Exhibit 10.2
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SOUTHERN CALIFORNIA EDISON COMPANY
REFORMED STANDARD OFFER 1
AS-AVAILABLE CAPACITY AND ENERGY
POWER PURCHASE AGREEMENT
BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND
PAMC MANAGEMENT CORPORATION
QFID NO. 6308
Pursuant To Decision No. 04-01-050
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TABLE OF CONTENTS
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Section Title
Page
------- -----
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The
Parties...........................................................1
Recitals..............................................................1
1
Project
Summary.......................................................2
2
Definitions...........................................................6
3
Termination of Original Contract, Effective
Date and Termination of
Agreement.....................................9
4
Project
Fee...........................................................9
5
Project Development
Milestones........................................9
6
Generating
Facility..................................................11
7
Operating
Options....................................................14
8
Interconnection
Facilities...........................................15
9
Review and
Disclaimer................................................16
10 Real
Property
Rights.................................................16
11
Metering.............................................................17
12 Qualifying
Facility Status and Permits...............................19
13 Energy
Purchase......................................................19
14 Capacity
Purchase....................................................20
15
Curtailment..........................................................20
16
Interruption of
Deliveries...........................................22
17 Payment
and Billing..................................................22
18 Indemnity
and Liability..............................................23
19
Insurance............................................................24
20 Force
Majeure........................................................25
21 Review of
Records and Data...........................................26
22
Assignment...........................................................26
23
Abandonment..........................................................26
24
Non-Dedication.......................................................27
25
Non-Waiver...........................................................27
26 Section
Headings.....................................................27
27 Governing
Law........................................................27
28 Amendment,
Modification or Waiver....................................27
29 Several
Obligations..................................................27
30
Signatures...........................................................28
Appendix A: Time of Delivery
Periods
Appendix B: Southern
California Edison Company's Tariff Rule No. 21
Appendix C: Interconnection
Facilities Agreement
Appendix D: Metrological
Tower Side Letter
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Southern California Edison Company
Reformed Standard Offer No. 1
As-Available Energy and Capacity Power Purchase Agreement
PARTIES
PAMC Management Corporation, a Colorado
corporation, who is acting on its own
behalf and on behalf of all other owners of
the Generating Facility and
seller(s) of electrical power generated by
the Generating Facility,
(collectively, referred to as "Seller"),
and Southern California Edison Company
("Edison" or "SCE"), a California
corporation, referred to collectively as
"Parties" and individually as "Party",
agree as follows:
RECITALS
This Agreement is made with reference to
the following facts, among others:
A. Edison is a California
investor-owned public utility corporation ("IOU").
B. Seller operates an electric
power generation facility near Palm Springs,
California,
which Seller represents and warrants, is a qualifying facility
("QF") under
applicable regulations of the Federal Energy Regulatory
Commission.
C. On April 12, 1982, Edison
and Mesa Wind Developers, as
successor-in-interest to Pan Aero Corporation ("Mesa Wind") entered
into an
agreement
entitled "Wind Park Power Purchase and Sales Agreement." The
Wind
Park Power
Purchase and Sales Agreement, as amended, is referred to herein
as the "Original
Contract." The Original Contract is subject to termination
by any Party on
five years written notice which shall not be given prior to
the expiration
of fifteen (15) years from the Firm Operation of all
generating
units. Such notice of termination was given by SCE to Seller on
June 23, 2000.
On June 22, 2005, the Original Contract was assigned to PAMC
Management
Corporation ("PAMC") pursuant to an Assignment of Power
Contract, dated
as of June 22, 2005, between PAMC and Mesa Wind. Edison
consented to
such assignment pursuant to that certain Consent Agreement,
dated as of June
22, 2005 between Edison and Mesa Wind.
D. On August 22, 2002, the CPUC
issued Decision ("D.") No. 02-08-071, in which
it ordered
Edison and other IOUs to make SO1 power purchase agreements
available to
certain QFs that meet the requirements of that decision.
E. On or about December 22,
2003, the CPUC issued Decision 03-12-062 (the
"Short Term 2004
Procurement Decision"), in which it ordered that "QFs in
operation and
under contract to provide power to an investor-owned utility
at any point
between January 1, 1998 and December 18, 2003, whose contracts
are set to
expire before January 1, 2005, shall be afforded interim
1
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treatment,
consistent with that provided in D.02-08-071." Short Term 2004
Procurement
Decision, Ordering Paragraph 14, mimeo at 88.
