Current through Register Vol. 63, No. 9, September 1, 2024
(1) Each public utility must offer standard
power purchase agreements to eligible qualifying facilities. Each public
utility must submit all forms of standard power purchase agreements to the
Commission for approval.
(2)
Qualifying facilities have the unilateral right to select a purchase period of
up to 20 years for a standard power purchase agreement. Qualifying facilities
electing to sell firm output at fixed prices have the unilateral right to a
fixed-price term of up to 15 years, subject to the reduction specified in
section (6) for a development period that exceeds three years. In addition, the
fixed-price term continues to run during the cure period should the qualifying
facility fail to meet the scheduled commercial operation date. Qualifying
facilities may also select a nonfixed-price term of up to five years to run at
the conclusion of the fixed-price term.
(3) The development period of a standard
power purchase agreement begins on the Effective Date, unless the start of the
development period is delayed by the initiation of the Network Upgrade cost
allocation process in OAR 860-029-0044. The development period ends at 24:00 in
the time zone in which the qualifying facility is located on the day before the
scheduled commercial operation date specified in the standard power purchase
agreement or such earlier date on which the qualifying facility achieves the
commercial operation date in compliance with these rules.
(4) The purchase period of a standard power
purchase agreement begins on the earlier of the commercial operation date or
the scheduled commercial operation date. The scheduled commercial operation
date may be delayed by Force Majeure, extended by agreement of the purchasing
public utility and the qualifying facility or modified under subsection (5)(b)
or section (6) of this rule. In these cases, the purchase period and fixed
price term commence on the earlier of the commercial operation date or the
delayed or extended scheduled operation date.
(5) A qualifying facility may specify a
scheduled commercial operation date for a standard power purchase agreement
subject to the following requirements:
(a)
Anytime within three years from the date of agreement execution;
(b) Anytime within five years from the date
of agreement execution. If the qualifying facility can, utilizing the process
specified in section (6), provide an interconnection study by the purchasing
utility showing that the time it will take the purchasing utility to complete
the interconnection to the qualifying facility necessitates a commercial
operation date longer than three years from the Effective Date, then the
additional time necessitated by the interconnection up to an additional two
years will not be taken off the period of the fixed-price term. Under other
circumstances, the additional time will be taken off the period of the
fixed-price term; or
(c) In any
standard power purchase agreement with a scheduled commercial operation date
more than three years after the Effective Date, except as specified otherwise
in these rules, the fixed-price term will be reduced one day for every day of
the development period after three-year anniversary of the Effective date, with
the reduction taken from the end of the fixed-price term. Example: A standard
power purchase agreement with a development period of three years and six
months will have a fixed-price term of 14 years and 6 months. The fixed-price
term will begin on the scheduled commercial operation date and will end after
14 years and 6 months.
(6) Modification of Scheduled Commercial
Operation Date or Termination
(a) Anytime
within six months after the Effective Date of a standard power purchase
agreement, the qualifying facility may terminate the standard power purchase
agreement or modify the scheduled commercial operation date in the standard
power purchase agreement if the qualifying facility receives an interconnection
study report that is completed after the Effective Date that:
(A) Includes an estimate of time to
interconnect that is longer than the development period in the executed
standard power purchase agreement; or
(B) Includes an estimate of costs to
interconnect that render the project uneconomic in the qualifying facility's
opinion.
(b) A
qualifying facility that chooses to modify the scheduled commercial operation
date under subsection (a) of this section (6) may not select a new scheduled
commercial operation date more than five years from the date the standard power
purchase agreement was executed except as specified otherwise in these
rules;
(c) If a qualifying facility
terminates the standard power purchase agreement under subsection (a) of this
section (6), it is liable for damages incurred by the public utility up until
the date of termination, which may be taken from the Project Development
Security posted by the qualifying facility;
(d) In the event the qualifying facility is
delayed in reaching commercial operation because of an event of Force Majeure
or the public utility's default under the standard power purchase agreement or
any other agreement related to the interconnection of the qualifying facility
to the purchasing utility's system, including interconnection study agreements
and interconnection agreements, the scheduled commercial operation date in the
standard power purchase agreement will be extended commensurately with the
delay caused by the event of Force Majeure or the public utility's default,
except for periods of delay that could have been prevented had the qualifying
facility taken mitigating actions using commercially reasonable efforts. An
extension of the scheduled commercial operation date under this subsection is
not subject to the fixed-price term reduction in subsection (5)(c) or the
five-year limitation in subsection (5)(b).
(7) Unless otherwise excused under the
standard power purchase agreement, the utility is authorized to issue a Notice
of Default if the qualifying facility does not meet the scheduled commercial
operation date in the standard power purchase agreement. If a Notice of Default
is issued for failure to meet the scheduled commercial operation date in the
standard power purchase agreement, the qualifying facility has one year in
which to cure the default for failure to meet the scheduled commercial
operation date, during which the public utility may collect damages for failure
to deliver.
