HomeMy WebLinkAbout04093 - NEW WEST ENERGY • New West Energy
(subsidiary of SRP)
AGREEMENT 44093
R19501, 4-21-99
NEW WEST ]ENERGY CORPORATION
AND
CITY OF PALM SPRINGS
FINANCIAL ASSURANCES AGREEMENT
FINANCIAL ASSURANCES AGREEMENT
THIS FINANCIAL ASSURANCES AGREEMENT ("Agreement") is made this 21st day
of April, 1999 by and between the CITY OF PALM SPRINGS, a California municipal
corporation ("City"), and NEW WEST ENERGY CORPORATION ("NWE"), an Arizona
corporation, which is a wholly owned subsidiary of Salt River Project Agricultural Improvement
and Power District("SRP").
RECITALS
A. The City and Enron California Municipal Services, Inc. (formerly known as Palm
Springs Utility Solutions, Inc. and FirstPoint California, Inc.) are parties to a Municipal Utility
Services Agreement dated February 5, 1997,pursuant to which Enron's predecessor was selected
by the City to provide services to support the City's operations as a public agency aggregator in
the newly competitive market for electricity in the State of California.
B. The City is a public agency aggregator and is carrying out this function as "City
of Palm Springs Energy Services", also known as Palm Springs Energy Services ("PSES").
C. Enron Corp. and its various subsidiaries and affiliates have determined that they
no longer wish to continue the program described in the February 5, 1997 Municipal Utility
Services Agreement and have given notice to the City of their intention to terminate the program.
D. NWE is willing to provide on a trial basis certain services to the City that would
allow the City to continue to sell electricity to those parties with which the City presently has
month to month contracts to provide electric energy sales, as well as other residential customers
located within the boundaries of the City that City is obligated to offer service.
E. NWE has therefore entered into a Municipal Utilities Services Agreement with
the City on even date with this Agreement.
F. Under the Municipal Utility Services Agreement between City and NWE, NWE
has agreed to provide certain support services to enable the City to serve as public agency
aggregator of electric services within its municipal boundaries and to coordinate the provision of
unbundled energy and energy-related services to the City and its residents and, at NWE's
discretion, businesses located within the City's boundaries. Contemporaneously with this
Agreement the City and NWE are entering into a Retail Support Services Agreement (the
"RSSA") for this purpose.
G. Contemporaneously with this Agreement, pursuant to Section 4.3 of the
Municipal Utility Services Agreement between the parties, the City has entered into a Power
Purchase and Sale Agreement with SRP (the "Power Purchase Agreement") for the purpose of
obtaining wholesale electricity for resale to the City's customers that NWE has agreed to serve
pursuant to the provisions of Section 2.1 of the Municipal Utility Services Agreement.
Electricity obtained under the Power Purchase Agreement will be resold to the City's customers
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through a variety of Electric Energy Safes Agreements (collectively the "Sales Agreements") that
have been or will be executed by PSES and individual customers.
H. The City and NWE desire to enter into this Agreement to ensure that NWE
provides the financial assurances and accepts the risks associated with the City's financial
obligations and liabilities the City incurs by virtue of the City's entering into the Power Purchase
Agreement and Sales Agreements.
AGREEMENT
NOW, THEREFORE,the parties hereto agree as follows:
1.0 PURPOSE OF AGREEMENT.
The purpose of this Agreement is to clarify that except as identified herein, NWE will
assure the City that NWE will meet financial obligations or liabilities that the City incurs by
virtue of the City's entering into certain agreements that are contemplated by the Municipal
Utility Services Agreement executed by NWE and City. These agreements are the following:
(a) The Power Purchase Agreement (which includes the obligation to
purchase and receive electrical energy, as discussed in Section 2.3 below).
(b) The RSSA (which generally defines the services that NWE will provide in
support of the City's provision of retail electric utility service as a public agency aggregator).
(c) The Sales Agreements (which contain the terms and conditions under
which the City will sell power to the City's retail customers, as discussed in Section 2.4 below).
This Agreement allocates certain risks to which the City may be exposed under the Power
Purchase Agreement and the Sales Agreements, and provides for certain financial assurances
from NWE to the City. The risks addressed under this Agreement are classified as "Rate Risks,"
Collection Risks," Purchase Obligations Risks," and "Customer Obligations Risks" (as further
defined below).
