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HomeMy WebLinkAboutReso 58-1997 RESOLUTION NO. 5R-q7 CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION AUTHORIZING AN AGREEMENT BETWEEN THE CITY OF SOUTH SAN FRANCISCO AND FIRSTPOINT CALIFORNIA, INC. RELATED TO PROVISION OF UTILITY SERVICES WHEREAS, the electrical utility industry has been characterized by vertically-integrated utilities providing generation, transmission and distribution services within territories where the utility operated as a regulated monopoly; and WHEREAS, residential, commercial and industrial users have been faced with excessive retail electric rates with no choice of suppliers; and WHEREAS, in 1992 the United States Congress approved the Energy Policy Act giving the Federal Energy Regulatory Commission authority to order transmission of wholesale electric power; and WHEREAS, the California Public Utilities Commission thereafter proposed implementation of open access for transmission service to all retail customers; and WHEREAS, AB 1890 which was adopted by the California Legislature in 1996 authorizes direct purchase power from electric suppliers subject to the payment of transmission fees and, for an interim period, a competitive transition charge; and WHEREAS, the City desires to provide the residents and commercial entities of South San Francisco with an alternative source of electric power services; and WHEREAS, Firstpoint California, Inc., dba South San Francisco Utility Solutions, was selected to assist the City in providing alternative electric power opportunities, as well as other utility opportunities, as part of a request for qualifications and interview process previously conducted by the City; and WHEREAS, the City has negotiated the first in a series of agreements with Firstpoint California to establish a relationship between the City and Firstpoint California related to the provision of electric power services in South San Francisco, as well as other utility services; and WHEREAS, the City Council of the City of South San Francis desires to provide its residents with the greatest opportunities for cost-saving alternatives for the provision of electric power services. NOW, THEREFORE, the City Council of the City of South San Francisco does hereby resolve as follows: 1. The City Council hereby approves the municipal utilities services agreement between Firstpoint California, Inc., dba South San Francisco Utility Solutions and the City of South San Francisco. 2. The City Council further authorizes the Mayor to execute the agreement on behalf of the City of South San Francisco. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regu 1 a r meeting held on the 28th day of gay ,1997 by the following vote: AYF_3: Councilmembers James L. Datzman, Eugene R. Mullin, John R. Penna, Robert Yee and Mayor Joseph A. Fernekes NOES: None ABSTAIN: None ABSENT: Nnno ATTEST: A: \ FIRSTPNT. RES EXHIBIT TO RESOLUTION NO. 58-97 FIRSTPOINT CALIFORNIA, INC DBA SOUTH SAN FRANCISCO UTILITY SOLUTIONS CITY OF SOUTH SAN FRANCISCO MU~CIPAI. UTILITY SERVICES AGREEMENT FIRSTPOINT CALIFORNIA, INC. DBA SOUTH SAN FRANCISCO UTILITY SOLUTIONS CITY OF SOUTH SAN FRANCISCO MUNICIPAL UTILITY SERVICES AGREEMENT THIS MUNICIPAL UTILITY SERVICES AGREEMENT ("Agreement") is made and entered into this __ day of ,1997, by and between THE CITY OF SOUTH SAN FRANCISCO, a California municipal corporation ("City"), and FIRSTPOINT CALIFORNIA, INC., an Oregon corporation d.b.a. SOUTH SAN FRANCISCO UTILITY SOLUTIONS, INC CSSFUS"), and a wholly-owned subsidiary of First. Point, Inc., an Oregon Corporation. RECITALS A. The electrical utility industry has been characterized by vertically integrated utilities providing generation, transmission and distribution services within territories where the utility operated as a regulated monopoly. B. In this anti-competitive environment in California residential, commercial and industrial users have been faced with excessive retail electric rates with no choices of suppliers C. In 1992 Congress approved the Energy Policy Act (42 U.S.C. § 13201) giving the Federal Energy Regulatory Commission CFERC") statutory authority in Section 211 of the Federal Power Act CFPA") (16 U.S.C. § 824j) to order transmission of wholesale electric power ("wheeling"), and FERC required the 137 utilities owing or controlling transmission facilities to file "open access" transmission tariffs on a wholesale basis. D. On April 20, 1994, the State of California through its California Public Utilities Commission CCPUC") proposed implementation of open access to transmission service for all retail customers. In the ensuing two years many different proposals were evaluated for implementing open access, creating an open market for the purchase of power from generators, establishing fair fees for transmission service and allowing the utilities to recover for appropriate "stranded" investments. E. SSFUS is a newly-created Oregon corporation, formed to perform the terms of this Agreement and to coordinate the provision of unbundled services to the City. SSFUS is a subsidiary of Portland General Corporation. The Portland General family of companies also includes Portland General Electric Company ("PGE"). F. The City has solicited responses to a Request for Statements of Qualifications for