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Elmore, Ltd. Funding Agreement

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Sectors: Utilities
Governing Law: California , View California State Laws
Effective Date: May 18, 1990
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1. PARTIES: The Parties to this Funding Agreement ("Agreement") are Elmore, Ltd., a California limited partnership ("Seller") and Southern California Edison Company ("Edison"), a California corporation, hereinafter sometimes referred to individually as "Party" and collectively as "Parties."

2. RECITALS: This Agreement is made with reference to the following facts, among others:

2.1 On June 15, 1984, Edison and Magma Electric Company ("Magma Electric") executed a Power Purchase Contract to provide the terms and conditions for the sale by Magma Electric and the purchase by Edison of electrical power from an electrical generating facility to be located at Niland, California.

2.2 On November 30, 1984, Edison and Magma Electric, amended the Power Purchase Contract (Amendment No. 1).

2.3 On April 10, 1986, Edison and Magma Electric amended the Power Purchase Contract (Amendment No. 2).

2.4 On January 1, 1988, Magma Electric Company assigned its rights, title, and interest in the Power Purchase Contract to Magma Power Company ("Magma"), a Nevada corporation, to which assignment Edison consented on March 14, 1988.

2.5 On March 14, 1988, Magma Power Company assigned its rights, title, and interest in the Power Purchase Contract to Seller, to which assignment Edison consented on March 14, 1988.

2.6 Seller is a signatory to the Funding and Construction Agreement ("Funding and Construction Agreement") among the Imperial Irrigation District ("IID") and independent power companies, listed as participants ("Participants") therein, which was executed on June 29, 1987. Seller's capacity entitlement under the Funding and Construction Agreement is sufficient to satisfy its capacity and energy deliveries under the Power Purchase Contract.

2.7 Seller is, at the date of execution of this Agreement, in full compliance with the terms and conditions of the Power Purchase Contract, the Qualifying Facilities Milestone Procedure ("QFMP") and/or Edison's Tariff Rule 21, as applicable.

2.8 Seller and Edison jointly agree that a transmission capacity limit of 400 MW exists on the existing transmission line between Edison's Mirage Substation and its Devers Substation (the "Mirage/Devers Line") and that construction of additional transmission facilities may, in Edison's sole judgment, be required to allow delivery of Seller's electrical energy and capacity over the portion of Edison's system between Edison's Mirage and Devers Substations. Such facilities shall hereinafter be referred to as the "Additional Transmission Facilities."

2.9 Six (6) Qualifying Facility projects identified in Appendix A, Appendix B, and Appendix C, attached hereto, have previously executed Funding Agreements to pay a pro rata share of the Additional Transmission Facilities.


2.10 Seller acknowledges that, because of the transmission priority of its project under the QFMP and/or Edison's Tariff Rule No. 21, it may not be entitled thereunder to use the existing Mirage/Devers Line to deliver its power to Edison. Therefore, Seller is willing to pay a portion of the cost of the Additional Transmission Facilities which may be required to accommodate transmission of its electrical energy and capacity, as further set forth therein.

3. AGREEMENT: The Parties agree as follows:

4. TERM: This Agreement shall be effective upon execution by the Parties and shall remain in effect until the earliest of (a) termination by agreement of the Parties, (b) completion of the Additional Transmission Facilities, or (c) January 1, 1995.


5.1 Within 30 days after the date of execution of this funding agreement, Seller shall, in the amount determined pursuant to the formula set forth herein, either (a) provide Edison with an irrevocable letter of credit issued by a commercial lender acceptable to Edison in its sole judgment allowing Edison to draw the funds for use consistent with the terms and conditions of this Agreement, or (b) establish and fund an escrow account governed by an escrow agreement in a form acceptable to Edison, consistent with the terms and conditions of this Agreement. The escrow account or letter of credit so established shall hereinafter be referred to as the "Funding Account." The dollar amount of Seller's Funding Account shall be


the amount specified in Appendix D hereto as Seller's funding contribution, which is established as follows:

X = A x (B / C)
Where: X = Seller's Funding Account in dollars
A = Seller's MW capacity as specified in
Appendix D
B = $3,150,000
C = 79 MW

Seller shall not be required to contribute any funds in excess of the amount identified in Appendix D hereto as Seller's funding contribution.

5.2 Interest which may be paid to the Funding Account shall accrue to the Funding Account and shall contribute to the principal when earned. Seller shall not have any right to make withdrawals of accrued interest unless and until the Funding Account is released to Seller pursuant to Section 5.6 of this Agreement.

5.3 Edison shall have sole drawing rights on the funds contained in the Funding Account. Edison may use those funds for payment of the costs actually incurred by Edison to construct the Additional Transmission Facilities determined necessary by Edison in its sole discretion to accept the electric capacity and energy of Seller pursuant to the Power Purchase Contract and to pay any taxes
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