(a) Unless otherwise excused under
the standard power purchase agreement, damages for failure to meet the
scheduled commercial operation date in a standard power purchase agreement are
equal to the positive difference between the utility's replacement power costs
less the prices in the standard power purchase agreement during the period of
default, determined on a daily basis with positive differences aggregated and
invoiced as a monthly sum, plus costs reasonably incurred by the utility to
purchase replacement power and additional transmission charges, if any,
incurred by the utility to deliver replacement energy to the point of
delivery.
(b) If the qualifying
facility would have been required by the standard power purchase agreement to
transfer Renewable Energy Credits to the public utility during the period when
the qualifying facility is in default under this subsection, damages owed to
the public utility will include the public utility's cost to acquire
replacement Renewable Energy Credits.
(c) Notwithstanding subsections (a) and (b),
damages incurred under this section may not exceed an amount equal to what the
qualifying facility would have received under the standard power purchase
contract for energy delivered during the default period.
(8) Subject to the one-year cure period in
section (7) above, a utility may terminate a standard power purchase agreement
for failure to meet the scheduled commercial operation date in the power
purchase agreement, if such failure is not otherwise excused under the
agreement.
(9) Point of Delivery.
An off-system qualifying facility may propose the Point of Delivery for a
standard power purchase agreement. The purchasing public utility must agree to
the Point of Delivery before it is included in the standard power purchase
agreement. The purchasing public utility may not unreasonably withhold
agreement.
(10) The standard power
purchase agreement must include a mechanical availability guarantee (MAG) for
wind, hydroelectric, and solar qualifying facilities as follows:
(a) A 90 percent overall guarantee, measured
per turbine for wind resources and system-wide for other resources, starting
three years after the commercial operation date for qualifying facilities with
new contracts or one year after the commercial operation date for qualifying
facilities that renew a contract or enter into a superseding contract, subject
to an allowance for 200 hours of planned maintenance per turbine per year that
does not count toward calculation of the overall guarantee.
(b) A qualifying facility may be subject to
damages for its failure to meet the MAG calculated by
(A) Determining the amount of the "shortfall"
for the year, which is the difference between the projected average on-and
off-peak Net Output from the project that would have been delivered had the
project been available at the guaranteed availability for the contract year and
the actual Net Output provided by the qualifying facility for the contract
year;
(B) Multiplying the
"shortfall" by the positive difference, if any, obtained by subtracting the
Contract Price from the price at which the utility purchased replacement power;
and
(C) Additional ancillary
service and transmission costs to deliver replacement power to the point of
delivery and the cost of replacement renewable energy certificates, if
any.
(c) The 90 percent
availability guarantee will be reduced on a pro rata basis for any portion of
the annual period the qualifying facility was prevented from being available
for reasons of Force Majeure or a default by the purchasing public utility
under the power purchase agreement or interconnection agreement.
(d) Notwithstanding subsection (b), the total
amount of damages owed to the purchasing public utility by a qualifying
facility for failure to meet the MAG will not exceed what the qualifying
facility would have been paid under the standard power purchase agreement had
it delivered sufficient output to meet the MAG.
(11) A public utility may issue a Notice of
Default, and subsequently terminate a standard power purchase agreement
pursuant to its terms and limitations, for failure to meet the MAG if the
qualifying facility does not meet the MAG for two consecutive years if such
failure is not otherwise excused by the power purchase agreement.
(12)
(a)
The standard purchase agreement will include an annual minimum delivery
guarantee (MDG) for geothermal and biomass qualifying facilities equal to 90
percent of the qualifying facility's expected energy for the year.
(b) The qualifying facility may be subject to
damages for failure to meet the MDG calculated by:
(A) Determining the amount of the "shortfall"
for the year, which is the difference between 90 percent of the qualifying
facility's expected energy for the year and the actual Net Output delivered by
the qualifying facility to the purchasing public utility in the year;
(B) Multiplying the "shortfall" by the
positive difference, if any, obtained by subtracting the Contract Price from
the price at which the utility procured replacement power; and
(C) Additional ancillary service and
transmission costs to deliver replacement power to the point of delivery and
the cost of replacement renewable energy certificates, if any.
(c) Notwithstanding subsection
(b), the total amount of damages owed to the purchasing public utility by a
qualifying facility for failure to meet the MDG will not exceed what the
qualifying facility would have been paid under the standard power purchase
agreement for energy it would have delivered had it met the MDG.