F. On or about January 26,
2004, the CPUC issued Decision 04-01-050 (the "Long
Term 2004
Procurement Decision"), in which it ordered that "[f]or
Qualifying
Facilities (QF)s with existing contracts expiring before
December 31,
2005, the utilities shall offer five-year Standard Offer 1
(SO1) contracts
at short-run avoided cost ("SRAC") prices." Long Term 2004
Procurement
Decision, Ordering Paragraph 4, mimeo at 200.
G. For the reasons set forth in
Edison's comments, reply comments and
applications for
rehearing filed at the CPUC in Rulemaking 01-10-024
concerning the
Short Term 2004 Procurement Decision and the Long Term 2004
Procurement
Decision (collectively, the "2004 Procurement Decisions"),
Edison contends
that the 2004 Procurement Decisions are unlawful insofar as
they require
Edison to enter into this Agreement at a price exceeding that
permitted under
applicable state and federal law. Edison has applied for
rehearing of the
2004 Procurement Decisions, which application was denied
by the CPUC.
Edison has filed a petition for a writ of review before the
Court of Appeal,
Second Appellate District, in connection with the 2004
Procurement
Decisions. Edison reserves all rights and defenses with respect
this Agreement
and the 2004 Procurement Decisions. Seller disputes that
pricing under
this Agreement is unlawful and reserves its rights and
defenses with
respect to this Agreement, including its right to oppose
Edison's
petition for a writ of review or further review of the 2004
Procurement
Decisions.
H. In addition, the Long Term
2004 Procurement Decision requires that SO1
contracts to be
entered into thereunder include the provision that the
pricing terms
may change if the CPUC subsequently modifies its policy on QF
pricing
methodology. Long Term 2004 Procurement Decision, Ordering
Paragraph 4,
mimeo at 194.
I. Uniform Standard Offer No. 1
("USO1") as it existed on February 24, 1989,
does not in all
respects conform to the requirements of D.02-08-071 or
changes of
circumstances that have occurred since the adoption of USO1,
and
therefore this
Reformed Standard Offer No. 1 ("RSO1") was developed by
adding to,
removing or modifying portions of USO1 to conform with
D.02-08-071 and
changed circumstances.
J. To effectuate the foregoing
decisions, and subject to their respective
positions as set
forth above, the Parties desire to enter into this
Agreement.
AGREEMENT
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1. PROJECT SUMMARY
1.1 Seller's Generating Facility:
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(a) QFID Number:
6308
(b) Nameplate Rating:
30 MW. (Net of Station Use)
The Nameplate Rating may not exceed the nameplate rating agreed
to between Edison and Seller in the Original Contract
referenced
in Section 1.1(e) below. Seller may not increase the Nameplate
Rating after Initial Operation.
(c) Location:
Riverside County, California
Alta Mesa: ~68 acres in Section 4, T.3S, R.3E., SBBM
North Whitewater: ~409 acres in Sections 27, 33, and 34, T.2S.,
R.3E., SBBM
(d) Type: (Check
One)
-----
Cogeneration facility.
Natural Gas (primary energy source).
X Small
power production facility.
-----
(primary energy source).
(e) Seller represents
and warrants that it was in operation and under
contract to sell power to an IOU at some point in time between
January 1, 1998 and December 18, 2003, and that its contract to
provide such power expired or terminated, or will expire or is
set to terminate, before December 31, 2005. Edison may, at its
sole discretion, terminate this Agreement by written notice
effective immediately, in the event it learns of a breach of
Seller's representation and warranty in this Section 1.1(e).
Enter name of contracting IOU: SCE
Enter date of Original Contract expiration: The Parties agree
that the Original Contract shall be deemed terminated as of
12:01
a.m. on the Effective Date.
1.2 Expected annual energy deliveries:
71,000,000 kWh.
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1.3 [This section intentionally left
blank].
1.4 [This section intentionally left
blank].
1.5 Project Development Material
Milestones:
(a) [This section
intentionally left blank].
(b) [This section
intentionally left blank].
(c) [This section
intentionally left blank].