2.0 RISK ALLOCATION DUE TO THE CITY'S OBLIGATIONS UNDER
THE PURCHASE AGREEMENT AND THE SALES AGREEMENTS.
2.1 Rate Risk - Revenue Deficit. Under the RSSA, NWE is authorized to the
maximum extent permitted by law to set rates and terns of service applicable to the Sales
Agreements that it has committed or may commit to serve. The City is not willing to accept the
risk that the revenue from the rates set by NWE will not be enough to meet the City's payment
obligations under the Power Purchase Agreement and applicable franchise fees, municipal
surcharges and utility taxes.
2.2 Collection Risk - Customer NonPayment. As a public agency aggregator, the
City is required under California law to offer service to all applicants for residential service
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within the City's boundaries. The City is not willing to accept the risk of nonpayment by its
customers.
2.3 City's Obligations Under the Power Purchase Agreement. The Power
Purchase Agreement imposes certain obligations on the City (herein the "Purchase Obligations").
The Purchase Obligations include, but are not limited to, the following:
(a) Purchasing and receiving the full Contract Quantity of electrical energy for
those customers that NWE has committed or may commit to provide services on behalf of the
City;
(b) Forecasting the nature and amount of the power demand;
(e) Arranging and taking responsibility for distribution service from the
Delivery Points, including any costs, charges and penalties imposed or associated with the
Contract Quantity, including Ancillary Services required by the Transmitting Utility;
(d) Payment of the Contract Price;
(e) Liability for new sale, use, excise, ad valorem and other taxes imposed by
federal, state or local governments applicable to the delivery of energy from and after the
Delivery Points;
(f) Maintaining confidentiality regarding the Contract Quantity and the
Contract Price; and
(g) Various other obligations of the City as defined in the Power Purchase
Agreement.
2.4 City's Obligations Under the Sales Agreements. To implement the resale of
electricity to an individual customer, the City, through PSES, has or will enter one of several
different Sales Agreements. These Sales Agreements will impose certain obligations on the City
(herein the "Customer Obligations"). These Customer Obligations include the following:
(a) Delivering the entire Contract Quantity of electrical energy to each
Delivery Point and customer location, regardless of any default by SRP in its obligations to
deliver power under the Purchase Agreement;
(b) Accurate calculation of a customer's bill;
(c) Providing metering services if so elected by a customer, including entry
onto customer property;
(d) Various other obligations of the City as defined in the Sales Agreements.
2.5 Liabilities of City. Failure to meet the Purchase Obligations imposed on the City
by the Power Purchase Agreement or the Customer Obligations imposed on the City by the Sales
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Agreements may result in liability to the City for associated monetary damages, penalties,
interest, or taxes, including the payment of auditing fees, reimbursement for the purchase of
replacement energy by the Customer, or liability for damages or injury caused by the energy
controlled by the City.
3.0 NWE'S FINANCIAL ASSURANCES AND ACCEPTANCE OF RISKS.
Because of the contractual relationship between the City and NWE, NWE agrees to
accept the risk for any liability, damages, or injury caused by or related to SRP's performance or
failure to perform either the Power Purchase Obligations or the Customer Obligations on behalf
of the City under the Power Purchase Agreement or the Sales Agreements that are applicable to
customers that NWE has agreed or may agree to serve pursuant to the provisions of Section 2.1
of the Municipal Utility Services Agreement between NWE and the City. NWE also agrees it
will be responsible for any of the City's financial obligations incurred as a result of NWE's
performance on behalf of the City of the Power Purchase Agreement or the Sales Agreements
that are applicable to customers that NWE has agreed or may agree to serve on behalf of the City,
including any damages or penalties for which the City becomes responsible due to NWE's
actions or emissions. Notwithstanding the foregoing, NWE shall not be responsible for any
liability, damages, or injury resulting from the City's breach or default of this Agreement, the
Power Purchase Agreement, the RSSA, or the Sales Agreements or in connection with any
agreement the City may enter into without NWE's knowledge and consent. NWE will in no case
be responsible for or have any financial or other liability with respect to the employment by the
City of any person or entity, or for any action taken by any City employee, representative or
agent. NWE will in no case be responsible for any costs, expenses or liabilities associated with
services that were provided by City, Enron California Municipal Services, Inc. or any other
entity on behalf of City, prior to the time that NWE commenced service under the provisions of
the Municipal Utility Services Agreement, the Power Purchase Agreement, the RSSA or the
Sales Agreements, even if such costs, expenses or liabilities are not billed to the City or its retail
agent until after NWE commenced service. This limitation includes any late charges rendered as
a result of usage data reconciliations, energy theft or charges billed by the ISO or local
distribution company that relate to service prior to the time that NWE commenced service.
