHERN CALIFORNIA
By: December 30 , 1991
—7
h B. Marcotte, Chair n Date
.. •
n..
1 APPENDIX D
2 PRICING FOR SOT TRANSMISSION SERVICE
1133
4 1. The TANC Commission shall determine, from time to time, the SOT Service Charge and
5 the SOT Short-Term Reallocation Rate to be in effect for SOT transmission service to SOT
6 Members. The SOT Service Charge shall be used for billing purposes by the TANC
'!-r 7 Treasurer when preparing the monthly bill to SOT Members. The SOT Short-Term
8 Reallocation Rate shall be used as the maximum rate for Short-Term Reallocations pursuant
9 to Section 4.4.1 of the Agreement.
10
11 2. SOT Service Charge - The SOT Service Charge shall be determined by including all costs
12 that TANC incurs to provide the service,provided however, that charges for replacement
,L
13 power provided pursuant to the TMTS Agreement shall be billed by the TANC Treasurer
'I
;! 14 directly to the SOT Member which uses that service. The SOT Service Charge shall
15 include,but not be limited to, (i)the TMTS Charge plus, (ii)an amortized monthly amount
16 designed to fully recover the SOT costs for SOT-related litigation and the Initial
,i 17 Reinforcements plus, (iii) any routine TANC administrative, legal, consulting, and other
,
18 costs related to SOT transmission service that TANC has occurred during the billing period.
19
20 For illustrative purposes, the SOT Service Charge shall be determined as follows:
21
i
22 SOT Service Charge = (A + B + C)
23
Where: A = The total dollars that TANC has been charged by PG&E during the
24
current billing period, pursuant to the TMTS Agreement, excluding
25
any replacement power.
26
27
28
D-1 APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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B = The monthly charge which reflects the amortization of certain SOT
2 costs. Those costs shall include, but are not limited to, (i) all SOT
3 litigation costs as accrued, capitalized, and placed into debt service
4 by TANC and(ii)TANC's contribution for the Initial Reinforcements.
5 The amortization period for those accrued costs shall be over a time
6 period beginning March 1, 1992 and ending May 1, 2024. The
7 interest rate shall reflect TANC's true interest costs as determined by
8 the appropriate bonds or their successor(s).
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10 C = TANC's routine administrative,legal,consulting costs related to SOT
11 transmission service,and other SOT costs, based on TANC's annual
12 budget.
13
14 The SOT Service Charge shall be applied to any Long-Term Reallocations or Permanent
15 Reallocations pursuant to Section 4 of the Agreement.
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17 3. SOT Short-Term Reallocation Rate - The SOT Short-Term Reallocation Rate shall be
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18 determined using the most recent monthly SOT Service Charge as its basis. For illustrative
19 purposes, the rate shall be determined as follows:
20 SOT Short-Term Reallocation Rate k+1 = SOT Service Charge'`
($/kW-day) 300,000 kW * 30.42
21
Where k = is the most recent billing period
22
23
The TANC Commission shall review the rate design for the SOT Short-Term Reallocation
24
J Rate in Section 3 of this Appendix D by December 1st of each year. Any revision to the
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t rate design shall be in effect beginning January 1 of the following year, or as otherwise
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determined by the TANC Commission.
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11 D_2 APPROVED BY TAMC COMMISSION-DECEMBER 16,1992
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APPENDDC E
i 2 INITIAL REINFORCEMENTS LETTER AGREEMENT
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APPROVED BY TANC COMMISSION-DECEMBER 16,1992
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