Utility Partnering Assistance dated March 11, 1997 (the "RFQ"). G. FirstPoint Utility Solutions, Inc., a sister corporation and wholly-owned subsidiary of FirstPoint, Inc. has submitted a Statement of Qualifications (the "Proposal") in response to the RFQ. In order to implement the terms of the proposal, FirstPoint Utility Services, Inc. has assigned its rights and obligations to SSFUS. H. The Proposal contemplates a phased program to develop, operate and maintain a municipal utility by working with state regulatory bodies to expedite deregulation, to provide innovative products and services to give customers cost-effective energy choices, to assist the City in an economic development program, and to enable the City and SSFUS to offer power to South San Francisco residents, businesses and industries at rates less than those offered by Pacific Gas & Electric. I. As an urgency measure signed by the Governor September 23, 1996, the California Legislature adopted AB 1890 amending the Public Utilities Act so that end use customers could directly purchase power from electric suppliers subject to payment of transmission fees and, for an interim period, a competitive transition charge ("CTC"). In addition, a state bond issue would finance recovery of transition costs and a 10 percent rate reduction for certain customers. Many regulatory actions must be taken by CPUC to implement AB 1890, and future statutory amendments are likely. J. This Agreement will establish the initial rights and obligations of SSFUS to serve as the City's agent for implementation of AB 1890. Full implementation of this Agreement will require subsequent agreements between the parties. K. The City plans to identify an appropriate electric enterprise within the City's organization that will perform the City's obligation hereunder, recognizing that the intent of this Agreement with SSFUS is to minimize to the maximum extent possible the City's risks and staffing requirements while providing attractive electrical service choices for all of the City's industries, businesses, and residents. /// /// 5/23/97 2 NOW, THEREFORE, the parties hereto agree as follows: 1.0 PURPOSE AND LENGTH OF AGREEMENT. 1.1 Purpose. Due to the changing regulatory environment it is impossible to precisely fix many of the obligations of the parties hereto, including the timing of these obligations. The parties recognize their mutual goal, to offer an alternative source of reliable electric power to South San Francisco's residents, businesses and industries at the lowest possible prices, to create a competitive alternative to PG&E energy and conservation services, which will ensure that City's customers receive rates lower than those that will be charged by PG&E, and to give customers the highest quality of service, while still providing an economic return to SSFUS. In so doing, the parties believe that inexpensive electric power will promote economic development of the community. For the reasons stated above, the parties expect the basis of their relationship to evolve from that described in the Proposal and this Agreement, in response to the changing regulatory and legal environment, and evolving market forces. Therefore, the parties agree that in carrying out the terms of this Agreement, future specific contracts, understandings, and agreements will be required, and these agreements will amend, change, modify, and supplement this Agreement. In negotiating these agreements and in implementing the terms of these agreements, the parties will keep the foregoing goals and objectives in mind and use their best efforts to accomplish them in the evolving conditions affecting them. 1.2 Nature of Power Services. The services to be provided by SSFUS under this Agreement relate, in part, to the furnishing of electric and natural gas utility service. These services are to be provided by SSFUS in a manner consistent with state and federal law. SSFUS shall deliver these services and provide retail power supply through appropriate departments and agencies of SSFUS and the City. It is the intent of the parties that nothing herein requires or contemplates that SSFUS or any of its affiliates would perform any services or engage in any activities in such a manner as would result in SSFUS, FirstPoint, Inc. or or any separate parent corporation, subsidiary or affiliate thereof becoming a regulated utility subject to the jurisdiction of the CPUC. 1.3 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 fifth (5th) anniversary of the date of execution of this Agreement by the City (the "Term"). Notwithstanding the foregoing, this Agreemert may be terminated prior to its expiration of the Term for the following reasons: ao 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; or 5/23/97 3 bo At the option of either party, if the City or SSFUS is not authorized to aggregate electric power prior to January 1, 1998. It is expressly understood that condition b above is a condition subsequent to the effectiveness of this Agreement and termination at the option of either party under that subsection shall not be deemed a default hereunder. Moreover, in entering into other agreements to implement this Agreement, the terms of such agreements shall govern regardless of whether they shall be cross- defaulted and automatically terminated by the termination of this Agreement. 