Similarly, NWE will in no case be responsible for any costs, expenses or liabilities associated
with services that may be provided by City, Enron California Municipal Services, Inc. or any
other entity on behalf of the City to customers other than the customers that NWE has agreed to
serve pursuant to the provisions of Section 2.1 of the Municipal Utility Services Agreement.
3.1 Rate Risks. Except as provided above,NWE agrees to reimburse the City for the
actual amount paid by the City under the Power Purchase Agreement for any revenue deficit
caused by retail rates set too low to meet the City's payment obligations.
3.2 Collection Risks. Except as provided above, NWE agrees to reimburse the City
for amounts paid by the City under the Power Purchase Agreement and for amounts owed to the
City for applicable franchise fees, municipal surcharges and utility taxes, resulting from the
failure of any retail customer served by NWE on behalf of the City to pay its electric utility bill.
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City shall comply with NWE's recommendations regarding requests to terminate
electrical service to any customer for nonpayment or for any other reason not prohibited by law,
and for inclusion in the Sales Agreements such deposit requirements or other creditworthiness
standards as NWE may deem appropriate from time to time. The City hereby acknowledges that
NWE may, using its own sole discretion, set credit standards, including deposit requirements,
based on its evaluation of the credit history of the specific customer that applies for service.
The City further agrees to support NWE's collection actions against any retail customer
that fails to pay its bill for any reason. If the City instructs NWE not to pursue any such
remedies or refuses to support such actions, NWE's reimbursement obligations described below
shall not apply with respect to such customer account.
3.3 Indemnification. Except as provided above, NWE agrees to indemnify the City,
its officers, agents and employees against, and will hold and save each of them harmless from,
any and all actions, suits, claims, damages to persons or property, losses, costs, penalties,
obligations, errors, omissions or liabilities, including paying any legal costs and reasonable
attorneys' fees, or paying any judgment (herein "claims or liabilities") that may be asserted or
claimed by any person, firm or entity arising out of or in cormection with the negligent
performance of the work or services of NWE, its agents, employees, subcontractors, or invitees,
excluding such claims or liabilities to the extent caused by the negligence or willful misconduct
of the City.
The City agrees to indemnify NWE, its affiliates, and their respective officers, agents and
employees against, and will hold and save each of them harmless from, any and all actions, suits,
claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or
liabilities, including paying any legal costs and reasonable attorneys' fees, or paying any
judgment (herein "claims or liabilities") that may be asserted or claimed by any person, firm or
entity arising out of or in connection with the negligent performance of the work or services of
the City, its agents, employees, subcontractors, or invitees, excluding such claims or liabilities to
the extent caused by the negligence or willful misconduct of NWE. The City will defend any
action or actions filed in connection with any said claims or liabilities and will pay all costs and
expenses, including legal costs and reasonable attorneys' fees, incurred in connection therewith.
3.4 Tender of Defense. If either the City or NWE becomes aware of any claim made
against the other party or its officers, agents or employees, or if any of the foregoing are made a
party to any action or proceeding, in connection with any matter, for which either party
("Indemnitor") may be obligated to indemnify the other party ("Indemnitee") or its officers,
agents or employees, or to reimburse the Indemnitee, pursuant to this Agreement, then the
Indemnitee shall promptly notify the Indemnitor of such claim, action or proceeding and request
that the Indemnitor defend such claim, action or proceeding. If the Indemnitor refuses the
request to defend, then the Indemnitee may proceed to defend against such claim, action or
proceeding as it sees fit. If it is determined pursuant to the dispute procedures outlined in this
Agreement that the Indemnitor had the obligation to reimburse the Indemnitee with respect to the
subject matter of such claim, action or proceeding under the terms of this Agreement, then the
Indemnitor shall bear its own costs with respect to such defense. If the Indemnitor chooses to
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accept the request to defend, and if it is later determined pursuant to the dispute resolution
procedures outlined in this Agreement that the Indemnitor had no obligation to reimburse or
indemnify the Indemnitee with respect to the subject matter of such claim, action or proceeding
under the terms of this Agreement, then the Indemnitee shall reimburse the Indemnitor for the
costs the Indemnitor incurred in connection with such defense. In either case, if it is determined
pursuant to the dispute resolution procedures outlined in this Agreement that the Indenmitor had
an obligation to indemnify or reimburse the Indemmitee for some, but not all of the subject matter
of such claim, action or proceeding, then the Indemnitor and the Indemnitee shall share in the
costs of such defense, with the Indemnitor's share being in proportion to the amount that the
Indemnitor's obligation to reimburse or indemnify bears to the total amount of such claim, action
or proceeding.
