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HomeMy WebLinkAbout04091 - NEW WEST ENERGY *TAN & TUCKER, LL '0 ATTORNEYS AT LAW A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS1�/) �O 611 ANTON BOULEVARD, SUITE 1400 Aqp �v ory COSTA MESA, CALIFORNIA 92626-I996 _NY O N(VICKI)DALLAS DIRECT ALL MAIL TO: P. O. BOX 1950 LR SH COSTA MESA, CALIFORNIA 92628-1950 TELEPHONE (]I4) 641-5100 FACSIMILE b14) 546-9035 N ,q INTERNET www.mtam. om " GALLAGHER N CHAELA RVOIN IND EN SMITH O ECI, LIE K y ANG ry UEGG-Io721 HLOHMARN nry R UB8G-19501 11919--1.B.1 H gppcRR Hp WCLLR 11 a25 1331 CHARLES AT RT III RENA TON WEASHA HEI-I TfHEW X R R RICHARD G. MICHAELT HORNAH RUSS,O.OWED WERTHEIMER KARA A.CARLSON MARK M MALOVOS May 11, 1999 A"I'DS'"'L"I"A '" CAVILS A,JR. 4 m ARiSALpI. III Mr. Leo Miller e Legal Service Department 1 c Salt River Project G'✓l RK 1521 N. Project Drive - Mail Stop PAB 300 Tempe, AR 85281 Re: Legal Authority for New West Energy Agreement Approvals Dear Leo: This is to put into written form a request we made weeks ago which the Salt River Project and New West Energy have, evidently, had difficulty addressing, and to respond to your arguments in our telephone call on May 10, 1999. Frankly, this is becoming a matter of concern for us. On April 21, 1999, the Palm Springs City Council, by Resolution No. 19501, terminated certain agreements with Enron Energy Services and authorized execution of various agreements with New West Energy, a wholly-owned subsidiary, as we understand it, of the Salt River Project. A copy of the Resolution is enclosed for your information. Our City Clerk is a very conscientious City Clerk, and it is a matter of policy to require for all agreements which the City enters into appropriate documentation of the authority of the person(s) signing on the part of the other party to sign and bind the entity for which they are signing. This policy applies consistently as much for small construction or service contracts of less than $10,000 as for multi-million dollar contracts. It applies not only to contacts with private entities, but also public agencies. The need for this policy was recently brought home by the case of Snukal v. Fli hg tways Mfg.. Inc. (1998) 63 Cal.App.4th 1062, where a contract was not enforced because it was only signed by one representative of the corporation. We gave the City a memorandum concerning this case, a copy of which is enclosed. Based upon the foregoing, we asked the Salt River Project and New West Energy to provide proper documentation of the authority of Ms. Anne Bertolet and Ms. karen Caldwell 276/014084-0093/3262645. mO5/10/99 RUT.o.N & TUCKER, LLP • • ATTORNEYS AT LAW Mr. Leo Miller May 11, 1999 Page 2 to execute the New West agreements with the City. We assumed that the Salt River Project or New West Energy would either have bylaws or a resolution delegating authority. We were somewhat surprised when the first explanation received was, "they were having trouble finding any paperwork". I was then requested to contact Salt River Project's legal advisor to make sure they understood what we were looking for. You and I discussed potentially providing a binding legal opinion establishing the authority of Ms. Anne Bertolet and Ms. karen Caldwell, which would act as an estoppel, or having the; Board take a formal action to ratify the agreements. Based upon our prior conversations, I had assured the City Clerk that this matter would be taken care of. Now, after our last conversation, I am starting to have some concerns myself. You have indicated that Salt River Project is not inclined to pursue either of the options which we discussed and believes that we should be satisfied that its representatives have "apparent" authority. For the reasons set forth above, this is not acceptable. I cannot believe, with the size and importance of the projects which the Salt River Project and New West Energy administer, the contracts which they enter into and the entities with which they must deal, that there is no way of documenting the authority of persons signing on the entities' behalf to bind the Salt River Project and New West Energy. I would certainly hope that our relationship is not deemed so unimportant that no one wants to take the trouble to make sure that the proper authority is known and have authorized our relationship. I hope that my speculations are unwarranted and the final housekeeping item necessary for our relationship to go forward can be;promptly addressed. If you should have any questions, please do not hesitate to call. Sincerely, RUTAN & TUCKER, LLP David J. A es re City Attorney City of Palm Springs DJA:el Enclosure cc: Mr. Rob Parkins, City Manager Mr. Dallas Flicek, Assistant City Manager, Administration Ms. Judy Sumich, City Clerk 276/014094-009313262645. m05/10199 RESOLUTION NO. 19501 OF THE CITY COUNCIL OF TIIE CITY OF PALM SPRINGS, CALIFORNIA APPROVING FOUR AGREEMENTS TO FORMA NEW ENERGY ALLIANCE BETWEEN CITY OF PALM SPRINGS ENERGY SERVICES AND NEW WEST ENERGY, A WHOLLY OWNED SUBSIDIARY OF SALT RIVER PROMCT, AND AUTHORIZING TERMWATION OF CERTAIN AGREEMENTS WITH ENRON CALIFORNIA AND ENRON POWER MARKETING AND ALL AMENDMENTS THERETO,SUBJECT TO CITY ATTORNEY APPROVAL. ----------- - --- BE TT RESOLVED, by the City Council of the City of Palm.Springs, California, approving four agreements between the City Palm Springs Energy Services(PSES)and New"Nest Energy(NWE), and