AMENDMENT NO. 2
to the
POWER PURCHASE CONTRACT
Between
SOUTHERN CALIFORNIA EDISON COMPANY
and
ORMESA GEOTHERMAL
RAP ID 3010

This Amendment No. 2 (‘‘Amendment’’) to the above-referenced Power Purchase
Contract is entered into by ORMESA LLC, a Delaware limited liability company
(‘‘Seller’’) and ORMAT TECHNOLOGIES, INC., a Delaware corporation (‘‘Ormat’’),
on the one hand, and SOUTHERN CALIFORNIA EDISON COMPANY, a California
corporation (‘‘Edison’’), on the other hand. Seller, Ormat and Edison are
sometimes referred to in this Amendment individually as a ‘‘Party’’ and jointly
as the ‘‘Parties.’’

RECITALS

This Amendment is entered into with reference to the following facts, among
others:

[spacer.gif] [spacer.gif] [spacer.gif] A.  On July 18, 1984, Edison and Republic
Geothermal, Inc. (‘‘Republic’’) executed the Power Purchase Contract
(‘‘Contract’’), whereby Edison agreed to purchase energy and capacity from a
geothermal power plant (‘‘3010 Project’’) located in East Mesa, Imperial County,
California. Edison identifies the 3010 Project as RAP ID 3010. The ‘‘Contract’’
is henceforth deemed to mean the Contract as amended, supplemented, or otherwise
modified from time to time.

[spacer.gif] [spacer.gif] [spacer.gif] B.  On November 6, 1984, Republic
assigned all of its rights to and interests in the Contract to Ormat Systems,
Inc. Edison consented to the assignment on December 19, 1984.

[spacer.gif] [spacer.gif] [spacer.gif] C.  On February 27, 1985, Ormat Systems,
Inc. assigned all of its rights to and interests in the Contract to Ormesa
Geothermal. Edison consented to the assignment on July 22, 1985.

[spacer.gif] [spacer.gif] [spacer.gif] D.  On December 23, 1988, Edison and
Ormesa Geothermal entered into Amendment No. 1 to the Contract (‘‘Amendment No.
1’’), which increased the Contract Capacity, limited energy deliveries under the
Contract and limited the Contract Capacity eligible for a Capacity Bonus
Payment.

[spacer.gif] [spacer.gif] [spacer.gif] E.  On June 19, 2001, Edison and Ormesa
Geothermal entered into the Agreement Addressing Renewable Energy Pricing and
Payment Issues (‘‘Renewable Agreement’’).

[spacer.gif] [spacer.gif] [spacer.gif] F.  On November 30, 2001, Edison and
Ormesa Geothermal entered into Amendment No. 1 to the Renewable Agreement.

[spacer.gif] [spacer.gif] [spacer.gif] G.  In a filing before the Federal Energy
Regulatory Commission (‘‘FERC’’) dated December 30, 2002, Seller represented
that it is the successor to Ormesa Geothermal, following a merger between Seller
and a number of its subsidiaries.

[spacer.gif] [spacer.gif] [spacer.gif] H.  In a second filing before FERC, also
dated December 30, 2002, Seller represented that it is also the successor to
Ormesa Geothermal II, the seller under a separate power purchase contract
between Ormat Systems, Inc. and Edison dated June 13, 1984 (‘‘3012 Contract’’),
that provides for the sale to Edison of electrical power generated by a separate
geothermal plant (‘‘3012 Project’’), which is also located in East Mesa,
Imperial County, California. Edison identifies the 3012 Project as RAP ID 3012.

[spacer.gif] [spacer.gif] [spacer.gif] I.  In 2002, Edison and Seller entered
into negotiations to discuss the consolidation of the 3010 and 3012 Projects and
the termination of the 3012 Contract.

[spacer.gif] [spacer.gif] [spacer.gif] J.  On or about November 22, 2002 and
April 28, 2003, and subsequently on June 21, 2005, Edison and Seller entered
into confidentiality agreements protecting their negotiations from public
disclosure.

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[spacer.gif] [spacer.gif] [spacer.gif] K.  On or about May 1, 2003, Edison and
Seller reached an agreement, subject to California Public Utilities Commission
(‘‘CPUC’’ or ‘‘Commission’’) approval, regarding the consolidation of the 3010
and 3012 Projects and the termination of the 3012 Contract. Edison withdrew its
support for the consolidation and termination based upon concerns that the 3010
and 3012 Projects were interconnected with another Qualifying Facility (‘‘QF’’),
Geo East Mesa (‘‘GEM’’), which had previously sold its output to Edison under a
QF contract that was terminated pursuant to a Commission-approved buyout
agreement. Edison alleged that, in view of the interconnection, the
consolidation might improperly facilitate sales of GEM-produced power to Edison
under the terms of the consolidated QF amendment. Although the Commission
initially approved Edison’s and Seller’s agreement regarding the consolidation
and termination on October 16, 2003 in Resolution E-3848, on January 22, 2004,
the Commission granted Edison’s application for rehearing and vacated Resolution
E-3848. Accordingly, the 3010 and 3012 Projects remained separate projects,
subject to separate contracts.

[spacer.gif] [spacer.gif] [spacer.gif] L.  Edison contends that, since
approximately June 2003, the 3010 and 3012 Projects have been interconnected
with GEM generating units that are not part of the 3010 and 3012 Projects, and
that the 3010 and 3012 Projects improperly sold power generated by the GEM
generating units to Edison pursuant to the Contract and the 3012 Contract
resulting in overpayments by Edison to Seller. Seller disputes Edison’s
contentions. This dispute shall henceforth be known as the ‘‘Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] M.  Edison protested a recertification
filed by the 3012 Project with FERC disputing the project capacity amount
designated by the 3012 Project. After FERC rejected Edison’s protest in part,
Edison appealed to the United States Court of Appeals for the District of
Columbia Circuit. The Court of Appeals affirmed FERC’s ruling and subsequently
denied Edison’s petition for rehearing. This dispute shall henceforth be known
as the ‘‘FERC Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] N.  On or about November 6, 2005, Edison
and Seller entered into an Interim Agreement (‘‘Interim Agreement’’), effective
as of October 1, 2005 and attached hereto as Appendix A, whereby Edison agreed,
without prejudicing either Edison’s or Seller’s position in respect of the
Dispute, to permit Seller to supply electrical energy deliveries from GEM under
the Contract on an interim basis. In the Interim Agreement, the sole payment to
be made by Edison to Seller for GEM power is an energy-only price of 5.37
cents/kWh, which is time-differentiated by time-of-delivery period in the manner
utilized for energy payments under the Contract. The Interim Agreement, which
may be terminated by either Edison or Seller after May 1, 2007, was intended to
bridge the interim time period until a final agreement regarding the Dispute and
the FERC Dispute could be negotiated and executed by Edison and Seller.

[spacer.gif] [spacer.gif] [spacer.gif] O.  On or about May 10, 2006, Edison and
Seller entered into Agreement No. 2 Addressing Renewable Energy Pricing Issues
for the 3010 and 3012 Projects. Those agreements provide for a new fixed energy
price starting at 6.15 cents/kWh on May 1, 2007. The agreements are silent about
GEM power.

[spacer.gif] [spacer.gif] [spacer.gif] P.  Pursuant to the Contract and the 3012
Contract, the capacity payment allowance for scheduled maintenance for the 3010
and 3012 Projects may not exceed 840 hours in any twelve month period. On or
about March 2006, the 3010 Project used up its allotment of maintenance hours.
On July 28, 2006, Seller sent an e-mail to Edison stating that it had made a
data entry error and requested an adjustment in maintenance hours credit for the
3010 Project for November 2005 through May 2006 such that the maintenance hours
scheduled by Seller for the 3010 Project during that time period be applied
solely to mid-peak hours. On January 9, 2007, Edison sent Seller a letter
denying Seller’s request. This dispute shall henceforth be known as the
‘‘Maintenance Hours Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] Q.  Edison and Seller have now reached a
final agreement on the consolidation of the 3010 and 3012 Projects and the
delivery of power from GEM to Edison which provides, among other things, for (i)
the potential for Seller to deliver GEM power to Edison from a combined

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[spacer.gif] [spacer.gif] [spacer.gif]   project consisting of the 3010 and 3012
Projects and GEM, (ii) an increase in the amount of electricity to be sold to
Edison from the combined project of up to 6.5 MW more than the previous amounts
that were covered by the Contract and the 3012 Contract, which incremental
amount will receive an energy only price as specified below, (iii) the
termination of the 3012 Contract and the Interim Agreement, and (iv) the
settlement of the Dispute, the FERC Dispute and the Maintenance Hours Dispute.
Accordingly, Edison and Seller agree to amend the Contract as set forth herein.

[spacer.gif] [spacer.gif] [spacer.gif] R.  Concurrently with this Agreement,
Edison and Seller are executing: (i) a Contract Termination Agreement that
terminates the 3012 Contract (‘‘Termination Agreement’’); and (ii) a Settlement
Agreement that settles the Dispute, the FERC Dispute and the Maintenance Hours
Dispute between the Parties (‘‘Settlement Agreement’’).

[spacer.gif] [spacer.gif] [spacer.gif] S.  In addition, Edison has agreed that
this Amendment, the Termination Agreement and the Settlement Agreement will take
effect without Commission approval in exchange for Seller’s and Ormat’s
agreement to, jointly and severally, indemnify Edison for certain amounts if
Edison fails to obtain Commission approval for its cost recovery related to the
Amendment, the Termination Agreement and the Settlement Agreement. Accordingly,
Seller and Ormat have agreed to, jointly and severally, indemnify Edison as
provided in Section 2.8, below.

[spacer.gif] [spacer.gif] [spacer.gif] T.  The rights and obligations of Seller
under this Amendment, the Termination Agreement and the Settlement Agreement
will confer benefits upon Ormat as Seller’s indirect parent corporation, and
therefore, Ormat is willing to provide the indemnification set forth in Section
2.8, below.

AGREEMENT

[spacer.gif] [spacer.gif] 1.  In consideration of the mutual promises and
covenants and agreements hereinafter set forth and for other good and valuable
consideration, receipt of which is hereby acknowledged, as of the Effective Date
(defined in Section 2.1, below), Edison and Seller agree to amend the Contract
as follows:

[spacer.gif] [spacer.gif] [spacer.gif] 1.1  The new RAP ID number for the
amended and consolidated Contract shall be RAP ID No. 3104.

[spacer.gif] [spacer.gif] [spacer.gif] 1.2  Sections 1.2a. and 1.2b. shall be
deleted in their entirety and replaced as follows:

‘‘a.    Nameplate Rating:    63,000 kW including generating units at Ormesa I
(3010 Project), Ormesa II (3012 Project), and Geo East Mesa Project.

b.    Location:    East Mesa, Imperial County, California, as shown in the map
attached hereto as Appendix D.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.3  Section 1.3 shall be deleted in its
entirety and replaced as follows:

‘‘1.3    Contract Capacity:    53,000 kW with the following exceptions (for the
purpose of ensuring that 6.5 MW of power to be supplied by the Generating
Facility will be paid a capacity price of $0/kW-year).

As expressly provided in Section 4.4.8, at Edison’s request, Seller shall make
all reasonable efforts to deliver power at an average rate of delivery at least
equal to a Contract Capacity of 46,500 kW during periods of Emergency.

As expressly provided in Section 4.4.9 and Appendix F, the Annual Contract
Capacity Demonstration Protocol and Criteria requires Seller to demonstrate the
ability to provide a Contract Capacity of 46,500 kW.

The Firm Capacity Purchase calculation, as found in Section 8.1.2.1, is based on
a Contract Capacity (designated as C in the formula) of 46,500 kW. For the
avoidance of doubt, the Period Performance Factor (designated as D in the same
formula) is calculated based on the Contract Capacity of 53,000 kW.

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The Capacity Bonus Payment calculation, as found in Section 8.1.2.4c, is based
on a Contract Capacity (designated as D in the formula) of 42,000 kW. For the
avoidance of doubt, the On-Peak Capacity Factor (as found in A in the same
formula) is calculated based on the Contract Capacity of 53,000 kW.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.4  Section 1.4 shall be deleted in its
entirety and replaced as follows:

‘‘1.4    Expected annual production:    485,000,000 kWh.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.5  Section 1.6 shall be deleted in its
entirety and replaced as follows:

‘‘1.6    Contract Term:    Period in years from October 9, 1987 until
November 30, 2017.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.6  Section 1.8 shall be deleted in its
entirety and replaced as follows:

‘‘Seller shall be deemed to have selected Capacity Payment Option B – Firm
Capacity, as found at Section 8.1.2.

The Contract Capacity Price for purposes of calculating the capacity payment to
be made to Seller pursuant to Section 8.1 shall be $174.52/kW-yr (Firm
Capacity).’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.7  Section 2.1 shall be deleted and
replaced as follows:

‘‘2.1    3010 Project Adjusted Capacity Price:    The $/kW-yr capacity purchase
price calculated using the Capacity Payment Schedule attached hereto as Appendix
H. For the purposes of calculating the 3010 Project Adjusted Capacity Price
using the Capacity Payment Schedule attached hereto as Appendix H, the Year of
Initial Delivery shall be 1987 and the Contract Term shall be the time period in
years beginning on October 9, 1987 and ending on the date of a reduction or
deration pursuant to Section 8.1.2.5b.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.8  Section 2.2 shall be deleted and
replaced as follows:

‘‘2.2    3012 Project Adjusted Capacity Price:    The $/kW-yr capacity purchase
price calculated using the Capacity Payment Schedule attached hereto as Appendix
H. For the purposes of calculating the 3012 Project Adjusted Capacity Price
using the Capacity Payment Schedule attached hereto as Appendix H, the Year of
Initial Delivery shall be 1988 and the Contract Term shall be the time period in
years beginning on March 3, 1988 and ending on the date of a reduction or
deration pursuant to Section 8.1.2.5b.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.9  Section 2.9 shall be deleted and
replaced as follows:

‘‘2.9    Contract Capacity Price:    The Contract Capacity Price of
$174.52/kW-yr, as specified in Section 1.8.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.10  Section 2.10 shall be amended by
adding the following at the end thereof:

‘‘, as specified in Section 1.6.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.11  Section 2.11 shall be deleted in
its entirety.

[spacer.gif] [spacer.gif] [spacer.gif] 1.12  Section 2.19 shall be deleted and
replaced as follows:

‘‘2.19    Generating Facility:    All of Seller’s generators, together with all
protective and other associated equipment and improvements, necessary to produce
electrical power at Ormesa I (3010 Project), Ormesa II (3012 Project) and the
Geo East Mesa Project, excluding associated land, land rights, and interests in
land. The Generating Facility shall be identified by Edison as RAP ID 3104.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.13  Section 2.22 shall be amended by
adding the following at the end thereof:

‘‘The Interconnecting Utility for this Contract is Imperial Irrigation District
(‘‘IID’’). The Seller will deliver to IID at the Highline substation.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.14  Section 2.28 shall be amended by
adding the following at the end thereof:

‘‘The Point of Interconnection for this Contract is Mirage substation.’’

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[spacer.gif] [spacer.gif] [spacer.gif] 1.15  The following definitions shall be
added to Section 2:

‘‘2.40    Agreement Addressing Renewable Energy Pricing and Payment
Issues:    The June 19, 2001 Agreements Addressing Renewable Energy Pricing and
Payment Issues for the 3010 and 3012 Projects, as amended.

2.41    Agreement No. 2 Addressing Renewable Energy Pricing Issues:    The
May 10, 2006 Agreements No. 2 Addressing Renewable Energy Pricing Issues for the
3010 and 3012 Projects.

2.42    Amendment No. 2:    Amendment No. 2 to the Contract, which was executed
to consolidate the 3010 and 3012 Projects under the Contract, and to provide for
Edison accepting energy deliveries from the Geo East Mesa Project under the
Contract.

2.43    Capacity Attributes:    Any and all current or future defined
characteristics, certificates, tags, credits, ancillary service attributes, or
accounting constructs, howsoever entitled, including any accounting construct
counted toward any resource adequacy requirements, attributed to or associated
with any unit of generating capacity of the Generating Facility during the term
of the Contract.

2.44    Effective Date of Amendment No. 2:    March 1, 2007.

2.45    Green Attributes:    Any and all credits, benefits, emissions
reductions, offsets, and allowances, howsoever entitled, attributable to the
generation from the Generating Facility, and its displacement of conventional
energy generation. Green Attributes include but are not limited to: (i) any
avoided emissions of pollutants to the air, soil or water such as sulfur oxides
(SOx), nitrogen oxides (NOx), carbon monoxide (CO) and other pollutants; (ii)
any avoided emissions of carbon dioxide (CO2), methane (CH4), nitrous oxide,
hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and other greenhouse
gases (GHGs) that have been determined by the United Nations Intergovernmental
Panel on Climate Change, or otherwise by law, to contribute to the actual or
potential threat of altering the Earth’s climate by trapping heat in the
atmosphere; (iii) the reporting rights to these avoided emissions, such as Green
Tag Reporting Rights; and (iv) Renewable Energy Credits. Green Tag Reporting
Rights are the right of a Green Tag Purchaser to report the ownership of
accumulated Green Tags in compliance with federal or state law, if applicable,
and to a federal or state agency or any other party at the Green Tag Purchaser’s
discretion, and include without limitation those Green Tag Reporting Rights
accruing under Section 1605(b) of The Energy Policy Act of 1992 and any present
or future federal, state, or local law, regulation or bill, and international or
foreign emissions trading program. Green Tags are accumulated on a MWh basis and
one Green Tag represents the Green Attributes associated with one (1) MWh of
energy.

Green Attributes do not include: (i) any energy, capacity, reliability or other
power attributes from the Generating Facility; (ii) production tax credits
associated with the construction or operation of the Generating Facility and
other financial incentives in the form of credits, reductions, or allowances
associated with the Generating Facility that are applicable to a state or
federal income taxation obligation; (iii) fuel-related subsidies or ‘‘tipping
fees’’ that may be paid to Seller to accept certain fuels, or local subsidies
received by the Seller for the destruction of particular pre-existing pollutants
or the promotion of local environmental benefits; or (iv) emission reduction
credits encumbered or used by the Generating Facility for compliance with local,
state, or federal operating and/or air quality permits.