If the Indemnitor chooses to accept the Indemnitee's request to defend, then the
Indemnitor may select attorneys of its choice and will have the right to manage the settlement or
litigation of the matter as it sees fit. The Indemnitee may utilize attorneys of its choice to
observe or participate in such proceedings at its sole expense. The Indemnitor shall periodically
inform the Indemnitee as to the status of the claim, action or proceeding.
The City will not waive any claim of sovereign immunity, and neither party will waive
any other limitation of damages available to it in defense of legal actions under any applicable
law, and each will cooperate with the other in utilizing any defense to the fullest possible extent,
in connection with any claim, action or proceeding brought by any third party with respect to this
Agreement, the Purchase Agreement, the RSSA or the Sales Agreement.
3.5 Liability for Monetary Damages. The parties acknowledge that the limitations
of liability contained in the Power Purchase Agreement, the RSSA and the Municipal Utility
Services Agreement are not intended to limit the ability of the City and NWE to collect amounts
due them under this Section 3. Notwithstanding any limitation on liability in other agreements,
including the Municipal Utility Services Agreement, each party can hold the other liable for
monetary damages for breach of this Agreement according to the terms hereof. In no event shall
the City or NWE be liable to the other for any lost or prospective profits or any special, punitive,
exemplary, consequential, incidental or indirect losses or damages (in tort, contract or otherwise)
under or in respect of this Agreement.
4.0 MISCELLANEOUS.
4.1 Disputes: Right to Cure: Mediation: Attorneys' Fees. Failure or delay by
either party to timely perform any covenant of this Agreement constitutes a default under this
Agreement, but only if the party who so fails or delays does not commence to cure, correct, or
remedy such failure or delay within thirty (30) days after receipt of a written notice specifying
such failure or delay, and does not thereafter prosecute such cure, correction, or remedy with
diligence to completion. The injured party shall give written notice of default to the party in
default, specifying the default complained of by the injured party. Except as required to protect
against further damages, the injured party may not institute proceeding against the party in
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default until thirty (30) days after giving such notice. Failure or delay in giving such notice shall
not constitute a waiver of any default nor shall it change the time of default.
All claims and disputes between City and NWE arising out of or related to this
Agreement will first be attempted to be resolved by the responsible management personnel for
both parties. Resolution failing to materialize, senior management for both the City and NWE
will negotiate in good faith to reach an acceptable and timely resolution of the claim or dispute.
Should the parties be unable to resolve the dispute to their mutual satisfaction within two
(2) weeks after such negotiation by senior management, or any other mutually agreeable time
period, the parties will attempt to resolve the dispute through nonbinding mediation (using a
mediator upon which the parties shall mutually agree) within thirty (30) days, as a condition
precedent to pursuing litigation. Neither parry shall be obligated to engage in mediation for
longer than two (2) weeks. Each party shall be responsible for its own expenses and one-half of
any mediation expenses incurred to resolve the dispute. If the parties are still unable to resolve
their differences after good-faith consideration of a resolution through mediation for a period not
to exceed two (2) weeks, each party shall have the right to pursue litigation in accordance with
the provisions set forth below. Neither party shall commence any action at law or in equity as a
result of any dispute, controversy or claim arising out of or in connection with or relating to this
Agreement or any breach or alleged breach hereof until the above procedures with respect to
settlement and mediation have been complied with.
In the event of any dispute resulting in litigation between the parties hereto involving the
covenants or conditions contained in this Agreement or arising out of the subject matter of the
Agreement, the prevailing party shall be entitled to recover, and the other party agrees to pay, all
reasonable fees, expenses and costs, including but not limited to attorneys' fees both at trial and
upon appeal.