authorizing termination of certain agreements with ENRON California and ENRON Power Marketing,and all amendments thereto,as follows; Section 1. The City is authorized to enter into the following agreements with New West Energy (NWE): (a) The Municipal tilities Services Agreement (MUSA), which serves as a framework and coordinating document which identifies and defines all necessary support services that New West Energy is required to provide to enable the City to continue to serve as a public agency aggregator:within its municipal boundaries to coordinate the provision of unbundled energy and energy-related services to the City and to its residents and businesses. (b) The Retail Support Services Agreement,which identifies the services that New West Energy will be required to provide,either directly of through one or more of its affiliates, in order to service:the PSES retail customers, and related 'implementing agreements with Southern California Edison Company. (c) The Financial Assurances Agreement,which addresses the allocation of certain risks to NWE to which the City may otherwise be exposed under the Retail Support Services Agreement and under a Power Purchase and Sale Agreement. Section 2. The City is authorized to enter into the following agreement with the Salt River Project: (a) A Power Purchase and Sale Agreement between the C#y and Salt River Project, a subdivision of the State of Arizona, for the purpose of obtaining wholesale electricity for resale to the City's customers. Salt River Project,the parent company of NWE,provides the wholesale power pursuant to Section 2.1(b) of the MUSA. Section 3. The following agreements with ENRON California and ENRON Power Marketing, and all amendments thereto, are hereby terminated,effective on the implementation dates of the newly approved agreements with New West Energy and Salt River Project,subject to the approval of such terminations by the City Attorney: (a)The Municipal Utilities Services Agreement with ENRON California Municipal Services, Inc., (formerly known as Palm Springs Utility Solutions, Inc., and First Point California,Inc.), Agreement 03764, dated 2/5/97; (b) A Power Purchase and Sale Agreement with ENRON Power Marketing, Inc., Agreement,#3995,dated 1/14/98; and. R19501 Page 2 Resolution-NWE April21, 1999 (c)A Retail and Support Services Agreement with E•'NRON California Municipal Services, Inc. (formerly known as Palm Springs Utility Solutions, Inc„ and First Point California,Inc.), Agreement#3894,dated 1114/98. ADOPTED this 21st day of Aori 1 , 1999. AYES: Members Barnes, Hodges, dden, Reller-5purgln adn Mayor Kleindienst NOES: None ABSENT: None ATTEST: CITY DF PP'ALM SP GS,CALIFORNIA sy_C —�--City Clerk City ManageT REVIEWED AND APPROVED AS TO FORM MEMORANDUM July 22, 1998 TO: W. Robert W. Parkins, City Manager FROM: William fir' Wynd6r, Es;�1. Chief Litigation Depute SUBJECT: Recommendation to City to Obtain Signatures From Two Corporate Officers When Entering Into Contracts With Corporations COPIES: Mr. Dallas J. Flieck, Assistant City Manager Ms. Judith H. Sumich, City Clerk Ms. Susan E. Mills, Human Resources Manager Mr. Doug Evans, - Director of Planning & Zoning Mr. Bary Freet, Fire Chief Mr. Thomas M. Kanarr, Director of Finance/City Treasurer Mr. Al Smoot, Director of Transportation Mr. John Tuite, Director of Economic Development The purpose of this memorandum is to advise the City of Palm Springs that, in certain circumstances, the signature of a single officer may not be sufficient to bind a corporation under a written contract. We recommend the City obtain signatures from two corporate officers when entering into a contract with a corporation. A recent case interpreted Section 313 of the Corporations Code pertaining to the authority of corporate officers to enter into contracts on behalf of a corporation as requiring the signatures of two corporate officers to bind a corporation. (Snukal v. Flightways Mfg., Inc (1998) 63 Cal.App.4th 1062.) In Snukal, Kirt Lyle signed a lease agreement ("Agreement") for a beach house purportedly on behalf of the corporation, Flightways Mfg., Inc. ("Flightways"). Lyle was the president, secretary, and chief financial officer of Flightways. The Agreement was signed by Lyle in his capacity as president of Flightways. Lyle paid the rent for the beach house with checks drawn on the corporate account. Lyle did not have authority to enter into the i 268/0140844)OOW185164. .07122/98 Agreement on behalf of Flightways nor did he have authority to use corporate funds to pay the rent. The landlord instituted an action against Flightways for breach of contract after the rent due under the Agreement bad not been paid for three months. Flightways claimed it was not bound by the Agreement because Lyle did not have authority to enter into the Agreement on its behalf. The landlord-argued that, notwithstanding Lyle's lack of authority to enter into the Agreement on behalf of Flightways, the Agreement was nonetheless binding on Flightways pursuant to Section 313 of the Corporations Code ("Section 313"). Section 313 provides that a contract signed by certain specified officers -is "not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same." The court in Snukal held that the signatures of two corporate officers is a prerequisite to the application of Section 313. The court concluded that the landlord could not invoke Section 313 to bind Flightways to the Agreement due to the lack of the requisite second signature. Under Section 313, one of the signatures must be provided by the chairman of the board, president, or any vice president, and the other signature must be provided by the secretary, any assistant secretary, the chief financial officer, or any assistant treasurer. Based on Snukal, we recommend the City obtain signatures from two corporate officers with one each from the two categories referenced in the preceding sentence. Although Snukai does not invalidate other means of proving actual authority to bind a corporation (e.g., a corporate board resolution) in the absence of verifiable evidence that a single signatory has authority, we strongly urge the City to obtain two signatures as outlined above. 