1.4 Renewal. No later than six (6) months prior to the expiration of the Term, the parties may commence negotiations for the renewal of this Agreement. 2.0 SCOPE OF SERVICES. 2.1 General Services. The parties recognize that SSFUS's ability to provide services is contingent upon 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, SSFUS shall diligently endeavor to provide the services provided in this Agreement. The services to be provided are as follows: ae Utility Services. SSFUS shall provide "Retail Support Service" and other utility services upon all of the terms, conditions, and provisions contained in this Agreement or any future agreement between the parties. Retail Support Services shall include all functions, other than provision of wholesale power supply, which would be necessary to provide retail electric and natural gas service to customers including, but not limited to, metering (installation and maintenance of meters), meter reading, customer billing, collections and accounting, customer service (new hookups, outage reporting, conservation, etc.), marketing (developing and attracting new loads), and interfacing with PG&E's transmission and distribution services through a wheeling agreement. SSFUS shall assist end-use customers in reducing costs through a range of services that improve the efficiency and cost- effectiveness of large in-building equipment and energy systems. b. Power Sales: Pursuant to Section 4.4, not later than August 1, 1997, SSFUS and the City will negotiate and enter into a power services agreement to provide the City with competitively priced power to serve its aggregated loads consistent with the implementation of retail electric service competition under California law and 5/23/97 4 customer choices. The parties agree that the Agreement shall require SSFUS, consistent with the terms of this Agreement, to begin delivery of electric power to all customers in South San Francisco that request service and to continue such service through, at minimum, the term of this Agreement, provided that the customer makes all payments due on a timely basis. The parties acknowledge that during the transition period beginning January 1, 1998, and extending until at least December 31, 2001, the majority of costs associated with providing electrical service will comprise "CTC, .... ISO" and distribution charges that are set by mandate of the CPUC, and hence the opportunities for price reductions to electrical consumers beyond the ten percent rate reduction mandated by AB 1890 will be minimized. Recognizing this limitation, SSFUS agrees that the power services agreement shall provide electric power and service rates that, for the term of this Agreement, result in a five percent savings for each customer on that consumer's total electric services bill. These savings shall in addition to the ten percent rate reduction mandated by AB 1890. These rate reductions specified herein shall reflect the load characteristics of the users. SSFUS shah not make any charge, exclusive of charges imposed or mandated by the CPUC, corresponding to the California CTC in its cost for wholesale electric power. SSFUS and the City will also negotiate and enter into a power sale agreement under which SSFUS or an affiliate would provide backup power to the City's existing cogeneration facilities, if it is legally feasible and economically attractive to both parties. SSFUS will develop an allocation and selection process for optimum aggregation of customers to participate in the phase-in of direct access contemplated by AB 1890. This will include having the marketing and infrastructure in place per rules established now or in the future by the CPUC pursuant to AB 1890. Legislative/Regulatory Support: SSFUS shall, at no cost to the City, provide strategic public policy and technical support in developing an effective political and lobbying presence in Sacramento to promote and position South San Francisco/SSFUS as an eligible participant in the state's 1998 phase-in of direct access to the electricity supply market and thereafter on an as-needed basis as further legislative developments occur in the area of energy restructurirg. SSFUS shall not lobby or advocate a position specifically on behalf of the City unless previously authorized by the City. 5/23/97 5 ge Technical Support: SSFUS shall, at no cost to the City, provide the City and local business and developers proposing development within the City with technical and engineering support in preparation for building, expanding or modifying the distribution system in support of economic development. In addition, SSFUS will study and determine the economic feasibility of expanding the current municipal generation and distribution system as allowed under AB 1890. SSFUS shall make available wholesale power, pricing options, and risk management tools to industrial customers, and market these services as a business recruitment tool. Subject to need and economic feasibility and prior approval of the City, SSFUS shall invest in site utility infrastructure as necessary to support new industry served by SSFUS. Ener_~,y Management: SSFUS shall, at no cost to the City, provide commercial, industrial, and residential customers with a wide range of energy management services