4.2 Notices. Unless otherwise provided for herein any notice to be given or other
document shall be delivered by either party to the other hereunder shall either be delivered in
person to such party or may be deposited in the United States mail, duly certified or registered, or
by reputable overnight delivery service, with postage prepaid, addressed to the party for whom
intended as follows:
To City: City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92263
Attention: City Manager
Telephone: (760) 322-8350
Facsimile: (760) 323-8207
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Copy to: Rutan& Tucker
611 Anton Boulevard, Suite 1400
Costa Mesa, CA 92626
Attention: David J. Aleshire, Esq.
Telephone: (714) 641-5100
Facsimile: (714) 546-9035
To NWE : New West Energy Corporation
P. O. Box 61868
Phoenix, AZ 85082-1868
Attention: Anne Bertolet
Telephone: (602) 236-0244
Facsimile: (602) 236-6981
Either party may from time to time, by written notice to the others, designate a different
address which shall be substituted for the one above specified, and/or specify additional parties
to be notified.
4.3 Late Payment. The due date for any payment or reimbursement required by this
Agreement shall be the date provided in the Power Purchase or Sales Agreements, or if none,
then thirty (30) days following notice from the City to NWE. Any failure to make any payment
required hereunder on the due date shall accrue interest thirty (30) days thereafter at the rate of
one percent(1%) per month or the maximum allowed by law, whichever is less.
4.4 Modi£eation. Any amendments or modifications to this Agreement must be in
writing and executed by both parties to this Agreement.
4.5 Interpretation-Governing Law. This Agreement shall be construed according
to its fair meaning and as if prepared by both parties hereto. This Agreement is negotiated by the
parties as a logical evolution of their relationship as prescribed by the Municipal Utility Services
Agreement. This Agreement shall be construed in accordance with the laws of the State of
California in effect at the time of the execution of this Agreement. As used in this agreement,
masculine, feminine or neutral gender and the singular or plural shall each be deemed to include
the others wherever and whenever the context so dictates.
4.6 No Waiver. No delay or omission by either party hereto in exercising any right
or power accruing upon the compliance or failure of perforniance by the other party hereto under
the provisions of this Agreement shall impair any such right or power or be construed to be a
waiver thereof. A waiver by either party hereto of a breach of any of the covenants, conditions or
agreements hereof to be performed by the party shall not be construed as a waiver of any
succeeding breach of the same or other covenants, agreements, restrictions or conditions thereof.
4.7 Severability. If any term, provision, condition or covenant of this Agreement or
the application thereof to either party or circumstances shall, to any extent, be held invalid or
unenforceable, the remainder of this instrument, or the application of such term, provision,
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condition or covenant to persons or circumstances other than those as to where or which it is held
invalid or unenforceable, shall not be affected thereby, and each term and provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law. Notwithstanding
the foregoing, should the intent of this Agreement be frustrated such that NWE not be held
responsible under this Agreement for satisfying the Purchase Obligations or the Customer
Obligations such that the City's general funds are required to satisfy these obligations, then
notwithstanding any contrary provision therein, the City shall have the right to unilaterally
terminate the Power Purchase Agreement, the RSSA and the Municipal Utility Services
Agreement upon notice to NWE.
4.8 Authority to Execute. Each individual executing this Agreement on behalf of a
party represents and warrants that he or she is duly authorized to execute and deliver this
Agreement on behalf of such party, that all conditions to the exercise of such authority have been
complied with.
4.9 Counterparts. This Agreement, including any exhibits attached hereto may be
executed by the parties hereto in several counterparts, each of which shall be deemed to be an
original copy.
4.10 Captions and Headings. The captions and headings of this Agreement are for
convenience only and shall not be construed or referred to in resolving questions of interpretation
or construction. Any Recitals set forth at the beginning of this Agreement are contractual and
shall be considered or referred to in resolving questions of interpretations or construction.
4.11 No Third-Party Beneficiaries,
This Agreement is for the benefit of, and may be
enforced only by, the City and NWE. No person not a party to this Agreement is an intended
beneficiary of this Agreement, and no person not a party to this Agreement shall have any right
to enforce any term of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first-above written.
"City"
CITY OF PALMssPRING
a Californi municipal corpor io
By:
City Ma ager for the ity of Palm Springs
ATTEST:
City Clerk
Approved as to form:
F � _
t�
NEW WEST ENERGY CORPORATION, an
Arizona corporation
By: t _ \�2� 0 , Itc—
Amre Bertolet
Director of Marketing & Sales
By / (L(i 4/l ca,
Name: &Ve-vl cam( uj M
Title:
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