268/014094-0001/3185164. 07/22/98 -2- M E M O R A N D U M DATE: April 28, 1999 TO: City Attorney-David FROM: Office of the City Clerk-Trisha RE: New West Energy CC: File When we were executing the agreements between the City and New West Energy, we noted the signatures were not notarized, nor signed by parties that usually sign agreements. We requested New West Energy supplement the agreement with a Company Resolution, By-law, indicating the parties had the authorization to enter into the agreements. It seems that they may be having some problem with specific written authorization. Do you wish to pursue?_ (Initial) File as signed (Initial) Trisha New West Energy 0,subsidiary of SRP) AGREEMENT 44091 R19501, 4-21-99 NEW WEST ENERGY CORPORATION AND CITY OF PALM SPRINGS MUNICIPAL UTILITY SERVICES AGREEMENT NEW WEST ENERGY CORPORATION AND CITY OF PALM SPRINGS MUNICIPAL UTILITY SERVICES AGREEMENT THIS MUNICIPAL UTILITY SERVICES AGREEMENT (this "Agreement") is made and entered into this 21" day of April, 1999, by and between the CITY OF PALM SPRINGS, a California municipal corporation ("City") and NEW WEST ENERGY CORPORATION, an Arizona corporation ("NWE") which is a wholly owned subsidiary of Salt River Project Agricultural Improvement and Power District ("SRP"). RECITALS A. WHEREAS, on February 5, 1997, City and FirstPoint California, Inc. (formerly known as Palm Springs Utility Solutions, Inc.), a wholly owned subsidiary of Portland General Holdings, Inc., entered into a Municipal Utility Services Agreement whereby FirstPoint California, Inc. agreed to provide certain,services to City; and B. WHEREAS, Enron Corp. subsequently acquired Portland General Holdings, Inc. and assumed the obligations of FirstPoint California, Inc. under the Municipal Utility Services Agreement; and C. WHEREAS, pursuant to various provisions of the February 5, 1997 Municipal Utility Services Agreement, City and various subsidiaries of Enron Corp. instituted a program under California's electric re-structuring laws and regulations, whereby Enron Power Marketing, Inc. sold wholesale power to City pursuant to a Power Purchase and Sales Agreement, dated January 14, 1998, and City, as a public agency aggregator of electricity, resold such electricity to parties within the boundaries of the City; and D. WHEREAS, pursuant to various provisions of the February 5, 1997 Municipal Utility Services Agreement, City and FirstPoint California, Inc. entered into a Retail Services Agreement, dated January 14, 1998 whereby, FirstPoint California, Inc. agreed to provide certain services to City to allow City to carry out its obligations as a public agency aggregator and to sell electricity to parties within the City's boundaries; and E. WHEREAS, on January 14, 1998, City and FirstPoint California, Inc. entered into a Financial Assurance Agreement whereby FirstPoint California, Inc. agreed to provide City financial assurances and to accept the risks that result from the City's financial obligations and liabilities associated with the City entering into the Power Purchase and Sales Agreement and various electric energy sales agreements with parties located within its boundaries; and 111/165235.05.00 1 042099/1006149263.00008 F. WHEREAS, the obligations and rights of FirstPoint California, Inc under the Municipal Utility Services Agreement, Retail Services Agreement and Financial Assurances Agreement were subsequently assumed by Enron California Municipal Services, Inc., a subsidiary of Enron Corp.; and G. WHEREAS, City has entered into approximately 2,200 electric energy sales agreements with parties located within its boundaries; and H. WHEREAS, Enron Corp. and its various subsidiaries and affiliates have now 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 aforementioned contracts, including the Municipal Utility Services Agreement, Power Purchase and Sales Agreement, Retail Services Agreement and Financial Assurances Agreement; and I. WHEREAS, the City believes that its sales of electricity as a public agency aggregator have been beneficial to customers located within the boundaries of the City and should be continued; and J. WHEREAS, NWE is a certified Energy Service Provider in California and is interested in providing certain electric services on a trial basis (and perhaps longer), to loads similar to that served by the City; and K. WHEREAS, City desires NWE to provide for or arrange for the provision of certain services that will allow City to continue to provide electric energy services to customers located within its boundaries; NOW, THEREFORE, the parties hereto agree as follows: 1.0 PURPOSE AND LENGTH OF AGREEMENT. 