that will enable them to operate more efficiently, control costs and position themselves for open access in the electric energy market. Customer Services: SSFUS shall, at no cost to the City, provide metering, billing and service options to industrial, commercial and residential customers served by the City/SSFUS as aggregated load under AB 1890 or as customers connected to the City's own distribution facilities. Specifically, SSFUS shall: 1. develop an allocation and selection process for customer aggregation, including planning, marketing, and customer care information; 2. offer industrial customers metering options to suit their individual requirements and the requirements of AB 1890 and regulatory policy; 3. provide energy-related billing, accounting and collecting services for the City, including automated transactions to reduce costs for billing, collecting, and account maintenance for all customer classes; 4. produce monthly bills showing a range of data, including all information required by AB 1890 and any other PUC regulation adopted pursuant thereto. In addition, the bills shall include information related to level monthly payments, local in-person payment drop, customized bills for larger end-users, customer-selecteddue dates, electronic funds transfer, and other value-added services as appropriate. These bills shall also identify savings achieved through aggregation compared with comparable non- aggregation rates; 5/23/97 6 he j$ 5. consider the introduction of automated meter reading (AMR) for all customer classes; 6. provide a local and/or a toll-free phone number with operators available seven days a week and twenty-four hours a day and an office open during regular business hours for service-related customer contacts. 7. make renewable energy source available to those customers who have a preference for renewable energy sources. Economic Development: SSFUS shall, at no cost to the City, work with the City's Economic Development Department in implementing an effective economic development plan designed to attract industry for the purpose of creating jobs, expanding the tax base and diversifying the economy. SSFUS shall: 1. support the local economic development programs and initiatives that focus on the bio-medical industry; 2. support marketing of the City through a focused economic development promotional strategy; and 3. developing a coordinated marketing program with the City including, at a minimum, informing the of potential new or expanded business leads; 4. supporting the expansion of existing businesses. Services, Sales and Marketing: As soon as the City or SSFUS qualifies for direct access as an aggregator under Assembly Bill 1890, SSFUS and the City will immediately begin marketing customer choice alternatives within parameters authorized under the final requirements and qualifications established by the CPUC. SSFUS will position the City to be the preferred "energy solutions" provider, offering both electrical and gas solutions. SSFUS will also provide the City with the capability to begin to, or, with the agreement of the City, will itself through one or more of its affiliates offer other services to include, but not limited to telecommunications and natural gas service, fiber optics, weatherization, home security systems, and health monitoring. SSFUS will continually introduce and market value-added customer choice alternatives in energy and related services. Privatizati0n of City Facilities: The City operates cogeneration facilities which provide power to various city, county and private loads. Within sixty (60) days 5/23/97 7 after the City provides SSFUS with a detailed description of such cogeneration facilities, SSFUS shall submit a proposal pursuant to which SSFUS itself or through one or more of its affiliates would operate such facilities under contract. Said proposals shall include other ways of utilizing the cogeneration facilities to maximize efficiencies and maximize sales. The proposal shall specify the manner in which SSFUS itself or an affiliate would operate such facilities, costs, and what savings the City could achieve, if any. If the City so desires, the City may negotiate a contract with SSFUS itself or an affiliate of SSFUS for operation of the facilities. SSFUS or such affiliate may operate such facilities in conjunction with any local office SSFUS may maintain. For purposes of Section 2.1, the phrase "at no cost to the City" will not preclude charging the cost of any services rendered under this Section to the account of consumers or beneficiaries of the services other than the City, provided the City approves such categories of charges. 2.2 Method of Implementation. As stated in Section 1.1, many of the above-referenced subjects are not specific nor are specific timeframes established. Implementation of this Agreement will be accomplished pursuant to specific initiatives to be developed by the parties. These initiatives will establish specific tasks and subtasks in each subject category identified in Section 2.1, assign personnel to accomplish such tasks and subtasks, and establish timefrarms for the accomplishment of said tasks to achieve the goals and objectives of this Agreement. 