HomeMy WebLinkAboutKotzebue Wind-Battery-Diesel Project Power Purchase Agreement - Oct 2013 - REF Grant 7030015AGREEMENT FOR THE PURCHASE AND SALE
OF INTERRUPTIBLE ELECTRIC ENERGY
THIS AGREEMENT FOR THE PURCHASE AND SALE OF
INTERRUPTIBLE ELECTRIC ENERGY ("Agreement") is entered into between KOTZEBUE
ELECTRIC ASSOCIATION, INC. ("KEA"), and MANIILAQ ASSOCIATION, INC.
("Maniilaq").
WHEREAS, KEA is an electric utility holding a certificate of public convenience
and necessity and is engaged in the generation and distribution of electric energy to consumers in
the area in and around Kotzebue, Alaska; and
WHEREAS, Maniilaq owns and operates a hospital the Maniilaq Medical Center
("MMC"); for the provision of healthcare to residents in and around Kotzebue, Alaska. and
WHEREAS, to provide space heating and hot water generation Maniilaq heats the
hospital space and water with diesel -fueled boilers;
WHEREAS, to reduce its consumption of diesel fuel for space and water heating,
Maniilaq desires to purchase and utilize excess electric energy produced by the KEA wind plant
to produce thermal energy to be utilized for heating hospital space and water; and
WHEREAS, KEA desires to sell and provide to Maniilaq such electric energy on
an interruptible basis;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement, the parties agree as follows:
1. Term. This Agreement shall be for a term of fifteen (15) years,
commencing on the date that this Agreement is signed by both Parties. The Agreement shall
automatically renew for one (1) year terms unless either Party provides written notice to the
other Party of its intention to terminate the Agreement at least ninety (90) days prior to the
expiration of the original term or of a successive term of this Agreement; provided, however, that
Maniilaq may otherwise terminate this Agreement at any time with ninety (90) days prior written
notice if it is reasonably determined that the interruptible electric energy provided under this
Agreement is not needed.
2. Sale and Purchase of Interruptible Electric Energy_. KEA agrees to
produce and sell to Maniilaq and Maniilaq agrees to purchase and receive from KEA,
interruptible electric energy pursuant to the terms, conditions, and rates set forth in this
Agreement.
3. Interru tible Electric Energy Electric Energy From Wind Generation. The
electric energy provided by KEA under this Agreement is fully interruptible, non -firm electric
energy. The source of this interruptible energy is available excess energy from KEA's wind
generators that cannot be utilized by KEA's system. KEA is obligated only to provide excess
fs1KOTZlGeneral Advice110-27-131f
8. Easements, Permits, and Authorizations. Maniilaq shall provide, without
cost or fee to KEA, any easements, permits, or authorizations that are required for KEA to install
the new electric service. KEA shall not be obligated to install the new equipment or commence
interruptible electric energy deliveries until all required easements, permits, and authorizations
are provided.
9. Metering.
A. KEA to Provide Metering Devices. KEA shall provide dedicated
metering devices to measure, in kilowatt-hours ("kWh"); the amount of interruptible electric
energy that is supplied to Maniilaq's heating system under this Agreement.
B. Estimated Ouantities When Meters Are Inaccurate or Out of
Service. For any month in which a metering device fails to accurately measure the quantity of
interruptible electric energy that is provided, due to inaccuracy or malfunction of the metering
device, KEA shall reasonably estimate and bill for the quantities of interruptible electric energy
supplied based upon the best data available. If it is determined that material inaccuracy or
malfunction of a metering device exists, KEA shall make all reasonable efforts to promptly
correct or repair the inaccuracy or malfunction or replace the metering device.
10. Access to Premises. Any properly identified employee or representative
of KEA shall have access to the interruptible electric energy system at the MMC at all reasonable
times for any purpose relating to KEA's delivery of interruptible electric energy to Maniilaq,
including but not limited to: (A) inspection of electrical equipment related to the interruptible
electric energy system; (B) inspection of any metering devices related to the interruptible electric
energy system; and (C) inspection of Maniilaq's electric boilers and associated equipment as
necessary to protect Maniilaq's or KEA's equipment. KEA shall make reasonable efforts to
notify the appropriate MMC personnel prior to accessing the equipment or, if prior notification is
not practical, as soon as notification is practical.
11. Price.
A. Calculation of Monthly Interruptible Electric Energy Charges.
(1) The charges for interruptible electric energy to be paid by
Maniilaq shall be calculated monthly and shall equal sixty percent (60%) of the diesel fuel costs
that Maniilaq avoided during the prior month as a result of receiving interruptible electric energy
from KEA for MMC heating.
(2) The amount owed shall be determined based on the
following formula:
Monthly Charge = Quantity of Diesel Fuel Avoided x Price of Diesel Fuel x 60%
AGREEMENT FOR THE PURCHASE AND SALE
OF INTERRUPTIBLE ELECTRIC ENERGY
Page 3 of 7
&KOWGeneral Advice110-27-13V
(3) In the formula in (2), Quantity of Diesel Fuel Avoided
("QDFA") shall be calculated as follows:
BTU's Provided = kWh X HVE
BTU's Avoided = BTU's Provided / DBPE
QDFA = BTU's Avoided / HVD
Where
(i) HVE is a constant factor representing the estimated heating value of
electric energy, expressed in BTU's. This constant factor shall be 3414
BTUs per kWh.