1.1 Purpose. This Agreement is intended to allow the City, as a public agency aggregator to continue to provide,without interruption, electric energy service to those customers with which it presently has electric energy service contracts with a month to month service term, as well as serve other residential customers located within the City's boundaries which may seek service from City and other non-residential customers located within the City's boundaries that NWE, in its sole discretion undertakes to serve on behalf of the City. It is the parties intent that service to such customers would be at rates that are less than those available from the local utility distribution company, Southern California Edison Company, but would still allow NWE to make a reasonable profit and to gain experience in serving customers with loads that are similar to those that are served by the City. NWE anticipates that it will offer to provide electric service to City's residential customers at a cost that is two percent (2%) less than the cost of bundled service offered by Southern California Edison Company, before state and local taxes and regulatory fees. Nothing herein, however, shall preclude NWE from modifying such rates. 111/165235.05.00 2 042099/1006/49263,00008 1.2 General Services to fie Provided. NWE is prepared to sell retail support services and to negotiate on City's behalf with NWE's parent, SRP to sell wholesale electric power supply to City upon all of the terms, conditions and provisions contained in this Agreement. Retail support services shall include all functions, other than wholesale power supply, which would be necessary to provide retail electric service to electric customers including, but not limited to, metering (installation and maintenance of meters), meter reading, customer billing, collections, accounting, customer service and arranging for a scheduling coordinator to schedule the transmission and distribution of electric energy to the City's electric customers. 1.3 Nature of Power Services. The services to be provided by NWE under this Agreement relate to the furnishing of electric utility service. These services are to be provided through the City as a wholesale acquirer of such services in order to enable the City to provide electric service to its retail customers in a manner consistent with state and federal law. City shall deliver these services and provide retail power supply through appropriate departments and agencies of City. It is the intent of the parties that nothing herein requires or contemplates that NWE or SRP would perform any services or engage in any activities in such a manner as would result in NWE or SRP or any separate subsidiary or affiliate thereof becoming a regulated electric utility subject to the jurisdiction of the California Public Utilities Commission ("CPUC") or the Federal Energy Regulatory Commission ("FERC"). In the event that such jurisdiction may be asserted by the CPUC or FERC,NWE may immediately terminate this Agreement. City represents and warrants that it is currently in compliance with all orders, rules and regulations of the CPUC, as they may apply to public agency aggregators of electricity, and covenants that it will continue to comply with such orders, rules and regulations, including any changes thereto, during the term of this Agreement. Any violation of foregoing representation, warranty or covenant shall cause this Agreement to be void. In no event, however, shall City be liable to NWE or SRP, or their officer, agents or employees for damages for the breach of this covenant and warranty. 1.4 Term. This Agreement shall be effective from the date set forth above, and unless earlier terminated in accordance with the terms hereof, shall continue until the first (1") anniversary of the date of execution of this Agreement by City (the "Term"). Notwithstanding the foregoing, this Agreement may be terminated prior to its expiration of the Term for the following reasons: (a) At the option of the non-defaulting party, in the event of a default in the performance of the terms hereof, provided that the right to cure and dispute resolution provisions of Sections 5.2 and 5.3 are complied with; (b) At the option of either party, subject only to the provision that the party desiring to terminate the Agreement shall give the other party written notice of its intent to terminate this Agreement at least ninety (90) days prior to the date of termination, unless otherwise provided; 111/165235.05.00 3 042099/1006/49263.00008 (c) At NWE's option, in the event of a default in the performance of the terns of Section 3.4 of this Agreement. 1.5 Renewal. Unless terminated by either party pursuant to the provisions of Section 1.4 above, this Agreement shall automatically renew on a year to year basis. The termination provisions set forth in Sections 1.4 (a) and(b) above shall be applicable to any renewal period. 2.0 SCOPE OF SERVICES. 