2.3 Initial Activities. The Parties shall undertake the initial activities intended to provide the most expeditious and effective effort to initiate the tasks set forth above in Section 2.1. Those initial activities shall include, but not necessarily be limited to, the following: Developmert of StrateEic Plan and Schedule. SSFUS in consultation with the City shall on or before August 1, 1997, prepare an administrative draft of a detailed strategic plan and schedule for the implementation of the Agreement. The Strategic Plan shall include at a minimum the following elements: A time line for activities, with decision points identified. The time line should track parallel activities that are needed to pursue electric load aggregation and system development. The direct access schedule identified in AB 1890 may form the baseline for the schedule. Alternatives and options such as the impact of adding other loads or resources. Contingency plans that attempt to identify and address roadblocks that may arise. Specific work task responsibilities. 5/23/97 8 be Development of Customer Information Plan. SSFUS in consultation with the City shall by November 1, 1997, develop a Customer Information Plan, which shall include the following elements: Development of a customer information brochure to be mailed to all City residents and businesses that identifies the City's goals and plan for reducing electricity (and potentially other) costs. Preparation and distribution of a customer questionnaire, which shall be used to develop a customer data base. Establishment of direct contact with large commercial/industrial utility users and informationnecessary to analyze utility demand requirements Development of a confidentiality agreement for customers who may be sensitive to releasing utility consumption information. Load Agt~regation Implementation Preparatior[ SSFUS in consultation with the City shall perform the following activities in preparation for the implementation of a program of electric load aggregation in the City: 4. 5. 6. 7. 8. As a result of direct customer contact and survey, develop a detailed assessment of electric peak loads and energy requirements particularly for individual large utility users. Identify a potential power supply portfolio and develop contractual relationships for power supplies for the City's role as a load aggregator. Identify responsibility for PG&E's competition transition charges, both for the long and short term. Prepare forms of contract with large electrical consumers. Develop billing procedures and accounting systems required by the City or determine the contracts needed to have this work done by SSFUS. Develop energy conservation programs that might benefit the City and its customers of utility services. Examine the potential for adding any cogeneration facilities to the resource mix serving the City's electric customers. Prepare an application to the California Public Utilities Commission for designated aggregator status for the City or SSFUS. 3.0 IMPLEMENTATION. 3.1 Coordination of Work. Walt Pollock (the "Representative")of SSFUS is hereby designated as being its primary representative and is authorized to act in its behalf with respect to the work specified herein and to make all decisions in connection herewith. The identity of the Representative is of particular importance to the City due to Representative's knowledge, 5/23/97 9 experience, and capability. In the event of a change in the identity of Representative, SSFUS's appointment of a successor Representative shall be effective only if approved by the City, which approval shall not be unreasonably withheld. The Representative shall be responsible during the term of this Agreement for directing all activities of SSFUS, to carry out the terms of this Agreement, and shall personally devote sufficient time to supervise the services and coordinate the work hereunder. The City's representative shall be the City Manager or his or her designee (the "Contract Officer"). It shall be SSFUS's responsibility to assure that the Contract Officer is kept informed of the progress of the performance of the services and SSFUS shall refer any decisions which must be made by the City to the Contract Officer. Unless otherwise specified herein, any approval of SSFUS required hereunder shall mean the approval of the Representativ~ The Representative shall have authority to sign all documents on behalf of SSFUS to carry out the terms of this Agreement. The Contract Officer shall only have authority to sign documents where such authority is expressly granted herein. All other City approvals shall be subject to City Council approval. 3.2 Cost and Gain Sharing; Franchise Fees. SSFUS and the City will establish budget and project proformas for the work program and for each project and service jointly pursued. Fees and expenses established for services shall consider risk, cost of capital and investment, need to achieve savings, value, and competitive electric service rates in the market place. The City shall be authorized to establish and impose franchise fees that are the same as those franchise fees established and imposed by the City on similarly situated utility/energy services providers. 4.0 ADDITIONAL DUTIES OF THE PARTIES. 4.1 Local Office. SSFUS shall designate a Utility Service Manager headquartered in the City to supervise implementation of the services provided for in this Agreement. 