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1.6. Operating
Options pursuant to Section 7: (Check One)
X Operating
Option I (Buy/Sell):
Entire Generating
-----
Facility output less Station output less Station Use
sold to Edison.
-----
Operating Option II (Surplus Sale): The Generating
Facility output, less Station Use and any other use by
Seller, sold to Edison. Capacity allocated to other
use
by Seller: ________
kW.
1.7 Metering Location: (Check one)
Seller selects metering location pursuant to Section 11 as
follows:
X
High-voltage side of the Interconnection Facilities
-----
transformer.
-----
Low-voltage side of the Interconnection Facilities
transformer, with the transformer loss compensation factor
determined in accordance with Section 11.2.
1.8 Notices:
Any written notice, demand, or request required or authorized
in
connection with this Agreement shall be deemed properly given
if
delivered in person or sent by first class mail, postage prepaid,
to
the person specified below:
Edison: Southern
California Edison Company
Attention: Director,
QF Resources Business Unit
P.O. Box 800
Rosemead, CA 91770
Telephone:
626-302-1212
Facsimile:
626-302-1103
Seller: PAMC
Management Corporation
Attention: Robert
Keeley
12630 Milan Road
Colorado Springs, CO 80908
Attention:
President
Telephone:
719-942-3194
Facsimile:
719-262-3494
Seller's notices to Edison pursuant to this Section 1.8 shall refer
to
the QFID number set forth in Section 1.1(a). The designated
addresses
for giving notice under this Agreement may be changed at any time
upon
notice by the Party's authorized representative to the notice
address
in effect at the time of the notice address change.
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1.9 Location of (Edison) Designated
Switching Center:
Devers Switching Center
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1.10 Seller's
arrangement includes Host(s): (Check one)
yes
-----
no X
-----
If yes, the following sections shall apply:
(a) Host(s):
_____________________________
_____________________________
_____________________________
(b) Seller has made
arrangements with Host(s) to: (Check one
or both)
a. ___ Deliver
all or a portion of the ectrical output of the
Generating Facility to Host(s).
b. ___ Deliver
useful thermal output from the Generating
Facility to Host(s).
(c) Seller shall,
within ten (10) days of the Effective Date,
provide Edison with the name(s) and address(es) of
representative(s) of the Host(s) who is (are) authorized to act
on behalf of the Host(s) in matters related to the arrangement
identified in this Section 1.10. Seller shall notify Edison of
any change(s) of authorized representative(s) within ten (10)
days of being notified of such change.
(d) Any references to
Host(s) contained in this Agreement are not
intended and shall not be construed to create any third party
rights or remedies.
1.11
Location of Edison
Customer Service District Office:
Palm Springs District Office
----------------------------------------
1.12
The Point of Delivery
is as follows:
Existing 115 kV metering point at PanAero Substation
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2. DEFINITIONS
When italicized,
whether in the singular or in the plural, the following
terms shall have
the following meanings:
2.1 Agreement: This document and any written
amendments which may be
agreed upon by the Parties from time-to-time.
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2.2 As-Available Capacity:
The capacity delivered
to Edison from the
Generating Facility that Edison is contractually obligated to
purchase at its published As-Available Capacity price as approved
by
the CPUC.
2.3 CPUC: The Public Utilities Commission of
the State of California.
2.4 Designated Switching Center:
The Edison facility
which is described
in Section 1.9.
2.5 Tariff Rule 21: The tariff
setting forth Edison's interconnection
standards for cogenerators and small power producers
interconnected
with the Edison system, as such tariff may be modified by the
CPUC
from time-to-time. A copy of the current version of such tariff
is
attached hereto as Appendix B and incorporated herein by
reference.
2.6 Emergency: An actual or
imminent condition or situation which, in
Edison's sole opinion, jeopardizes Edison Electric System
Integrity
or the integrity of other systems to which Edison is connected;
or
any condition so-defined and declared by the ISO.
2.7 Force Majeure: Any
occurrence, other than Forced Outages, beyond the
reasonable control of and without the fault or negligence of
the
Party claiming Force Majeure which causes the Party to be unable
to
perform its obligations, which by exercise of due foresight
such
Party could not
reasonably have been expected to avoid and which the
Party is unable to overcome by the exercise of due diligence.
Such
an occurrence may include, but is not limited to, acts of God,
labor
disputes, sudden actions of the elements, actions or inactions
by
federal, state, and municipal agencies, and actions or inactions
of
legislative, judicial, or regulatory agencies.