2.46    Geo East Mesa or GEM Project:    The Geo East Mesa or GEM project
includes the GEM 2 & 3 power plants, which are double flash facilities that each
utilize: (i) one dual-admission condensing steam turbine and directly coupled
generator; (ii) steam separation vessels; (iii) a cooling tower; and (iv) the
balance of power plant equipment. The Geo East Mesa or GEM project also includes
an 8 MW GEM bottoming geothermal power plant to be installed at or near the
location of the other GEM units.

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2.47    Governmental Authority:    (i) Any federal, state, local, municipal or
other government; (ii) any governmental, regulatory or administrative agency,
commission, or other authority lawfully exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; or (iii) any court or government tribunal.

2.48    Nameplate Rating:    The gross generating capacity of the Generating
Facility less Site Use. For purposes of this Contract, Nameplate Rating is that
rating specified in Section 1.2a.

2.49    Ormesa I or 3010 Project:    The geothermal project originally identifed
by Edison as QFID 3010 in the Contract.

2.50    Ormesa II or 3012 Project:    The geothermal project originally
identified by Edison as QFID 3012 in a June 13, 1984 Power Purchase Contract
between Edison and Ormat Systems, Inc.

2.51    Renewable Energy Credit:    ‘‘Renewable energy credit’’ as that term is
defined in Public Utilities Code Section 399.12(g), as may be amended from
time-to-time or as further defined or supplemented by applicable law.

2.52    Resource Adequacy Benefits:    The rights and privileges attached to the
Generating Facility that satisfy any entity’s resource adequacy obligations, as
those obligations are set forth in any Resource Adequacy Rulings and shall
include any local, zonal or otherwise locational capacity attributes associated
with the Generating Facility.

2.53    Resource Adequacy Rulings:    Commission Decisions 04-01-050, 04-10-035,
05-10-042, 06-06-024, 06-07-031 and any subsequent Commission ruling or decision
relating to resource adequacy, or any other resource adequacy laws, rules or
regulations enacted, adopted or promulgated by any applicable Governmental
Authority, as such decisions, rulings, laws, rules or regulations may be amended
or modified from time-to-time during the term of the Contract.

2.54    RPS Legislation:    The State of California Renewables Portfolio
Standard Program, as codified at California Public Utilities Code Section 399.11
et seq., or any successor to this legislation.

2.55    Site 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 (including production pumps), injection
pumps, control systems, and sump pumps.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.16  The first sentence of Section 4.4.8
shall be deleted and replaced as follows:

‘‘At Edison’s request, Seller shall make all reasonable efforts to deliver power
at an average rate of delivery at least equal to a Contract Capacity of 46,500
kW during periods of Emergency.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.17  Section 4.4.9 shall be deleted and
replaced as follows:

‘‘At least once per year at Edison’s request, Seller shall demonstrate the
ability to provide a Contract Capacity of 46,500 kW pursuant to the Annual
Contract Capacity Demonstration Protocol and Criteria attached hereto as
Appendix F. If Seller fails to demonstrate the ability to provide a Contract
Capacity of 46,500 kW pursuant to Appendix F, the Parties acknowledge that the
damages sustained by Edison would be difficult or impossible to determine, or
that obtaining an adequate remedy would be unreasonably time consuming or
expensive, and therefore agree that Seller shall pay Edison liquidated damages
as provided in Appendix F. The Parties agree that the liquidated damages as
provided in Appendix F constitute a reasonable approximation of the harm or loss
to Edison.’’

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[spacer.gif] [spacer.gif] [spacer.gif] 1.18  New Sections 4.4.14, 4.4.15, and
4.4.16 shall be added following Section 4.4.13 as follows:

‘‘4.4.14    Seller represents and warrants that Seller has not and will not
convey to any person or entity other than Edison any Green Attributes, Capacity
Attributes or Resource Adequacy Benefits associated with the output from the
Generating Facility throughout the term of the Contract.

Seller shall use commercially reasonable efforts (which shall not involve Seller
incurring out-of-pocket costs in excess of $10,000 per year) to ensure (or to
support Edison’s efforts to ensure) that, throughout the term of the Contract:
(i) the Generating Facility is certified by the California Energy Commission
(‘‘CEC’’) as an Eligible Renewable Energy Resource (‘‘ERR’’) for purposes of the
RPS Legislation; and (ii) all electrical output delivered to Edison from the
Generating Facility is certified by the CEC as an ERR for purposes of the RPS
Legislation.

4.4.15    Seller shall dedicate and convey any and all Green Attributes,
Capacity Attributes and Resource Adequacy Benefits generated or produced by
Seller during the term of the Contract to Edison, and Edison shall be given sole
title to all such Green Attributes, Capacity Attributes and Resource Adequacy
Benefits.

In addition, Seller shall, at its own cost, take all actions that are
commercially reasonable (which shall not involve Seller incurring out-of-pocket
costs in excess of $10,000 per year) and execute all documents or instruments
necessary to effectuate the use of the Green Attributes, Capacity Attributes and
Resource Adequacy Benefits for Edison’s sole benefit throughout the term of the
Contract. Seller shall not be required to reduce the output of the Generating
Facility in order to effectuate the use of the Green Attributes, Capacity
Attributes and Resource Adequacy Benefits by Edison throughout the term of the
Contract, other than in connection with periodic testing as may be required by
the California Independent System Operator. Subject to the foregoing, such
actions shall include, without limitation:

[spacer.gif] [spacer.gif] [spacer.gif] (a)  Cooperating with and encouraging the
regional entity responsible for resource adequacy administration to certify or
qualify the Contract Capacity for resource adequacy purposes;

[spacer.gif] [spacer.gif] [spacer.gif] (b)  Testing the Generating Facility in
order to certify the Contract Capacity for resource adequacy purposes;

[spacer.gif] [spacer.gif] [spacer.gif] (c)  Complying with all current and
future California Independent System Operator tariff provisions that address
resource adequacy, including but not limited to provisions regarding performance
obligations and penalties; and

[spacer.gif] [spacer.gif] [spacer.gif] (d)  Committing to Edison the full
Contract Capacity subject to Section 1.3.

Edison will have the exclusive right, at any time or from time-to-time during
the term of the Contract, to sell, assign, convey, transfer, allocate,
designate, award, report or otherwise provide any and all such Green Attributes,
Capacity Attributes or Resource Adequacy Benefits to third parties; provided,
however, any such action shall not constitute a transfer of, or release Edison
of its obligations under the Contract and Seller shall not be required to incur
any out-of-pocket costs to facilitate such action.

Edison shall be responsible for any costs associated with Edison’s accounting
for or otherwise claiming Green Attributes, Capacity Attributes and Resource
Adequacy Benefits.

Seller grants, pledges, assigns and otherwise commits to Edison the full
Contract Capacity in order for Edison to meet its resource adequacy obligations
under any Resource Adequacy Rulings.

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Seller also represents, warrants and covenants to Edison that Seller:

[spacer.gif] [spacer.gif] [spacer.gif] (a)  Has not used, granted, pledged,
assigned or otherwise committed; and

[spacer.gif] [spacer.gif] [spacer.gif] (b)  Will not, during the term of the
Contract use, grant, pledge, assign or otherwise commit any portion of the
Generating Facility to meet the resource adequacy requirements of, or to confer
Resource Adequacy Benefits upon, any entity other than Edison.’’

4.4.16    Seller represents and warrants that: (i) the generating equipment at
the 3010, 3012 and Geo East Mesa Projects as of the Effective Date of Amendment
No. 2, which equipment is described in Appendix E, (ii) the interconnection
configuration described in the drawing attached hereto as Appendix G, and (iii)
any agreements or arrangements between Seller and the Imperial Irrigation
District (‘‘IID’’) regarding interconnection, scheduling, transmission or retail
electric service for or related to the 3010, 3012 and Geo East Mesa Projects as
of the Effective Date of Amendment No. 2, shall be preserved for the entirety of
the Contract unless written permission to modify such equipment, configuration,
agreements or arrangements is obtained from Edison, which permission shall not
be unreasonably withheld or delayed; provided that, notwithstanding the
foregoing, Seller may, without Edison’s consent, consolidate the agreements or
arrangements with IID referenced above (and terminate existing, and enter into
new, agreements in connection therewith) so long as there is no material change
in the services to be provided thereunder (not including financial provisions as
between Seller and IID).’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.19  A new Section 4.5.4 shall be added
following Section 4.5.3 as follows:

‘‘Seller and Edison shall follow the maintenance outage scheduling procedure
attached hereto as Appendix I.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.20  Section 7.1 shall be amended by
adding the following at the end thereof:

‘‘Unless Edison and Seller agree otherwise in writing, Seller’s electricity
deliveries to Edison shall be measured by an IID master meter at the Highline
substation as shown on the drawing attached hereto as Appendix G. Payments to
Seller will be calculated by deducting line losses from the IID master meter to
the Mirage substation.’’

1.21    Section 8.1 shall be deleted and replaced as follows:

‘‘8.1    Capacity Payments

Seller shall sell to Edison and Edison shall purchase from Seller capacity at
the price set forth in Section 1.8. Seller shall be paid a monthly capacity
payment subject to the conditions herein.’’

1.22    Section 8.1.2 shall be deleted and replaced as follows:

‘‘8.1.2    Capacity Payment Option B – Firm Capacity Purchase

If Seller selects Capacity Payment Option B, Seller shall provide to Edison for
the Contract Term the Contract Capacity specified in Section 1.3, and Seller
shall be paid as follows:’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.23  The definition of the formula
values A, C, & D in Section 8.1.2.1 shall be deleted and replaced as follows:

‘‘Where A = Contract Capacity Price specified in Section 1.8’’

‘‘C = Contract Capacity of 46,500 kW as specified in Section 1.3’’

‘‘D = Period Performance Factor, not to exceed 1.0, is calculated using 53,000
kW for Contract Capacity as specified in Section 1.3, as follows:

[spacer.gif] [Period kWh Purchased by Edison

Period Performance Factor =  (Limited by the Level of Contract
Capacity)]                               

[spacer.gif] [0.8 x Contract Capacity x (Period Hours minus Maintenance Hours
Allowed in Section 4.5)]’’

8

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[spacer.gif] [spacer.gif] [spacer.gif] 1.24  The definition of the formula
values ‘‘A and D’’ in Section 8.1.2.4c shall be deleted and replaced as follows:

‘‘Where A = (1.2 x On-Peak Capacity Factor) − 1.02

Where the On-Peak Capacity Factor, not to exceed 1.0, is calculated using 53,000
kW for Contract Capacity as specified in Section 1.3, as follows:

[spacer.gif] [Period kWh Purchased by Edison

On-Peak Capacity Factor =     (Limited by the Level of Contract
Capacity)]                             

[spacer.gif] [(Contract Capacity) x (Period Hours minus Maintenance Hours
Allowed in Section 4.5)]’’

‘‘D = Contract Capacity of 42,000 kW, as specified in Section 1.3.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.25  Section 8.1.2.5 shall be deleted
and replaced as follows:

‘‘Capacity Reduction

[spacer.gif] [spacer.gif] [spacer.gif] a.  The Contract Capacity values
specified in Section 1.3 may be reduced as a result of a change in Operating
Option pursuant to Section 5.2. In addition, the Contract Capacity values
specified in Section 1.3 may be derated by Edison pursuant to Section 8.1.2.2a.

[spacer.gif] [spacer.gif] [spacer.gif] b.  If the Contract Capacity values
specified in Section 1.3 are reduced pursuant to Section 5.2 or derated pursuant
to Section 8.1.2.5a such that the Contract Capacity of 53,000 kW is reduced or
derated below 46,500 kW, then, subject to Section 9.3, Seller shall refund to
Edison with interest at the current published Federal Reserve Board three months
prime commercial paper rate, a capacity reduction payment (‘‘Capacity Reduction
Payment’’). The Capacity Reduction Payment that Seller shall refund to Edison
will be based on the sum of (i) the Capacity Reduction Payment for the 3010
Project for the period prior to the Effective Date of Amendment No. 2,
calculated as set forth in Section 8.1.2.5c (ii) the Capacity Reduction Payment
for the 3012 Project for the period prior to the Effective Date of Amendment No.
2, calculated as set forth in Section 8.1.2.5d, and (iii) the Capacity Reduction
Payment for the period after the Effective Date of Amendment No. 2, calculated
as set forth in Section 8.1.2.5e.

[spacer.gif] [spacer.gif] [spacer.gif] c.  The Capacity Reduction Payment for
the 3010 Project for the period prior to the Effective Date of Amendment No. 2
shall be an amount equal to the difference between (i) the accumulated Monthly
Capacity Payments paid by Edison to the 3010 Project in respect of the 3010
Project Reduction Amount (as defined below) pursuant to Capacity Payment Option
B from October 9, 1987 to the Effective Date of Amendment No. 2, and (ii) the
total capacity payments which Edison would have paid to the 3010 Project in
respect of the 3010 Project Reduction Amount (as defined below) during that time
period if based on the 3010 Project Adjusted Capacity Price.

The 3010 Project Reduction Amount shall be 31.5/46.5 of the quantity, in kW, by
which the Contract Capacity of 53,000 kW is reduced or derated below 46,500 kW.

[spacer.gif] [spacer.gif] [spacer.gif] d.  The Capacity Reduction Payment for
the 3012 Project for the period prior to the Effective Date of Amendment No. 2
shall be an amount equal to the difference between (i) the accumulated Monthly
Capacity Payments paid by Edison to the 3012 Project in respect of the 3012
Project Reduction Amount (as defined below) pursuant to Capacity Payment Option
B from March 3, 1988 to the Effective Date of Amendment No. 2, and (ii) the
total capacity payments which Edison would have paid to the 3012 Project in
respect of the 3012 Project Reduction Amount (as defined below) during that time
period if based on the 3012 Project Adjusted Capacity Price.

The 3012 Project Reduction Amount shall be 15/46.5 of the quantity, in kW, by
which the Contract Capacity of 53,000 kW is reduced or derated below 46,500 kW.

9

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[spacer.gif] [spacer.gif] [spacer.gif] e.  The Capacity Reduction Payment for
the period after the Effective Date of Amendment No. 2 shall be an amount equal
to the difference between (i) the accumulated Monthly Capacity Payments paid by
Edison to the Generating Facility in respect of the Generating Facility
Reduction Amount (as defined below) pursuant to Capacity Payment Option B after
the Effective Date of Amendment No. 2, and (ii) the total capacity payments
which Edison would have paid to the Generating Facility in respect of the
Generating Facility Reduction Amount (as defined below) during that time period
if based on the weighted average of the 3010 Project Adjusted Capacity Price and
the 3012 Project Adjusted Capacity Price, weighted based on the original
Contract Capacities of the 3010 and 3012 Projects (31,500 kW and 15,000 kW,
respectively).

The Generating Facility Reduction Amount shall be the quantity, in kW, by which
the Contract Capacity of 53,000 kW is reduced or derated below 46,500 kW.

[spacer.gif] [spacer.gif] [spacer.gif] 1.26  Sections 8.1.2.6 and 8.1.2.7 shall
be deleted in their entirety.

[spacer.gif] [spacer.gif] [spacer.gif] 1.27  Section 8.3 shall be amended by
adding the following at the beginning thereof:

‘‘Subject to the last paragraph of this Section 8.3,’’

Section 8.3 shall be further amended by adding the following new paragraph at
the end thereof:

‘‘Energy pricing for the Generating Facility is subject to the Agreement
Addressing Renewable Energy Pricing and Payment Issues for the 3010 Project
until May 1, 2007. On and after May 1, 2007, the energy pricing for the
Generating Facility will be subject to the Agreement No. 2 Addressing Renewable
Energy Pricing Issues for the 3010 Project.’’

1.28    Section 9.3.2 shall be deleted in its entirety.

[spacer.gif] [spacer.gif] [spacer.gif] 1.29  Section 15.1 shall be amended by
adding the following at the end thereof:

‘‘Insurance will cover the Generating Facility as described in Section 2.19.’’

[spacer.gif] [spacer.gif] [spacer.gif] 1.30  Appendix D to this Amendment shall
be added as Appendix D to the Contract.

[spacer.gif] [spacer.gif] [spacer.gif] 1.31  Appendix E to this Amendment shall
be added as Appendix E to the Contract.

[spacer.gif] [spacer.gif] [spacer.gif] 1.32  Appendix F to this Amendment shall
be added as Appendix F to the Contract.

[spacer.gif] [spacer.gif] [spacer.gif] 1.33  Appendix G to this Amendment shall
be added as Appendix G to the Contract.

[spacer.gif] [spacer.gif] [spacer.gif] 1.34  Appendix H to this Amendment shall
be added as Appendix H to the Contract.

[spacer.gif] [spacer.gif] [spacer.gif] 1.35  Appendix I to this Amendment shall
be added as Appendix I to the Contract.

10

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OTHER TERMS AND CONDITIONS

In consideration of the mutual promises and covenants and agreements hereinafter
set forth and for other good and valuable consideration, receipt of which is
hereby acknowledged, as of the Effective Date (defined in Section 2.1, below),
the Parties further agree as follows:

[spacer.gif] [spacer.gif] 2.  Effective Date and Termination

[spacer.gif] [spacer.gif] [spacer.gif] 2.1  This Amendment shall become binding
when it is executed by duly authorized representatives of each of the Parties,
except that the entirety of Section 1 above (including Sections 1.1 through
1.35) shall only become effective, as of March 1, 2007, on the first day on
which each of the following has occurred (‘‘Effective Date’’): (i) execution of
the Termination Agreement in substantially the form attached hereto as Appendix
B by duly authorized representatives of Edison and Seller; (ii) execution of the
Settlement Agreement in substantially the form attached hereto as Appendix C by
duly authorized representatives of Edison and Seller; and (iii) payment by
Seller to Edison of the sum of $1,150,000 (one million one hundred fifty
thousand dollars) as provided in this Amendment and the Settlement Agreement.