(d) The 90 percent MDG will be reduced on a
pro rata basis for any portion of the annual period the qualifying facility was
prevented from generating or delivering electricity for reasons of Force
Majeure, a default by the purchasing public utility under the power purchase
agreement or interconnection agreement, or any interconnection and transmission
curtailment initiated by the purchasing utility or the transmitting
utility.
(13) A
purchasing utility may issue a Notice of Default, and subsequently terminate a
standard power purchase agreement pursuant to its terms and limitations, for
failure to meet the MDG if the qualifying facility does not meet the MDG for
three consecutive years if such failure is not otherwise excused by the
standard power purchase agreement.
(14) Incremental Facility Upgrades.
(a) During the development period, the
qualifying facility may make reasonable modification to the design and
components of its facility from the design and components contained in the
power purchase agreement. The qualifying facility is obligated to provide the
purchasing public utility an as-built supplement describing the Facility within
90 days after the commercial operation date. Except with the purchasing
utility's written consent or as described in subsection (b) of this rule, the
Facility as reflected in the as-built supplement may not:
(A) Have a Nameplate Capacity Rating that
exceeds the Nameplate Capacity Rating in the power purchase agreement at the
time it was executed; or
(B) Result
in an expected annual net output that is greater than 10 percent above that
specified in the power purchase agreement at the time it was
executed.
(b) In the
event that the qualifying facility seeks to upgrade the facility during the
development period or the term of the power purchase agreement in a manner that
does not increase the Nameplate Capacity Rating of the facility in the power
purchase agreement, but which is reasonably likely to cause the expected annual
net output to exceed that listed in the power purchase agreement by more than
10 percent, such upgrades may be made without the utility's prior approval
subject to the following requirements:
(A) The
proposed upgrades may not cause the qualifying facility to fail to meet the
current eligibility requirements for either the standard power purchase
agreement or standard prices, to breach its generation interconnection
agreement, or necessitate network upgrades in order to maintain designated
network status.
(B) At least six
months in advance of the scheduled installation date for the proposed upgrades,
the qualifying facility must send written notice to the purchasing utility
containing a detailed description of the proposed upgrades and their impact on
expected net output and revised 12 x 24 delivery schedule and requesting
indicative pricing for the incremental additional net output expected to be
generated as a result of the upgrades.
(C) Within 30 days after receiving such a
request, the purchasing utility must respond with indicative pricing for the
expected incremental additional Net Output to be generated as a result of the
upgrades and which exceeds 10 percent of the expected annual Net Output
specified in the power purchase agreement.
(D) Within 30 days after receiving indicative
pricing, the qualifying facility may request a draft amendment to the power
purchase agreement to reflect revised pricing for the remaining term of the
power purchase agreement, effective upon completion of the upgrades. If it is
not reasonably feasible to separately meter the incremental additional Net
Output resulting from the proposed upgrades, the purchasing utility may create
a blended rate based on the proportion the expected incremental additional net
output bears to the expected total Net Output following the installation of the
upgrades.
(c) Within 90
days after the date on which upgrades are installed under subsections (a) or
(b) of this section, the qualifying facility is obligated to provide the
purchasing utility an as-built supplement describing in detail the upgraded
facility.
(d) A qualifying facility
that wishes to install upgrades that would cause the Facility to increase its
Nameplate Capacity Rating must terminate its existing power purchase agreement
and may choose to enter a new standard or new non-standard power purchase
agreement based on the then current avoided cost. In calculating damages
resulting from the early termination of the original standard power purchase
agreement, if any, the cost to cover will be calculated based on the pricing
set forth in the new non-standard pricing agreement notwithstanding any other
provision in these rules to the contrary. A qualifying facility that chooses to
negotiate a new power purchase agreement under this subsection will not be
liable for damages for any default caused by its failure to maintain
eligibility for a standard power purchase agreement.
(15) Project Development Security. A new
qualifying facility that has executed a standard power purchase agreement that
does not meet the creditworthiness requirements in this rule must post Project
Development Security for the purchasing public utility's benefit within 120
days of the Effective Date of the standard power purchase agreement. The amount
of required Default Security will be $150/kWh. The obligation to maintain the
Project Development Security will expire once the qualifying facility commences
commercial operation. The qualifying facility may use either of the following
options to post Project Development Security:
(a) Cash Escrow Security. The qualifying
facility shall deposit in an escrow account established by the purchasing
utility in a banking institution acceptable to both the qualifying facility and
purchasing utility, Project Development Security. Such sum shall earn interest
at the rate applicable to money market deposits at such banking institutions
from time to time. To the extent the purchasing utility receives payment from
the Project Development Security for damages in the event of default, the
qualifying facility will, within 15 days, restore the Project Development
Security as if no such deduction had occurred.