2.8 Forced Outage: Any outage of
the Generating Facility or Seller's
Interconnection Facilities resulting from a design defect,
inadequate
construction, operator error, interruption in fuel supply
unless
excused as a Force Majeure, or a breakdown of the mechanical or
electrical equipment that fully or partially curtails the
electrical
output of the Generating Facility.
2.9 Generating Facility: All of
Seller's generating units, together with
all protective and other associated equipment and improvements
owned,
maintained, and operated by Seller, which are necessary to
produce
electrical power, excluding associated land, land rights, and
interests in land.
2.10
Host(s): The entity or
entities identified in Section 1.10 which will
accept: (a) useful thermal output of the cogenerator; (b) all or
a
portion of the electric output of the Generating Facility; or
(c)
both.
2.11
Initial Operation: The
day that the Generating Facility delivers
electric power to the Point of Delivery under this Agreement.
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2.12
Interconnection
Facilities: All means required, and apparatus
installed, to interconnect and deliver power from the
Generating
Facility to the Point of Delivery by means of either the Edison
system or the ISO Grid, including, but not limited to,
connection,
transformation, switching, metering, communications, control,
and
safety equipment, such as equipment required to protect (a) the
Edison system (or other systems to which Edison is directly or
indirectly connected, including the ISO Grid) and its customers
from
faults occurring at the Generating Facility, and (b) the
Generating
Facility from faults occurring on the Edison system or on the
systems
of others to which the Edison system is directly or indirectly
connected. Interconnection Facilities also include any
necessary
additions and reinforcements by Edison to the Edison system
required
as a result of the interconnection of the Generating Facility to
the
Edison system, the ISO Grid system, or systems to which the
Edison
system is connected.
2.13
Interconnection
Facilities Agreement: The Interconnection Facilities
Agreement, dated as of the date herein, between Seller and
Edison,
attached hereto as Appendix C.
2.14
Nameplate Rating: The
gross generating capacity of the Generating
Facility less Station Use. For purposes of this Agreement,
Nameplate
Rating is that rating specified in Section 1.1(b) of this
Agreement.
2.15 Edison Electric System Integrity:
The state of operation of Edison's
electric system in a manner which is deemed to minimize the risk
of
injury to persons and/or property and enables Edison to provide
adequate and reliable electric service to its customers.
2.16
Point of Delivery:
That certain location on Edison's system or on the
ISO Grid within Edison's geographic service territory, which is
set
forth in Section 1.12, at which title to electricity delivered
by
Seller from the Generating Facility will transfer from Seller
to
Edison.
2.17
[This section is
intentionally left blank].
2.18
Protective Apparatus:
All relays, meters, power circuit breakers,
synchronizers, and other control devices as shall be agreed to by
the
Parties in accordance with the requirements of Edison as
necessary
for proper and safe operation of the Generating Facility in
parallel
with Edison's electric system and/or the ISO Grid.
2.19
Prudent Electrical
Practices: Those practices, methods, and
equipment, as changed from time to time, that are commonly used
in
prudent electrical engineering and operations to design and
operate
similar electric equipment lawfully and with safety,
dependability,
efficiency, and economy.
2.20
[This section is
intentionally left blank].
2.21
Short-Run Avoided
Costs or "SRAC": CPUC-approved costs, updated from
time to time, which are the basis of Edison's published energy
and
capacity prices.
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2.22
Station Use: Energy
used to operate the Generating Facility's
auxiliary
equipment. The auxiliary equipment includes, but is not
limited to, forced and induced draft fans, cooling towers,
boiler
feed pumps, lubricating oil systems, plant lighting, fuel
handling
systems, control systems, and sump pumps.
2.23
Effective Date:
June 23, 2005.
2.24
IOU: A California
investor-owned public utility corporation, e.g.,
Southern California Edison Company, San Diego Gas and Electric
Company, or Pacific Gas and Electric Company.
2.25
ISO: The California
Independent System Operator Corporation, a state
chartered, nonprofit, public benefit corporation that controls
certain transmission facilities of all participating
transmission
owners and dispatches certain electric generation units and
loads.
2.26
ISO Grid: The system
of transmission lines and associated facilities
of the participating transmission owners that have been placed
under
the ISO's operational control.