'Prior to commencement of marketing services, SSFUS will establish its own offices, open during regular business hours, in the City. 4.2 Records and Reports. SSFUS shall prepare and maintain 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 SSFUS. SSFUS shall, during regular business hours, make the books, accounts and records to be maintained hereunder available in South San Francisco to the City or a representative of the City for examination and audit by appointment, upon twenty-four (24) hours notice. Any such audit shall be at the expense of the City. SSFUS 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 SSFUS, and kept accessible for 5/23/97 10 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. SSFUS shall make available to the City and should the City so request, provide copies of all or any portion of any invoice, statement, purchase order, billing report or other document with respect to this Agreement. SSFUS acknowledges and agrees that these books, accounts, and records may be subject to public disclosure to the extent required by Public Records Act, California Government Code Section 6250 et seq. 4.3 Utility Coordination. ae Municipal Coordination: The City, immediately and continually throughout the Term of this Agreement, shall publicly announce the identity and organization of the entity associated with the City responsible for providing retail electric service to electric customers within the City limits. The Representative and the Contract Officer shall coordinate the efforts of SSFUS and those the City departments and agencies to develop a consistent and effective interface for promotion, communication and interaction with the SSFUS's potential and existing electric customers. be Scheduling Coordinator Services: The City hereby designates SSFUS as its Scheduling Coordinator for all purposes required by the Independent System Operator (ISO) being established pursuant to AB 1890 and decisions of the Federal Energy Regulatory Commission and the CPUC. SSFUS 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. Prior to commencement of service, SSFUS and the City shall endeavor to establish mutually acceptable fees and other terms and conditions for such scheduling coordinator services, and in the event such agreement cannot be reached, the City reserves the right to change such designation. As part of its duties as scheduling coordinator, SSFUS shall perform the following daily functions: 1. prepare all necessary load forecasts for aggregated loads as required for development of preschedules used for power scheduling; 5/23/97 11 2. develop balanced 24-hour preschedules for each day of the month; 3. provide real-time scheduling and coordination duties including monitoring load, confirming deliveries, notifying the affected parties of supply or delivery anomalies, balancing resources with actual loads going into the hour, and providing schedule adjustments as necessitated by generation or transmission disturbances or changes; and 4. perform daily and end-of-month verification of schedules and resolve any discrepancies found during the process including settling with system operators for congestion management, imbalances and ancillary services. 4.4 Power Supplier. The City agrees that during the Term of this Agreement, SSFUS or its designees shall have the right to be the City's exclusive supplier of or procurement agent for wholesale electric power for resale to the customers served with power aggregated pursuant to this Agreement, other than electric power generated by the City itself, and municipal electric utility services, provided however, that these rights are subject to termination prior to the expiration of the Term in accordance with Section 1.3. SSFUS's right to be the exclusive supplier of or procurement agent for wholesale electric power is subject to the parties' ability to negotiate a mutually satisfactory power supply contract. SSFUS shall be solely responsible for purchasing and paying for wholesale power distributed as part of the municipal aggregation. With the exception of SSFUS's cost-reimbursement obligation pursuant to this Section 5.10, neither party shall have any liability one to the other for failing to negotiate such an agreement. If the parties should fail to negotiate such a power supply agreement, either party may elect to terminate this Agreement. SSFUS's obligation to negotiate such a power supply agreement is further limited to the effect that the City has not yet been approved as an aggregator of power and may ultimately not have the right to acquire such power. It is expressly understood that approval of aggregator status is an condition subsequent to the effectiveness of this Agreement. 4.5 Future Agreements. SSFUS and the City agree to negotiate in good faith to achieve agreements and final contracts that would provide for SSFUS to: ao Assume operation of and expand, if economically and strategically desirable, all electric generation by the City; Assume energy management of mutually-agreed City facilities; Co Provide joint metering and billing of the City services once delivery of retail electricity has begun; and 5/23/97 12 d. Pursue with the City other mutually beneficial commercial and industrial development. Provide natural gaS and telecommunications services to customers in the City. Such agreements will provide for mutually acceptable financial rewards for performance such as share of the savings payments. In entering other agreements to implement this Agreement, the terms of such agreements shall govern regardless of whether they shall be cross- defaulted and automatically terminated by the termination of this Agreement. 