[spacer.gif] [spacer.gif] [spacer.gif] 2.2  Concurrently with the execution of
this Amendment, Edison and Seller shall execute the Termination Agreement in
substantially the form attached hereto as Appendix B.

[spacer.gif] [spacer.gif] [spacer.gif] 2.3  Seller shall pay Edison the sum of
$1,150,000 (one million one hundred fifty thousand dollars) within five (5) days
after the execution of this Amendment.

[spacer.gif] [spacer.gif] [spacer.gif] 2.4  Concurrently with the execution of
this Amendment, Edison and Seller shall execute the Settlement Agreement in
substantially the form attached hereto as Appendix C.

[spacer.gif] [spacer.gif] [spacer.gif] 2.5  Edison will issue a final version of
the draft letter regarding the William R. Gould Power Plant attached hereto as
Appendix K within five (5) days after the Effective Date of this Amendment.

[spacer.gif] [spacer.gif] [spacer.gif] 2.6  The Interim Agreement attached
hereto as Appendix A shall terminate and be of no further force or effect, as of
March 1, 2007, on the Effective Date of this Amendment.

[spacer.gif] [spacer.gif] [spacer.gif] 2.7  Effective on the Effective Date of
this Amendment, the accumulated scheduled maintenance allowance hours for the
Generating Facility pursuant to Section 4.5.3 of the Contract, as of
March 1, 2007, shall be the prorated combination of the 3010 and 3012 Projects’
maintenance hours. The calculation will be based on the contribution of each of
the 3010 and 3012 Projects’ original Contract Capacities toward the Contract
Capacity of 46,500 kW (31,500 kW and 15,000 kW respectively), their original
contract capacity pricing ($170/kW-yr and $184/kW-yr respectively), and the
balance of their scheduled maintenance allowance as of March 1, 2007. An example
of the calculation is found attached hereto in Appendix J.

[spacer.gif] [spacer.gif] [spacer.gif] 2.8  Seller and Ormat shall, jointly and
severally, indemnify and hold Edison harmless from and against any rate or other
disallowance by the Commission resulting from Edison’s entry into (but not
administration of) this Amendment, the Settlement Agreement or the Termination
Agreement; provided that Seller’s and Ormat’s joint and several liability under
this Section 2.8 shall be limited to $4,600,000 (four million six hundred
thousand dollars); and provided further that Seller’s and Ormat’s obligations
under this Section 2.8 shall expire on the earlier of: (a) the date on which the
Commission issues a decision, no longer subject to appeal, approving this
Amendment, the Settlement Agreement and the Termination Agreement (subject to
Edison’s prudent administration thereof) without modification or conditions
unacceptable to Edison, in its reasonable discretion, or (b) the date that is
three (3) years after the Effective Date of this Amendment.

[spacer.gif] [spacer.gif] [spacer.gif] 2.9  Edison agrees to make a timely and
appropriate request for Commission approval of this Amendment, which may be in
its next Energy Resource Recovery Application, and to diligently and in good
faith pursue such Commission approval, including timely and properly

11

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[spacer.gif] [spacer.gif] [spacer.gif]   responding to requests for information
and taking any reasonable actions as requested by the Commission. Edison agrees
to keep Seller informed as to the status of such request for Commission approval
and to cooperate in good faith with Seller in connection with such request for
Commission approval. Notwithstanding anything in this Amendment to the contrary,
Edison shall have no obligation to seek rehearing or to appeal a Commission
decision which disallows the recovery by Edison of any amounts paid or to be
paid under this Amendment, fails to approve this Amendment, or which contains
findings with conditions or modifications unacceptable to any Party.

[spacer.gif] [spacer.gif] [spacer.gif] 2.10  Effective on the Effective Date of
this Amendment, the Parties agree that there will be no Capacity Bonus Payment
for the Generating Facility pursuant to Section 8.1.2.4 of the Contract for the
months of January through May of 2007. The Parties further agree that Seller
shall be on probation pursuant to Section 8.1.2.2a of the Contract for the
period beginning on March 1, 2007 and ending on October 1, 2007.

[spacer.gif] [spacer.gif] 3.  Except as amended herein, all terms, covenants and
conditions in the Contract shall remain in full force and effect.

[spacer.gif] [spacer.gif] 4.  Terms or words that are capitalized and not
defined in this Amendment shall have the same meaning as in the Contract.

[spacer.gif] [spacer.gif] 5.  None of the provisions of this Amendment,
including this Section, shall be considered waived by any Party except when such
waiver is given in writing. The failure of any Party to insist in any one or
more instances upon strict performance of any of the provisions of this
Amendment or to take advantage of any of its rights hereunder shall not be
construed as waiver of any such provisions or the relinquishment of any such
rights for the future, but the same shall continue and remain in full force and
effect.

[spacer.gif] [spacer.gif] 6.  This Amendment shall not be amended, changed,
modified, abrogated, or superseded by a subsequent agreement unless such
subsequent agreement shall be in the form of a written instrument signed by all
Parties.

[spacer.gif] [spacer.gif] 7.  This Amendment shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, Seller shall not assign any rights or delegate
any duties under the Contract, as modified by this Amendment, except as provided
in Section 24 of the Contract.

[spacer.gif] [spacer.gif] 8.  If any provision or provisions of this Amendment
shall be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby so long as the economic and legal substance of this
Amendment are not affected in a manner materially adverse to any Party.

[spacer.gif] [spacer.gif] 9.  The headings in this Amendment are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.

[spacer.gif] [spacer.gif] 10.  This Amendment, the Termination Agreement and the
Settlement Agreement shall constitute the entire agreement of the Parties as to
the subject matter of this Amendment, the Termination Agreement and the
Settlement Agreement and shall supersede any and all prior or contemporaneous
negotiations, correspondence, undertakings, and agreements between the Parties
concerning the particular subject matter of this Amendment, the Termination
Agreement and the Settlement Agreement.

[spacer.gif] [spacer.gif] 11.  This Amendment is the result of negotiation and
each Party has participated in the preparation of this Amendment. Accordingly,
any rules of construction to the effect that any ambiguity shall be resolved
against the drafting Party shall not be employed in the interpretation of this
Amendment.

[spacer.gif] [spacer.gif] 12.  This Amendment shall be governed by, construed
and enforced in accordance with the laws of the State of California, without
giving effect to choice of law provisions that might apply the laws of a
different jurisdiction.

12

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[spacer.gif] [spacer.gif] 13.  This Amendment may be executed in counterparts,
each of which shall be deemed to be an original and all of which, taken
together, shall constitute a single document. This Amendment may be executed by
signature via facsimile transmission which shall be deemed the same as an
original signature.

[spacer.gif] [spacer.gif] 14.  Each Party represents and warrants that the
person who signs below on behalf of such Party has authority to execute this
Amendment on behalf of the Party for whom such person signs.

[spacer.gif] [spacer.gif] 15.  Each notice which any Party gives under or in
connection with this Amendment shall be in writing and shall be deemed given as
follows: (i) notice by facsimile or hand delivery shall be deemed given at the
close of business on the day actually received, if received during business
hours on a business day, and otherwise shall be deemed given at the close of
business on the next business day; (ii) notice by overnight mail or courier
service shall be deemed given on the next business day after it was sent out;
and (iii) notice by first class United States mail shall be deemed given two (2)
business days after the postmarked date.

Notice shall be addressed to the Parties as follows:

[spacer.gif] [spacer.gif] [spacer.gif] If to Edison:  Southern California Edison
Company

Renewable and Alternative Power Department

Manager, Contract Administration

2244 Walnut Grove Avenue
Rosemead, California 91770
Facsimile: (626) 302-9622

[spacer.gif] With a copy to:

[spacer.gif] Southern California Edison Company
Law Department
Manager, Power Procurement Section
2244 Walnut Grove Avenue
Rosemead, California 91770
Facsimile: (626) 302-1904

[spacer.gif] [spacer.gif] [spacer.gif] If to Seller:  Ormesa LLC c/o Ormat
Nevada, Inc.
6625 Neil Road
Reno, Nevada 89511
Facsimile: (775) 356-9039

[spacer.gif] [spacer.gif] [spacer.gif] If to Ormat:  Ormat Technologies, Inc.
6625 Neil Road
Reno, Nevada 89511
Facsimile: (775) 356-9039

[spacer.gif] [spacer.gif] 16.  The execution of, and entry into, this Amendment
by Ormat does not in any way make Ormat a party to or otherwise obligate, or
subject to liability, Ormat under the Contract or any other agreement or
instrument other than this Amendment. Ormat’s obligations under this Amendment
are limited to those obligations set forth in Section 2.8 hereof; provided that
Sections 2.1 and 3 through 17 of this Amendment are also binding on and/or
applicable to Ormat.

13

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[spacer.gif] [spacer.gif] 17.  IN WITNESS WHEREOF, the Parties hereto have
caused this Amendment to be executed by their duly authorized representatives on
the dates indicated below the signatures.

[spacer.gif]

[spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] SOUTHERN CALIFORNIA EDISON
COMPANY,
a California corporation [spacer.gif] [spacer.gif] ORMESA LLC,
a Delaware limited liability company By:    [spacer.gif] [spacer.gif] By:   
        Name: Pedro J. Pizarro [spacer.gif] [spacer.gif]         Name:
        Title:    Senior Vice President, PPBU [spacer.gif] [spacer.gif]
        Title:         Date: [spacer.gif] [spacer.gif]         Date:

ORMAT TECHNOLOGIES, INC.,
a Delaware corporation

By:   
        Name:
        Title:
        Date:

14

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Southern California Edison

 

 

APPENDIX A

Interim Agreement

 

 

     Appendix A

Interim Agreement

[a7.jpg]

November 8, 2005

Mr. Kevin Payne
Director, QF Resources

2244 Walnut Grove Avenue

Rosemead, CA 91770

Re: Interim Agreement between Ormesa LLC and Southern California Edison Company
to Accept Electrical Energy Deliveries from Geo East Mesa Generating Units 2 and
3 on an Interim Basis (QFIDs 3010. 3012)

Dear Mr. Payne:

Attached is an executed Interim Agreement. Please be aware that in executing and
performing under the Interim Agreement, Ormesa LLC does not concede any of
Edison’s arguments or assertions in connection with our pending dispute and
reserves all of its rights in connection therewith. Ormesa views the Interim
Agreement as an interim settlement between Ormesa and Edison in which the status
quo concerning the dispute is tolled.

As the Interim Agreement indicates, it is our mutual desire to resolve the
dispute promptly with a amicable long-term settlement agreement.

 

Regards,

 

 

 

       

/s/ Hezy Ram

 

 

 

 

 

 

 

 

ORMESA LLC

980 Greg Street • Sparks, Nevada 89431-6039 • Telephone (775) 356-9029 •
Facsimile (775) 356-9039

 

 

--------------------------------------------------------------------------------

Bruce L. McCarthy

Manager, QF Contract Management
QF Resources
(626) 302-8667
FAX: (626)  302-9622

November 3, 2005

Via Certified Mail

Mr. Hezy Ram
Executive Vice President
ORMAT Nevada Inc.
980 Greg Street
Sparks, NV 89431

Dear Mr. Ram:

SUBJECT:

Interim Agreement between Ormesa LLC and Southern California Edison Company to
Accept Electrical Energy Deliveries from Geo East Mesa Generating Units 2 and 3
on an Interim Basis, (QFIDs 3010, 3012)

The purpose of this letter is to memorialize an agreement (“Agreement”) between
Ormesa LLC (“Ormesa”) and Southern California Edison Company (“SCE”) whereby SCE
agrees to accept electrical energy deliveries from Geo East Mesa (“GEM”)
generating units numbers 2 and 3, which are depicted in the attached East Mesa
Electrical Schematic [from mid-August 2005] (“GEM electrical generation”) on an
interim basis under the terms of the “Ormesa I” power purchase agreement (QFID
3010) (the “Ormesa I PPA”), as modified by the terms of this Agreement. By this
Agreement, SCE and Ormesa also agree to modify the measurement per the attached
Exhibit A, for payment purposes, of electrical generation under the Ormesa I PPA
and the “Ormesa II” power purchase agreement (QFID 3012) (“Ormesa II PPA”).

The sole payment to be made by SCE to Ormesa for GEM electrical generation is an
energy-only price of 5.37 cents per kilowatt-hour. This energy-only price shall
be time-differentiated by time-of-delivery period in the manner utilized for
energy payments in the Ormesa I PPA. There will be no capacity or other payments
for GEM electrical generation. The capacity payments for Ormesa I and II shall
be determined according to the Ormesa I and II PPAs, but the kWh amount used to
determine the capacity and energy payments under these PPAs shall be derived as
described in Exhibit A, section 1.01(b). Ormesa hereby conveys to SCE all
environmental attributes, capacity attributes and resource adequacy benefits
associated with all electrical generation under the Ormesa I and Ormesa II PPAs,
including the GEM electrical generation. SCE may count such electrical
generation toward any renewable energy procurement requirements and resource
adequacy rulings or requirements applicable to SCE.

 

 

--------------------------------------------------------------------------------

Mr. Hezy Ram

ORMAT Nevada Inc.

October 24, 2005

Page 2

For purposes of this Agreement, and the Ormesa I and II PPAs, GEM electrical
generation, and electrical generation from Ormesa I and II under the Ormesa I
and II PPAs, shall be calculated as described in the attached Exhibit A. Ormesa
shall provide to SCE prompt and unimpeded access to the SCE meters installed at
Ormesa I, Ormesa II, and the IID Highline Substation depicted on the attached
East Mesa Electrical Schematic [from mid-August 2005] (“Schematic”), for
purposes of administration of this Agreement and to all electronic and other
records and files necessary for SCE to determine GEM electrical generation in an
accurate and timely fashion.

Ormesa represents and warrants that the existing generating equipment,
production and injection well equipment, and interconnection configuration
described in the attached Schematic for Ormesa I, Ormesa II, and GEMs,
(“Configuration”) as well as any agreements or arrangements between Ormesa and
Imperial Irrigation District regarding interconnection, scheduling, transmission
or retail electric service for or related to the projects or loads currently
affiliated with the Ormesa I PPA and the Ormesa II PPA (collectively, the “IID
Agreements”) shall be preserved for the entirety of this Agreement unless
written permission to modify the Configuration or the IID Agreements is obtained
from SCE, whose permission shall not be unreasonably withheld.

Ormesa represents and warrants that it has full authority to convey the GEM
electrical generation. SCE and Ormesa each represent and warrant that the
execution and performance of this Agreement are within its powers, have been
duly authorized by all necessary action and do not violate any of the terms and
conditions of its governing documents or any contracts to which it is a party.

This Agreement shall be effective as of November 1, 2005. SCE shall have the
right, in its sole and absolute discretion to terminate this Agreement at any
time on written notice given under the terms of the PPA, which termination shall
be effective as follows: (i) on the first day of the calendar month immediately
following the date on which notice is given provided such notice is given on or
before the 25th day of a calendar month, (ii) the first day of the second
calendar month after the date such notice is given if the notice is given after
the 25th day of a calendar month. Ormesa shall have the right, in its sole and
absolute discretion to terminate this Agreement at any time on written notice
given under the terms of the PPA, which termination shall be effective, subject
to the proviso below, as follows: (i) on the first day of the calendar month
immediately following the date on which notice is given provided such notice is
given on or before the 25th day of a calendar month, (ii) the first day of the
second calendar month after the date such notice is given if the notice is given
after the 25th day of the calendar month, provided that no such termination by
Ormesa shall be effective before May 1, 2007.

Except as expressly provided herein, the Ormesa I PPA and the Ormesa II PPA
shall not be modified and shall remain in full force and effect.

 

 

--------------------------------------------------------------------------------

Mr. Hezy Ram

ORMAT Nevada Inc.

October 24, 2005

Page 3

Ormesa and SCE desire to replace this Agreement with a long-term agreement for,
among other things, the supply to SCE of GEM electrical generation. Ormesa and
SCE shall promptly attempt to negotiate this long-term agreement. However, no
such long-term agreement shall be binding upon either of the parties until a
definitive agreement is negotiated and executed by authorized representatives of
both SCE and Ormesa. SCE and Ormesa expressly preserve all of their respective
rights, remedies, claims and defenses arising from or relating to the delivery
to SCE of GEM electrical generation during periods before the effective date of
this Agreement and after the effective date of any termination of this
Agreement.

 

Sincerely,

 

 

 

/s/ Bruce McCarthy

 

 

 

Bruce McCarthy

 

 

 

 

 

Southern California Edison Company

 

By: 

/s/ Kevin M. Payne

 

 

 

 

Kevin M. Payne
Director, QF Resources

 

 

 

         

Date:

11/3/05

 

 

 

 

Ormesa LLC

 

By:

ORMAT FUNDING CORP.

 

 

 

By: 

/s/ Raj Raviv

 ( Raj Raviv)

 

 

 

[Print Name]

 

 

 

         

Title 

VICE PRESIDENT

 

 

 

         

Date 

11/6/2005

 

 

 

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

EXHIBIT A

Monthly Contract Energy Payment Calculation

 

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 1

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

 

EXHIBIT A

Table of Contents

 

EXHIBIT A

1

Table of Contents

2

SCE’S OBLIGATIONS

3

1.01

 

Payments

3

(a)

 

Monthly Energy Payment Formula:

3

(b)

 

Calculated Amounts:

4

1.02

 

TOD Periods

8

1.03

 

Energy Payment Allocation Factors

9

Attachment 1

10

 

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 2

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

 

EXHIBIT A

Monthly Contract Energy Payment Calculation

SCE’S OBLIGATIONS

1.01

Payments.

 

(a)

Monthly Energy Payment Formula:

 

(i)

For the purpose of calculating monthly Energy Payments, Calculated Amounts shall
be time-differentiated according to the time period and season of delivery (“TOD
Periods”) set forth in Section 1.02 and weighted by the Energy Payment
Allocation Factors set forth in Section 1.03 of this Exhibit A and adjusted for
losses to Mirage Substation.

 

(ii)

As set forth in Section 1.02 of this Exhibit A, TOD Periods for the winter
season shall be mid-peak, off-peak and super off-peak and TOD Periods for the
summer season shall be on-peak, mid-peak and off-peak.