2.27
Project Manager: The
entity designated in this Agreement responsible
for operating and maintaining the Project with sole authority
and
agency to act on behalf of Seller in all matters relating to
this
Agreement. Enron Wind Systems, LLC shall act as Project Manager
of
this Agreement.
2.27
Reformed Standard
Offer No. 1, Reformed SO1 or RSO1: The
standardized, unexecuted form of this Agreement offered pursuant
to
D.02-08-071, D.03-12-062 or D.04-01-050.
2.28
Uniform Standard Offer
No. 1, USO1, or SO1: The standardized Southern
California Edison Company Uniform Standard Offer 1 -
As-Available
Capacity and Energy Power Purchase Agreement, approved by the CPUC
on
February 24, 1989.
3. TERMINATION OF ORIGINAL
CONTRACT, EFFECTIVE DATE AND
TERMINATION OF
AGREEMENT
3.1 This Agreement shall be valid and
binding upon the Parties on the date
that it has been executed by both Parties.
3.2 Unless terminated sooner, this
Agreement shall terminate at 11:59 p.m.
on the last day before the fifth anniversary of the Effective
Date.
Unless otherwise provided herein, any rights vested as of the
termination of this Agreement shall survive the termination.
3.3 This Agreement may be terminated
sooner by Seller upon providing
thirty (30) days prior written notice in accordance with Section
1.8.
8
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4. PROJECT FEE
[This section
intentionally left blank].
5. PROJECT DEVELOPMENT
MILESTONES
Seller shall
complete each Project Development Milestone as provided in
this Section
5.
5.1 Project Development Milestones
(a) The following
events shall constitute Project Development
Milestones:
(1) [This section
intentionally left blank].
(2) Maintenance of
Site Control (pursuant to Section 5.3).
(3) [This section
intentionally left blank].
(4) [This section
intentionally left blank].
(5) [This section
intentionally left blank].
(b) If Seller fails to
complete each Project Development Milestone in
the time and manner provided in Sections 5.2 through 5.6,
Edison
may terminate this Agreement upon thirty (30) days written
notice.
5.2 [This section intentionally left
blank].
5.3 Maintain Site Control
(a) Seller warrants
that it possessed Site Control of the site
described in Section 1.1(c) as of the date Seller executed this
Agreement and that Seller shall maintain continuous Site
Control
for the term of this Agreement.
(b) Site Control: Site
Control shall consist of one of the following,
or other form of Site Control acceptable to Edison in its sole
discretion:
(1) Seller's ownership
of the location of Seller's Generating
Facility specified in Section 1.1(c);
(2) Seller's leasehold
interest or right of way grant in the
location specified in Section 1.1(c), which leasehold
interest shall specifically include the right to construct
and operate the Generating Facility at such location;
(3) Seller's exclusive
and irrevocable contractual right to
construct and operate the Generating Facility at the
location specified in Section 1.1(c); or
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(4) Seller's exclusive
and irrevocable option to obtain any of
the rights described in Section 5.3(b)(1) through Section
5.3(b)(3) above. This alternative shall only constitute Site
Control prior to the commencement of construction of
Seller's Generating Facility.
(c) Seller shall
provide Edison with prompt notice of any change in
the status of its Site Control. If, at any time, Edison has
reason to believe that Seller has lost Site Control, Edison may
request from Seller evidence that Seller continues to possess
Site Control. If Seller fails to provide such evidence within
thirty (30) calendar days after Seller receives Edison's
request,
the provisions of the last sentence of Section 5.3(d) shall
apply.
(d) Where the term of
Seller's Site Control does not extend for the
full term of this Agreement, Seller shall advise Edison of the
date Site Control is scheduled to expire. Seller shall provide
to
Edison, no later than the date Seller's Site Control is
scheduled
to expire, evidence that Seller's Site Control has been renewed
or extended. If Seller fails to provide such evidence, Edison
shall notify Seller in writing that Seller is not in compliance
with this Section 5.3(d). Unless Seller provides Edison with
evidence that Site Control has been renewed or extended within
thirty (30) calendar days after Edison's notification, the
provisions of Section 5.1(b) shall apply.
(e) This Agreement is
project and site specific; however, Seller may
with Edison's prior consent, be permitted to adjust the
location
of Seller's Generating Facility within the proximity of the
site
specified in Section 1.1(c) if necessary for project
development.