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 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 the City and SSFUS 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 SSFUS 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 5/23/97 13 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. 5.4 Limitation of Liability; 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. As a changing regulatory environment exists as explained above, and the market forces affecting the price of energy, including energy in its various forms from both renewable and non- renewable sources, are volatile and difficult to predict, and the market for financing is also subject to unpredictable changes, the parties are agreed that it would be extremely difficult and impracticable, if not impossible to ascertain with any degree of certainty, the damages suffered by either party by the failure to perform the Agreement. Based on the foregoing, 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. Except as provided in the following paragraph, 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. The parties agree that this waiver is not applicable to subsequent agreements between the parties. Notwithstanding the foregoing, the City will be entitled to collect for consultant costs, staff costs, and legal fees incurred prior to a breach of the terms of this Agreement by SSFUS and which SSFUS is obligated to pay pursuant to this Agreement. This paragraph shall apply in the event of termination of this Agreement by either party pursuant to Sections 1.3(b) and 4.4. 5.5 Insurance. SSFUS shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City, during the entire term of this Agreement including any extension thereof, the following policies of insurance or evidence of self insurance by SSFUS 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 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 per accident. 5/23/97 14 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 $1,000,000 per person and $2,000,000 per occurrence and property damage liability limits of $250,000 per occurrence and $500,000 in the aggregate or (ii) combined single limit liability of $2,000,000. Said policy shall include coverage for owned, non-owned, leased and hired cars. (d) Professional Liability. Errors and Omissions coverage in the amount of $1,000,000. (e) Additional Insurance. Policies of such other insurance as may be required by the City to fulfill the requirements of the Agreement. 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 all 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, SSFUS shall, prior to the cancellation date, submit new evidence of insurance or self insurance in conformance with this Section to the City. No work or services under this Agreement shall commence until SSFUS 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. It is recognized that the sufficiency of insurance coverage is affected by many factors, including loss history, developing legal precedents, the enactment of laws, development of new insurance product, competition of carriers and other events affecting market conditions, which events are beyond the control of the parties. Due to such uncertainties, the Risk Manager of the City ("Risk Manager") may determine that the work or services to be performed under this Agreement creates an increased or decreased risk of loss to the City, and SSFUS agrees that the minimum limits of the insurance policies required by this Section may be changed accordingly upon receipt of written notice from the Risk Manager; provided that SSFUS shall have the right to appeal a determination of increased coverage by the Risk Manager to the City Council of the City within 10 days of receipt of notice from the Risk Manager. 5/23/97 15 SSFUS agrees that the provisions of this Section shall not be construed as limiting in any way the extent to which SSFUS may be held responsible for the payment of damages to any persons or property resulting from SSFUS' activities or the activities of any person or persons for which SSFUS is otherwise responsible. In the event SSFUS subcontracts any portion of the work, the contract between SSFUS and such subcontractor shall require the subcontractor to maintain the same policies of insurance that SSFUS is required to maintain pursuant to this Section. 5.6 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. 5.7 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 the City: The City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attention: The City Manager Telephone: (415) 877-8500 Facsimile: (415) 872-3269 Copy to: City of South San Francisco 313 Maple Street South San Francisco, CA 94080 Attention: City Attorney Telephone: (415) 877-8515 Facsimile: (510) 351 4481 To SSFUS: FirstPoint California, 1 WTC-09 121 SW Salmon Street Portland, OR 97204 Attention: Walt Pollock Telephone: (503) 464-8390 5/23/97 16 Facsimile: (503) 778-5566 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. 