2.1 General Services. The parties recognize that NWE's ability to provide services is contingent upon the restrictions of California and federal law and regulatory control, including without limitation, California Assembly Bills 1890 and 2589, Federal Energy Regulatory Commission Order No. 888, and Federal Power Act Section 212. Within the constraints of such laws and regulations, NWE shall diligently endeavor to provide the services provided in this Agreement. The services are summarized as follows: (a) Service Responsibili . NWE will serve only those customers of City that presently have month to month contracts with the City, plus any additional new customers that enter into contracts with the City following the date of this Agreement. Responsibility for providing the services set forth in this Agreement to customers with month to month contracts will be transferred to NWE during the month of May 1999 at 12:00 a.m. on the first day that follows the day on which the customer's meter was read by Southern California Edison Company during the month of May 1999. City acknowledges that NWE shall have no responsibility for providing service to those customers that have contracts that are for a fixed term (i.e. are not month to month contracts) or for customers with month to month contracts for that period of time prior to 12:00 a.m. on the first day that follows the day on which the customer's meter was read by Southern California Edison Company during the month of May 1999. NWE shall supply City by June 15, 1999 a list of the names and addresses of the customers for which it assumed service responsibility. NWE shall advise City of all additions or deletions to such customer list within a reasonable time after such information is known to NWE. (b) Power Sales. Pursuant to Section 4.3 NWE shall negotiate with SRP on City's behalf to enable City to enter into a power services agreement that provides the City with competitively priced power to serve the City's aggregated load that is being served by NWE pursuant to the terms of this Agreement. (e) Customer Services. NWE will provide or arrange for the provision of metering, billing and service to customers commencing at such time as NWE is responsible for providing service for such customer, as set forth in(a) above. (d) Sales and Marketing. At the sole discretion of NWE, but consistent with the provisions of Section 366 of the Public Utilities Code, NWE, with the cooperation of the City, may market the program described in this Agreement to potential customers beyond those that are electric customers as of the date of this Agreement. City agrees to provide reasonable assistance to NWE, including providing NWE with potential customer lists, advertising such 111/165235.05 00 4 042099/1006149263,00008 program (without charge to NWE) on the City's public access television station, and including such program information in brochures issued by the City. Nothing herein shall require City to provide finding for the marketing of such program by NWE. NWE shall make the availability of the program known to potential residential customers using the communications means set forth in this paragraph. (e) Limitation. NWE shall not be responsible for the provision of service to existing customers of the City prior to the time that responsibility for service is transferred to NWE, as set forth in (a) above. NWE shall not be responsible for complaints, causes of action, judgments, penalties, payments, audits, refunds, or the provision of data that arise out of or result from service prior to the time that NWE commenced service to customer, as described in (a) above. 3.0 IMPLEMENTATION. 3.1 Power Implementation Committee. The parties agree that to implement this program, a forum should be created for ongoing meetings to identify tasks to be accomplished and to review the progress of implementation. This forum is not intended to be advisory to the City Council but rather a staff working group. Therefore, the City Manager is authorized to create a staff committee which may be referred to as the Power Implementation Committee ("PIC"). If the City Manager elects to form the PIC, the City Manager shall invite NWE to participate through representatives selected by NWE. The PIC may meet regularly or on an as-needed basis in accordance with a schedule approved by the PIC, but there shall be no quorum requirements and group decision making shall be consensual. The PIC may develop a specific work program with monthly and quarterly goals and tasks to be achieved and may monitor performance of the work program. Any goals or tasks developed by the PIC shall be in the nature of recommendations only and shall not be binding on NWE. 3.2 Coordination of Work. NWE shall designate a representative (the "Representative") as being its primary representative, who shall be authorized to act in its behalf with respect to the work specified herein and to make all decisions in connection herewith. NWE's Representative shall be responsible during the term of this Agreement for directing all activities of NWE, to carry out the terms of this Agreement, and shall personally devote sufficient time to supervise the services and coordinate the work hereunder. The Representative shall be knowledgeable and experienced in the provision of electric services. The City's representative shall be the City Manager or his designee (the "Contract Officer"). It shall be NWE's responsibility to assure that the Contract Officer is kept informed of the progress of the performance of the services and NWE shall refer any decisions which must be made by the City to the Contract Officer. The Representative and Contract Officer shall have authority to sign any document on behalf of NWE or the City, as the case may be, required hereunder to carry out the terms of this Agreement. 