5.4 [This section intentionally left
blank].
5.5 [This section intentionally left
blank].
5.6 [This section intentionally left
blank].
6. GENERATING FACILITY
The Generating
Facility shall be owned by Seller. The Generating Facility
shall be
designed, constructed, operated, and maintained as follows:
6.1 Design and Construction:
(a) Seller, at
Seller's sole expense, shall:
(1) Design the
Generating Facility;
(2) Acquire all
permits and other approvals necessary for the
construction, operation, and maintenance of the Generating
Facility; and
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(3) Complete all
environmental impact studies necessary for the
construction, operation, and maintenance of the Generating
Facility.
(b) Seller shall
provide to Edison reasonable advance written notice
of any changes in Seller's Generating Facility and provide to
Edison specifications and design drawings of any such changes
for
Edison's review and approval.
(c) The total
installed capacity (net of Station Use) of Seller's
Generating Facility shall not exceed the Nameplate Rating set
forth in Section 1.1(b) of this Agreement.
6.2 Construction:
(a) Seller, at
Seller's sole expense, shall construct the Generating
Facility.
(b) Edison shall have
the right to review and consult with Seller
regarding Seller's construction schedule.
(c) Edison shall have
the right to periodically inspect the
Generating Facility upon advance notice to Seller. Seller, at
its
option, may be present at such inspection.
6.3 Operation:
(a) Seller shall
operate the Generating Facility in accordance with
Prudent Electrical Practices.
(b) Seller shall
operate the Generating Facility to generate such
reactive power or provide individual power factor correction as
necessary to maintain voltage levels and reactive power support
for the Generating Facility as may be required by Edison in its
sole discretion. Seller shall not deliver excess reactive power
to Edison unless otherwise agreed upon between the Parties. If
Seller fails to provide reactive power support, Edison may do
so
at Seller's expense.
(c) The Generating
Facility shall be operated with all of Seller's
Protective Apparatus in service whenever the Generating
Facility
is connected to, or is operated in parallel with, the Edison
electric system or the ISO Grid. Any deviation for brief
periods
of Emergency or maintenance shall only be by agreement of the
Parties.
(d) Seller shall
maintain operating communications with either the
Edison Designated Switching Center or the Edison Generation
Operations Center, as requested by Edison. The Generation
Operations Center can be reached at any time at 626-302-3285.
The
operating communications shall include, but not be limited to,
system parallel operation or separation, scheduled and
unscheduled outages, equipment clearances, protective relay
11
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operations, levels of operating voltage and reactive power, and
daily capacity and generation reports. For coordination of
switching and Edison grid operations, the Seller may be
referred
to the Switching Center designated in Section 1.9.
(e) Seller shall keep
a daily operations log for the Generating
Facility which shall include information on availability,
maintenance outages, circuit breaker trip operations requiring
a
manual reset, and any significant events related to the
operation
of the Generating Facility, including but not limited to: real
and reactive power production; changes in operating status and
protective apparatus operations; and any unusual conditions
found
during inspections. Changes in setting shall also be logged for
Seller's generator(s) if it is "block-loaded" to a specific kW
capacity.
(f) Seller shall
maintain complete daily operations records
applicable to the Generating Facility, including but not
limited
to wind speeds and other pertinent meteorological conditions,
fuel consumption, cogeneration fuel efficiency, maintenance
performed, kilowatts, kilovars and kilowatt-hours generated and
settings or adjustments of the generator control equipment and
protective devices. Such information shall be available to
Edison
pursuant to Section 21.
(g) If Seller's
Generating Facility has a Nameplate Rating greater
than one (1) and up to and including ten (10) megawatts, Edison
may require Seller to report to the Designated Switching
Center,
twice a day at agreed upon times for the current day's
operation,
the hourly readings in kW of capacity delivered and the energy
in
kWh delivered since the last report.
(h) If Seller's
Generating Facility has a Nameplate Rating greater
than ten (10) megawatts, Edison shall provide, at Seller's
expense, telemetering equipment.
(i) Edison may require
Seller, at Seller's expense, to demonstrate to
Edison's satisfaction the correct calibration and operation of
Seller's Protective Apparatus at any time Edison has reason to
believe that said P