(b) Letter of Credit Security. The qualifying
facility shall post and maintain in an amount equal to the Project Development
Security either a guaranty from a party that satisfies the creditworthiness
requirements under Section (18) of this rule, or a Letter of Credit in favor of
the purchasing public utility. To the extent the public utility receives
payment from the Project Development Security for damages in the event of
default, the qualifying facility will, within 15 days, restore the Project
Development Security as if no such deduction had occurred.
(16) Default Security. A qualifying facility
that has executed a standard power purchase agreement that does not meet the
public utility's creditworthiness requirements must post Default Security upon
commencing commercial operation. The amount of required Default Security will
be $50/kWh. The qualifying facility may use one of the following options to
post Default Security:
(a) Cash Escrow
Security. The qualifying facility shall deposit the Default Security in an
escrow account established by the purchasing utility in a banking institution
acceptable to both the qualifying facility and purchasing utility. Such sum
shall earn interest at the rate applicable to money market deposits at such
banking institutions from time to time. To the extent the purchasing utility
receives payment from the Default Security for damages in the event of default,
the qualifying facility will, within 15 days, restore the Default Security as
if no such deduction had occurred;
(b) Letter of Credit Security. The qualifying
facility shall post and maintain in an amount equal to the Default Security
either a guaranty from a party that satisfies the creditworthiness requirements
under section (18) of this rule, or a Letter of Credit in favor of the
purchasing public utility. To the extent the public utility receives payment
from the Default Security for damages in the event of default, the qualifying
facility will, within 15 days, restore the Default Security as if no such
deduction had occurred.
(c) Step-in
Rights and Senior Liens. Default security can be satisfied through grant of
step-in rights or a senior lien to the purchasing utility in a form acceptable
to the purchasing public utility in its reasonable-exercised
discretion.
(17)
Insurance requirements. The standard power purchase agreement must specify that
a qualifying facility with a Nameplate Capacity Rating greater than 200 kW must
secure and maintain general liability insurance coverage that complies with the
following:
(a) The insurance provider must
have a rating no lower than "A-" by A.M. Best Company;
(b) Insurance coverage will include:
(A) general commercial liability insurance
covering bodily injury and property damage in the amount of $1,000,000 each
occurrence combined single limit, or greater if desired by the qualifying
facility; and
(B) Umbrella
insurance in the amount of $5,000,000, or greater if desired by the qualifying
facility.
(18) Creditworthiness requirements under
subsections (15) and (16) of this rule may be satisfied by:
(a) A senior, unsecured long term debt rating
(or corporate rating if such debt rating is unavailable) of:
(A) 'BBB+' or greater from S&P Global
Ratings; or
(B) 'Baal' or greater
form Moody's Investor Services; provided that if such ratings are split, the
lower of the two ratings must be at least 'BBB+' or 'Baal' from S&P Global
Ratings or Moody's Investor Services.
(b) If a rating from S&P Global Ratings
or Moody's Investor Services is not available, the qualifying must provide
financial documentation that supports an equivalent rating as determined by the
purchasing utility through a reasonable internal process review and utilizing a
credit scoring model. In such case, the purchasing utility will request audited
financial statements for the most recent two full years (including balance
sheet, income statement, statement of cash flows, and accompanying footnotes),
which information is evaluated considering:
(A) the type of generation
resource;
(B) the size of the
resource;
(C) the expected energy
delivery start date; and
(D) the
term of the power purchase agreement.
(c) The internal review process will
evaluate, at minimum, certain profitability, cash flow, liquidity, and
financial leverage metrics.
(d) If
the qualifying facility is required to post a letter of credit, the letter of
credit must be issued by an institution, not subject to bail-in regulation,
with a credit rating on its long-term senior unsecured debt of at least 'A'
from S&P Global Ratings and 'A2' from Moody's Investor Services.
(19) Except as explicitly provided
in these rules, any qualifying facility that has entered into a standard power
purchase agreement with a public utility under PURPA will not make any changes
in its ownership, control or management that would cause the qualifying
facility to fail to satisfy the eligibility requirements for entering into the
standard power purchase agreement or receipt of standard pricing reflected in
the agreement. No more than once every 24 months, at the request of the public
utility, the qualifying facility will provide documentation and information
reasonably requested by the public utility to establish the qualifying
facility's continued compliance with eligibility requirements for the standard
power purchase agreement executed by the qualifying facility and public
utility. The public utility shall take reasonable steps to maintain the
confidentiality of any such documentation and information the qualifying
facility identifies as confidential, provided that the public utility may
provide all such information to the Commission in a proceeding before the
Commission.
Statutory/Other Authority: ORS 183, ORS 756, ORS 757 &
ORS 758
Statutes/Other Implemented: ORS
756.040 & ORS
758.505-758.555