111/165235.05.00 5 042099/1006/49263.00008 • i 3.3 Insurance. NWE shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City, during the entire term of this Agreement including any extension thereof, the following policies of insurance or evidence of self insurance by NWE for the same coverages: (a) Comprehensive General Liability Insurance. A policy of comprehensive general liability insurance for a combined single limit of $5,000,000.00 for bodily injury, death and property damage, contractual liability and products and completed operations. (b) Worker's Compensation Insurance. A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and employers liability insurance in the amount of$1,000,000.00 per accident. (c) Automotive Insurance. A policy of comprehensive automobile liability insurance written on a per-occurrence basis in an amount not less than either: (i) bodily injury liability limits of$250,000.00. per person and $500,000.00 per occurrence and property damage liability limits of$100,000.00 per occurrence and $250,000.00 in the aggregate; or (ii) combined single limit liability of$500,000.00. Said policy shall include coverage for owned, non-owned, leased and hired cars. All of the above policies of insurance shall be primary insurance and shall name the City, its officers, employees and agents as additional insureds. The insurer shall waive any rights of subrogation and contribution it may have against the City, its officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or canceled without providing thirty (30) days' prior written notice by registered mail to the City. In the event any of said policies of insurance are canceled, NWE shall, prior to the cancellation date, submit new evidence of insurance or self-insurance in conformance with this Section to the City. Unless waived in writing by the City, no work or services under this Agreement shall commence until NWE, has provided the City with Certificates of Insurance or self-insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders are approved by the City. Insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated "A" or better in the most recent edition of Best Rating Guide, the Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Risk Manager of the City due to unique circumstances. NWE agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which NWE may be held responsible for the payment of damages to any persons or property resulting from NWE's activities or the activities of any person or persons for which NWE is otherwise responsible. 111/165235.05.00 6 04209911006/49263.00008 In the event NWE subcontracts any portion of the work, the contract between NWE and such subcontractor shall require the subcontractor to maintain the same policies of insurance that NWE is required to maintain pursuant to this Section. 3.4 Current Customer Information. City shall provide or cause Enron California Municipal Services, Inc. to provide to NWE on behalf of the City, within five (5) days of the date of this Agreement, customer information, usage and billing data, and other reasonable data that may be requested by NWE for all month to month customers presently served by the City. Said data shall be provided without cost to NWE in the format that is generally provided by Southern California Edison Company to an energy service provider when a direct access service agreement request is filed with the utility. 3.5 City Responsibility for Past Costs. City shall be responsible for and shall hold NWE harmless for all costs, expenses, and liability associated with service that was provided or continues to be provided by Enron California Municipal Services, Inc., or any other entity associated with service by the City prior to the commencement of service by NWE. 4.0 ADDITIONAL DUTIES OF THE PARTIES. 4.1 Records and Reports. NWE will keep books, accounts and records that accurately reflect all payments received and all expenditures incurred in connection with this Agreement. The books, accounts and records shall be maintained at the principal place of the business of NWE. NWE shall, during regular business hours, make the books, accounts and records to be maintained hereunder available to the City or a representative of the City for examination and audit by appointment, upon seventy-two (72)hours' notice. Any such audit shall be at the expense of the City. NWE shall retain for safekeeping and store all original invoices, statements, purchase orders, billings and other documents with respect to this Agreement. All such fiscal records, books, documents, papers, plans and writings shall be retained by NWE, and kept accessible for a minimum of four years, except as required longer by law, following final payment and termination of this Agreement, or until the conclusion of any audit, controversy or litigation arising out of or related to this Agreement, whichever date is later. NWE shall make available to the City and should the City so request, provide, within reason, copies of and/or any portion of any invoice, statement, purchase order, billing report or other document with respect to this Agreement. 