(ii) DBPE is a constant factor representing the assumed net efficiency of
Maniilaq's diesel boiler used as its primary heating source. This constant factor shall be 80%.
(iii) HVD is a constant factor representing the estimated heating value of No. 1
diesel fuel, expressed in BTUs per gallon, and rounded to the third decimal place (0.000). This
constant factor shall be 131,000 BTUs per gallon; and
(4) In the formula in (2), the Price of Diesel Fuel shall be the
total delivered price of No. 1 diesel fuel, as evidenced by supplier and transporter invoices, paid
for by, and most recently delivered to the MMC for use in the MMC's heating boilers, expressed
in dollars per gallon, and rounded to the fifth decimal place (0.00000). Changes in the Price of
Diesel Fuel shall become effective, for purposes of the formula in (2), beginning with the
interruptible electric energy invoice rendered in the calendar month following the date that the
diesel fuel was delivered to Maniilaq Hospital. Upon receiving a diesel fuel invoice from a
supplier or transporter, including revised invoices or invoice adjustments, Maniilaq shall
promptly provide KEA with a copy of such invoice.
(5) Sample Calculation of Monthly Charges.
Assumed data:
Metered kWh supplied during month: 40,000 kWh
Maniilaq Price of Diesel Fuel: $5.00000 per Gallon
Calculation:
BTU's Provided = 40,000 kWh X 3414 BTUs = 136,560,000 BTUs
AGREEMENT FOR THE PURCHASE AND SALE
OF INTERRUPTIBLE ELECTRIC ENERGY
Page 4 of 7
fsIKOTMeneral Advice110-27-131f
BTU's Avoided = 136,560,000 BTUs / 80% = 170,700,000 BTUs
QDFA = 170,700,000 BTUs / 131,000 BTUs per Gallon = 1,303.05 Gallons
Monthly Charge = 1,303.05 Gallons X $5.00000 per Gallon X 60% = $3,909.15
B. Adjustment of Constants. The constant factors in (2) shall remain
unchanged. If a party reasonably believes that a constant factor is no longer accurate, the parties
shall work together in good faith to determine whether an adjustment to the constant factor is
warranted and, if so, work together in good faith to determine the amount by which the constant
factor shall be adjusted.
C. Reimbursement for Fees and Taxes. In addition to the monthly
interruptible electric charges provided for in A, above, Maniilaq shall reimburse KEA for any
and all user fees, taxes, or assessments, if any, that may be levied upon the sale of interruptible
electric energy under this Agreement.
12. Billing and Payment. KEA will read the interruptible electric energy
meters and issue an invoice to Maniilaq for interruptible electric energy on a monthly basis.
Invoices for interruptible electric energy shall be due and payable within thirty (30) days after
the invoice date. The failure of Maniilaq to receive a monthly invoice shall not excuse Maniilaq
from paying for the interruptible electric energy received from KEA.
13. Past Due Accounts. Without prejudice to any other remedy available to
KEA under this Agreement or by operation of law, if the full amount billed for interruptible
electric energy is not paid when due, interest on any unpaid amounts shall be paid by Maniilaq at
a rate equal to the maximum rate permitted by law. Payment by Maniilaq of any amount,
whether or not disputed, shall not constitute a waiver of Maniilaq's right to contest and recover
any amounts determined to have been overpaid, provided that a claim for overpayment is made
within sixty (60) days of payment.
14. Discontinuance of Service for Non -Payment. Without prejudice to any
other remedy available to KEA under this Agreement or by operation of law, if the full amount
billed for interruptible electric energy is not paid when due, or if interest charges billed under
Section 13 are not paid, KEA may discontinue delivery of interruptible electric energy to
Maniilaq.
15. Approvals. This Agreement shall be effective only when it has received
all necessary approvals in writing, including approval by the Board of Directors of KEA and any
other approvals which are required by law.
16. Mutual Indemnification. Maniilaq shall indemnify, defend, save, and hold
harmless at its sole cost and expense KEA and its respective officers, agents, and employees,
AGREEMENT FOR THE PURCHASE AND SALE
OF INTERRUPTIBLE ELECTRIC ENERGY
Page 5 of 7
&TOMGeneral AdviceA0-27-I31f
F. Successors and Assigns. This Agreement shall be binding on and
inure to the benefit of the legal representatives, successors, and assigns of the parties hereto,
except that no assignment or other transfer of a party's rights, duties, or other interest under this
Agreement shall be effective without the written consent of the other party (which consent shall
not be unreasonably withheld), and the assignee must, in the commercially reasonably opinion of
the other party, be financially capable of assuming such obligations.
G. Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Alaska.
H. Notice. Except as otherwise provided in this Agreement, all
notices shall be given in writing at the addresses set forth below, or such other addresses as the
parties shall designated from time to time by written notice.
Kotzebue Electric Association, Inc.
Attention: General Manager
P.O. Box 44
Kotzebue, Alaska 99752
Maniilaq Association Inc.
Attn: Paki JLmson
/r! !llryHti,tylryc��r
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below.
KOTZEBUE ELECTRIC
ASSOCIATION, INC.
Brad Reeve
Its: General Manager
Date: e,
AGREEMENT FOR THE PURCHASE AND SALE
OF INTERRUPTIBLE ELECTRIC ENERGY
Page 7 of 7
MANIILAQ ASSOCIATION INC.
By:
Its: }�r�r � ez"r, -/ /CE
Date: y & -0-0/
fs1KOMGeneral Advice\10-27-131f