 

(iii)

Monthly Energy Payments shall equal the sum of the monthly TOD Period Energy
Payments for all TOD Periods in the month. Each monthly TOD Period Energy
Payment shall be calculated pursuant to the following formula, where “n” is the
TOD Period being calculated:

 

TOD PERIODn ENERGY PAYMENT = EP x EF x

LastHour

S

FirstHour

CAh

Where:

 

EP =

Energy Price is $0.0537 in $/kWh.

 

EF =

Energy Payment Allocation Factor for the TOD Period being calculated as set
forth in Section 1.03 of this Exhibit A.

 

CAh =

The hour, ‘h’, Calculated Amounts as defined in Section 1.01(b) in this Exhibit
A for the TOD Period being calculated in kWh.

 

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 3

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

(b)

Calculated Amounts:

The energy deliveries, in kWh, to SCE from Seller (“Calculated Amounts”) in each
TOD hour shall be determined as follows for each project:

 

(i)

Ormesa I:

CALCULATED AMOUNTS FOR ORMESA I = (MB- F1 x LF) x AF

Where:

 

MB

=

Metered Energy in kWh, from SCE Ormesa I meter ‘MB’ as shown in Attachment 1 of
this Exhibit A

F1

=

Ormesa I Factor as set forth in Section 1.01(b)(i)1).

LF

=

Load Factor as set forth in Section 1.01(b)(iv).

AF

=

TOD Loss Adjustment Factor as set forth in Section 1.01(b)(v).

 

1)

Ormesa I Factor:
factor ‘F1’ in Section 1.01(b)(i).

ORMESA I FACTOR = MB/ (MB + MC)

Where:

 

MB

=

Metered Energy in kWh, from SCE Ormesa I meter ‘MB’ as shown in Attachment 1 of
this Exhibit A

MC

=

Metered Energy in kWh, from SCE Ormesa II meter ‘MC’ as shown in Attachment 1 of
this Exhibit A

 

(ii)

Ormesa II:

CALCULATED AMOUNTS FOR ORMESA II = (MC- F2x LF) x AF

Where:

 

MC

=

Metered Energy in kWh, from SCE Ormesa II meter ‘MC’ as shown in Attachment 1 of
this Exhibit A

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 4

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

F2

=

Ormesa II Factor as set forth in Section 1.01(b)(ii)l).

LF

=

Load Factor Four as set forth in Section 1.01(b)(iv).

AF

=

TOD Loss Adjustment Factor as set forth in Section 1.01(b)(v).

 

1)

Ormesa II Factor:
factor ‘F2’ in Section 1.01(b)(ii).

ORMESA II FACTOR = MC/ (MC + MB)

Where:

 

MC

=

Metered Energy in kWh, from SCE Ormesa II meter ‘MC’ as shown in Attachment 1 of
this Exhibit A

MB

=

Metered Energy in kWh, from SCE Ormesa I meter ‘MB’ as shown in Attachment 1 of
this Exhibit A

MA

=

Metered Energy in kWh, from SCE Master meter ‘MA’as shown in Attachment 1 of
this Exhibit A.

 

 

(iii)

GEM:

CALCULATED AMOUNTS FOR GEM = GN x AF

Where:

 

GN

=

GEM Net Energy as set forth in Section 1.01(b)(iii)1).

AF

=

TOD Loss Adjustment Factor as set forth in Section 1.01(b)(v).

 

 

1)

GEM Net Energy:
factor ‘GN’ in Section 1.01(b)(iii).

GEM NET ENERGY IS:

The greater of:

= [MA-(MB + MC)], or

= Zero (0).

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 5

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

 

Where:

 

MA

=

Metered Energy in kWh, from SCE Master meter ‘MA’ as shown in Attachment 1 of
this Exhibit A.

MB

=

Metered Energy in kWh, from SCE Ormesa I meter ‘MB’ as shown in Attachment 1 of
this Exhibit A.

MC

=

Metered Energy in kWh, from SCE Ormesa II meter ‘MC’ as shown in Attachment 1 of
this Exhibit A.

 

(iv)

Load Factor to account for hours when Metered Energy at the Highline Substation
SCE meter (“Master Meter”) is not greater than SCE Metered Energy from Ormesa I
and II:

factor ‘LF’ in Section 1.01(b)(i), (ii), and (iii).

LOAD FACTOR IS:

The greater of:

= (MB+MC-MA), or

= Zero (0).

Where:

 

MB

=

Metered Energy in kWh, from SCE Ormesa I meter ‘MB’ as shown in Attachment 1 of
this Exhibit A.

MC

=

Metered Energy in kWh, from SCE Ormesa II meter ‘MC’ as shown in Attachment 1 of
this Exhibit A.

MA

=

Metered Energy in kWh, from SCE Master meter ‘MA’ as shown in Attachment 1 of
this Exhibit A.

 

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 6

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

 

 

(v)

TOD Adjustment Factor for Losses to Mirage Substation for the calculation month:

factor ‘AF’ in Section 1.01(b)(i), (ii), and (iii).

TODn LOSS ADJUSTMENT FACTOR:

 

 

LastHour

 

LastHour

 

= {

∑

(S1+S2)}/{

∑

(A1 + A2)}

 

FirstHour

 

FirstHour

 

Where:

 

S1

=

Scheduled Energy for Ormesa I as set forth in IID Geothermal Statement for the
calculation month to SCE.

S2

=

Scheduled Energy for Ormesa II as set forth in IID Geothermal Statement for the
calculation month to SCE.

A1

=

Actual Energy for Ormesa I as set forth in IID Geothermal Statement for the
calculation month to SCE.

A2

=

Actual Energy for Ormesa II as set forth in IID Geothermal Statement for the
calculation month to SCE

 

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 7

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

1.02

TOD Periods.

 

Time of Delivery Periods (“TOD Periods”)

TOD Period

Summer
Jun 1st – Sep30th

Winter
Oct 1st – May 31st

Applicable Days

On-Peak

Noon – 6:00 p.m.

Not Applicable.

Weekdays except Holidays.

Mid-Peak

8:00 a.m.– Noon

8:00 a.m. – 9:00 p.m.

Weekdays except Holidays.

6:00 p.m. – 11:00 p.m.

Weekdays except Holidays.

Off-Peak

11:00 p.m. – 8:00 a.m.

6:00 a.m. – 8:00 a.m.

Weekdays except Holidays.

9:00 p.m. – Midnight

Weekdays except Holidays.

Midnight – Midnight

6:00 a.m. – Midnight

Weekends and Holidays

Super-Off-Peak

Not Applicable.

Midnight – 6:00 a.m.

Weekdays, Weekends and Holidays

“Holiday” is defined as New Year’s Day, Presidents’ Day, Memorial Day,
Independence Day, Labor Day, Veterans Day, Thanksgiving Day, and Christmas Day.

When any Holiday listed above falls on a Sunday, the following Monday will be
recognized as an off-peak period. No change will be made for Holidays falling on
Saturday.

 

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 8

 

 

--------------------------------------------------------------------------------

 

Southern California Edison

Confidential Information

 

 

1.03 Energy Payment Allocation Factors.

Energy Payment Allocation Factors

 

Season

 

TOD Period

 

Calculation Method

 

Energy Payment
Allocation Factor

Summer

 

On-Peak

 

Fixed Value.

 

1.4251

 

Mid-Peak

 

(Total # hours in month -
(1.4251 x # Summer On-Peak hours in month)-
(0.8526 x # Summer Off-Peak hours in month)) /
#Summer Mid-Peak hours in month

 

Calculated Value

 

Off-Peak

 

Fixed Value.

 

0.8526

Winter

 

Mid-Peak

 

Fixed Value.

 

1.2185

 

Off-Peak

 

(Total # hours in month -
(1.2185 x # Winter Mid-Peak hours in month)-
(0.7760 x # Winter Super-Off-Peak hours in month)) /
#Winter Off-Peak hours in month

 

Calculated Value

 

Super-Off-Peak

 

Fixed Value.

 

0.7760

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 9

 

 

--------------------------------------------------------------------------------

Southern California Edison

Confidential Information

 

 

Attachment 1

Ormesa/GEM Meter Configuration

[a13img1.jpg]

 

*** End of Exhibit A ***

The contents of this document are subject to restrictions on disclosure.

Exhibit A

Monthly Contract Energy Payment Calculation

Page 10

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

 

APPENDIX B

Form of Termination Agreement

 

 

     Appendix B

Form of Termination Agreement

CONTRACT TERMINATION AGREEMENT
between
ORMESA LLC
and
SOUTHERN CALIFORNIA EDISON COMPANY
(RAP ID 3012)

This Contract Termination Agreement (‘‘Agreement’’) is entered into by ORMESA
LLC, a Delaware limited liability company (‘‘Seller’’) and SOUTHERN CALIFORNIA
EDISON COMPANY, a California corporation (‘‘Edison’’). Seller and Edison are
sometimes referred to herein individually as a ‘‘Party’’ and collectively as the
‘‘Parties.’’

RECITALS

This Agreement is entered into with reference to the following facts, among
others:

[spacer.gif] [spacer.gif] [spacer.gif] A.  On June 13, 1984, Edison and Ormat
Systems, Inc. (‘‘Ormat’’) entered into a Power Purchase Contract (‘‘PPC’’),
under which Ormat delivered to Edison, in exchange for compensation, electrical
power generated by a geothermal project (‘‘3012 Project’’) located in East Mesa,
Imperial County, California. Edison identifies the 3012 Project as RAP ID 3012.
The ‘‘PPC’’ is henceforth deemed to mean the PPC as amended, supplemented, or
otherwise modified from time to time.

[spacer.gif] [spacer.gif] [spacer.gif] B.  On April 30, 1987, Ormat assigned all
of its rights to and interests in the PPC to Ormat Energy Systems, Inc. (‘‘Ormat
Energy’’). On that date, Ormat Energy also assigned all of its rights to and
interests in the PPC to Ormesa Geothermal II. On July 28, 1987, Edison consented
to the assignments.

[spacer.gif] [spacer.gif] [spacer.gif] C.  On June 19, 2001, Edison and Ormesa
Geothermal II entered into the Agreement Addressing Renewable Energy Pricing and
Payment Issues (‘‘Renewable Agreement’’).

[spacer.gif] [spacer.gif] [spacer.gif] D.  On November 30, 2001, Edison and
Ormesa Geothermal II entered into Amendment No. 1 to the Renewable Agreement.

[spacer.gif] [spacer.gif] [spacer.gif] E.  In a filing before the Federal Energy
Regulatory Commission (‘‘FERC’’) dated December 30, 2002, Seller represented
that it is the successor to Ormesa Geothermal II, following a merger between
Seller and a number of its subsidiaries.

[spacer.gif] [spacer.gif] [spacer.gif] F.  In a separate filing before FERC,
also dated December 30, 2002, Seller represented that it is the successor to
Ormesa Geothermal, the seller under a separate power purchase contract between
Republic Geothermal, Inc. and Edison dated July 18, 1984 (‘‘3010 Contract’’),
that provides for the sale to Edison of electrical power generated by a separate
geothermal plant (‘‘3010 Project’’), which is also located in East Mesa,
Imperial County, California. Edison identifies the 3010 Project as RAP ID 3010.

[spacer.gif] [spacer.gif] [spacer.gif] G.  In 2002, the Parties entered into
negotiations to discuss the consolidation of the 3010 and 3012 Projects and the
termination of the PPC.

[spacer.gif] [spacer.gif] [spacer.gif] H.  On or about November 22, 2002 and
April 28, 2003, and subsequently on June 21, 2005, the Parties entered into
confidentiality agreements protecting their negotiations from public disclosure.

[spacer.gif] [spacer.gif] [spacer.gif] I.  On or about May 1, 2003, the Parties
reached an agreement, subject to California Public Utilities Commission
(‘‘CPUC’’ or ‘‘Commission’’) approval, regarding the consolidation of the 3010
and 3012 Projects and the termination of the PPC. Edison withdrew its support
for the consolidation and termination based upon concerns that the 3010 and 3012
Projects were interconnected with another Qualifying Facility (‘‘QF’’), Geo East
Mesa (‘‘GEM’’), which had previously sold its output to Edison under a QF
contract that was terminated pursuant to a Commission-approved buyout agreement.
Edison alleged that, in view of the interconnection, the consolidation might
improperly facilitate sales of GEM-produced power to Edison under

1

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[spacer.gif] [spacer.gif] [spacer.gif]   the terms of the consolidated QF
contract. Although the Commission initially approved the Parties’ agreement
regarding the consolidation and termination on October 16, 2003 in Resolution
E-3848, on January 22, 2004, the Commission granted Edison’s application for
rehearing and vacated Resolution E-3848. Accordingly, the 3010 and 3012 Projects
remained separate projects, subject to separate contracts.

[spacer.gif] [spacer.gif] [spacer.gif] J.  Edison contends that, since
approximately 2003, the 3010 and 3012 Projects have been interconnected with GEM
generating units that are not part of the 3010 and 3012 Projects, and that the
3010 and 3012 Projects improperly sold power generated by the GEM generating
units to Edison pursuant to the 3010 Contract and the PPC resulting in
overpayments by Edison to Seller. Seller disputes Edison’s contentions. This
dispute shall henceforth be known as the ‘‘Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] K.  Edison protested a recertification
filed by the 3012 Project with FERC disputing the project capacity amount
designated by the 3012 Project. After FERC rejected Edison’s protest in part,
Edison appealed to the United States Court of Appeals for the District of
Columbia Circuit. The Court of Appeals affirmed FERC’s ruling and subsequently
denied Edison’s petition for rehearing. This dispute shall henceforth be known
as the ‘‘FERC Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] L.  On or about November 6, 2005, the
Parties entered into an Interim Agreement (‘‘Interim Agreement’’), effective as
of October 1, 2005, whereby Edison agreed, without prejudicing either Party’s
positions in respect of the Dispute, to permit Seller to supply electrical
energy deliveries from GEM under the 3010 Contract on an interim basis. In the
Interim Agreement, the sole payment to be made by Edison to Seller for GEM power
is an energy-only price of 5.37 cents/kWh, which is time-differentiated by
time-of-delivery period in the manner utilized for energy payments under the
Contract. The Interim Agreement, which may be terminated by either Party after
May 1, 2007, was intended to bridge the interim time period until a final
agreement regarding the Dispute and the FERC Dispute could be negotiated and
executed by the Parties.

[spacer.gif] [spacer.gif] [spacer.gif] M.  On or about May 10, 2006, the Parties
entered into Agreement No. 2 Addressing Renewable Energy Pricing Issues for the
3010 and 3012 Projects. Those agreements provide for a new fixed energy price
starting at 6.15 cents/kWh on May 1, 2007. The agreements are silent about GEM
power.

[spacer.gif] [spacer.gif] [spacer.gif] N.  Pursuant to the 3010 Contract and the
PPC, the capacity payment allowance for scheduled maintenance for the 3010 and
3012 Projects shall not exceed 840 hours in any twelve month period. On or about
March 2006, the 3010 Project used up its allotment of maintenance hours. On
July 28, 2006, Seller sent an e-mail to Edison stating that it had made a data
entry error and requested an adjustment in maintenance hours credit for the 3010
Project for November 2005 through May 2006 such that the maintenance hours
previously scheduled by Seller for the 3010 Project during that time period be
applied solely to mid-peak hours. On January 9, 2007, Edison sent Seller a
letter denying Seller’s request. This dispute shall henceforth be known as the
‘‘Maintenance Hours Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] N.  The Parties have now reached a final
agreement on the consolidation of the 3010 and 3012 Projects and the delivery of
power from GEM to Edison which provides, among other things, for (i) the
potential for Seller to deliver GEM power to Edison from a combined project
consisting of the 3010 and 3012 Projects and GEM, (ii) an increase in the amount
of electricity to be sold to Edison from the combined project of up to 6.5 MW
more than the previous amounts that were covered by the 3010 Contract and the
PPC, which incremental amount will receive an energy only price, (iii) the
termination of the PPC and the Interim Agreement, and (iv) the settlement of the
Dispute, the FERC Dispute and the Maintenance Hours Dispute. Accordingly, the
Parties agree to terminate the PPC as set forth herein.

2

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[spacer.gif] [spacer.gif] [spacer.gif] O.  Concurrently with this Agreement, the
Parties and Ormat Technologies, Inc. are executing Amendment No. 2 to the 3010
Contract (‘‘Amendment No. 2’’) to effectuate the consolidation of the 3010 and
3012 Projects under the 3010 Contract; and the Parties are executing a
Settlement Agreement that settles the Dispute, the FERC Dispute and the
Maintenance Hours Dispute between the Parties (‘‘Settlement Agreement’’).

AGREEMENT

In consideration of the mutual promises and covenants and agreements hereinafter
set forth and for other good and valuable consideration, receipt of which is
hereby acknowledged, the Parties agree as follows:

[spacer.gif] [spacer.gif] 1.  TERMINATION OF THE PPC

Notwithstanding anything to the contrary in the PPC, on the Effective Date (as
defined below), the PPC shall terminate as of March 1, 2007. The ‘‘Effective
Date’’ is the first day on which each of the following has occurred: (i)
execution of this Agreement by duly authorized representatives of both of the
Parties; (ii) payment by Seller to Edison of the sum of $1,150,000 (one million
one hundred fifty thousand dollars) as provided in Amendment No. 2 and the
Settlement Agreement; (iii) execution of Amendment No. 2 by duly authorized
representatives of the Parties and Ormat Technologies, Inc.; and (iv) execution
of the Settlement Agreement by duly authorized representatives of both of the
Parties.

[spacer.gif] [spacer.gif] 2.  INDEMNIFICATION

Upon termination of the PPC and continuing thereafter, Seller shall indemnify
and hold Edison harmless from and against any and all claims, damages, demands,
losses, expenses, debts, accounts, obligations, costs, expenses, liens, actions
or causes of action and other liabilities (including without limitation
reasonable legal and accounting fees and costs) of any nature suffered or
incurred by Edison that arise out of or relate to or are in connection with any
claims or judgment brought or obtained by any third party or other person
claiming rights as a Seller under the PPC.