4.2 Utility Coordination. (a) Municipal Coordination. The Representative and the Contract Officer shall coordinate the efforts of NWE and those City departments and agencies to develop a consistent and effective interface for communication and interaction with the City's existing electric customers. (b) Scheduling Coordinator Services. The City hereby designates NWE as its Scheduling Coordinator for all purposes required by the Independent System Operator 111/165235.05.00 7 04209911006149263.00008 ("ISO") established pursuant to AB 1990 and decisions of FERC and the CPUC. NWE may subcontract this responsibility to SRP, or any other approved Scheduling Coordinator. NWE, or its designee, will be responsible for communicating power-flow nominations to the ISO as required to facilitate direct access transactions and for receiving recorded power delivery and consumption data as well as billing and settlement information from the ISO. 4.3 Exclusive Power Supplier. Excepting the provision of power to existing non- month to month customers presently under contract with City, to other customers of the City not accepted by NWE for service, and to month to month customers prior to the date that their meter is read during the month of May 1999, City agrees that during the Term of this Agreement, NWE shall have the right to be the City's sole and exclusive procurement agent for wholesale electric power for resale to the City's customers (other than those customers identified above). City may continue to generate electric power by itself and utilize such power for municipal services. 5.0 MISCELLANEOUS. 5.1 Time of Essence. Parties agree that time is of the essence in the performance of this Agreement. 5.2 Defaults and Right to Cure. Failure or delay by either party to timely perform any covenant of this Agreement constitutes a default under this Agreement, but, only if, unless provided otherwise, 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 proceedings against the party in 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. 5.3 Dispute Resolution. 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 non- binding mediation (using a mediator upon which the parties shall mutually agree within thirty (30) days), as a condition precedent to pursuing litigation. Neither party 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 111/165235.05.00 8 04 2 09 9/1 0 06/4 92 6 3.00008 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. 5.4 Limitation on Liabilities: Remedies. The parties expressly agree that each party is in full and complete compliance with all prior oral or written understandings or agreements and neither party has any claims one against the other at this time. The parties waive one against the other any right to assert any claim for loss or damage for the breach of any term of this Agreement. As used herein, "claim" includes any effort to recover losses, damages, expenses, whether direct, indirect, or consequential, and whether general, punitive, or otherwise. No legal damages shall be available for a breach of the terms hereof and the sole and exclusive remedy shall be an action for specific performance or declaratory or injunctive relief. Notwithstanding the foregoing, the above limitation on liability for damages shall not apply if City breaches the exclusivity covenant contained in Section 4.9 before the expiration of the term hereof. 5.4 Attorneys' Fees. 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. 5.5 Notices. Unless otherwise provided for herein, any notice to be given or other document to 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 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 111/165235.05.00 9 04209911006/49263.00008 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. Notwithstanding anything to the contrary herein contained, any notices or documents which may be delivered by mail pursuant to this Section 5.6 must be actually delivered to the other party on the last business day immediately preceding any deadline date specified in this Agreement. 5.6 Assignment. NWE shall have no right to assign this Agreement or any right or privilege NWE might have in this Agreement, if any, by operation of law or otherwise, without the prior written consent of City, which consent may not be unreasonably withheld by City. An assignment without the prior written consent of City shall be null and void and shall automatically terminate this Agreement. City's consent to an assignment by NWE shall not relieve NWE from its obligations under this Agreement. In addition, neither this Agreement nor any interest herein may be transferred, assigned, conveyed, hypothecated, or encumbered voluntarily or by operation of law, whether for the benefit of creditors or otherwise, without the prior written approval of City. Transfers restricted hereunder shall include the direct transfer to any person or group of persons acting in concert of more than twenty-five percent (25%) of the present common stock of NWE, taking all transfers into account on a cumulative basis. For this purpose, transfers within SRP or NWE shall not be restricted hereunder. In the event of any such unapproved transfer, including any bankruptcy proceeding, this Agreement shall be void. In this regard, City hereby consents to NWE assigning its Scheduling Coordination responsibilities and billing functions to SRP and its assignment of any meter responsibilities to any certified Meter Service Provider("MSP") or Meter Data Management Agent("MDMA"). 