5.8 Assi~,nment. SSFUS shall have no right to assign this Agreement or any right or privilege SSFUS might have in this Agreement, if any, by operation of law or otherwise, without the prior written consent of the City, which consent may be withheld in the City's sole and absolute discretion. Any attempt by SSFUS to make an assignment other than that with the prior written consent of the City shall be null and void and shall automatically terminate this Agreement. The City's consent to an assignment by SSFUS shall not relieve SSFUS 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 the 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 voting stock of SSFUS, taking all transfers into account on a cumulative basis. For this purpose, transfers within the Portland General family of companies shall not be restricted hereunder. In the event of any such unapproved transfer, including any bankruptcy proceeding, this Agreement shall be void. 5.9 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. 5.10 Costs. SSFUS shall reimburSe the City for all costs, including legal fees, incurred by the City in the development of the RFQ and the selection process leading to SSFUS's selection to enter into this and any subsequent agreements with the City including costs associated with the drafting of this Agreement. Upon execution of this Agreement, the City shall provide SSFUS with a billing providing documentation of the foregoing costs. SSFUS shall pay the billing within thirty (30) days after receipt. SSFUS shall reimburse the City for the City's costs including consultant services in oversight of the Agreement and for reasonable legal expenses associated with defense of any challenge to the validity of this Agreement or defense of any claim, action, lawsuit arising out of SSFUS's, its employees, agents, or contractors actions pursuant to this Agreement 5/23/97 17 5.11 Modification. During the term of this Agreement, the parties may by mutual agreement enter into discussions to amend any portion of this Agreement. Any amendments or modificatiom to this Agreement must be in writing and executed by both parties to this Agreement. Notwithstanding any other provision of this Agreement, the parties agree that if the City does not become the aggregator, the parties agree to enter into good faith negotiations regarding amendments to this Agreement based on SSFUS' status as an exclusive endorsee of the City for the purpose of providing the services specified herein. 5.12 Interpretation--GoverningLaw. 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. Any legal action brought pursuant to or to enforce this Agreement shall be filed in San Mateo County, California. 5.13 No Waiver. No delay or omission by either party 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. 5.14 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. 5.15 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. 5.16 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. 5/23/97 18 5.17 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. The 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. 5.18 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. 5.19 Publicity. SSFUS 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. 5.20 Hold Harmless and Indemnification. Notwithstanding Section 5.4 of this Agreement, SSFUS shall indemnify, defend and hold harmless the City, its officers, officials, directors, employees and agents from and against any or all loss, liability, expense, claim, costs (including costs of defense), suits, and damages of every kind, nature and description for potential liability arising from the negligence, fraud, willful injury or violations of law whether negligent or willful of SSFUS, its officers, employees, agents, and contractors in implementing the terms of this Agreement. This paragraph shall not be construed to exempt the City, its employees and officers from its own negligence, fraud, willful injury or violation of law whether willful or negligent. For purposes of Section 2782 of the California Civil Code the parties hereto recognize and agree that this agreement is not a construction contract. By execution of this agreement SSFUS acknowledges and agrees that it has read and understands the provisions hereof and that this paragraph is a material element of consideration. 5.21 Compliance with Applicable Laws. SSFUS shall comply with all laws applicable to the performance of the terms herein, including, but not limited to, laws prohibiting discrimination based on race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status or sex. 5.22 No Third Party Beneficiaries. This agreement shall only be enforceable by the parties hereto. Neither party intends that this Agreement may be enforced by any individual or entity not a party hereto. /// 5/23/97 19 IN WITNESS WHEREOF, the parties hereto have executed this Municipal Utility Services Agreement the day and year first above written. "The City" The City of South San Francisco, a municipal corporation Attest: By: Mayor City Clerk Approved as to Form: City Attorney Approved as to Form: "SSFUS" FirstPoim California, Inc., dba South San Francisco Utility Solutions, Inc., an Oregon corporation By: General Counsel 405/O l /agree/may97 /elec2. w61 5/23/97