[spacer.gif] [spacer.gif] 3.  RELEASES

Upon termination of the PPC and continuing thereafter, Seller, on its own behalf
and on behalf of each of its successors and assigns by operation of law or
otherwise, releases and forever discharges Edison, and each of its past, present
and future shareholders, officers, directors, employees, representatives,
insurers, attorneys, parent corporations, subsidiary corporations and/or other
affiliates, and successors and assigns, whether by operation of law or
otherwise, from any and all claims arising out of or relating to Edison’s
performance, failure to perform, breach of covenants and warranty, or any other
claims relating to the PPC or termination of the PPC by Edison, including but
not limited to, any obligation to purchase energy or capacity under the PPC;
provided that this release shall not affect Edison’s and/or Seller’s rights
and/or obligations under Sections 2.7, 2.8 and 2.10 of Amendment No. 2. This
release does not extend to payment for power deliveries by Seller to Edison in
the ordinary course of business under the PPC before the effective date of the
PPC termination, which deliveries have not been paid for by Edison as of the
effective date of the PPC termination.

Upon termination of the PPC and continuing thereafter, Edison, on its own behalf
and on behalf of each of its successors and assigns by operation of law or
otherwise, releases and forever discharges Seller, and each of its past, present
and future shareholders, officers, directors, employees, representatives,
insurers, attorneys, parent corporations, subsidiary corporations and/or other
affiliates, and successors and assigns, whether by operation of law or
otherwise, from any and all claims arising out of or relating to Seller’s
performance, failure to perform, breach of covenants and warranty, or any other
claims relating to the PPC or termination of the PPC by Edison, including but
not limited to, any obligation to sell energy or capacity under the PPC;
provided that this release shall not affect Edison’s and/or Seller’s rights
and/or obligations under Sections 2.7, 2.8 and 2.10 of Amendment No. 2.

3

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Seller and Edison expressly waive and relinquish all rights and benefits
afforded by Section 1542 of the Civil Code of California in any way relating to
the foregoing releases as set forth in the two preceding paragraphs and do so
understand and acknowledge the significance and consequences of such specific
waiver of Section 1542. Section 1542 of the Civil Code of California states as
follows:

‘‘A general release does not extend to claims which the creditor does not know
or suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her settlement
with the debtor.’’

[spacer.gif] [spacer.gif] 4.  NO THIRD PARTY BENEFICIARIES

The Parties do not intend to create rights in, or grant remedies to, any third
party as a beneficiary of this Agreement or of any duty, covenant, obligation or
understanding established under this Agreement.

[spacer.gif] [spacer.gif] 5.  ENTIRETY

This Agreement, Amendment No. 2 and the Settlement Agreement constitute the full
and complete understanding of the Parties concerning the subject matter
contained therein, and any prior agreements, representations, and understandings
are hereby terminated and canceled in their entireties and are of no further
force and effect.

[spacer.gif] [spacer.gif] 6.  NON-WAIVER

None of the provisions of this Agreement shall be considered waived by a Party
except when such waiver is given in writing. The failure of any Party at any
time or times to enforce any right or obligation with respect to any matter
arising in connection with this Agreement shall not constitute waiver as to
future enforcement of that right or obligation or of any other right or
obligation of this Agreement.

[spacer.gif] [spacer.gif] 7.  AMENDMENT, FURTHER ASSURANCES

Any amendments or modifications to this Agreement shall be in writing and agreed
to by each Party. Each Party agrees to execute and deliver all further
instruments and documents, and take any further actions that may be reasonably
necessary to effectuate the purposes and intent of this Agreement.

[spacer.gif] [spacer.gif] 8.  SECTION HEADINGS

Section headings appearing in this Agreement are inserted for convenience only
and shall not be construed as interpretation of text.

[spacer.gif] [spacer.gif] 9.  CONSTRUCTION

[spacer.gif] [spacer.gif] [spacer.gif] (a)  Neither Party to this Agreement
shall be deemed to have drafted any part of this Agreement, and no ambiguity in
the provisions of this Agreement shall be construed against any Party for having
drafted any part of this Agreement.

[spacer.gif] [spacer.gif] [spacer.gif] (b)  The Parties acknowledge that this
Agreement is and will be the product of each Party’s concessions and unique
circumstances.

[spacer.gif] [spacer.gif] 10.  GOVERNING LAW

This Agreement shall be interpreted, governed, and construed under the laws of
the State of California as if executed and to be performed wholly within the
State of California (without giving effect to choice of laws provisions that
might apply the laws of a different jurisdiction).

[spacer.gif] [spacer.gif] 11.  COUNTERPARTS AND EXECUTION

This Agreement may be signed in counterparts, each of which shall be deemed an
original and all of which shall constitute a single instrument. This Agreement
may be executed by signature via facsimile transmission which shall be deemed
the same as an original signature.

4

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[spacer.gif] [spacer.gif] 12.  SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and assigns.

[spacer.gif] [spacer.gif] 13.  EFFECTIVE DATE

This Agreement shall become binding when it is executed by duly authorized
representatives of each of the Parties, except that the PPC shall terminate as
provided in Section 1.

[spacer.gif] [spacer.gif] 14.  NOTICES

Each notice which any Party gives under or in connection with this Agreement
shall be in writing and shall be deemed given as follows: (i) notice by
facsimile or hand delivery shall be deemed given at the close of business on the
day actually received, if received during business hours on a business day, and
otherwise shall be deemed given at the close of business on the next business
day; (ii) notice by overnight mail or courier service shall be deemed given on
the next business day after it was sent out; and (iii) notice by first class
United States mail shall be deemed given two (2) business days after the
postmarked date.

Notice shall be addressed to the Parties as follows:

[spacer.gif] [spacer.gif] [spacer.gif] If to Edison:  Southern California Edison
Company

Renewable and Alternative Power Department

Manager, Contract Administration

2244 Walnut Grove Avenue
Rosemead, California 91770
Facsimile: (626) 302-9622

[spacer.gif] With a copy to:

[spacer.gif] Southern California Edison Company
Law Department
Manager, Power Procurement Section
2244 Walnut Grove Avenue
Rosemead, California 91770
Facsimile: (626) 302-1904

[spacer.gif] [spacer.gif] [spacer.gif] If to Seller:  Ormesa LLC c/o Ormat
Nevada, Inc.
6625 Neil Road
Reno, Nevada 89511
Facsimile: (775) 356-9039

[spacer.gif] [spacer.gif] 15.  COMMISSION APPROVAL

Edison agrees to make a timely and appropriate request for Commission approval
of this Agreement, which may be in its next Energy Resource Recovery
Application, and to diligently and in good faith pursue such Commission
approval, including timely and properly responding to requests for information
and taking any reasonable actions as requested by the Commission. Edison agrees
to keep Seller informed as to the status of such request for Commission approval
and to cooperate in good faith with Seller in connection with such request for
Commission approval. Notwithstanding anything in this Agreement to the contrary,
Edison shall have no obligation to seek rehearing or to appeal a Commission
decision which disallows the recovery by Edison of any amounts paid or to be
paid under this Agreement, fails to approve this Agreement, or which contains
findings with conditions or modifications unacceptable to any Party.

[spacer.gif] [spacer.gif] 16.  SIGNATURE CLAUSE

Each Party represents and warrants that the person who signs below on behalf of
such Party has authority to execute this Agreement on behalf of such Party
without the further concurrence or approval of any person, entity or court, and
that all requisite approvals and consents to enter into, and bind such Party to,
this Agreement have been obtained.

5

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[spacer.gif] [spacer.gif] 17.  SIGNATURES

IN WITNESS WHEREOF, the Parties hereto have caused this agreement to be executed
by their duly authorized representatives on the dates indicated below the
signatures.

[spacer.gif]

[spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] SOUTHERN CALIFORNIA EDISON
COMPANY,
a California corporation [spacer.gif] [spacer.gif] ORMESA LLC,
a Delaware limited liability company By:    [spacer.gif] [spacer.gif] By:   
         Name: Pedro J. Pizarro [spacer.gif] [spacer.gif]          Name:
                                                      Title:    Senior Vice
President, PPBU [spacer.gif] [spacer.gif]
         Title:                                                          
         Date:                                                          
[spacer.gif] [spacer.gif]
         Date:                                                

6

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Southern California Edison

 

 

APPENDIX C

Form of Settlement Agreement

 

 

     Appendix C

Form of Settlement Agreement

SETTLEMENT AGREEMENT

This Settlement Agreement (the ‘‘Agreement’’) is entered into by and between
ORMESA LLC, a Delaware limited liability company (‘‘Ormesa’’), on the one hand,
and SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation (‘‘Edison’’),
on the other hand. Ormesa and Edison are sometimes referred to in this Agreement
individually as a ‘‘Party’’ and jointly as the ‘‘Parties.’’

RECITALS

This Agreement is entered into with reference to the following facts, among
others:

[spacer.gif] [spacer.gif] [spacer.gif] A.  On July 18, 1984, Edison and Republic
Geothermal, Inc. as ‘‘Seller’’ executed the Power Purchase Contract (as amended,
supplemented, or otherwise modified from time to time, the ‘‘3010 Contract’’),
whereby Edison agreed to purchase energy and capacity from a geothermal power
plant (the ‘‘3010 Project’’) located in East Mesa, Imperial County, California.
Edison identifies the 3010 Project as RAP ID 3010. On November 6, 1984, Republic
Geothermal, Inc. assigned all of its rights to and interests in the 3010
Contract to Ormat Systems, Inc. Edison consented to the assignment on
December 19, 1984. On February 27, 1985, Ormat Systems, Inc. assigned all of its
rights to and interests in the 3010 Contract to Ormesa Geothermal. Edison
consented to the assignment on July 22, 1985. In a filing before the Federal
Energy Regulatory Commission (‘‘FERC’’) dated December 30, 2002, Ormesa
represented that it is the successor to Ormesa Geothermal, following a merger
between Ormesa and a number of its subsidiaries.

[spacer.gif] [spacer.gif] [spacer.gif] B.  Among other things, the 3010 Contract
provides that Edison shall pay Seller an energy payment for electric energy
deliveries from the 3010 Project pursuant to an energy payment option selected
by Seller. The 3010 Contract also specifies that Edison shall pay Seller a
separate capacity payment for the electric power production capacity from the
3010 Project that Seller dedicates to Edison.

[spacer.gif] [spacer.gif] [spacer.gif] C.  On June 13, 1984, Edison and Ormat
Systems, Inc. as ‘‘Seller’’ entered into a Power Purchase Contract (as amended,
supplemented, or otherwise modified from time to time, the ‘‘3012 Contract’’),
whereby Edison agreed to purchase energy and capacity from another geothermal
power plant (the ‘‘3012 Project’’) located in East Mesa, Imperial County,
California. Edison identifies the 3012 Project as RAP ID 3012. On
April 30, 1987, Ormat Systems, Inc. assigned all of its rights to and interests
in the 3012 Contract to Ormat Energy Systems, Inc. On that date, Ormat Energy
Systems, Inc. also assigned all of its rights to and interests in the 3012
Contract to Ormesa Geothermal II. On July 28, 1987, Edison consented to the
assignments. In a filing before FERC dated December 30, 2002, Ormesa represented
that it is the successor to Ormesa Geothermal II, following a merger between
Ormesa and a number of its subsidiaries.

[spacer.gif] [spacer.gif] [spacer.gif] D.  Among other things, the 3012 Contract
provides that Edison shall pay Seller an energy payment for electric energy
deliveries from the 3012 Project pursuant to an energy payment option selected
by Seller. The 3012 Contract also specifies that Edison shall pay Seller a
separate capacity payment for the electric power production capacity from the
3012 Project that Seller dedicates to Edison.

[spacer.gif] [spacer.gif] [spacer.gif] E.  In 2002, the Parties entered into
negotiations to discuss the consolidation of the 3010 and 3012 Projects and the
termination of the 3012 Contract. On or about November 22, 2002 and
April 28, 2003, and subsequently on June 21, 2005, the Parties entered into
confidentiality agreements protecting their negotiations from public disclosure.

[spacer.gif] [spacer.gif] [spacer.gif] F.  On or about May 1, 2003, the Parties
reached an agreement, subject to California Public Utilities Commission
(‘‘CPUC’’ or ‘‘Commission’’) approval, regarding the consolidation of the 3010
and 3012 Projects and the termination of the 3012 Contract. Edison withdrew its
support for the consolidation and termination based upon concerns that the 3010
and 3012 Projects were interconnected with another Qualifying Facility (‘‘QF’’),
Geo East Mesa (‘‘GEM’’), which had previously sold its output to Edison under a
QF contract that was

1

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[spacer.gif] [spacer.gif] [spacer.gif]   terminated pursuant to a
Commission-approved buyout agreement. Edison alleged that, in view of the
interconnection, the consolidation might improperly facilitate sales of
GEM-produced power to Edison under the terms of the consolidated QF contract.
Although the Commission initially approved the Parties’ agreement regarding the
consolidation and termination on October 16, 2003 in Resolution E-3848, on
January 22, 2004, the Commission granted Edison’s application for rehearing and
vacated Resolution E-3848. Accordingly, the 3010 and 3012 Projects remained
separate projects, subject to separate contracts.

[spacer.gif] [spacer.gif] [spacer.gif] G.  Edison contends that, since
approximately 2003, the 3010 and 3012 Projects have been interconnected with GEM
generating units that are not part of the 3010 and 3012 Projects, and that the
3010 and 3012 Projects improperly sold power generated by the GEM generating
units to Edison pursuant to the 3010 and 3012 Contracts resulting in
overpayments by Edison to Ormesa. Ormesa disputes Edison’s contentions. The
dispute described in this Recital G shall henceforth be known as the
‘‘Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] H.  On February 3, 2004, Ormesa filed an
application with FERC for recertification that the net capacity of the 3012
Project is 16.57 MW (FERC Docket No. QF86-681-005). In March 4, 2004, Edison
protested Ormesa’s application for recertification. On April 16, 2004, FERC
granted Ormesa’s application for recertification that the net capacity of the
3012 Project is 15.22 MW. FERC also ruled that the 3012 Project could sell an
additional 1.35 MW purchased from another QF without jeopardizing its QF status.
Ormesa and Edison both requested rehearing from FERC. On September 22, 2004,
FERC denied rehearing. On November 22, 2004, Edison filed a petition for review
of FERC’s orders to the United States Court of Appeals for the District of
Columbia Circuit (U.S. Court of Appeals for the District of Columbia Circuit,
Case No. 04-1396). On March 24, 2006, the Court of Appeals affirmed FERC’s
rulings. On May 8, 2006, Edison filed a petition for panel rehearing which was
denied by the Court of Appeals on June 2, 2006. This dispute described in this
Recital H shall henceforth be known as the ‘‘FERC Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] I.  On or about November 6, 2005, the
Parties entered into an Interim Agreement (‘‘Interim Agreement’’), effective as
of October 1, 2005, whereby Edison agreed, without prejudicing either Party’s
positions in respect of the Dispute, to permit Ormesa to supply electrical
energy deliveries from GEM under the 3010 Contract on an interim basis. In the
Interim Agreement, the sole payment to be made by Edison to Ormesa for GEM power
is an energy-only price of 5.37 cents/kWh, which is time-differentiated by
time-of-delivery period in the manner utilized for energy payments under the
3010 Contract. The Interim Agreement, which may be terminated by either Party
after May 1, 2007, was intended to bridge the interim time period until a final
agreement regarding the Dispute and the FERC Dispute could be negotiated and
executed by the Parties.

[spacer.gif] [spacer.gif] [spacer.gif] J.  Pursuant to the 3010 and 3012
Contracts, the capacity payment allowance for scheduled maintenance for the 3010
and 3012 Projects may not exceed 840 hours in any twelve month period. On or
about March 2006, the 3010 Project used up its allotment of maintenance hours.
On July 28, 2006, Ormesa sent an e-mail to Edison stating that it had made a
data entry error and requested an adjustment in maintenance hours credit for the
3010 Project for November 2005 through May 2006 such that the maintenance hours
scheduled by Ormesa for the 3010 Project during that time period be applied
solely to mid-peak hours. On January 9, 2007, Edison sent Ormesa a letter
denying Ormesa’s request. The dispute described in this Recital J shall
henceforth be known as the ‘‘Maintenance Hours Dispute.’’

[spacer.gif] [spacer.gif] [spacer.gif] K.  The Parties have now reached a final
agreement on the consolidation of the 3010 and 3012 Projects and the delivery of
power from GEM to Edison which provides, among other things, for (i) the
potential for Ormesa to deliver GEM power to Edison from a combined project
consisting of the 3010 and 3012 Projects and GEM, (ii) an increase in the amount
of electricity to be sold to Edison from the combined project of up to 6.5 MW
more than the

2

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[spacer.gif] [spacer.gif] [spacer.gif]   previous amounts that were covered by
the 3010 Contract and the 3012 Contract, which incremental amount will receive
an energy only price, (iii) the termination of the 3012 Contract and the Interim
Agreement, and (iv) the settlement of the Dispute, the FERC Dispute and the
Maintenance Hours Dispute.

[spacer.gif] [spacer.gif] [spacer.gif] L.  By this Agreement, the Parties wish
to settle and resolve the Dispute, the FERC Dispute and the Maintenance Hours
Dispute as specified in this Agreement and to avoid further litigation with
respect to the 3010 and 3012 Contracts and GEM deliveries.

[spacer.gif] [spacer.gif] [spacer.gif] M.  Concurrently with this Agreement, the
Parties and Ormat Technologies, Inc. are executing Amendment No. 2 to the 3010
Contract (‘‘Amendment No. 2’’) to effectuate the consolidation of the 3010 and
3012 Projects under the 3010 Contract; and the Parties are executing a Contract
Termination Agreement that terminates the 3012 Contract (‘‘Termination
Agreement’’).