5.7 Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the matters covered hereby, and all negotiations and agreements, statements or promises between the parties hereto or their agents with respect to this transaction are merged in this Agreement, which alone expresses the parties' rights and obligations, and if not contained herein shall not be binding or valid against either of the parties hereto. 5.8 Late Payment. 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 avowed by law, whichever is less. 5.9 Modification. Any amendments or modifications to this Agreement must be in writing and executed by both parties to this Agreement. 111/165235.05.00 10 04209911006/49263.00008 5.10 Interpretation-Governing Law. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. 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. Titles and captions are for convenience only and shall not constitute a portion of this Agreement. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 5.11 No Waiver. No delay or omission by either parry hereto in exercising any right or power accruing upon the compliance or failure of performance 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. 5.12 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, condition or covenant to persons or circumstances other than those as to whom 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. 5.13 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 satisfied and that this Agreement will be binding upon such entity in accordance with its terms. 5.14 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. 5.15 No Joint Venture. Nothing in this Agreement is intended to create a joint venture or any other form of business association, partnership, or entity among the parties. City is interested only in the result to be achieved as a result of this Agreement and the conduct and control of the work to be performed will be as provided herein. Neither of the parties hereto shall be considered as the agent or employee of the other party for any purpose. 5.16 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 interpretation or construction. 5.17 Publicity. NWE and the City shall coordinate with respect to any press releases or publicity related to this Agreement and the business relationships created herein except for general public filings and releases which discuss broadly agreements of this nature and except for legally required disclosures. 111/165235.05.00 1 1 04209911006/49263.00008 IN WITNESS WHEREOF, the parties hereto have executed this Municipal Utility Services Agreement the day and year first above written. ATTEST: "CITY" CITY O BALM SP \ a munic' al corporation City Clerk By: City M iager REVIEWED &APPROVED AS TO FORM: ��P� City Attorney "NWE„ NEW WEST ENERGY CORPORATION, an Arizona corporation By: 9 0 Name: Anne Bertolet .^m 9 - Director of Marketing & ,faPPG�� VEPI 8� t u� ,F 0Tas �,�1 Y �" 2'ICV. Sales ,._ _ -1•-�--�-L�--- Address: P.O. Box 61868 �} / �c7 Phoenix, AZ 85082-1868 1 Name: �a'e-jk C% �c� se l� Title: Y(l�a Vk a t ak� _ i Co-A0s' 1111165235.05.00 12 042099/1046/49263.00008 ISSUE DATE(MM/DD/YV) acllien® CERTIFICA F INSURANCE --04/21/99--- - !,PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AON RISK SERVICES, INC. OF AZ ! POLICIES BELOW.D� EXTEND-OR ALTER THE COVERAGE AFFORDED-BY THE II 3200 E. CAMELBACK RD., SUITE 210 COMPANIES AFFORDING COVERAGE PHOENIX, AZ 85018-2320 (602) 468-3200 FAX: (602) 808-3501 COMPANY LETTER A EMPLOYERS INS. OF WAUSAU COMPANY B ! INSURED LETTER WAUSAU UNDERWRITERS INS. CO. CC NEW WEST ENERGY CORPORATION MPANY C TEMPER AZE8528RIVE � AQ�6yLM �LETTERNvD - U C NY E II ET R - —RECEIVED - - - --ICOVERAGES11 - Q THIS IS TO CERTIFY THAT THE POLICIES OF INSURAN OW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT,TERM R CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. CO POLICY EFFECTIVE POLICY EXPIRATION TYPE OF INSURANCE POLICY NUMBER LIMITS LTR DATE(MM/DD/VV) DATE(MM/DD/VV) GENERAL LIABILITY GENERAL AGGREGATE $ 1,000,000 X :COMMERCIAL GENERAL LIABILITY PRODUCTS-COMP/OP AGG. $ 1 000 000 'III B CLAIMS MADE, x'OCCUR - *0869-00-015342 10/01/9B - 08/18/99 PERSONAL&ADV INJURY $ 1,000,()00 OWNER'S&CONTRACTOR'S PROT. EACH OCCURRENCE $ 1,000000 ' FIRE DAMAGE(Any one tire) $ 1 00 000_ MED.EXPENSE(Any one person) $ AUTOMOBILE LIABILITY - COMBINED SINGLE $ ANY AUTO LIMIT B' 0869-00-015342 10JO1198 08/18/99 1,000,000 'ALL OWNED AUTOS BODILY INJURY $ SCHEDULED AUTOS (Per person) X HIRED AUTOS BODILY INJURY : 'NON-OWNED AUTOS (Per accident) $ I p X GARAGE LIABILITY PROPERTY DAMAGE $ EXCESS LIABILITY EACH OCCURRENCE $ 4,000,000 III A X UMBRELLA FORM 0839-00-015342 10/01/98 08/18/99 AGGREGATE $ 4,000,000 OTHER THANAND UMBRELLA FORM-___ STATUTORYDISEASE—POLICY LIMIT 111 DENT $ 1,000,000 - III WORKER'S COMPENSATION EACH B EMPLOYERS'LIABILITY 0819-00-015342 08/18/98 08/18/99 1,000,000 DISEASE—EACH EMPLOYEE $___1-,000.00.0=II OTHER-_-- - :DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS **10 DAY NOTICE OF NONPAYMENT. *CITY OF PALM SPRINGS, ITS: OFFICERS, EMPLOYEES & AGENTS ARE ADDITIONAL INSUREDS AS REQUIRED BY WRITTEN CONTRACT. I -- CERTIFICATE HOLDER CANCELLATION i� CITY OF PALM SPRINGS SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE ATTN: CITY CLERK EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL AVR� X II PAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE III' P.O. BOX 2743 MAIL e - PALM SPRINGS, CA 92263-2743 LEFT' rXXTQytXsc7tI�C�C �CpC� CQC�C AUTHORIZED UEPI19ESENTATIVE . � ' ©ACORD CORPORATION 1990 Ali � � � �. ��� ���' 4, .: - - - � � .