Exhibit 10.2
Power Purchase Agreement
------------------------
The Sunnyside Project operates under a Standard Offer No. 2 Power Purchase
Agreement with PG&E, which provides for the following:
Term: 30 years from date operations commenced (May 1991).
Capacity: 5,500 Kilowatts, firm, delivered to PG&E system (after
considering parasitic requirements of the plant site).
Capacity $209.00 per Kilowatt-year plus bonuses of up to $36.88 per
Price: kilowatt-year. Both are subject to a line-loss adjustment
factor of .989 to yield net capacity payments of $206.70 and
$36.48, respectively.
Capacity See Capacity Payments Section herein.
Payements:
Energy 100% of PG&E's full short-run avoided operating cost
Price: ("SRAC") per Kilowatt hour as approved by the California
Public Utilities Commission. (Prices vary between On-Peak,
Partial-Peak, Off-Peak and Super-Off-Peak hours, and differ
between Period A and Period B.)
Availability: During applicable operating period (generally 13 hours per
day), the Project must be available to operate at a minimum
of 80% of contract capacity. The Project is "dispatchable"
and may be called upon by PG&E to produce electricity at any
time.
Payments: PG&E shall provide statements and issue checks in favor of
the Project on a monthly basis. (in general, the Project
receives capacity and energy payments within 35 days of the
last day of the month in which power is produced, e.g., May
revenues are collected by July 5.)
Scheduled The Project may have outages of up to 840 hours per year for
Maintenance scheduled maintenance. (Scheduled Maintenance outages are
Outages: generally not permitted during On-Peak hours of the three
Peak Months.)
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Capacity Payments From PG&E
---------------------------
Capacity Payment Revenues consist of Base Capacity Payments and Capacity
Bonuses. A combined formula which calculates the total Capacity Payments for a
month is shown below:
Capacity Payment = Period Price Factor ("PPF")
Times
-----
Monthly Delivered Capacity ("MDC")
Times
-----
Capacity Line Loss Adjustment Factor ("CLAF")
Times
-----
Performance Bonus Factor ("PBF")
PPF: The Period Price Factor segments the annual Base Capacity Payment per
Kilowatt of contract capacity into a monthly base payment per Kw which,
for Sunnyside, is equal throughout the year.
Base Capacity
PG&E's Payment
Monthly Factor Per Kw
-------------- ------
January 8.3333% $ 17.42
February 8.3333 17.42
March 8.3333 17.42
April 8.3333 17.42
May 8.3333 17.42
June 8.3333 17.42
July 8.3333 17.42
August 8.3333 17.42
September 8.3333 17.42
October 8.3333 17.42
November 8.3333 17.42
December 8.3333 17.42
-------- -------
100.0000% $209.00
======== =======
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MDC: Monthly Delivered Capacity is the product of (x) contract firm capacity
of the facility times (y) the actual Monthly Capacity Factor ("MCF")
achieved during the month during both On-Peak and Partial-Peak hours (a
total of 13 hours per day during Period A).
The contract firm capacity of the Project is 5,500 Kw.
The Monthly Capacity Factor, MCF, represents (1) the actual electric
output of the facility during applicable hours divided by (2) (i)
contract firm capacity times (ii) hours in the period (minus PG&E's
forced outage hours and scheduled maintenance hours) times (iii) 80%.
The MCF is limited to not more than 1.0 (100%).
Thus, by operating the Project at 80% of contract capacity during the
On-Peak and Partial-Peak hours (13 hours) for the month the MDC equals:
Contract
Firm
Capacity MCF MDC
-------- --- ---
5,500 X 1 = 5.500
CLAF: This factor is a multiplier designed to account for line losses which
occur between (x) the point of delivery into PG&E's system and (y) the
point of delivery to the ultimate end-user. Contractually, PG&E and the
Protect have agreed that the line-loss is 1.1%, hence a factor of .989
(98.9%)
PBF: The Performance Bonus Factor is designed to increase the Capacity
Payment by a "Capacity Bonus". Eligibility for the Capacity Bonus
payment is measured relative to the On-Peak hours (noon to 6:00 p.m.
weekdays) of each Peak Month (June, July and August). A Capacity Bonus
can be earned by any Project that exceeds an 85% average output
(measured solely with reference to the energy produced by the Project's
contractually specified firm capacity) during the On-Peak hours of the
three Peak Months. The "Performance Bonus Factor (PBF) is a multiplier
representing the percentage (up to 17.65%) by which the Projects On-Peak
output exceeds 85% of contract firm capacity. Thus, a Performance Bonus
Factor of 1.1765 (the maximum PBF; 100% divided by 85% = 1.1765 or
1.1765% of contract firm capacity) represents a 100% capacity factor
during the On-Peak hours of each of the Peak Months. (The PBF is 1.0 for
output between 80% and 95% of capacity during the On-Peak hours.) In
determining Capacity Bonus Payments. PG&E has the right to, and does,
accumulate performance for up to five consecutive Bonus Periods.
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The Maximum Capacity Payment for the Sunnyside Project is shown below:
Kilowatts
Period Monthly Capacity Performance Maximum
Price Delivered Line-Loss Bonus Capacity
Factor Capacity Factor Factor Payment
------ -------- ------ ------ -------
PPF x MDC x CLAF x PBF =
January $ 17.42 5,500 .989 1.176 $ 111,456
February 17.42 5,500 .989 1.176 111,456
March 17.42 5,500 .989 1.176 111,456
April 17.42 5,500 .989 1.176 111,456
May 17.42 5,500 .989 1.176 111,456
June 17.42 5,500 .989 1.176 111,456
July 17.42 5,500 .989 1.176 111,456
August 17.42 5,500 .989 1.176 111,456
September 17.42 5,500 .989 1.176 111,456
October 17.42 5,500 .989 1.176 111,456
November 17.42 5,500 .989 1.176 111,456
December 17.42 5,500 .989 1.176 111,456
----- ----- -------
$209.00 1.176 $1,337,477
======= ===== ==========
Base Payment 1.000 $1,136,856
Bonus Payment .176 200,621
---- -------
1.176 $1,337,477
===== ==========
Threshold Output
In order to meet the contractual obligations of supplying firm capacity, and to
become "eligible" for receiving the full amount of firm capacity payments, a
Project must deliver its contractually specified firm capacity for all of PG&E's
On-Peak hours (12:00 noon - 6:00 p.m.) during each of the Peak Months (June,
July and August), subject to a 20% forced outage rate (forced by equipment
failure, etc.). (Maintenance outages are generally not permitted during the Peak
Months.) Stated another way, an average of at least 80% of the
contractually-specified firm capacity must be delivered during each of the
On-Peak hours in each of the Peak Months. Failure to meet this minimum
performance standard will result in the Project being placed on probation for a
period not to exceed 15 months, during which time Capacity Payments will be
reduced in accordance with the contract. If at the end of the probation period
the Project cannot meet the performance requirements for the firm capacity it
has pledged, PG&E can permanently de-rate the Project's firm capacity.
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