AGREEMENT

In consideration of the mutual promises and covenants and agreements hereinafter
set forth and for other good and valuable consideration, receipt of which is
hereby acknowledged, the Parties hereby agree as follows:

[spacer.gif] [spacer.gif] 1.  Effective Date

This Agreement shall become binding when it is executed by duly authorized
representatives of each of the Parties, except that the entirety of Sections 4
and 5 below shall only become effective at 12:01 a.m. on the first day on which
each of the following has occurred (‘‘Effective Date’’): (i) execution of
Amendment No. 2 by duly authorized representatives of the Parties and Ormat
Technologies, Inc.; (ii) execution of the Termination Agreement by duly
authorized representatives of the Parties; and (iii) payment by Ormesa to Edison
of the sum of $1,150,000 (one million one hundred fifty thousand dollars) as
provided in Amendment No. 2 and this Agreement.

[spacer.gif] [spacer.gif] 2.  Other Agreements

Concurrently with this Agreement, the Parties and Ormat Technologies, Inc. shall
execute Amendment No. 2 and the Parties shall execute the Termination Agreement.

[spacer.gif] [spacer.gif] 3.  Settlement Payment

Ormesa shall pay Edison the sum of $1,150,000 (one million one hundred fifty
thousand dollars) within five (5) days after the execution of Amendment No. 2.

[spacer.gif] [spacer.gif] 4.  Mutual Releases

Effective upon the Effective Date, Edison (on behalf of itself, its
predecessors, successors, and assigns by operation of law or otherwise), on the
one hand, and Ormesa (on behalf of itself, its predecessors, successors, and
assigns by operation of law or otherwise), on the other hand, shall be deemed to
have released, and forever discharged, as of the Effective Date, each other and
each other’s present and former affiliates, parents, directors, officers,
shareholders, partners, employees, agents, representatives, attorneys, insurers,
predecessors, assigns, and successors in interest, from any and all claims,
actions, causes of action, regulatory challenges, liabilities, breaches of
contract, offsets, defenses, demands, losses, and damages of any kind
whatsoever, whether known or unknown, asserted or unasserted, suspected or
unsuspected, which may now exist or which may hereafter accrue, arising out of,
relating to, concerning, or connected with: (1) the Dispute; (2) the FERC
Dispute; provided that Edison reserves the right to enforce, on a prospective
basis from and after November 23, 2004 – the date on which FERC’s denial of
Ormesa’s application for rehearing with respect to FERC’s order on Ormesa’s
application for recertification of the 3012 Project became final – the QF
certifications of the 3010 Project, the 3012 Project and any other generating
facility, consistent with FERC precedent; and (3) the Maintenance Hours Dispute
and the use, scheduling and/or crediting of maintenance hours for

3

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the 3010 and 3012 Projects, prior to the Effective Date; provided this release
shall not affect the Parties’ rights and/or obligations pursuant to Sections
2.7, 2.8 and 2.10 of Amendment No. 2.

Edison’s prospective release associated with the FERC Dispute, as set forth in
subclause (2) above, shall apply to the generating facilities owned or
controlled by Ormesa, as well as to the generating facilities owned or
controlled by any affiliate of Ormesa. Edison’s reservation of rights in
subclause (2) above is without prejudice to any defenses or counterclaims that
Ormesa or its affiliates may assert.

[spacer.gif] [spacer.gif] 5.  Waiver of Civil Code § 1542

Each of the Parties believes it is fully familiar with the facts giving rise to
this Agreement and the releases contained herein, and agrees that this Agreement
shall remain fully effective and binding as to each of them even if the facts
turn out to be different from what they now believe them to be. Each of the
Parties further acknowledges that the releases set forth in Section 4 of this
Agreement extend to claims which are presently unknown as well as to known
claims. As to the specific matters released in Section 4, each of the Parties
waives the benefits of California Civil Code § 1542, which provides:

‘‘A general release does not extend to claims which the creditor does not know
or suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her settlement
with the debtor.’’

This waiver of California Civil Code § 1542 applies to the specific matters
released in Section 4 of this Agreement only, and is not intended to create a
general release as to all claims, or potential claims, related to the 3010 and
3012 Contracts or between the Parties.

[spacer.gif] [spacer.gif] 6.  Confidentiality

[spacer.gif] [spacer.gif] [spacer.gif] 6.1  The terms and conditions of this
Agreement are confidential. Therefore, except for disclosing that the Dispute,
the FERC Dispute and the Maintenance Hours Dispute have been settled and except
as otherwise provided in this Section, each of the Parties agrees, for a period
of three (3) years from the Effective Date, not to voluntarily disclose the
terms and conditions of this Agreement to any third party without the prior
written consent of the other Party. The Parties, or any of them, may make such
disclosures as are required by law, after taking reasonable precautions to
protect the confidentiality of relevant materials, and may make Securities and
Exchange Commission filings which describe this settlement only in summary terms
or otherwise by revealing only the minimum detail required by applicable law and
in a manner consistent with the confidential nature of this Agreement. If any
Party is served with a subpoena, request for production, or other form of
discovery (‘‘Discovery Request’’) which requires disclosure of the Agreement or
any of its terms or conditions, such Party shall promptly give written notice
thereof to the other Party and, unless otherwise expressly required, shall not
comply with the Discovery Request until the other Party has had a reasonable
opportunity (not to exceed the deadline set by applicable law for compliance
with the Discovery Request) to challenge it. In addition, the Parties may
disclose this Agreement and its terms and conditions to the following persons,
provided that the disclosing Party shall be responsible for any disclosure by
the recipients (other than courts and public agencies) that is not authorized by
this Agreement:

[spacer.gif] [spacer.gif] [spacer.gif] a.  the Commission and its divisions and
state and federal tax authorities, and attorneys and consultants representing
any of the Parties in proceedings pending or to be commenced before such
authorities, to the extent necessary to comply with applicable law or to the
extent reasonably necessary in any regulatory proceeding specifically related to
the 3010 and 3012 Contracts and the Interim Agreement or the Parties’
performance under the 3010 and 3012 Contracts and the Interim Agreement,
provided that in making such disclosures, the disclosing Party shall take such
steps as are reasonable to maintain the confidentiality of the Agreement and its
terms and conditions with respect to third parties other than such authorized
regulatory authorities, attorneys, and consultants;

4

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[spacer.gif] [spacer.gif] [spacer.gif] b.  the Parties’ accountants, lawyers,
and their staffs, to the extent necessary in connection with the preparation,
review, or audit of financial records or financial statements and to the extent
necessary to comply with applicable tax and securities laws and regulations; and

[spacer.gif] [spacer.gif] [spacer.gif] c.  a court (under seal or mutually
satisfactory protective order, if permitted by the court) and to attorneys of
the Parties and other professionals in connection with any action to enforce
this Agreement pursuant to Code of Civil Procedure section 664.6, or suit for
breach thereof.

[spacer.gif] [spacer.gif] [spacer.gif] 6.2  The Parties agree that monetary
damages would not be sufficient to compensate a Party hereto for any breach of
the provisions of Section 6.1, and further agree that equitable remedies,
including injunctive relief, would be appropriate to enforce those provisions.

[spacer.gif] [spacer.gif] 7.  Representations and Warranties by Edison

Edison represents and warrants that: (i) it has not assigned or transferred, or
purported to assign or transfer, voluntarily, involuntarily, or by operation or
law, any claims, causes of action, or rights alleged in, arising out of, or
relating to any of the matters being released pursuant to Section 4 of this
Agreement; and (ii) the person signing this Agreement in a representative
capacity on its behalf has full authority to do so without the need to obtain
any consent or approval which has not been obtained.

[spacer.gif] [spacer.gif] 8.  Representations and Warranties by Ormesa

Ormesa represents and warrants that: (i) it has not assigned or transferred, or
purported to assign or transfer, voluntarily, involuntarily, or by operation of
law, any claims, causes of action, or rights alleged in, arising out of, or
relating to any of the matters being released pursuant to Section 4 of this
Agreement; and (ii) the person signing this Agreement in a representative
capacity on its behalf has full authority to do so without the need to obtain
any consent or approval which has not been obtained.

[spacer.gif] [spacer.gif] 9.  Further Cooperation

The Parties agree to cooperate promptly and fully in providing and/or executing
such additional documents and taking such other actions as may be reasonably
necessary to effectuate the provisions of this Agreement. Edison further agrees
to make a timely and appropriate request for Commission approval of this
Agreement, which may be in its next Energy Resource Recovery Application, and to
diligently and in good faith pursue such Commission approval, including timely
and properly responding to requests for information and taking any resonable
actions as requested by the Commission. Edison agrees to keep Ormesa informed as
to the status of such request for approval and to cooperate in good faith with
Ormesa in connection with such request for Commission approval. Notwithstanding
anything in this Agreement to the contrary, Edison shall have no obligation to
seek rehearing or to appeal a Commission decision which disallows the recovery
by Edison of any amounts paid or to be paid under this Agreement, fails to
approve this Agreement, or which contains findings with conditions or
modifications unacceptable to any Party.

[spacer.gif] [spacer.gif] 10.  Review of Agreement and Construction

The Parties acknowledge that their designated representatives have read and
understand this Agreement and further acknowledge that, in entering into this
settlement, they have been advised by attorneys of their choice. Further, each
Party has cooperated and participated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any Party on the basis that the Party was the
drafter.

[spacer.gif] [spacer.gif] 11.  Unique Circumstances; No Effect on Other Parties
and Agreements

The Parties acknowledge that this Agreement is and will be the product of each
Party’s concessions and unique circumstances, and that this Agreement is not
intended to set a precedent for Edison’s transactions with sellers or other
power suppliers or other facilities.

5

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[spacer.gif] [spacer.gif] 12.  No Admission

Each Party acknowledges that neither this Agreement nor Amendment No. 2 or the
Termination Agreement (nor any of the provisions contained in this Agreement,
Amendment No. 2 or the Termination Agreement) constitute an admission of
liability as to any claim, and each Party expressly denies any such liability.
Neither this Agreement nor Amendment No. 2 or the Termination Agreement
constitutes a finding of fact with respect to any matters that may exist or may
arise between the Parties or their affiliates, nor may they be used by any Party
as evidence for any purpose, except solely for the enforcement or interpretation
of this Agreement, Amendment No. 2 and/or the Termination Agreement.

[spacer.gif] [spacer.gif] 13.  No Other Representations

Each of the Parties acknowledges that no other Party or any other person has
made any promises, representations, or warranties which are not expressly
contained in this Agreement, Amendment No. 2 or the Termination Agreement to
induce any of the Parties to enter into this Agreement, Amendment No. 2 and the
Termination Agreement, and the Parties acknowledge that they have not entered
into this Agreement, Amendment No. 2 or the Termination Agreement in reliance on
any promises, representations, or warranties not contained therein. This
Agreement, Amendment No. 2 and the Termination Agreement shall constitute the
entire agreement between the Parties concerning the subject matters of this
Agreement, Amendment No. 2 and the Termination Agreement and shall supersede any
previous communications on these subjects.

[spacer.gif] [spacer.gif] 14.  Successors and Assigns

Each provision of this Agreement shall inure to the benefit of, and be binding
on, the successors and assigns of the Parties.

[spacer.gif] [spacer.gif] 15.  Amendments

This Agreement shall not be amended or modified by any of the Parties, except by
an instrument in writing executed by both Parties.

[spacer.gif] [spacer.gif] 16.  Waiver

None of the provisions of this Agreement, including this Section, shall be
considered waived by either Party except when such waiver is given in writing.
The failure of either Party to insist in any one or more instances upon strict
performance of any of the provisions of this Agreement or to take advantage of
any of its rights hereunder shall not be construed as waiver of any such
provisions or the relinquishment of any such rights for the future, but the same
shall continue and remain in full force and effect.

[spacer.gif] [spacer.gif] 17.  Governing Law and Construction

This Agreement shall be interpreted, governed, and construed under the laws of
the State of California as if executed and to be performed wholly within the
State of California (without giving effect to choice of laws provisions that
might apply the laws of a different jurisdiction).

[spacer.gif] [spacer.gif] 18.  Expenses

Except as provided in this Agreement, each of the Parties shall pay its own
costs and expenses, including attorneys’ fees, incurred in connection with the
Dispute, the FERC Dispute, the Maintenance Hours Dispute and the negotiation and
preparation of this Agreement, Amendment No. 2 and the Termination Agreement and
their implementation, including but not limited to costs and expenses incurred
in preparing stipulations, making motions, and obtaining Commission approval of
this Agreement.

[spacer.gif] [spacer.gif] 19.  Execution and Counterparts

This Agreement may be executed in counterparts, each of which will be deemed to
be an original and all of which taken together shall constitute a single
instrument. This Agreement may be executed by signature via facsimile
transmission which shall be deemed the same as an original signature.

6

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[spacer.gif] [spacer.gif] 20.  Headings

The headings used in this Agreement are for convenience and reference purposes
only, and shall not be construed as the actual terms of the Agreement.

[spacer.gif] [spacer.gif] 21.  Notices

Each notice which any Party gives under or in connection with this Agreement
shall be in writing and shall be deemed given as follows: (i) notice by
facsimile or hand delivery shall be deemed given at the close of business on the
day actually received, if received during business hours on a business day, and
otherwise shall be deemed given at the close of business on the next business
day; (ii) notice by overnight mail or courier service shall be deemed given on
the next business day after it was sent out; and (iii) notice by first class
United States mail shall be deemed given two (2) business days after the
postmarked date.

Notice shall be addressed to the Parties as follows:

[spacer.gif] [spacer.gif] [spacer.gif] If to Edison:  Southern California Edison
Company
Renewable and Alternative Power Department
Manager, Contract Administration
2244 Walnut Grove Avenue
Rosemead, California 91770
Facsimile: (626) 302-9622

[spacer.gif] With a copy to:

[spacer.gif] Southern California Edison Company
Law Department
Manager, Power Procurement Section
2244 Walnut Grove Avenue
Rosemead, California 91770
Facsimile: (626) 302-1904

[spacer.gif] [spacer.gif] [spacer.gif] If to Ormesa:  Ormesa LLC c/o Ormat
Nevada, Inc.
6625 Neil Road
Reno, Nevada 89511
Facsimile: (775) 356-9039

[spacer.gif] [spacer.gif] 22.  Signatures

IN WITNESS WHEREOF, the Parties hereto have caused this agreement to be executed
by their duly authorized representatives on the dates indicated below the
signatures.

[spacer.gif]

[spacer.gif] [spacer.gif] [spacer.gif] [spacer.gif] SOUTHERN CALIFORNIA EDISON
COMPANY,
a California corporation [spacer.gif] [spacer.gif] ORMESA LLC,
a Delaware limited liability company By:    [spacer.gif] [spacer.gif] By:   
    Name: Pedro J. Pizarro [spacer.gif] [spacer.gif]     Name:
                                                          Title:    Senior Vice
President, PPBU [spacer.gif] [spacer.gif]
    Title:                                                                           
    Date:                                                                          
[spacer.gif] [spacer.gif]
    Date:                                                       

7

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Southern California Edison

 

 

APPENDIX D

East Mesa Lease Map

 

 

     Appendix D

East Mesa Lease Map

 

 

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APPENDIX D

[img1.jpg]

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Southern California Edison

 

 

APPENDIX E

Equipment of Consolidated Projects

 

 

     Appendix E

Equipment of Consolidated Projects

 

 

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Appendix E

Equipment of Consolidated Projects

3010 Project Equipment

Ormesa 1

 

Unit

 

KW rating

 

KVA

 

Generator Brand

 

Generator Serial No.

 

Application

OEC 1

 

12,000

 

15,000

 

Brush

 

410063

 

Binary

OEC 32

 

1,200

 

 

 

Ormat

 

527-5

 

Binary

OEC 2

 

10,000

 

12,500

 

Kato

 

15013-01

 

Binary

OEC 31

 

1,200

 

 

 

Ormat

 

534-4

 

Binary

Ormesa 1E

 

Unit

 

KW rating

 

KVA

 

Generator Brand

 

Generator Serial No.

 

Application

OEC1

 

1,200

 

 

 

Ormat

 

534-3

 

Binary

OEC 2

 

1,200

 

 

 

Ormat

 

527-6

 

Binary

OEC 3

 

1,200

 

 

 

Ormat

 

BB 550-1

 

Binary

OEC 4

 

1,200

 

 

 

Ormat

 

BB 550-10

 

Binary

OEC 5

 

1,200

 

 

 

Loher

 

5-106-397

 

Binary

OEC 6

 

1,200

 

 

 

Ormat

 

BB 636-3

 

Binary

OEC 7

 

1,200

 

 

 

Ormat

 

BB 650-20

 

Binary

OEC 8

 

1,200

 

 

 

Ormat

 

527-4

 

Binary

OEC 9

 

1,200

 

 

 

Ormat

 

527-3

 

Binary

OEC 10

 

1,200

 

 

 

Ormat

 

527-1

 

Binary

OEC 11

 

1,200

 

 

 

Ormat

 

AF-581-2

 

Binary

OEC 12

 

1,200

 

 

 

Ormat

 

AF-581-1

 

Binary

Ormesa 1H

 

Unit

 

KW rating

 

KVA

 

Generator Brand

 

Generator Serial No.

 

Application

OEC 11

 

1,200

 

 

 

Ormat

 

AP-531-2

 

Binary

OEC 21

 

1,200

 

 

 

Ormat

 

AC-653-8

 

Binary

OEC 12

 

1,200

 

 

 

Ormat

 

BB 636-4

 

Binary

OEC 22

 

1,200

 

 

 

Ormat

 

AC-653-3

 

Binary

OEC 13

 

1,200

 

 

 

Ormat

 

AD-531-1

 

Binary

OEC 23

 

1,200

 

 

 

Ormat

 

AC-653-10

 

Binary

OEC 14

 

1,200

 

 

 

Keller

 

10122004147938

 

Binary

OEC 24

 

1,200

 

 

 

Ormat

 

AC-653-2

 

Binary

OEC 15

 

1,200

 

 

 

Ormat

 

AC-653-1

 

Binary

OEC 25

 

1,200

 

 

 

Ormat

 

AC-653-6

 

Binary

OEC 16

 

1,200

 

 

 

Ormat

 

AC-653-9

 

Binary

OEC 26

 

1,200

 

 

 

Ormat

 

AC-653-5

 

Binary

3012 Project Equipment

 

Unit

 

KW rating

 

KVA

 

Generator Brand

 

Generator Serial No.

 

Application

OEC 21

 

12,000

 

15,000

 

Brush

 

410041-01

 

Binary

OEC 22

 

12,000

 

15,000

 

Brush

 

410041-02

 

Binary

GEM Equipment

 

Unit

 

KW rating

 

KVA

 

Generator Brand

 

Generator Serial No.

 

Application

GEM 2

 

18,500

 

24,000

 

Mitsubishi

 

188181801

 

Flash

GEM 3

 

18,500

 

24,000

 

Mitsubishi

 

288181801

 

Flash

GEM Bottoming

 

8,000

 

10,000

 

Kato

 

17965

 

Binary

    Appendix E

 

 

-1-

Southern California Edison

 

 

APPENDIX F

Annual Contract Capacity Demonstration Protocol and Criteria

 

 

     Appendix F

Annual Contract Capacity Demonstration Protocol and
Criteria

 

 

--------------------------------------------------------------------------------

Southern California Edison

APPENDIX F

ANNUAL CONTRACT CAPACITY DEMONSTRATION PROTOCOL AND CRITERIA

1)

Annual Contract Capacity Demonstration Date:

 

a)

An Annual Contract Capacity Demonstration (“Capacity Demonstration”) shall be
held on a non-holiday weekday, within the Peak Months, that is agreed to by
Edison and Seller. If, by June 1 of a particular year, Edison and Seller have
not agreed upon a date for the Capacity Demonstration, Edison shall select a
date for that year. At its discretion, Edison may request that the Capacity
Demonstration be held on a non-holiday weekday in a non-Peak Month.

 

b)

Either Party may request to reschedule the originally scheduled Capacity
Demonstration date upon one week’s written Notice sent by facsimile transmission
or e-mail to the other Party. However, the Capacity Demonstration may only be
rescheduled once per year. Moreover, once the Capacity Demonstration has
commenced, subject to Section 7b below, it cannot be terminated or rescheduled
for any reason whatsoever.

2)

Capacity Demonstration Period:

The Capacity Demonstration period shall commence at 12:00 p.m. (noon) on the
selected day and end at 6:00 p.m. of the same day.

3)

Satisfactory Demonstration:

 

a)

Seller shall operate at a rate of delivery (net of line losses to the Point of
Interconnection as specified below) which is equal to or greater than a Contract
Capacity of 46,500 kWh/h, as specified in Sections 1.3 and 4.4.9 of the
Contract, during each and every Edison metering interval within the Capacity
Demonstration period.

 

b)

For the Capacity Demonstration, the rate of delivery (kWh/h) means the energy
(kWh) recorded by the Testing Tools, as defined in Section 4 below, within an
Edison metering interval times the number of intervals within an hour, adjusted
for the Interconnecting Utility loss factors. The Interconnecting Utility is
Imperial Irrigation District (“IID”). For example, a 15-minute energy recording
would be multiplied by four to obtain the rate of delivery in kWh/h units, and
then multiplied by 0.97 to adjust for a 3% IID loss factor.

 

 

     Appendix F

Annual Contract Capacity Demonstration Protocol and
Criteria

 

 

--------------------------------------------------------------------------------

Southern California Edison

During the Capacity Demonstration, the IID loss factors to be utilized shall be
those published for the period of the Capacity Demonstration, or those for the
prior year if the current year loss factors are not available before the
Capacity Demonstration begins.

4)

Testing Tools:

The rate of delivery for the Capacity Demonstration is to be determined using
Edison’s meter, installed and maintained at Seller’s expense, as shown on
Appendix H and Edison’s data recorder.

5)

Representation and Access:

 

a)

Edison representatives (normally one to three) may attend the setup and
operation of the Capacity Demonstration.

 

b)

Edison representatives may also, concurrently with the Capacity Demonstration,
conduct a site inspection of the Generating Facility and associated facilities,
systems and equipment.

 

c)

Edison shall have access to and copies of control room logs, control system
display screens, and instrumentation data before, during and after the Capacity
Demonstration.

 

d)

Generating Facility personnel may be present during both the Capacity
Demonstration and site inspection at the Seller’s option.

6)

Cost of Capacity Demonstration:

Each Party shall bear its own costs of the Capacity Demonstration.

7)

Remedial Action for Failing the Capacity Demonstration:

 

a)

Should the Seller fail to operate at a rate of delivery (net of line losses to
the Point of Interconnection as specified above) which is equal to or greater
than a Contract Capacity of 46,500 kWh/h, as specified in Sections 1.3 and 4.4.9
of the Contract, during each and every Edison metering interval during the
Capacity Demonstration period, Seller shall pay to Edison as liquidated damages
$50/kW based on the difference between 46,500 kWh/h and Seller’s lowest rate of
delivery during any Edison metering interval during the Capacity Demonstration
period.

 

b)

If the Seller fails to demonstrate Contract Capacity of a 46,500 kW due to an
abnormal and unforeseeable operating condition, as verified and determined at
Edison’s sole discretion, an additional Capacity Demonstration may be scheduled,
provided there is time remaining within the current year’s Peak Months or such
other month as Edison may select.

 

 

     Appendix F

Annual Contract Capacity Demonstration Protocol and
Criteria

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

 

APPENDIX G

Metering One Line

 

 

Appendix G

Metering One Line

 

 

--------------------------------------------------------------------------------

ORMSEA Metering One Line

[img2.jpg]

 

 

Southern California Edison

 

 

APPENDIX H

Capacity Payment Schedule

 

 

Appendix H

Capacity Payment Schedule

APPENDIX H

TABLE P

SOUTHERN CALIFORNIA EDISON COMPANY

ANNUAL CAPACITY PAYMENT SCHEDULE FOR STANDARD OFFER NO. 2

FOR FIRM POWER PURCHASES

 

Line
No.

 

Year of
Initial
Delivery

 

$/kW – yr. (Based on 80% CF)
Contract Term (Years)

 

 

1

 

5

 

10

 

15

 

20

 

25

 

30

 

 

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

(6)

 

(7)

 

1.

 

1982

 

66

 

74

 

85

 

97

 

106

 

113

 

118

 

2.

 

1983

 

70

 

80

 

92

 

105

 

114

 

121

 

127

 

3.

 

1984

 

76

 

86

 

100

 

113

 

123

 

131

 

137

 

4.

 

1985

 

81

 

93

 

108

 

122

 

132

 

141

 

147

 

5.

 

1986

 

87

 

100

 

117

 

131

 

143

 

152

 

158

 

6.

 

1987

 

94

 

107

 

127

 

142

 

154

 

163

 

170

 

7.

 

1988

 

101

 

117

 

137

 

153

 

166

 

176

 

184

 

8.

 

1989

 

109

 

128

 

149

 

165

 

179

 

189

 

198

 

 

 

Appendix H, Amendment No.2

 

Table P

 

--------------------------------------------------------------------------------

Southern California Edison

APPENDIX I

Maintenance Outage Scheduling Procedures

 

 

     Appendix I

Maintenance Outage Scheduling Procedures

Qualifying Facility
Maintenance Outage Scheduling Procedures

 

I.

Applicability

The Qualifying Facility Maintenance Outage Scheduling Procedures (“Maintenance
Procedures”) apply to the scheduling of an outage on a QF generating facility as
a result of planned maintenance to keep the generating facility in suitable
operating condition. A maintenance outage, whether full or partial, must be
scheduled prior to the actual event and must be of a predetermined duration.
These Maintenance Procedures are applicable only to firm capacity contracts with
a provision for maintenance credit.

II.

Contract Provisions

Presented in this section is a general overview of the standard contract
provisions concerning scheduled maintenance, as well as some of SCE’s
administrative principles derived from these provisions. The standard provisions
may not be found in all QF contracts. The QF should always refer to its contract
for any variations in the scheduled maintenance provisions. In the event of a
conflict between the QF’s contract and the overview in this Section II, the QF’s
contract shall govern.

 

A.

Many Standard Offer and negotiated firm capacity contracts establish the
following notification requirements for scheduled outages:

 

 

Outage Duration

Notification Required

 

Less than 1 day

24 hours

 

1 day or more (except Major Overhaul)

1 week

 

Major Overhaul*

6 months

Notification requirements in each contract will be strictly enforced.

*A Major Overhaul is a one-day-or-more maintenance outage that is scheduled six
months or more in advance. During a Major Overhaul, the unit may not carry any
load, except for testing purposes. A Major Overhaul may not be scheduled to
occur during peak months, currently June, July, August, and September.

 

B.

Many Standard Offer and negotiated firm capacity contracts provide for
adjustments to firm capacity and bonus payments for scheduled maintenance. The
adjustments may be summarized as follows:

 

 

TOU Period Performance Factor

=

TOU Preiod kWhs

 

 

 

0.8 x Contract Capacity x (TOU Period Hours – TOU Allowable Maintenance Hrs)

and

 

 

TOU Period Capacity Factor

=

TOU Preiod kWhs

 

 

 

Contract Capacity x (TOU Period Hours – TOU Allowable Maintenance Hrs)

SCE calculates Allowable Maintenance Hours (i.e., maintenance credit or capacity
credit) as follows, by TOU period:

Allowable Maintenance Hours (TOU period) = Sum of the Hourly Credit Values for
the TOU period

 

 

Note: These procedures are subject to change as necessary.

Southern California Edison

Page 1

April 4, 2007

 

--------------------------------------------------------------------------------

Qualifying Facility
Maintenance Outage Scheduling Procedures

 

Hourly Credit Value is defined in Section IV-B-1.

 

C.

Many Standard Offer and negotiated firm capacity contracts also set the
following allowances for scheduled maintenance:

 

1.

Scheduled maintenance shall not exceed a total of 30 on-peak hours in a calendar
year.

 

2.

Scheduled maintenance, not including Major Overhauls, shall not exceed a total
of 840 hours in any 12-month period.

 

3.

Unused hours from the 840-hour allotment may be accumulated up to a maximum of
1080 hours to be used for Major Overhauls.

The hours from the 840-hour allotment may be used on a non-consecutive basis by
scheduling separate maintenance outages. This is in direct contrast to the
accumulated hours, which can only be used consecutively once a year. Moreover,
all maintenance hours must be used in one-hour increments.

The 30-on-peak-hour allotment is part of, not in addition to, the 840-hour
allotment. The number of available hours in the on-peak allotment shall never be
more than the number of unused hours in the 840-hour allotment.

 

D.

Many Standard Offer and negotiated firm capacity contracts further require the
QF to make reasonable efforts to scheduled routine maintenance outside the Peak
Months, currently June, July, August, and September.

III.

Scheduling Procedure

 

A.

All maintenance outages must be reported to SCE in advance. The QF is solely
responsible for meeting the advance notice requirement.

 

B.

Notifications of maintenance schedule and requests for maintenance credit should
be directed to SCE via the Web-based QF Outage Scheduling System (“Web
Scheduler”) at:

http://www3.sce.com/sscc/qf/qf.nsf

If the Web Scheduler is unavailable, notifications of maintenance schedule and
requests for maintenance credit should be e-mailed to SCE at
GenerationOutage@sce.com.

 

C.

Please have the following information ready when scheduling maintenance:

RAP ID (QFID)

Web Scheduler Password

Unit Number (if applicable)

Outage Period*

Date and time the unit is expected to be taken off-line

Date and time the unit is expected to return to service

Scheduled Output**

Capacity output, in kW, which will be on-line during Outage Period

Reason for Outage

Capacity Credit Period***

Date and time maintenance credit is requested to begin

 

 

Note: These procedures are subject to change as necessary.

Southern California Edison

Page 2

April 4, 2007

 

--------------------------------------------------------------------------------

Qualifying Facility
Maintenance Outage Scheduling Procedures

 

Date and time maintenance credit is requested to end

*If capacity credit is requested for an outage, the Outage Period must be the
same as the Capacity Credit Period. If the Outage Period is different from the
Capacity Credit Period, no credit will be given.

**For QFs which track Maintenance Hours separately for each generating unit,
please provide the expected Scheduled Output for the unit being scheduled for
maintenance.

***The Capacity Credit Period information is not applicable if the QF requests
that no credit be applied to the outage.

 

D.

After an outage has been scheduled through the Web Scheduler, a confirmation of
receipt can be printed for verification. The QF is solely responsible for data
accuracy.

 

E.

SCE’s Real-Time Generation Desk and/or local switching center should also be
informed of the maintenance outage. The Real-Time Generation Desk telephone
number is (626) 307-4410.

IV.

Maintenance Credit Evaluation

After a request for maintenance credit has been submitted, evaluation of
maintenance credit does not take place until SCE receives the QF’s Production
Output data. Production Output, in kWh per hour, is defined as the QF’s power
delivery on which its capacity payment is calculated. Once the Production Output
data is available, SCE calculates the maintenance credit (and the associated
allotment debit) following these steps:

 

A.

A Benchmark Capacity shall be determined for every scheduled maintenance outage.
Benchmark Capacity is defined as the highest hourly Production Output, not to
exceed Contract Capacity, at or after the time of outage notification, and
before the start of the outage. If the outage is rescheduled, the most recent
notification time shall be used in defining Benchmark Capacity. If the outage is
extended, or its Scheduled Output is updated, the previous notification time
shall be used in defining Benchmark Capacity.

In the special case of a less-than-one-day maintenance outage that directly
follows another less-than-one-day maintenance outage, Benchmark Capacity of the
outage that follows is defined as the highest hourly Production Output, not to
exceed Contract Capacity, between these two outage periods. In the event of
back-to-back, less-than-one-day outages, Benchmark Capacity for the second
outage shall be zero.

 

B.

For each hour in the Outage Period, an Hourly Credit Value and Hourly Debit
Value shall be calculated:

 

1.

Hourly Credit Value is based on the difference between Benchmark Capacity and
Production Output for the hour, or the difference between Benchmark Capacity and
Scheduled Output for the hour, whichever difference is smaller.

Hourly Credit Value = ( Delta / Benchmark Capacity ) * 1 hour

where Delta is the greater of

Benchmark Capacity minus the greater of Scheduled Output or Production Output

 

 

Note: These procedures are subject to change as necessary.

Southern California Edison

Page 3

April 4, 2007

 

--------------------------------------------------------------------------------

Qualifying Facility
Maintenance Outage Scheduling Procedures

or

zero

 

2.

Hourly Debit Value is based on the difference between Benchmark Capacity and
Scheduled Output for the hour, unless this difference is less than Scheduled
Output Deviation for the hour, in which case Hourly Debit Value shall be based
on the deviation amount. (Scheduled Output Deviation is defined as the absolute
difference between Production Output and Scheduled Output.)

Hourly Debit Value = Normalized Delta * 1 hour

where Normalized Delta is the greatest of

( Benchmark Capacity - Scheduled Output ) / Benchmark Capacity

or

( Scheduled Output - Production Output ) / Scheduled Output

or

( Production Output - Scheduled Output ) / Production Output

In case of division by zero, the value being calculated shall be zero.

 

C.

For each hour in the Outage Period, the Hourly Credit Value shall be applied, by
TOU, to the Performance Factor and/or the Capacity Factor, according to Section
II-B, and the associated Hourly Debit Value shall be deducted, by TOU where
applicable, from the appropriate allotment(s) in Section II-C. Once the
allotment balance reaches zero or becomes negative (i.e., the hours available
for scheduled maintenance have been exhausted), no more Hourly Credit Values
shall be applied to the Performance or Capacity Factor.

 

D.

After all the Hour Credit Values and Hourly Debit Values have been applied, the
final monthly TOU Allowable Maintenance Hours and allotment balances shall be
rounded to the nearest whole number. However, all intermediate computations
leading up to the final result shall be carried out with appropriate numeric
precision.

Note: The above description of the evaluation process assumes that the outage
request was properly submitted with sufficient advance notice and was approved
by SCE. Any deviation from the proper scheduling protocol can result in reduced
maintenance credit or increased allotment debit.

V.

Other Procedures and Administrative Principles

 

A.

A maintenance outage, except for a Major Overhaul, may be rescheduled if the
request to reschedule is received by SCE via the Web Scheduler no later than
5:00 a.m. on the day before the outage was previously scheduled to begin. For
example, if the outage was previously scheduled to begin on Monday, the request
to reschedule must be received by SCE no later than 5:00 a.m. on Sunday. The new
outage must also meet the notification requirements stated in Section II-A. An
outage may be rescheduled more than once.

 

B.

A Major Overhaul may be rescheduled provided:

 

 

Note: These procedures are subject to change as necessary.

Southern California Edison

Page 4

April 4, 2007

 

--------------------------------------------------------------------------------

Qualifying Facility
Maintenance Outage Scheduling Procedures

 

 

1.

The scheduling requirements for the original outage have been met;

 

2.

The rescheduled outage begins six months or more after the original (first)
outage notification date and time;

 

3.

The notification to reschedule is made at least one week before the outage was
previously scheduled to begin; and

 

4.

There is at least a one-month period between the notification to reschedule and
the commencement of the rescheduled outage.

A Major Overhaul may be rescheduled more than once.

 

C.

All maintenance outages may be extended by notifying SCE of the extension via
the Web Scheduler no later than 5:00 a.m. on the day before the outage was
previously scheduled to end. For example, if the outage was previously scheduled
to end on Monday, the request for extension must be received by SCE no later
than 5:00 a.m. on Sunday. An outage may be extended more than once.

Note: For less-than-one-day outages, the extension cannot result in a total
outage duration greater than 23 hours.

 

D.

If the scheduled maintenance is canceled, a cancellation notice is required and
must be received by SCE via the Web Scheduler no later than 5:00 a.m. on the day
before the outage was scheduled to begin.

 

E.

The Scheduled Output should always follow the Production Output as closely as
possible. If a change in the Production Output is anticipated or occurs during a
maintenance outage prior to 5:00 a.m. on the day before the outage is scheduled
to end, the Scheduled Output should be updated as soon as possible via the Web
Scheduler. Multiple updates can be submitted if necessary. Scheduled Output
cannot be updated after the outage is over.

 

F.

SCE’s Real-Time Generation Desk and/or local switching center should also be
informed of any changes in the outage schedule.

 

G.

A maintenance outage must not overlap another outage already scheduled on the
same unit.

 

H.

Maintenance credit will be given from the 840-hour allotment unless the QF
notifies SCE of the outage (Major Overhaul) six months or more in advance. If
notice is given at least six months in advance, the credit will be given from
the accumulated hours. Should the QF use up all of its available accumulated
hours during a Major Overhaul, additional credit may be taken from the 840-hour
allotment, up to the allowable limit, provided a written request has been
submitted to SCE.

 

I.

In determining the beginning and ending of an outage, all times are rounded to
the nearest hour. For examples, 11:29 = 11:00 and 11:30 = 12:00. For a
less-than-one-day outage, the rounding shall never result in a duration of more
than 23 hours. Also, 24:00 will be treated as 00:00 of the following day. For
example, 1/1/2000 24:00 will become 1/2/2000 00:00.

VI.

Non-Compliance

A material failure to comply with the Maintenance Procedures will result in loss
of claimed maintenance credits. SCE also reserves the right to seek recovery of
any and all losses it incurs as a result of a QF’s

 

 

Note: These procedures are subject to change as necessary.

Southern California Edison

Page 5

April 4, 2007

 

--------------------------------------------------------------------------------

Qualifying Facility
Maintenance Outage Scheduling Procedures

 

failure to comply with these Maintenance Procedures, including, but not limited
to, recovery of imbalance charges paid by SCE. In addition, repeated failure to
comply with the Maintenance Procedures may be deemed by SCE to be a material
breach of contract and SCE may seek to rely on such repeated failure as
justifying contract termination.

 

 

Note: These procedures are subject to change as necessary.

Southern California Edison

Page 6

April 4, 2007

 

--------------------------------------------------------------------------------

Southern California Edison

 

 

APPENDIX J

Maintenance Hour Allowance for Capacity Credit

 

 

     Appendix J

Maintenance Hour Allowance for Capacity Credit

 

--------------------------------------------------------------------------------

APPENDIX J

Maintenance Hour Allowance for Capacity Credit

 

 

 

Contract Capacity

 

Capacity Price

 

Maint Allowance
Balance as of
12/31/06 (hrs)

 

Maint Hr factor

 

Maint Allowance
Balance w/
Consolidation as
of 12/31/06 (hrs)

 

Ormesa I

 

31,500

 

$

170.00

 

365

 

0.659889094

 

241

 

Ormesa II

 

15,000

 

$

184.00

 

194

 

0.340110906

 

66

 

Consolidated

 

46,500

 

$

174.52

 

 

 

1.000000000

 

307

 

 

Ormesa 1 (QFID 3010)

 

Hours

 

Ormesa II (QFID 3012)

 

HOURS

 

From

 

To

 

Allowed

 

Annual Used

 

Balance

 

From

 

To

 

Allowed

 

Annual Used

 

Balance

 

1/1/2006

 

2/1/2006

 

98

 

671

 

169

 

1/1/2006

 

2/1/2006

 

36

 

420

 

420

 

2/1/2006

 

3/1/2006

 

75

 

739

 

101

 

2/1/2006

 

3/1/2006

 

47

 

433

 

407

 

3/1/2006

 

4/1/2006

 

108

 

840

 

0

 

3/1/2006

 

4/1/2006

 

37

 

444

 

396

 

4/1/2006

 

5/1/2006

 

0

 

840

 

0

 

4/1/2006

 

5/1/2006

 

37

 

443

 

397

 

5/1/2006

 

6/1/2006

 

15

 

840

 

0

 

5/1/2006

 

6/1/2006

 

72

 

466

 

374

 

6/1/2006

 

7/1/2006

 

0

 

840

 

0

 

6/1/2006

 

7/1/2006

 

46

 

512

 

328

 

7/1/2006

 

8/1/2006

 

16

 

735

 

105

 

7/1/2006

 

8/1/2006

 

13

 

462

 

348

 

8/1/2006

 

9/1/2006

 

44

 

723

 

117

 

8/1/2006

 

9/1/2006

 

53

 

463

 

377

 

9/1/2006

 

10/1/2006

 

0

 

739

 

101

 

9/1/2006

 

10/1/2006

 

0

 

495

 

435

 

10/1/2006

 

11/1/2006

 

62

 

797

 

43

 

10/1/2006

 

11/1/2006

 

84

 

450

 

390

 

11/1/2006

 

12/1/2006

 

74

 

545

 

195

 

11/1/2006

 

12/1/2006

 

170

 

611

 

229

 

12/1/2006

 

1/1/2006

 

81

 

573

 

267

 

12/1/2006

 

1/1/2006

 

87

 

682

 

158

 

1/1/2007

 

2/1/2007

 

 

 

 

 

365

 

1/1/2007

 

2/1/2007

 

 

 

 

 

194

 

 

Consolidated of Ormesa I & II

 

HOURS

 

From

 

To

 

Allowed

 

Annual Used

 

Balance

 

1/1/2006

 

2/1/2006

 

77

 

586

 

254

 

2/1/2006

 

3/1/2006

 

65

 

635

 

205

 

3/1/2006

 

4/1/2006

 

84

 

705

 

135

 

4/1/2006

 

5/1/2006

 

13

 

705

 

135

 

5/1/2006

 

6/1/2006

 

34

 

713

 

127

 

6/1/2006

 

7/1/2006

 

16

 

728

 

112

 

7/1/2006

 

8/1/2006

 

15

 

652

 

188

 

8/1/2006

 

9/1/2006

 

47

 

635

 

205

 

9/1/2006

 

10/1/2006

 

0

 

625

 

215

 

10/1/2006

 

11/1/2006

 

69

 

679

 

161

 

11/1/2006

 

12/1/2006

 

107

 

633

 

207

 

12/1/2006

 

1/1/2007

 

83

 

610

 

230

 

1/1/2007

 

2/1/2007

 

 

 

 

 

307

 

 

NOTE: Major Overhaul hours allowed for both Ormesa I and II, as of December 31,
2006, are at the maximum allotment of 1,080 hours at each facility. Therefore,
the Major Overhaul hours balance for the Consolidation of 3010 and 3012 is 1,080
hours. If either Ormesa I or II utilize maintenance hours from this category,
prior to the Effective Date, a similar calculation as above will be performed to
determine the Consolidation Major Overhaul hours balance.

 Appendix J

-1-

Maintenance Hour Allowance for Capacity Credit

 

--------------------------------------------------------------------------------

APPENDIX J

 

SOUTHERN CALIFORNIA

EDISON

 

 

 

RAP ID:

 

3010

Payment from:

 

12/01/2006

Payment to:

 

01/01/2007

Contract Manager:

Number of days:

 

31

P.O. Box 800

 

Michele Walker

 

Statement ID:

 

51318

Rosemead, CA

 

626-302-8908

 

Date prepared:

 

01/26/2007

91770

 

 

 

 

 

 

MAINTENANCE HOURS ALLOWANCE

UNIT: 1

ANNUAL

MAINTENANCE HOURS ALLOWED: 840

 

PAYMENT
FROM

TO

ALLOWED

ON
PEAK

MID
PEAK

OFF
PEAK

SUP OFF
PEAK

ANNUAL
USED

PERIOD END
BALANCE

01/01/2006

02/01/2006

98

0

44

33

21

671

169

02/01/2006

03/01/2006

75

0

40

21

14

739

101

03/01/2006

04/01/2006

108

0

41

41

26

840

0

04/01/2006

05/01/2006

0

0

0

0

0

840

0

05/01/2006

06/01/2006

15

0

8

3

4

840

0

06/01/2006

07/01/2006

0

0

0

0

0

840

0

07/01/2006

08/01/2006

16

16

0

0

0

735

105

08/01/2006

09/01/2006

44

10

15

19

0

723

117

09/01/2006

10/01/2006

0

0

0

0

0

739

101

10/01/2006

11/01/2006

62

0

27

20

15

797

43

11/01/2006

12/01/2006

74

0

31

27

16

645

195

12/01/2006

01/01/2007

81

0

35

29

17

573

267

MAJOR OVERHAUL

MAJOR OVERHAUL HOURS ALLOWED: 1080

 

ROLLOVER

UNUSED ANNUAL HOURS

YEAR END BALANCE

2003

677

1080

2004

754

1080

2005

267

1080

PAYMENT
FROM

TO

ALLOWED

ON
PEAK

MID
PEAK

OFF
PEAK

SUP OFF PEAK

YTD
USED

YTD AVAILABLE

NOTES

Outages shall not exceed 30 peak hours for the peak months or 840 hours (35
days) in any 12 month period.

Page 1 of 1

 

Appendix J, Amendment No. 2

3010 maintenance Hours Allowance

 

--------------------------------------------------------------------------------

Southern California Edison

 

 

APPENDIX K

Draft Letter and

Specifications for Gould Facility

 

 

Appendix K

Draft Letter and Specifications for Gould Facility

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

APPENDIX K

DRAFT Letter

[Month Day ], 2007

VIA FIRST CLASS MAIL

Mr. Stuart Hemphill

Director of Renewable and Alternative Power

Southern California Edison Company

P.O. Box 800

2244 Walnut Grove Avenue

Rosemead, CA 91770

RE:    Installation of the William R. Gould Power Plant and Sale of Power to
SCPPA

Dear Mr. Hemphill:

I am writing this letter on behalf of OrCal Geothermal Inc. (“OrCal”) to request
Southern California Edison Company’s (“Edison”) confirmation of certain matters
related to the new William R. Gould Power Plant (“Gould Plant”). By way of
background, OrCal’s lenders hold as security certain assets, including (i) the
Power Purchase Contract between Southern California Edison Company (“Edison”)
and Heber Geothermal Company (“HGC”), executed on August 26, 1983, as amended by
Amendment No. 1 to the Power Purchase Contract, executed as of December 11,
1984, and Amendment No. 2 to the Power Purchase Contract, executed as of August
7, 1995 (“HGC PPA”); and (ii) the Power Purchase Contract between Edison and
Second Imperial Geothermal Company (“SIGC”), executed on August 16, 1985, as
amended by Amendment No. 1 to the Power Purchase Contract, executed as of
October 23, 1987, Amendment No. 2 to the Power Purchase Contract, executed as of
July 27, 1990, and Amendment No. 3 to the Power Purchase Contract, executed as
of November 24, 1992 (“SIGC PPA”).

As we have discussed, OrHeber 2 Inc., an affiliate of OrCal, plans to install
and own the Gould Plant. The Gould Plant is comprised of geothermal generating
units located at or near the site of the HGC facility that sells its power to
Edison pursuant to the HGC PPA

 

 

Appendix K

Draft Letter and Specifications for Gould Facility

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

(“HGC Facility”) and a geothermal generating unit located at or near the site of
the SIGC facility that sells its power to Edison pursuant to the SIGC PPA (“SIGC
Facility”). A technical description of the Gould Plant, and its interconnection
and metering arrangements is attached hereto. OrHeber 2 Inc. will sell the
combined output from the Gould Plant units, in excess of various site
requirements, to the Southern California Public Power Authority (“SCPPA”).

OrCal and OrHeber 2 Inc. request that Edison confirm in writing our prior
discussions that the installation and continued operation of the Gould Plant in
accordance with the specifications attached hereto, and the sale of the output
therefrom to SCPPA, does not constitute a default under either the Heber PPA or
the SIGC PPA. Similarly, OrCal and OrHeber 2 Inc. request Edison to confirm that
the Gould Plant is not considered to be part of the generating facilities
covered by either the HGC PPA or the SIGC PPA. Your signature below will confirm
the foregoing; provided that, Edison will fully reserve its rights to withdraw
its confirmation of the foregoing: (i) in the event that that the Gould Plant is
not operated in accordance with the attached specifications; or (ii) in the
event of any amendments or modifications to the Heber PPA or the SIGC PPA, and
further fully reserves its rights to seek to apply to the Heber PPA, the Heber
Facility, the SIGC PPA and/or the SIGC Facility any decisions(s) by any court,
the Federal Energy Regulatory Commission or other governmental authority related
to the issues in the appeal currently pending before the U.S. Court of Appeals
for the District of Columbia Circuit, SCE v. FERC, Case No. 04-1396. Edison
shall have the right, at reasonable times, upon reasonable advance notice and in
accordance with reasonable plant safety and security protocols, to inspect the
HGC Facility, SIGC Facility and Gould Plant from time to time for the purpose of
monitoring compliance with the attached specifications.

Thank you very much for your assistance and cooperation with this matter.

Very truly yours,

 

Hezy Ram

 

SOUTHERN CALIFORNIA EDISON COMPANY

 

 

By: 

 

 

 

 

Stuart Hemphill,

Director of Renewable and Alternative Power

 

 

 

cc:

Bruce McCarthy
Joseph Karp

 

 

 

 

 

Appendix K

Draft Letter and Specifications for Gould Facility

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

APPENDIX K

SPECIFICATIONS FOR GOULD FACILITY

The proposed Gould Generating Facility will consist of two plants, Gould 1 and
Gould 2 and will operate in parallel with two geothermal plants currently
selling their entire output to Edison as qualifying facilities identified as
follows.

 

1.

Heber

QF 3001

2.

Second Imperial

QF 3021

These specifications describe equipment and administrative procedures that must
be installed and implemented to ensure that energy created by the Gould plant is
accounted for separately, that it will not be intermingled with the QF energy
accounting for the Heber and Second Imperial Projects, and that Gould plant
operation will not disadvantage energy production from the existing QF units.

These specifications also describe various wells, cooling towers and pumps
associated with QF 3001, QF 302l and the Gould plant. It is acknowledged that
these items may be replaced, modified or supplemented with additional equipment
in the ordinary course of business (for example, as field conditions, technology
or equipment operating parameters change over time) and that such changes will
not be considered to be inconsistent with these specifications.

QF 3001 is located at “portion of the East half of Tract 45, APN 054-250-36-01,
20 acres, Township 16 South, Range 14 East, SBB&M”. The address is 895 Pitzer
Road, Heber, California. QF 3001 is comprised of one (1) Mitsubishi 52 MW
turbine generator, eleven (11) production wells, nineteen (19) injection wells,
six (6) cell Marley counter flow cooling tower, two (2) 900 hp main circulating
water pumps, four (4) 900 hp brine return booster pumps and three (3) 3500 hp
injection pumps.

 

 

Appendix K

Draft Letter and Specifications for Gould Facility

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

The 11 artesian flow directionally drilled production wells with no pumps
installed are located on an island adjacent to the facility and are dedicated to
QF 3001. The injection wells and pumps associated with QF 3001 are supplied by
the QF 3001 project. There is no installed backup power or capability to supply
the injection pump power from any other source other than the QF 3001 facility.

QF 3021 is located at “portion of the East half of Tract 44, APN 054-250-31-01,
39.99 Acres, Township 16 South, Range 14 East, SBB&M”. The address is 855
Dogwood Road, Heber, California. QF 3021 is comprised of six (6) Ormat Energy
Converter (OEC) 4.5 MW turbine generators and six (6) 3.5 MW OEC turbine
generators for a total of 48 MW nameplate, twelve (12) production wells with 800
hp down hole pumps, eleven (11) injection wells, two (2) Hamon six (6) cell
counter flow cooling towers, six (6) 450 hp main cooling water pumps and five
(5) 700 hp injection pumps.

The production wells associated with QF 3021 can be supplied either from the QF
3021 project or from the Gould 2 project. The 13.2kv feeders for the production
pumps supplied by the Gould 2 project, and previously supplied by the IID, are
located on the 1200 amp bus connecting the Gould 2 generator to the IID Heber
Imperial Substation. Synchronized transfer switches for the production pumps
allow for switching between the Gould 2 13.2kv source and the Heber 2 13.8kv
source. QF 3021 does not utilize any injection pumps in order to inject its
geothermal brine into the injection wells.

The Gould plant located near QF 3001 (Gould 1) shall consist of one (1) 7 MW OEC
turbine generator, one (1) 3.5 MW OEC turbine generator and one (1) OEC turbine
driving mechanically a 3000 hp booster pump and four (4) cell Marley counter
flow cooling tower with three (3) 350 hp main cooling water pumps. There are no
production or injection wells for Gould 1. The heat source for Gould 1 is the
injected brine, at nominally 212 F, from Heber 1.

Energy from this plant shall pass through the existing revenue meter and will be
counted with the QF 3001 energy. To provide for the separation of energy from
these two sources, new

 

 

Appendix K

Draft Letter and Specifications for Gould Facility

 

 

--------------------------------------------------------------------------------

Southern California Edison

 

revenue metering shall be installed at the Gould 1 facility. IID shall subtract
the Gould energy from the total measured at the existing revenue meter. Ormat
shall add an additional set of test switches to the Gould facility metering PT
and CT circuits and provide adequate panel space to enable SCE to add their own
revenue meter. Ormat shall install and maintain a dedicated analog telephone
line within the metering cabinet to provide for reading the meter. The meter
shall be a Landis Gyr model 2510 or equivalent. The meter and socket shall be
supplied and maintained by SCE. SCE shall be provided access to the meter for
reading and maintenance.

The Gould plant located near QF 3021 (Gould 2) shall consist of one (1) 16MW OEC
turbine generator and three (3) cell Marley counter flow cooling tower with
three (3) 300 hp main cooling water pumps.

The energy from this plant shall be delivered to the IID system through an
interconnection which is separate from the interconnection supporting QF 3021.
The interconnection which shall be used for the Gould 2 plant is currently used
part of the time to supply the needs for the field production pumping load for
3021. The interconnection for QF 3021 can also be connected to the field
production pumping load associated with 3021. In general, the pumps are not
simultaneously connected to both interconnections except for a few seconds
during switching. Ormat shall install logic in their control system to prevent
the systems being interconnected for more than 1.5 seconds for switching to
prevent the intermingling of energy between the systems. Ormat shall provide the
logic diagrams and wiring diagrams (if applicable) to SCE and shall forward
changes and updates as they occur in the future as long as the plants are
physically capable of cross feeding energy. Ormat shall provide access to SCE to
examine the operation of the system and shall demonstrate the proper operation
of the logic to prevent anything other than momentary interconnection of the
systems on request.

 

 

Appendix K

Draft Letter and Specifications for Gould Facility

 

 

--------------------------------------------------------------------------------